Political Turmoil Undermining Thailand's Economic Strategies

[webfact]

Political turmoil undermining the Kingdom's economic strategies

By ACHARA DEBOONME

THE NATION

Red-shirt protesters rally outside the 11th Infantry Regiment yesterday to pressure the prime minister to hold a talk with their leaders

BANGKOK: -- The ongoing Red Shirt political rally poses risks for Thailand's economic recovery, but panellists at a Nation Group roundtable discussion on Friday were more specifically concerned about threats to the country's competitiveness and long-term development strategy.

Finance Ministry Spokesman Ekniti Nitithanprapas said that if the red shirts are able to disrupt the functioning of the government during the second or third quarters, the resulting power vacuum would affect the 2011 budget, which needs parliamentary approval before the start of the fiscal year in October. This would affect the disbursement of the Thai Khemkhaeng (TKK) stimulus funds, as another Bt400 billion worth of investment is awaiting parliamentary approval.

Ekniti said the investment is necessary to strengthen Thailand's economic competitiveness, given that the political chaos had prevented any government investment in improving infrastructure, compared to a typical expenditure of more than 10 per cent of the annual central budget in years gone by.

"On a global scale, Thailand's competitiveness is ranked 26th. But the main weak point is lack of improvement in physical and intangible infrastructure [labour productivity, education and R&D]. Without the investment [under TKK, despite the small size of each project], we would see no major investment in this regard at all," he said at the roundtable.

He said there is currently no clear long-term economic policy in Thailand, unlike in the 1980s, when the Eastern Seaboard development master plan was drawn up with help from technocrats. Then, thanks to infrastructure already in place, Thailand benefited from the exodus of automotive and electrical plants from Japan in pursuit of lower production costs. The Map Ta Phut conflict shows that there has been a long pause in the development of such infrastructure. Plans for industrial plants are all immediately directed toward Map Ta Phut, and the resulting concentration has caused the pollution problems behind the current crisis there, Ekniti said.

He noted that Thailand is also lagging behind in its water infrastructure, denying the country |the full benefits of the current agricultural price hikes. The |agricultural sector has seen a |20-per-cent increase in income |so far, as other countries suffer from drought. If water resources were better managed, this could have been much higher.

On the labour front, the country's low net birth rate of 0.7 per cent is becoming apparent in a labour shortage. Now, complimenting the 37 million-strong labour force are foreign labourers, mostly unskilled. This does not match Thailand's strategy to generate more value-added products and services, Ekniti said.

"A functional government is necessary to look at the overall picture," he said.

Sakon Varanyuwatana, an economics lecturer of Thammasat University and an economic adviser to Deputy Prime Minister Trairong Suwankhiri, agreed that a labour shortage is apparent, adding that more labourers now demand fewer work hours and more worker-friendly environments. Many would rather work in a Tesco Lotus store than at an industrial plant, Sakon said.

"Domestic independence will happen only if there are measures to boost jobs and incomes of local workers, to spur spending," he said.

Paiboon Ponsuwanna, chairman of the Thai National Shippers' Council (TNSC), said it is necessary to ask if Thailand is ready to shift its economic paradigm to lessen export independence. Of the country's top 10 export products, only rice and rubber are locally sourced. Others still need imported raw materials, yielding little benefit for Thais. Relying more on domestic consumption is not an option, Paiboon said. If the government really wants to promote the service sector, there are no incentives in place to attract skilled labour, he said. He also noted that it is also unclear how Thai companies would stand in Asean once the intra-regional investment moves freely five years from now, without government support. At present, companies from other countries enjoy tax incentives when investing in Thailand. Thai companies also enjoy tax waivers overseas, but by law they remain taxed at home.

On the domestic front, it is unclear whether sharp spikes in exports in the first two months of this year will continue, given higher oil prices, auto recalls and other factors, Paiboon said. This will encourage consumers to spend only on necessary items. Political instability, particularly the airport closure, remains a concern to buyers.

"Normally, top executives would be here during March and April. Now, they leave it in the hands of lower-ranking executives, or even carry it out through electronic channels. And these executives now prefer talks at golf courses outside Bangkok. This raises our costs and results in a drop in plant visits. It also delays the decision-making process," Paiboon said.

"The challenges will only grow - particularly the environmental costs," he added.

Sakon added that despite the likelihood that export value this year would grow 30 per cent on year, minus raw material imports, the real economic value of the sector is low. The government will need to find ways to boost local content and added value, he said. Still, even with the right long-term strategies, it remains in question how the strategies could be implemented, he said.

