Thai economy to veer away from exports

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ECONOMIC POLICY
Economy to veer away from exports
Erich Parpart
The Nation


Somkid

BANGKOK: -- The government will now turn its focus to restructuring the economy to reduce dependence on exports while boosting domestic tourism and other businesses, Deputy premier Somkid Jatusripitak said yesterday.

Somkid also said Thailand is now keen to join the US-led 12-nation Tran-Pacific Partnership (TPP) free-trade agreement that currently excludes Thailand.

Speaking at yesterday's Post Forum 2015, Somkid said the Finance Ministry is working on ways to lower the personal income tax rates, which are currently higher than the corporate income tax rate.

The highest personal income tax rate is 35 per cent compared to the corporate income tax rate of only 20 per cent.

The rate cut will be implemented after a nationwide e-payment and single business account system are in use.

Somkid said there would be less economic stimulus measures because previous measures are deemed sufficient to support economic growth at this stage.

He said Thailand is interested in applying to be a member country of the TPP because it will help boost trade and foreign investment.

It will take another year or so for the agreement to be ratified by each of the current 12 member countries so Thailand still has some time, he said, adding the country will shortly commence a comprehensive study to examine the pros and cons of this crucial trade and investment agreement, which covers 40 per cent of global trade.

Currently, Singapore, Malaysia and Vietnam are the only three Asean countries, who are also members of the TPP.

As head of the economic team, he said the government now needs to strengthen other foundations of the economy in addition to the export sector - such as the agricultural sector and local tourism.

He urged the Joint Public and Private Committee's provincial units to play a big role in this transformation with cooperation from all provincial, tambon and village units.

The second strategy is to increase the country's competitiveness and productivity, innovation and value-added products, which are the main focus of the Industry Ministry, the Board of Investment and the Ministry of Information and Communications Technology.

This will lead to more business start-ups while the government will provide incentives for investors to achieve the goals.

"If we can boost a large number of SMEs and start-ups there will be more jobs and this will be a new base of employment," he said.

The third strategy is to promote "Super Clusters" of new economic drivers in which the Board of Investment will play a key role in shifting the focus from building more manufacturing capacity to boosting competitiveness and productivity in services and other sectors.

Another key strategy is to increase connectivity with neighbouring countries and to turn north-south and east-west linkages into practical economic corridors so that Thailand is a hub for Asean.

Meanwhile, Finance Minister Apisak Tantivorawong revealed that around Bt130 billion is expected to be poured into the economy next year through various mega-infrastructure projects. He added that the ministry will concentrate on expanding the tax base, increase the efficiency of tax collection and the ease of paying taxes along with the introduction of the infrastructure fund to lower the government's financial burden from all the investment projects.

Apisak said the high personal income tax has affected foreign investors' decision to invest in the country since some of them would have to bring in expertise from abroad if they were to invest and they would also look at how much their employees would have to pay as personal income tax.

"If the national e-payment and the single business account schemes are fully implemented, I believe the personal income tax could be lowered," he said.

He revealed that the outline for the national e-payment scheme should be completed within a month's time.

Source: http://www.nationmultimedia.com/business/Economy-to-veer-away-from-exports-30270993.html


-- The Nation 2015-10-16

[alant]

May I respectfully suggest consideration of enabling full foreign investment without the 49/51% rule may encourage significant investment resulting in employment and tax revenue as would enabling work permits for non Thais without the need to own a company and employ staff. 1 man bands have grown to be large employers. At the very least they could pay taxes.

[Always18]

I'm having some difficulty understanding how "Thailand is now keen to join the............TPP Free Trade Agreement.........because it will boost trade" while, at the same time, Thailand will "reduce it's dependence on exports"?

[h90]

May I respectfully suggest consideration of enabling full foreign investment without the 49/51% rule may encourage significant investment resulting in employment and tax revenue as would enabling work permits for non Thais without the need to own a company and employ staff. 1 man bands have grown to be large employers. At the very least they could pay taxes.

while I understand that Thailand might be scared on the 49/51 rule and may endless discuss it, it would be extreme simple to streamline the work permit regulations. That wouldn't save the planet but it would help a bit.

[elgordo38]

May I respectfully suggest consideration of enabling full foreign investment without the 49/51% rule may encourage significant investment resulting in employment and tax revenue as would enabling work permits for non Thais without the need to own a company and employ staff. 1 man bands have grown to be large employers. At the very least they could pay taxes.

