Thai analysis: Latest TIP ranking batters already-fragile economy

[webfact]

ANALYSIS
Latest TIP ranking batters already-fragile economy
Achara Deboonme
The Nation

BANGKOK: -- As Thailand continues to languish in Tier 3 of the United States' "Trafficking in Persons" report, worsening the economic sentiment, the real impact, even worse, could be felt in the coming months.

The report was released at a time when the Thai economy is at one of its worst moments in decades. All economic engines with the exception of tourism are turned off. Severe drought is also a threat, cutting farmers' purchasing power.

With investment and consumption remaining weak, hopes are on public spending. Yet it was revealed that only 30 per cent of 46 state enterprises' investment budgets worth Bt350 billion had been disbursed so far. Meanwhile, the export sector, which accounts for 70 per cent of gross domestic product, was at its worst, falling 4.8 per cent year on year. A drop in imports also suggested low investment activities.

The TIP report is a fresh blow. Ranked in Tier 3, Thailand is on par with countries like North Korea, Syria, Iran, Algeria and Zimbabwe. Other than Thailand, no Asean nation is at the bottom of the list. This year, Malaysia's ranking rose above Tier 3, though it remains on the Watch List, along with Cambodia, Myanmar and Laos.

The ranking sparked criticism of the US for using the report as a political tool to weaken the junta. But regardless of such criticisms, Thailand should brace for the worst.

In light of the export slump, the ranking could worsen the situation. Penalties for countries demoted to Tier 3 are at the discretion of the US president. Within 90 days of the report's release, penalties can be announced. They may include a cut in the Generalised System of Preferences and other forms of non-humanitarian assistance and funding.

The US just this month agreed to renew the GSP for Thailand until the end of 2017.

Thailand's ranking has not moved up despite efforts to tackle human trafficking. This also raises fears that the European Union may also be displeased with Thailand's measures to deal with illegal fishing. These two main markets consume about 20 per cent of Thailand's exports.

As exports to all key markets except CLMV (Cambodia, Laos, Myanmar Laos) dropped in June, the Bank of Thailand is now the only hope for exporters. In recent weeks, the baht has weakened sharply against the US dollar and several economists are convinced that it will remain weak in the near future.

United Overseas Bank (UOB) said in a research note that the central bank would likely tolerate a weaker baht and its positive impact on exports given the deteriorating domestic conditions.

Expecting a 2-per-cent export contraction for the whole year, DBS economist Gundy Cahyadi noted that it would mean three consecutive years of export contraction for Thailand.

"It is one reason why the authorities have shown little concern for the baht, despite the unit being the third-worst-performing Asian currency against the US dollar over the past month," he said.

Without stronger export growth, the manufacturing sector will remain sluggish. As the sector makes up one-third of the economy, Thailand should expect sluggish GDP growth to persist.

"If we [are] to see any chance of GDP growth inching higher going forward, a faster pace of fiscal disbursement will be crucial towards the year-end. We had lowered our 2015 GDP growth forecast to 3.2 per cent back in May but continue to see some downside risks to our projections," he said.

The Finance Ministry's Fiscal Policy Office on Tuesday lowered its GDP growth forecast for the second time this year to 3 per cent, against 3.7 per cent in April and 3.9 per cent in January.

Expecting a spill-over impact of the export contraction on private investment, UOB projects GDP growth at 2.7 per cent, below the BOT's forecast of 3 per cent.

While expecting a policy-rate cut in the third quarter, HSBC noted: "Timely execution of public investment will be instrumental in ensuring the continuity of economic recovery, especially as the severe drought is threatening to dampen private sentiment further."

Source: http://www.nationmultimedia.com/business/Latest-TIP-ranking-batters-already-fragile-economy-30265581.html

-- The Nation 2015-07-31

[EricBerg]

The Tier 3 ranking is in the country's own hands. It needs a radical shift in thinking and operating to change that. Even sacrificing a few more generals would not work.