Apichart Sankary, honorary committee member of the Federation of Thai Tourism Associations, voiced concern about the service sector liberalisation planned for 2015 under the Asean Free Trade Area, of which he said there is little awareness among Thai operators. He said it is necessary for the government to organise training on the subject to prepare the operators for more competition.

"Venturing overseas is difficult. Though our funding costs are cheap, the cost of living overseas is higher," he said.

According to Sakon, the private sector should initiate changes and should not wait for the government's help.

However, politicians also need to ensure stability for smooth operations, he said.

Among his concerns is the ability of Thai operators to adjust their products and services to match the tastes of Asian consumers, who are playing a more important role than consumers in the Western hemisphere.

The government also has to look at how to balance the labour income in the production and service sectors, to prevent a labour shortage. While more financing should go to infrastructure development, politicians should think wisely about spending, as Thais tend to become addicted to populist policies. But if more welfare policies are to be implemented, more planning is required, Sakon said, because government revenue, at 17 per cent of gross domestic product, is insufficient to cover the cost.

"As agricultural prices are heading up, let's discuss how to further boost the gain in order to boost public confidence in the country and the economic system. Without confidence, everything will collapse."

-- The Nation 2010-03-29

[newsfooter][/newsfooter]

[wasabi]

Though Thailand is not a true democracy all these protests are going to end up hurting the red shirts the most when the square head pay checks come to an end and there are no jobs and no water and no food.

[Tejas]

Though Thailand is not a true democracy all these protests are going to end up hurting the red shirts the most when the square head pay checks come to an end and there are no jobs and no water and no food.

That is a good point.

The worst case scenario would be if they actually succeed in bringing back the person who has probably caused more damage to Thailand's economy and reputation than any other leader.

"Beware of what you wish for because you just might get it."

The best thing both sides can do now is talk and ask some significant questions. I think the most significant question is this:

How can we work together to improve the quality of life for all Thais?

If they don't ask and come up with a good answer to this simple question, the country is doomed.

[Jerrytheyoung]

Though Thailand is not a true democracy all these protests are going to end up hurting the red shirts the most when the square head pay checks come to an end and there are no jobs and no water and no food.

That is a good point.

The worst case scenario would be if they actually succeed in bringing back the person who has probably caused more damage to Thailand's economy and reputation than any other leader.

"Beware of what you wish for because you just might get it."

The best thing both sides can do now is talk and ask some significant questions. I think the most significant question is this:

How can we work together to improve the quality of life for all Thais?[/b]

If they don't ask and come up with a good answer to this simple question, the country is doomed.

IMHO, some suggestions.....

Thailand is not only Bangkok.....

If the industrial expansion continues on the current way, Bangkok will become a difficult to manage (or even non manageable) mega-pole, most of the Northern population will migrate at its periphery –the centre being too expansive-, it will generate very costly infrastructures (transport, accommodations...), create permanent huge traffic jams, police will have to face an increasing criminality..... We can say that the costs generated will be spiral type, every single decision in such an urban environment being more and more expansive.

At the same time Northern and Issan Regions will become desert with only elderly and children living there.

The Thai Budget belongs to all Thais and what is done with it is immensely important for the Future. Thai citizens should be more sensitive to what is done with their money...

I oppose another concept to the Bangkokian gigantism: creation of regional hubs to fix the populations, modernisation of the Agriculture (planning on several years of a whole irrigation and pumping system, development of new cultures with the help of the Universities already present, incitation to farmers for regrouping in Cooperative or equivalent structures, subsidised investments with a dedicate Bank for supporting the Agriculture, de-localisation of the food Industry close to the Farms...

I am not inventing such a policy: it is what we have named in France “Amenagement du Territoire”, with one Ministry (or under Ministry –depends on Goverment) for implementing this long term policy. I do know that some Thai Academics who have gotten the opportunity to discover this policy have been very interested and impressed. I think it is General de Gaulle who has started this policy, but it has been accepted by all successive Governments, independently of the “Colour” (Left or Right).

Industry has been delocalised, Paris suburb has lost some activities, some New cities have been created, some Regional Hubs are now prospering (Toulouse, Nice, Grenoble, Nantes amidst others....)

With the development of the TGV (High Speed Train), people accept easily to fix themselves at 300km or more from Paris. Paris population is stabilised, the infrastructure issues are also stabilised and remain at a manageable scale.

I think it is an important point which should be in the core of the next election: organisation of the Territory, support of Agriculture, North/ Issan population participation to economic development by transfer of some industries in Northern /issan regions, education (particularly professional Education must guarantee to Industrials accepting to re-locate). And clearly an important part of the Budget must be allocated on such a program.

