Slow economic growth, lack of foreign investment are major challenges

[webfact]

 

Thailand’s biggest economic challenge is that its economy has been growing at slower pace, about 3% per annum, than Malaysia and China, at about 5% annually, because it lacks the ability to attract foreign investors, according to Dr. Kobsak Pootrakool, executive vice president of the Bangkok Bank and a respected economist, in an exclusive interview with Thai PBS.

 

If the slow growth persists much longer, Thailand will lose the status of being the economic leader in the region, which would be a big problem, but not an economic crisis like the “tom yum kung” debacle in 1997, he said.

 

Foreign investment in Thailand today is much less than before the 1997 crisis, due to excessive red tape, which many investors find to be an obstacle to investment and, more importantly, Thailand has fewer free trade agreements than its neighbours, like Vietnam.

 

He said Thailand used to be the leader in Southeast Asia in the production of electronics but, today, it has lost that status to Vietnam and we are being left far behind.

 

The cutting of policy rates by the Bank of Thailand is not going to improve the Thai economy, although it may help the economy slightly. If the economy is to grow by 4.5% annually every year, it must be boosted by investment, production restructuring, new innovations and tourism expansion, said the economist.

 

Full story: Thai PBS 2024-02-14

 

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[ChaiyaTH]

Been saying this for years, even more with new tax rules, guess I should also call myself top economist. Vietnam is the new Thailand, and it is already too late to even get a chance to compete that, unless they turn like 180 degrees asap, even then, they likely only get a minor share.

Edited February 14 by ChaiyaTH

[Mike Lister]

A good article, very true

[Eric Loh]

Dr. Kobsak Pootrakool seem to fear mentioning the obvious that political instability caused by the continous coups scared off foreign investments. 

[Mike Lister]

3 minutes ago, Eric Loh said:

Dr. Kobsak Pootrakool seem to fear mentioning the obvious that political instability caused by the continous coups scared off foreign investments. 

There has only been two coups this century, 2006 and 2014, so that's unlikely to be a major reason.

 

More probable reasons are the ones the BOT constantly refers to and are structural and core to the Thai economy. Education, training, private investment, government policies regarding business investment are the key ones. Others include a strategy for an ageing population, productivity and climate change strategy are all factors.

 

 

 

 

https://en.wikipedia.org/wiki/Category:Military_coups_in_Thailand

 

[Eric Loh]

16 minutes ago, Mike Lister said:

There has only been two coups this century, 2006 and 2014, so that's unlikely to be a major reason.

 

More probable reasons are the ones the BOT constantly refers to and are structural and core to the Thai economy. Education, training, private investment, government policies regarding business investment are the key ones. Others include a strategy for an ageing population, productivity and climate change strategy are all factors.

 

 

 

 

https://en.wikipedia.org/wiki/Category:Military_coups_in_Thailand

 

 

2 coups in the last decades adds to the 18 successful and unsucessful coups since 1932 which Thailand holds that distinction being the most coups than any other country in the world. With every coup, structural programs like education stand the risk of policy changes and expropriation of fundings. The previous 9 years adminsitrators showed no interest in improving education. Foreign investors are wary of an unstable political climate for the same reasons of policy changes and civil unrests. Countries like Singapore, Japan etc that have political stability tends to do well attracting FDIs and implementation of structural programs like education, healthcare etc. 

[BayArea]

Wasn't there a recent article stating tourism is looking up in the new year for Thailand due to its vibrant culture and dynamic economy???

 

 

 

[ikke1959]

How can expect else in a country that has no progress but only keep outdated laws and rules, culture etc instead of updating them and enter the 21st century. Labour law should be reviewed, investors laws dito, double pricing should be abolshed and so many more... Keep the country at peace instead of focus on 1 topic that has no influence for the rest of the country.

[bokningar]

2 hours ago, webfact said:

He said Thailand used to be the leader in Southeast Asia in the production of electronics but, today, it has lost that status to Vietnam and we are being left far behind.

Compare Thai and Vietnamese school systems, and how hard Vietnamese kids work to get good grades.

Thailand has much to learn.

Lacy people with low education that can't speak English wont attract investors.

[hotchilli]

3 hours ago, webfact said:

If the slow growth persists much longer, Thailand will lose the status of being the economic leader in the region, which would be a big problem, but not an economic crisis like the “tom yum kung” debacle in 1997, he said.

Already lost, Thailands unstable political status has put many investors off.. other Asian nations are more organised and welcoming.

[Mike Lister]

1 hour ago, bokningar said:

Compare Thai and Vietnamese school systems, and how hard Vietnamese kids work to get good grades.

Thailand has much to learn.

Lacy people with low education that can't speak English wont attract investors.

agreed

[Srikcir]

4 hours ago, Mike Lister said:

There has only been two coups this century, 2006 and 2014, so that's unlikely to be a major reason.

The 2014 coup placed the military in charge into mid-2023 and the current minority government wears the taint of military control by its partnership with the military to block control by the elected majority party. Military influenced Senate, Election Commission and Constitutional Court cannot be said to be progressive to the extend found in Western democracies.

 

So yes, likely in part to be the reason.

[Srikcir]

5 hours ago, webfact said:

Foreign investment in Thailand today is much less than before the 1997 crisis,

To be fair Thailand may be affected inadvertently by the Russian-Ukraine war, the Israeli-Iran-Syrian, various African and Japan-Russia "conflicts" that are redirecting much Western and international discretional funding.

And I suspect Thailand acting at times now like an anti-democratic country with close relationships with China, North Korea and Russia doesn't get it far in the line for international funding priority.

[Mike Lister]

22 minutes ago, Srikcir said:

To be fair Thailand may be affected inadvertently by the Russian-Ukraine war, the Israeli-Iran-Syrian, various African and Japan-Russia "conflicts" that are redirecting much Western and international discretional funding.

And I suspect Thailand acting at times now like an anti-democratic country with close relationships with China, North Korea and Russia doesn't get it far in the line for international funding priority.

Agreed. The other point to remember is that Thai GDP is twice that of Vietnam, FDI's in SE Asia will probably be looking more for embryonic growth to invest in rather than established markets, which is what Thailand has become.

[stoner]

5 hours ago, Mike Lister said:

There has only been two coups this century, 2006 and 2014, so that's unlikely to be a major reason.

 

the last coup has been hugely influential on all aspects of thai society. this would include many parts of the economy as well. after all they are the ones who made decisions for the last decade. 

 

the concentration of wealth here has pretty much doubled since the last coup.