Slavery and human trafficking are horrible. They need to be tackled at all levels. The despicable corruption must be fought. High penalties instead of moving to inactive posts and the likes.

[selftaopath]

The Tier 3 ranking is in the country's own hands. It needs a radical shift in thinking and operating to change that. Even sacrificing a few more generals would not work.

Slavery and human trafficking are horrible. They need to be tackled at all levels. The despicable corruption must be fought. High penalties instead of moving to inactive posts and the likes.

AMEN.

Will Thailand EVER learn? I think not... they ahhhhhhhhhhhh never mind.... preaching to the choir.

[bamnutsak]

On the plus side, at least the Karaoke joints with the underage Cambodian and Laos girls are still doing a booming business.

And fishing boat workers from Myanmar now get free swimming lessons.

[upena]

EU red card coming and possible sanctions from US in 90 days

[tigermoth]

On the plus side, at least the Karaoke joints with the underage Cambodian and Laos girls are still doing a booming business.

And fishing boat workers from Myanmar now get free swimming lessons.

Yes, the trafficking goes even deeper than has been exposed. Even in Bangkok there are many bars with illegal Cambodian and Lao girls who are nothing but slaves whose only income is from drinks they can get out of the customers or offering their sexual favours. This also includes Thais.

[Srikcir]

"The Finance Ministry's Fiscal Policy Office on Tuesday lowered its GDP growth forecast for the second time this year to 3 per cent, against 3.7 per cent in April and 3.9 per cent in January."

and

"UOB projects GDP growth at 2.7 per cent, below the BOT's forecast of 3 per cent."

Finance Minister Sommai can't predict his way out of a paper bag over his head. If Prayut expects to stay as PM and salvage the economy, he needs a Finance Minister who can be honest about the state of the Thai economy, even if it conflicts with Prayut's political posturing.

[LALes]

Thailand's inability to improve its TIP ranking is a direct result of a culture of corruption and acceptance of inhuman conditions.

The blame and involvement go all the way to the highest levels of power. Maybe we'll see 40 to the dollar by year's end?

[Red Queen]

Finance Minister Sommai can't predict his way out of a paper bag over his head. If Prayut expects to stay as PM and salvage the economy, he needs a Finance Minister who can be honest about the state of the Thai economy, even if it conflicts with Prayut's political posturing.

True, but in Thailand, the benefit comes from the statement not the reality. One advantage of a poor education system is that by the time the reality arrives, they've all forgotten the statement. Thailand thrives on 9-day-wonder-ism.

[Red Queen]

Thailand's inability to improve its TIP ranking is a direct result of a culture of corruption and acceptance of inhuman conditions.

The blame and involvement go all the way to the highest levels of power. Maybe we'll see 40 to the dollar by year's end?

I think it's more complex than that. Thailand does not understand that if USA says something today, then it will still apply tomorrow.

In Thailand, some pooyay thinks up a wonderful but impossible \scheme while sitting on the toilet in the AM,. and by lunch-time it's law or fiat. No thought, no consideration, no concern about enforceability, just 'do as I tell you' Then later, of course it has to be withdrawn but nobody seems to be embarrassed about it - just business as usual. In western countries, drafting laws is a very skilled job. In Thailand even a foot-soldier is trusted to do it.

Just look at what happened with the 'no-selling-alcohol-zones' fiasco and you'll see what I mean. It's always bad enough on a good day with Thai governments run by Thais. When you allow people who should be digging ditches to run the country, it's even worse.

Edited July 31, 2015 by Red Queen

[gandalf12]

Baht 40 to the dollar wis realistic but the Baht is artificially kept below that

[Jimlove]

On top of all this there is gonna be a Court ruling about 2 scapegoats from KT - a case that can really damage the image (if any left) of Thailand and will have effect on tourism from the West (again if any left) ...

[SOTIRIOS]

.....is that what we will call it now.....'TIP'......

...sick....