[hammered]

The problem is the industry needs to be located close o seaports. Relocating it inland just means Thailand is at less competetive advantage to say Vietnam for international companies

Better education or valuing technical education higher is needed

Agree about irrigation and also think farmers need to organize better to move beyond the middlemen/miller/money lender troika

[Jerrytheyoung]

The problem is the industry needs to be located close o seaports. Relocating it inland just means Thailand is at less competetive advantage to say Vietnam for international companies

Better education or valuing technical education higher is needed

Agree about irrigation and also think farmers need to organize better to move beyond the middlemen/miller/money lender troika

only partly true, some industries depend more on aviation and food Industry (transformation of raw materials) can be located close to producers.

most of regional airports have a small industrial area in France.

But in Thailand, most belongs to ministry of Defence (Army, air Force), example: one food industrial (Fish transformation) has tried to set up its installation on Nakhon Phanom Airport. Negative answer, the 550 ha of the former US Air base belongs to Royal Thai Air Force.

[Jerrytheyoung]

Concerning the infrastructure, Vietnam is developing the number of local airports and has already an important regional fleet (ATR42 &72). Vietnam is not only developing its coastline.

[Thai at Heart]

The problem is the industry needs to be located close o seaports. Relocating it inland just means Thailand is at less competetive advantage to say Vietnam for international companies

Better education or valuing technical education higher is needed

Agree about irrigation and also think farmers need to organize better to move beyond the middlemen/miller/money lender troika

In some ways yes, but without a functioning rail network that can efficiently handle containerised shipments, the best option at the moment is to be near the sea ports.

I can't overstate how much the lack of good rail links effects Thai business. It is time for policies that enable companies to set themselves around the provincial cities to drag some of the labour back from Bangkok and the Eastern seaboard and provide better employment opportunities in the provincial areas. There are of course industries in the provincial areas, but their reliance on road for virtually all of their transport needs is also a major factor so a better train network has to be part of this policy, which is something apparently that the Dems have in the pipeline.

A decent rail network would also go a long way to reducing population pressure on Bangkok. There is no real reason why 20 years from now, towns that are two hours drive away couldn't be part of the commuter belt for Bangkok. 10 or 12 hours from up country versus a 4 or 5 hour drive is a pitiful comparison in terms of rail speed. At the moment there is no really practical way of getting to Bangkok from 2 hours away other than driving.

Coming to the airports, I understand there is a plan for Thai airways to stop flying to Khon Kaen because it is reportedly loss making. I can see the hotels loving this one. Could this be because despite the planes being completely full, a large percentage of the tickets are priced at government rates. The logic of government employees not paying full fare, the airline being under financial pressure and the government having to absorb the losses is all rather bizarre in my opinion.

Edited March 30, 2010 by Thai at Heart

[quiksilva]

IMHO, some suggestions.....

Thailand is not only Bangkok.....

If the industrial expansion continues on the current way, Bangkok will become a difficult to manage (or even non manageable) mega-pole, most of the Northern population will migrate at its periphery –the centre being too expansive-, it will generate very costly infrastructures (transport, accommodations...), create permanent huge traffic jams, police will have to face an increasing criminality..... We can say that the costs generated will be spiral type, every single decision in such an urban environment being more and more expansive.

Hmm you are describing Bangkok as it is today.

This is not a unique phenomenon to Bangkok, there are not many low income groups anywhere on Earth who can afford to buy centrally located houses in their centre of their capital city, or even in their major cities. It's called urban sprawl, and is a force that even the so called developed world has not figured out how to contain.

It certainly brings about problems including the ones you listed, which is what urban / town planners try to address, but for the most part fail miserably, because no matter how hard you try urbanisation is a strong and seemingly irresistible drive.

Now, for the first time in recorded history the world's population in urban centres outnumbers those living in the country side. Not by much but its a significant milestone nonetheless

I'm sure every country is aware that it needs to support its rural population but the truth is many still believe the big cities streets are paved with gold, and in a manner of speaking they are.

If you have a unique fix for that problem, I'm sure many governments around the world would pay dearly to hear from you.

edit to add: improving infrastructure such as rail networks will all help. What has been shown in other countries is that this will help smaller rural towns grow, and eventually they will have the same problems (everybody wants to be in the city centre, so values rise there the quickest, and so sprawl starts to take effect there too).

Personally I like to see the smaller provincial towns develop, and on my trips around Thailand over the past 14 years I think its fair to say that this is happening, albeit slowly, but regardless how quickly they grow ultimately the lure of the capital city will still be too strong for many to resist.

Edited March 30, 2010 by quiksilva

[mazeltov]

In some ways yes, but without a functioning rail network that can efficiently handle containerised shipments, the best option at the moment is to be near the sea ports.