It will not work as your dealing with a one man band in power.

[elgordo38]

Well looks like the word Hub is now being replaced with "Super Cluster" Boy am I impressed. I just hope this does not turn into a cluster well you know what I mean it starts with F no more clues. If they "veer" away from exports methinks they might hit a brick wall. You do not want to become a one trick pony dependent on sunshine.

Edited October 16, 2015 by elgordo38

[GAZZPA]

I'm having some difficulty understanding how "Thailand is now keen to join the............TPP Free Trade Agreement.........because it will boost trade" while, at the same time, Thailand will "reduce it's dependence on exports"?

Agree, and dont forget increasing its manufacturing capacity..

I am no economic expert but I would have thought that in a time when boarders are opening with the Asean and TPP Thailand would want to fix its falling exports, invest more in R&D and become SE Asia manufacturing hub with increasing exports.

They seem to say this in the statement, make them more competitive, look at joining TPP etc but are saying that they do not want to rely on exports going forward for growth. Well, domestic consumption increasing is going to be problem as Thai debt is rising at an alarming rate, according the the FT Thai personal debt has doubled in just 6 years and is now over 80% of the countries GDP. Thats a lot of cars, iPhones, tablets, laptops, clothes etc, etc,,,

This is exactly the mistake that many Western countries fell into, losing exports, drive domestic consumption and when things go wrong the economies fall over. Surely Thailand can learn from this.

http://www.ft.com/intl/cms/s/3/a4b3e582-111a-11e5-9bf8-00144feabdc0.html#axzz3oi5XO5yf

I can only see doom from policies they are presenting,, but again I am not an expert so what do I know.

[Thai at Heart]

But the domestic economy is in hock to its eyeballs.........

[MaiChai]

I compared UK and Thai personal tax rates and concluded I would be better paying tax in the UK. Thus personal tax rates are too high in Thailand.

I wonder if they can stimulate the local economy when past data shows personal debt is high and consumers don't have much spending power?

[Lunchbob]

I'm having some difficulty understanding how "Thailand is now keen to join the............TPP Free Trade Agreement.........because it will boost trade" while, at the same time, Thailand will "reduce it's dependence on exports"?

It is the newest strategy invented by the scum who started the tpp to pretend there is initial agreement among so many and things are moving along nicely, but this is baloney. The tpp will never develop.

[sfokevin]

What he really wants to say is with the political ( or lack there of) climate and future succession issues looming exports are veering away from Thailand...

[Thai at Heart]

I compared UK and Thai personal tax rates and concluded I would be better paying tax in the UK. Thus personal tax rates are too high in Thailand.

I wonder if they can stimulate the local economy when past data shows personal debt is high and consumers don't have much spending power?

Indeed personal rates are high in Thailand.

Do what the Chinese do. Make a company, live all family under one roof, employ all family, pool the money. Have company cars. Live like kings. Pay no income tax, everyone gets social security and health.

[Sydebolle]

a) do some image polishing for Thai products; Thai customers do not trust their own products (for good reason in most cases). The domestically offered version sucks while the exported versions sell (kiddies toys, garments, electronics)

can anyone please list the 100 top personal tax income payers and compare that to the ratio of Thai/non-Thai employees.

c) the 49%/51% is obsolete. Companies hesitate in certain cases as the Thai majority shareholder can do havoc to the minority alien. See Carlsberg/Thai Beverage or Union Mosaik Industries (UMI)/Keramikwerk Laufen.

d) to benefit of 100% net spending in the country make it more attractive to retirees. Do away with all your employment-creating nightmares like the 90 days notification; issue 5-years visa with an automatic multiple re-entry for, say, THB 100'000 and let them purchase a house-with-land in their name which they can own. Yes, it will make thousands of pencil-pushing ignorants obsolete but this takes place anyhow as of January 1st, 2016 in the context of AEC2015. The flip side is that you will find thousands of retiree-willing non-Thais coming into Thailand. Every single Baht they spend they brought in from overseas = 100% net spending. PS: Malaysia has this in place but for minaret-driven reasons the programme does not fly.

e) review the "Alien Business Law" and start by calling it simply "Business Law"; no foreigner in his right mind will go into hairdressing or ice-carving; both among quite a few other professions reserved for Thai nationals only.

f) stop the "inactive posting", clean up your cash-cow called tourism from all those touts, jet-skiers and beach chair operators. Make Thailand again what it was 30, 40 years ago; it was a true paradise to live and work here.