[brfsa2]

 

On the plus side, at least the Karaoke joints with the underage Cambodian and Laos girls are still doing a booming business.

And fishing boat workers from Myanmar now get free swimming lessons.

Yes, the trafficking goes even deeper than has been exposed. Even in Bangkok there are many bars with illegal Cambodian and Lao girls who are nothing but slaves whose only income is from drinks they can get out of the customers or offering their sexual favours. This also includes Thais.

 

Labour abuse is everywhere in Thailand. Cambodians and Burmese can work a lot for nearly no money, and Thais are so lazy to do the same job, they're incompetent and irresponsible. They can't do any thing that looks low. Thais are acustommed to this and will not submit to hard work. It's in the society.

I'm so used to see it on a daily basis on the construction industry. Thai workers are the worst, always having money problems, so many debts, gambling and drinking, always complaining not enough money. And still lazy as hell and not trustworthy.

While the workers from other nations hardly give any problem at all! They earn usually 1/2 of the thai workers, and get the job done faster. as long as they are with other from the same region and talk their own language.

This is the Thai society. All want is having a white skin, working on an easy job and getting easy money.

It will never change.

Edited July 31, 2015 by brfsa2

[WinnieTheKhwai]

Thailand's inability to improve its TIP ranking is a direct result of a culture of corruption and acceptance of inhuman conditions.

The blame and involvement go all the way to the highest levels of power.

TIP ranking seems highly subjective. I actually read the report and there is very little in there that's tangible, or any kind of examples to underwrite the claims. And where it gets really subjective is in the evaluation of government efforts to make improvements. The report lists many of those improvements, policies and actions on the part of Thai authorities, but then deems these not enough to raise Thailand up a tier. Yet there are no clear goals defined that would result in Thailand's status being raised. It seems a total crap shoot.

So, improving the listing would likely involve a whole lot of effort, a LOT of it in PR and a## kissing, and the rest would be a gargantuan effort to actually prevent trafficking, effort way beyond any kind of ROI compared to working on alleviating other social ills and economic challenges that are equally heart-breaking.

And then, the whole concept seems fairly artificial: because a national border happens to be crossed by a Lao speaking person to go work for another Lao speaking person who happens to be located across a porous and artificial border (as all borders are) it is now somehow a priority and worth imposing sanctions on. Yet it would take me about an hour or two to find a Thai person (Thai person as in Thai ID or legal resident) aged 16 or 17 engaging in sex work, right in any tourist bar area.. but that didn't involve trafficking.

Also be careful what anyone wishes for: the easiest solution to reducing trafficking is draconian immigration and deportation measures aimed at keeping people in their respective countries. All because of the collective guilt-trip that one country seems to be on, possibly caused by the demons of having been involved in the largest trafficking and organized slavery operation the world has ever seen.

Edited July 31, 2015 by WinnieTheKhwai

[brucec64]

It's not really necessary for all the Thai officials to make lame excuses for the trafficking problems in thailand when the TV sycophants are happy to do it themselves.

[Red Queen]

 

Labour abuse is everywhere in Thailand. Cambodians and Burmese can work a lot for nearly no money, and Thais are so lazy to do the same job, they're incompetent and irresponsible. They can't do any thing that looks low. Thais are acustommed to this and will not submit to hard work. It's in the society.

I'm so used to see it on a daily basis on the construction industry. Thai workers are the worst, always having money problems, so many debts, gambling and drinking, always complaining not enough money. And still lazy as hell and not trustworthy.

While the workers from other nations hardly give any problem at all! They earn usually 1/2 of the thai workers, and get the job done faster. as long as they are with other from the same region and talk their own language.

This is the Thai society. All want is having a white skin, working on an easy job and getting easy money.

It will never change.

A thoughtful post, thanks. Of course I liked it mainly because it almost exactly coincides with my own views and experience.

What I think is an important question is this: How can the culture be made to change?