I can't overstate how much the lack of good rail links effects Thai business. It is time for policies that enable companies to set themselves around the provincial cities to drag some of the labour back from Bangkok and the Eastern seaboard and provide better employment opportunities in the provincial areas. There are of course industries in the provincial areas, but their reliance on road for virtually all of their transport needs is also a major factor so a better train network has to be part of this policy, which is something apparently that the Dems have in the pipeline.

A decent rail network would also go a long way to reducing population pressure on Bangkok. There is no real reason why 20 years from now, towns that are two hours drive away couldn't be part of the commuter belt for Bangkok. 10 or 12 hours from up country versus a 4 or 5 hour drive is a pitiful comparison in terms of rail speed. At the moment there is no really practical way of getting to Bangkok from 2 hours away other than driving.

are you missing the good old mega-project? big investment plans to develop the infrastructure. bring the sexy lady globalisation to the provinces? concepts of decentralisation, away from the central power bangkok?

you sound like the enemy of the state number one.

[Thai at Heart]

are you missing the good old mega-project? big investment plans to develop the infrastructure. bring the sexy lady globalisation to the provinces? concepts of decentralisation, away from the central power bangkok?

you sound like the enemy of the state number one.

Ah yes, the good old mega-project sponsored by the Thai government, not to mention the dreaded three letter word. HUB

I foresee a day in 2050 when I will be sitting on the lower level of the 4th layer of the expressway in a traffic jam having left the 150th floor of my Bangkok office, wondering why I can't hop on the train and travel 2 hours to get to some greenery 300km away.

Unfortunately there won't be any people left up country after 2040, because they will all have been transported to the new flying textile factories and rice processing lines invented by PCP corp to avoid the punitive land taxes of 100 baht per rai enabled by Abhisit in 2011. The countryside is now just a giant ocean for rice production owned by PCP corp, a policy enacted in 2025 after PCP corp dominated the government of the day . In fact that's all we can get to eat. These flying factories will of course be tethered to the top of the new PCP building down town in Bangkok that scales 275 stories high with it's own dedicated slip and slide down the outside of the building for evacuations.

It will have been discovered that walking in fresh air and contacting trees and grass was the reason for darkening of skin, so the last park in Bangkok was ripped up in 2030 to make way for another apartment block. It is rumoured that grass still exists in Bangkok in some private houses, but there hasn't been a picture for years. Apparently walking on the ground is for the underclass so all of us who believe we are above them, actually are above them in our reserved 5 and 6 level walkways we use to walk from our apartments. Touching real ground is so passe these days.

[Jerrytheyoung]

IMHO, some suggestions.....

Thailand is not only Bangkok.....

If the industrial expansion continues on the current way, Bangkok will become a difficult to manage (or even non manageable) mega-pole, most of the Northern population will migrate at its periphery –the centre being too expansive-, it will generate very costly infrastructures (transport, accommodations...), create permanent huge traffic jams, police will have to face an increasing criminality..... We can say that the costs generated will be spiral type, every single decision in such an urban environment being more and more expansive.

Hmm you are describing Bangkok as it is today.

This is not a unique phenomenon to Bangkok, there are not many low income groups anywhere on Earth who can afford to buy centrally located houses in their centre of their capital city, or even in their major cities. It's called urban sprawl, and is a force that even the so called developed world has not figured out how to contain.

It certainly brings about problems including the ones you listed, which is what urban / town planners try to address, but for the most part fail miserably, because no matter how hard you try urbanisation is a strong and seemingly irresistible drive.

Now, for the first time in recorded history the world's population in urban centres outnumbers those living in the country side. Not by much but its a significant milestone nonetheless

I'm sure every country is aware that it needs to support its rural population but the truth is many still believe the big cities streets are paved with gold, and in a manner of speaking they are.

If you have a unique fix for that problem, I'm sure many governments around the world would pay dearly to hear from you.

edit to add: improving infrastructure such as rail networks will all help. What has been shown in other countries is that this will help smaller rural towns grow, and eventually they will have the same problems (everybody wants to be in the city centre, so values rise there the quickest, and so sprawl starts to take effect there too).

Personally I like to see the smaller provincial towns develop, and on my trips around Thailand over the past 14 years I think its fair to say that this is happening, albeit slowly, but regardless how quickly they grow ultimately the lure of the capital city will still be too strong for many to resist.

Yes, and it is the reason why some wise governments are decentralising their administration in a new city at 30/50 km or more:

Examples: Malaysia .... Putrajaya/ Cyberjaya

France.....Marne La Vallee

Bresil.....Brasilia

and so on....