[wabothai]

Madame TAT will love it.

[DavoTheGun]

Are these guys for real, what the hell are they on about, I think they have been drinking to much Thai Whiskey or something!

[Srikcir]

The World Bank predicted Thailand's GDP is predicted to grow by 2% next year and 2.4% in 2017 because China's slowdown continues to pressure Thailand's export sector. Meanwhile, the East Asia-Pacific region is predicted to race ahead by 6.4% next year and 6.3% in 2017. (The Nation 2015-10-06)

Thailand will have to become almost 100% tourist dependent economy to offset the loss of value from exports. Considering several East Asia-Pacific nations are going to ramp up their own toursim economies, veering away from exports will become an economic disaster. This might be especially true if there is a slowdown in the Chinese domestic economy that is currently feeding the surge in Thai tourism.

[Krataiboy]

Wake up, Thailand.

Of course the Kingdom will "veer away from exports" if the TPP is signed.This Trojan horse deal will let in US conglomerates to plunder Thailand's rich natural resources and exploit its domestic markets. Any future government which seeks to regulate the corporate pirates risks being sued for billions of dollars in an international kangaroo court established as part of the "free trade" agreement.

The supine Thai electorate should be demanding a referendum on whether to OK this hush-hush, secretly drafted and negotiated deal - not least because, as well as overriding national sovereignty, it will also drastically affect the living standards of everyone in the Kingdom.

The way the current non-elected government of the military and elite has caved in to pressure from the US-led TPP lobby is astonishing. Either it simply does not understand what TPP is all about or, even worse, it does, yet has no qualms about consigning the nation's economic future to business interests bent on monopolising world trade and the Earth's dwindling natural resources.

[Thai at Heart]

Wake up, Thailand.

Of course the Kingdom will "veer away from exports" if the TPP is signed.This Trojan horse deal will let in US conglomerates to plunder Thailand's rich natural resources and exploit its domestic markets. Any future government which seeks to regulate the corporate pirates risks being sued for billions of dollars in an international kangaroo court established as part of the "free trade" agreement.

The supine Thai electorate should be demanding a referendum on whether to OK this hush-hush, secretly drafted and negotiated deal - not least because, as well as overriding national sovereignty, it will also drastically affect the living standards of everyone in the Kingdom.

The way the current non-elected government of the military and elite has caved in to pressure from the US-led TPP lobby is astonishing. Either it simply does not understand what TPP is all about or, even worse, it does, yet has no qualms about consigning the nation's economic future to business interests bent on monopolising world trade and the Earth's dwindling natural resources.

Ummmm. Which abundant natural resources have the Thai been protecting from these nefarious foreigners all this time?

Why have Thais been waiting all this time to get into gear and do the business themselves?

Edited October 16, 2015 by Thai at Heart

[shirtless]

So where the growth going to come from , the domestic market?

[Thai at Heart]

I suppose they could put up minimum wages again.....

[Praematura]

Here we go, a significant driver of exports is being abandoned in some way. All these rideculous proposals have no traction. Why would I invest in a country ruled by the military with an economy cratering, lol in domestic tourism?

These guys need to step outside their bubble and expensive lifestyle and see what Thailand is like. He's talking about the agricultural sector that has no water? Haha.

[DaiHard]

No exports - no need for the internet. Single gateway problem solved.

[phoenixdoglover]

Where will the disposable income for domestic tourism come from? (rhetorical question)

Increased domestic tourism is not a strategy for growth, it's an opportunity and one possible outcome of growth.

[Mudcrab]

nobody veers away from exports...the customers veer away from importing.

[RubbaJohnny]

I'm having some difficulty understanding how "Thailand is now keen to join the............TPP Free Trade Agreement.........because it will boost trade" while, at the same time, Thailand will "reduce it's dependence on exports"?

A hub for oxymorons soon

[bangon04]

"The rate cut will be implemented after a nationwide e-payment and single business account system are in use."

so no time soon then.....

[phycokiller]

I would have thought Thailand has no chance of joining the TPP as a non democratic country

[HiSoLowSoNoSo]

So he saying that they should stick to sell their daughters to foreigners and "lure" tourists to be ripped of at government sponsored dual priced National "parks" !

[NongKhaiKid]

This is straight out of the TAT / Tourist Ministry book of BS.

When tourism is up it's the bees knees but when down, ah it's not that important to the economy and now exports are faltering the one size fits all BS is used.