That implies the question "How did the culture of laziness and exceptionalism get there in the first place?". Of course not all Thais are physically lazy, many of the rural Thais work a damn sight harder physically than I've ever worked, I've tried to match their physical work rate and I can't. But they are intellectually lazy and that seems to me to be the key - they've never been taught to think, they've only ever been taught to remember and repeat, and much of what they've been taught to remember and regurgitate involve the notion that Thais are more special than other nationalities. In other words, they are lied to and psychologically conditioned every day for the whole of their educational life and beyond. Come on guys, we see this every day in the Thai newspapers and on Thai television..

I do believe this cultural aspect, of intellectual laziness comes directly from the propaganda all Thais are subject to in the Thai education system - that they're 'special', and 'unique' and 'unconquered' because they have one attribute that no other country has.

This one attribute is (in my view) pernicious, and the propaganda was drilled into every Thai after the end of the Vietnam war. Undertaken by the Americans (no, I do not blame the Americans for everything but I do blame them for this and there is a plethora of evidence to support the notion).

When Thais realise they are not special for being Buddhist (albeit it a superficial and non-authentic, animist Buddhism) - and/or for having that one unique factor, and when they do something about what is universally recognised as a disastrous education system, then they will be able to start to catch up with a world that (at present) is kicking the crap out of them, a process which, in my opinion, will get a lot worse before it gets better. The of attracting the wrath of the international community was started by a betrayal of democracy - the democratic world is not going to diverted from expressing its displeasure at the betrayal and the manner of it, no matter how imperfect that democracy was claimed to be.

In my view, the cultural factors that make up the legendary Thai intellectual laziness and dishonesty come down to one thing, what seems to be a deliberate strategy to 'keep them poor' and 'keep them stupid' by the wealthy kleptocracy; mostly but not uniquely of Chinese extraction, and mainly in Bangkok. Teaching the hoi polloi how to think for themselves is anathema to the wealthy Thai and a direct threat to their hegemony. It constitutes a serious but concealed crime against the Thai people.

That's why I see a civil war in Thailand being almost inevitable, Thailand has all the classic features of civil war countries, and that makes Thailand ripe for some serious bloodshed. Now all Thais need to do is keep the Americans from interfering other than to restore democracy, because for those guys, most things they interfere with turn to sh|t.

Edited July 31, 2015 by Red Queen

[Rancid]

I don't know, seems that with the amount of civilian casualties the US & friends inflict daily around the globe, doubt they could care less what Thailand does.

More likely just letting the Thais know not to get too friendly with China.

[WinnieTheKhwai]

Or more likely still: they just can't be seen to improve a rating while Thailand is under military government, regardless of what the government has done or not. Imagine how that would look: military coup, junta in charge, followed by a pat on the back for improving a human rights related issue. Doesn't happen.

I'm expecting a much better ranking for Thailand after a transition back to the usual façade of democracy, even though any actions leading to that higher ranking in 1-2 years would have been made under military rule.

[TallGuyJohninBKK]

Re TIP, I would argue the Thai government is great at talking a good game and making promises -- all of which could then be easily ignored or left undone in the follow-up.

While I understand the military coup politics from the U.S. perspective of disapproval, I'd also expect that Thailand's TIP ranking will eventually improve if and when the country actually follows up on its promises and takes serious and concrete steps to improve the situation and punish traffickers and those who enable them.

Thus far, we've got what, 80+ people arrested including one Army general, but no one else in the Army beneath that general??? Does anyone seriously believe that's dealing with the full spectrum of what was going on with all of this? And of all those arrested, the court cases are just starting and not a single guilty verdict or sentence has been handed down as yet. Let's see how all that plays out.

Raising Thailand's TIP rating now would, as the group of prominent NGOs recently wrote, let the Thai authorities off the hook in terms of following through on what they've haltingly begun to do -- and that's to seriously fight trafficking. They now need to follow through and step up their game, not call it a day with pats on the back all around for a job well done and completed.