And those Governments are making money by selling their lands in Center downtown at a price 10 or 50 times the price of the New location.

The total costs of such a policy is certainly less than the immense budget sinking in the Megapole infrastructure with results 10 times to 100 times smaller. What can be the cost of 1km of Highway in Bangkok and 1km of highway in Ayuthaya?

What can be the cost of 1 km of BTS downtown Bangkok and 1km of equivalent railways in Ayuthaya?

(I have taken Ayuthaya as example, being at a reasonable distance from Bangkok downtown, more historically athe former Capital, but it can be anywhere around 50/70 km from Bangkok-)

So it can be a good operation, better infrastructures partly paid by selling the Government properties downtown

Edited March 30, 2010 by Jerrytheyoung

[quiksilva]

Actually Thailand also considered this route too, where they recently looked to decentralise to Nakorn Nayok.

Not much has been heard about that plan since Thaksin departed, and now that the enormous (950,000sqm) Chaeng Wattana government centre is complete, I expect that we will not hear more about that plan for a few more years.

[anotherpeter]

Actually Thailand also considered this route too, where they recently looked to decentralise to Nakorn Nayok.

Not much has been heard about that plan since Thaksin departed, and now that the enormous (950,000sqm) Chaeng Wattana government centre is complete, I expect that we will not hear more about that plan for a few more years.

When was the Chaeng Wattana centre started?

[thaihome]

Again, people’s lack of knowledge of actual development in Thailand is showing. Indeed there is massive manufacturing and industrial development from southern Bangkok suburbs all the way to Rayong. But there is also very large development both northwards in Ayuthaya and as well as east towards Nakorn Nayok going all the way to Kabin Buri. There are also many factories in the farther northeast as well.

I do agree that the lack of a wide track rail system hurts somewhat, but the fact of the matter is, it is cheaper to use trucks then build the railroads as the distances are just not that far, like in the US and Canada. In the US, railroads move a very large part of the long haul freight, but almost none at the distances in Thailand

TH

[steveromagnino]

I am sure for those who know something of Bangkok, that new factories are actually not allowed by law, and that the city has been consistently moving factories away, although existing factories remain.

The city administration has actually moved out of Bangkok, and much of it is now in Nonthaburi. Eventually, more will be moved out; this is ongoing and many of us presumably see the effect of visa admin and other functions moving away.

The issues of Bangkok are partly caused by the poor consulting work in the past, which focused on creating a city with a hub and spoke type system; now the thought is to focus on multiple 'hubs' in urban development; however we must accept that urban planning also needs to take into account the way in which rain fall and water flows through the city; on a map basically from top to bottom, north to south; part of the issues with the new airport is that affects runoff.

For Bangkok to compete and function, the infrastructure within Bangkok such as skytrain and underground, etc are required.

For a variety of reasons, one solution is to move people somewhere; under the Thaksin administration this was to Nakhon Nayok, where coincidentally many TRT politicians owned land. However, many of the staff have no desire to go and work all the way in the middle of nowhere, which is exactly why everytime it is proposed, it struggles to actually occur. A more logical why is to run the infrastructure needed and to appreciate that perhaps not all the people wanting a VISA extension wish to travel to Ayuttaya; however that certain departments are ideally suited to being that type of location. However, then we look at transportation, power, internet connections etc - and then we end up stuck back in Bangkok.

A far more logical step might be to drastically resize the civil service. Having watched Yes Prime Minister, well good luck with the number of Sir Humphries one might meet.

In terms of urban planning, the reason why so many upcountry folk come to Bangkok is the same as to why they go to Chonburi/Eastern seaboard and other parts of more developed Thailand. It is for more income, more work and more jobs. One of the Amartaya, Senator Meechai was instrumental in pushing industrial development out towards Isaan and other areas; however there are many reasons named by the companies that went why it doesn't work so well. Transportation, and particularly the lack of solid rail network is only one. There are others as well, including lawlessness, the influence of key (often) politicians/'business men' in the area, the motivation and willingness of staff to work, the access to staff (who are not in an urban setting, but often making big commutes on motorcycles etc) and the seasonality of work (a fair chunk of them just drop their tools in April and go back to farms) that cause issues. Staff can be trained, but certain parts of the country have both geographic and education/skill advantages. There is also the aspect of 'hubs'; for the plastic industry it needs to be close to oil refineries etc, and to clients who tend to also want to ship stuff back out; if you supply to the plastics industry then it is rather tough to be in Ubon when all your suppliers and your clients are all in Rayong.

So even with the industrial parks and incentives, it is very hard to persuade a business to move upcountry; some do and most don't and won't go to the areas that are actually the most far away and least wealthy. For instance, we see few big industrial parks in the southern 3 provinces, and it would require considerable pay increases to make people who currently live and work in say, Nonthaburi, to then move to Korat. In addition, we also run into the issues that in areas like Surin, the education levels and staff that a company or organisation can recruit are a damper on development in anything other than labour, specific crafts, skilled manual/factory work, etc - you could not easily set up an animation studio city there for instance.

The future of most country's development centres around the development of intellectual property, know how and services in which to add value to either existing production or in some cases to entirely non product based business models. Rice, sugar etc IMHO Thailand's biggest issue is that the number of people employed in these industries relative to the production of each is too high, resulting in low pay for each. Partly this is poor productivity, partly it is because there needs to be a major upskilling of the rural workforce to do something other than farming in order for the land to farmer ratio to improve. Right now, the rural poor are wanting to be able to work the same but earn more. It simply is not possible to fund them to do uneconomic activities; rather they need to be given the tools to add more value to their own asset base, or find something new to do.

The infrastructure they think they need is more water. The infrastructure they probably need is education, healthcare, rail network, consistent power/water/utilities supply, connections to other countries and the way in which they will get richer is through innovation and adding value to the processes they already do and creating or doing new processes.

They can either start choosing political representation that will give them this, wait for another Meechai or Pramoj and hope for development to be brought to them, they can accept a more modest standard of living which is sustainable given what they have now, or they can just get short term fixes like a junkie, making them even more reliant on Bangkok's taxes and rallies asking for more handouts, to subsidise their way of life.

Not once, have I ever felt that the vast majority of people from Isaan I met ever seemed to go for the last option, however the capacity for their areas to develop seems to be curtailed somehow; some might say by the regional politicians who get 10mb for a road, and spend 1 then keep 9.

To try to blame the lousy development outside of Bangkok on Bangkok itself, is just basic find an enemy PR 101.

Edited March 30, 2010 by steveromagnino

[quiksilva]

Again, people’s lack of knowledge of actual development in Thailand is showing. Indeed there is massive manufacturing and industrial development from southern Bangkok suburbs all the way to Rayong. But there is also very large development both northwards in Ayuthaya and as well as east towards Nakorn Nayok going all the way to Kabin Buri. There are also many factories in the farther northeast as well.

I do agree that the lack of a wide track rail system hurts somewhat, but the fact of the matter is, it is cheaper to use trucks then build the railroads as the distances are just not that far, like in the US and Canada. In the US, railroads move a very large part of the long haul freight, but almost none at the distances in Thailand

TH

There are certainly some fine Industrial estates in Ayutthaya and Kabinburi, and even a few towards Samut Sakohn. However, there are also many others in other locales (there over 30 in total in Thailand), but the more remote they are (i.e. far from Bangkok, and deep seaports) the lower their occupancy rates and general levels of activity.

These 'remote' estates might be perfectly suited to a wide variety of industries, yet they struggle to attract as much interest as those in say Rayong, Chonburi Samut Prakarn or Ayutthaya (the latter of which I consider to be well developed, playing host to a large portion of Thailand's important electronics industry).

Aside from the existing industry clusters (which should not be overlooked), there are two principal reasons why the established areas do well.

The first is because logistics plays an important role in the choice of location. If goods are export bound then they need to be close to Laemchabang Port (or at least have a cheap means of getting the goods there (i.e. the barely existent rail network). If they are bound for national distribution then the choices become easier but still show a preference for locales like Wangnoi at the convergence of the national road infrastructure network.

The second factor is the skill base of the local work force, which is sadly lacking in the remote locales. Note I did not say that it does not exist, but it is incomparable to what is available in the established industrial regions. Ayutthaya for example with its established electronics industry requires a very highly skilled work force, who in this case tend to based in Northern part of Bangkok.

Improve the two mentioned aspects and more investment will flow to those outlying areas, although the finer points that Steve mentioned [security, corrupt local officials etc.] will always be a consideration, especially if not located on a registered industrial estate.

That being said investment will continue to flow those outlying areas regardless, as some more fiscally conscious firms can be attracted by the tax advantages and the inherently lower construction costs (the load bearing capacity of the soil tends to be superior to that of the flood plains closer to Bangkok), and even better water availability can be found further away, yet still, the big draw factors of the established locations will always be difficult to surpass. (Well at least until land values appreciate in the better locations anyway)

Edited March 30, 2010 by quiksilva

[Jerrytheyoung]

I am sure for those who know something of Bangkok, that new factories are actually not allowed by law, and that the city has been consistently moving factories away, although existing factories remain.

The city administration has actually moved out of Bangkok, and much of it is now in Nonthaburi. Eventually, more will be moved out; this is ongoing and many of us presumably see the effect of visa admin and other functions moving away.

The issues of Bangkok are partly caused by the poor consulting work in the past, which focused on creating a city with a hub and spoke type system; now the thought is to focus on multiple 'hubs' in urban development; however we must accept that urban planning also needs to take into account the way in which rain fall and water flows through the city; on a map basically from top to bottom, north to south; part of the issues with the new airport is that affects runoff.

For Bangkok to compete and function, the infrastructure within Bangkok such as skytrain and underground, etc are required.

For a variety of reasons, one solution is to move people somewhere; under the Thaksin administration this was to Nakhon Nayok, where coincidentally many TRT politicians owned land. However, many of the staff have no desire to go and work all the way in the middle of nowhere, which is exactly why everytime it is proposed, it struggles to actually occur. A more logical why is to run the infrastructure needed and to appreciate that perhaps not all the people wanting a VISA extension wish to travel to Ayuttaya; however that certain departments are ideally suited to being that type of location. However, then we look at transportation, power, internet connections etc - and then we end up stuck back in Bangkok.

A far more logical step might be to drastically resize the civil service. Having watched Yes Prime Minister, well good luck with the number of Sir Humphries one might meet.

In terms of urban planning, the reason why so many upcountry folk come to Bangkok is the same as to why they go to Chonburi/Eastern seaboard and other parts of more developed Thailand. It is for more income, more work and more jobs. One of the Amartaya, Senator Meechai was instrumental in pushing industrial development out towards Isaan and other areas; however there are many reasons named by the companies that went why it doesn't work so well. Transportation, and particularly the lack of solid rail network is only one. There are others as well, including lawlessness, the influence of key (often) politicians/'business men' in the area, the motivation and willingness of staff to work, the access to staff (who are not in an urban setting, but often making big commutes on motorcycles etc) and the seasonality of work (a fair chunk of them just drop their tools in April and go back to farms) that cause issues. Staff can be trained, but certain parts of the country have both geographic and education/skill advantages. There is also the aspect of 'hubs'; for the plastic industry it needs to be close to oil refineries etc, and to clients who tend to also want to ship stuff back out; if you supply to the plastics industry then it is rather tough to be in Ubon when all your suppliers and your clients are all in Rayong.

So even with the industrial parks and incentives, it is very hard to persuade a business to move upcountry; some do and most don't and won't go to the areas that are actually the most far away and least wealthy. For instance, we see few big industrial parks in the southern 3 provinces, and it would require considerable pay increases to make people who currently live and work in say, Nonthaburi, to then move to Korat. In addition, we also run into the issues that in areas like Surin, the education levels and staff that a company or organisation can recruit are a damper on development in anything other than labour, specific crafts, skilled manual/factory work, etc - you could not easily set up an animation studio city there for instance.

The future of most country's development centres around the development of intellectual property, know how and services in which to add value to either existing production or in some cases to entirely non product based business models. Rice, sugar etc IMHO Thailand's biggest issue is that the number of people employed in these industries relative to the production of each is too high, resulting in low pay for each. Partly this is poor productivity, partly it is because there needs to be a major upskilling of the rural workforce to do something other than farming in order for the land to farmer ratio to improve. Right now, the rural poor are wanting to be able to work the same but earn more. It simply is not possible to fund them to do uneconomic activities; rather they need to be given the tools to add more value to their own asset base, or find something new to do.

The infrastructure they think they need is more water. The infrastructure they probably need is education, healthcare, rail network, consistent power/water/utilities supply, connections to other countries and the way in which they will get richer is through innovation and adding value to the processes they already do and creating or doing new processes.

They can either start choosing political representation that will give them this, wait for another Meechai or Pramoj and hope for development to be brought to them, they can accept a more modest standard of living which is sustainable given what they have now, or they can just get short term fixes like a junkie, making them even more reliant on Bangkok's taxes and rallies asking for more handouts, to subsidise their way of life.

Not once, have I ever felt that the vast majority of people from Isaan I met ever seemed to go for the last option, however the capacity for their areas to develop seems to be curtailed somehow; some might say by the regional politicians who get 10mb for a road, and spend 1 then keep 9.

To try to blame the lousy development outside of Bangkok on Bangkok itself, is just basic find an enemy PR 101.

You underline that it is possible to decentralise in remote areas if there is a political will: infrastructure (mainly railways), education, taxes incentives and also a generation of clean politicians. Not all can be decentralised but certainly a significant amount. Paris immediate Northern belt was an engineering hub: they gotten a notice of 10/15 years to move. Now the area is residential.

One aspect of the decentralisation is the political decisions and budget partly also decentralised with creation of big administrative units (In France the 95 departments have been regrouped in less than 10 regions, the Regions are taking the decisions for infrastructures, they have a small parliament, a relative autonomy, also Central administration is progressively distributing part of its prerogatives; you do not need to go to Paris to get a passport but Thai are obliged to go to Bangkok to get it...).

[mazeltov]

The future according to Abhisit

The future according to the government.

The future according to the MoF. (Korn -must watch!!)

[Thai at Heart]

Talking of economic plans. Debt moratorium for farmers announced by Abhisit in the paper that cannot be named.

Elegant scheme. Is this the deal that breaks PPP's back.

Edited March 31, 2010 by Thai at Heart

[quiksilva]

Yes I just read that, a very astute move!

It should have been higher on the agenda much earlier, but still better late than never and will no doubt be extremely popular. Its exactly this sort of short-term policy that resonates so strongly with this group and will be very tough for the reds to deal with.

At a cost of 80bn its practically being financed by recovering Thaksin's ill gotten gains.

[steveromagnino]

Yes I just read that, a very astute move!

It should have been higher on the agenda much earlier, but still better late than never and will no doubt be extremely popular. Its exactly this sort of short-term policy that resonates so strongly with this group and will be very tough for the reds to deal with.

At a cost of 80bn its practically being financed by recovering Thaksin's ill gotten gains.

because of the security backing each loan, and the modest leverage, it is a scheme that farmers should be able to meet the payments on a yield per rai of land basis, and yet if it goes belly up, then the debt holder can recover their money from the underlying asset.

Sorayud was being very complimentary yesterday, basically saying this is one of the biggest changes that could actually help the farmers in the next 10 years and he was saying we must hope that the election timing ensures that this gets through before electioneering, otherwise the farmers will suffer.

Basically, it is almost the opposite approach to the village fund method, which pushes easy credit, without asset backing or checking that the money could actually be paid back.

I would hardly all it the deal that breaks PPP's back, but it is a reflection of democrat typical schemes that they have done in the past - universal healthcare, free education, infrastructure development on a cost effective non-subsidised basis - hopefully this time they market it (basically the only difference of TRT was the marketing).

Edited March 31, 2010 by steveromagnino

[Thai at Heart]

Yes I just read that, a very astute move!

It should have been higher on the agenda much earlier, but still better late than never and will no doubt be extremely popular. Its exactly this sort of short-term policy that resonates so strongly with this group and will be very tough for the reds to deal with.

At a cost of 80bn its practically being financed by recovering Thaksin's ill gotten gains.

because of the security backing each loan, and the modest leverage, it is a scheme that farmers should be able to meet the payments on a yield per rai of land basis, and yet if it goes belly up, then the debt holder can recover their money from the underlying asset.

Sorayud was being very complimentary yesterday, basically saying this is one of the biggest changes that could actually help the farmers in the next 10 years and he was saying we must hope that the election timing ensures that this gets through before electioneering, otherwise the farmers will suffer.

Basically, it is almost the opposite approach to the village fund method, which pushes easy credit, without asset backing or checking that the money could actually be paid back.

I would hardly all it the deal that breaks PPP's back, but it is a reflection of democrat typical schemes that they have done in the past - universal healthcare, free education, infrastructure development on a cost effective non-subsidised basis - hopefully this time they market it (basically the only difference of TRT was the marketing).

At least it is a functioning system that allows the farmers to keep their land instead and work the debts off instead of them losing their land because of one issue or another. I think it is an elegant system and is a major policy step forward for the Dems. I would imagine the reds will spend all week and this weekend pillorying it, so someone needs to get on their voicebox. Why is this announced whilst Abhisit is apparently out of the country?

I don't care about the timing, but I would imagine that a lot will see it as cynical but then this is politics not the playground. I also what the PAD may have to say about this. Hopefully, nothing.

It does seem that the Dems do have a terrible time getting their message across, now we can say this is because they are being drowned out by the noise of the reds, but there is a fundamental distrust among the farmers in the NE particularly, about the policies that the Dems come up with. That said, the Nation doesn't even have it as a story yet. Presumably, they are trying to work out if editorially they can support it?

[mazeltov]

how realistic is that at all? isn't it at the moment just a more or less vague idea? is it really backed up and recommended by the government or just a thought a small board went prematurely public. with.

just a try to buy some time or a jump start into election campaign season. the small coalition partners can poker very high these days. if its really that cool, the opposition can say - yes fantastic concept we support that.