How Thailand could really boost its economy

[webfact]

How Thailand could really boost its economy
Nyshka Chandran

BANGKOK: -- Thailand's history of military coups has made policymakers too focused on political stability rather than foreign investment, according to a panel of experts.

At the CNBC Exchange during the 14th Asia Business Leaders Awards in Bangkok on Wednesday, issues like transparency remained major sticking points for investors hesitant to place their bets on Southeast Asia's second-largest economy.

Foreign direct investment (FDI) in Thailand's economy remains weak due to structural weaknesses likes high labor costs, availability of labor supply, and a lax regulatory environment.

"Thailand requires an attitude change. It has such great underlying strength, but areas like rule of law and corruption remain major hurdles," said Curtis Chin, former U.S. ambassador to the Asian Development Bank and Asia Fellow at the Milken Institute.

Full story: http://www.cnbc.com/2015/10/28/how-thailand-could-really-boost-its-economy.html

-- CNBC 2015-10-29

[AlexRRR]

Labour costs high? availability of labour? in Thailand? who was the moron who said that? Structural weakness like this stops foreign investment...ummmm seriously the people promoting this crap are being paid to much, of course if you want to read between the lines its all about keeping the little person down by giving them an excuse why your wages are not going up.

Take note Big Business....if you keep screwing the middle class your going to run out of people who can afford to buy you products.

[leeneeds]

Corruption is every where, every country , some maybe hidden a bit better, but its there, foreign direct investment is weak? Thats why all the condos bought by farangs, are still increasing in price, and who the <deleted> builds them, ? OPEN YOUR EYES YOU MEAT HEAD, building, roads, a few mining licences , gas, finds etc, don't mention the tourists dollars that flow in, , how supposedly educated people open their mouths and don't click their brain into gear, is amazing.

[trogers]

The 'high' in labour cost is measured to the labour productivity of Thai workers. And the proof is in the flood of skilled workers from neighbouring countries on all construction sites.

And the reason for this 'high' labour cost with no corresponding increase in labour productivity is the lack of rule of law and corruption leading to vote buying through populist policies.

[Lunchbob]

Legalize marijuana. Allow citizenship or some kind of secure residency to people who can build the future.

[jaltsc]

"Thailand requires an attitude change. It has such great underlying strength, but areas like rule of law and corruption remain major hurdles..."

No concept that there is an outside of the box. Economic, cultural and political Thailand is imprisoned inside of an impenetrable box labeled "Thainess" and will not allow other ideas and systems in.

Edited October 29, 2015 by jaltsc

[puukao]

Seize all farang bank accounts.......and right AFTER high-season, they say it's computer problem, then take it all!!! Then take all condos.......think of the billions!!!!

then seize all cars........etc....

and have a lottery like powerball in USA, and put in tons of casinos, and continue to fleece the sheep...

real money isn't here anyhow.....only people on budget with no real political might

[OneZero]

Labour costs high? availability of labour? in Thailand? who was the moron who said that? Structural weakness like this stops foreign investment...ummmm seriously the people promoting this crap are being paid to much, of course if you want to read between the lines its all about keeping the little person down by giving them an excuse why your wages are not going up.

Take note Big Business....if you keep screwing the middle class your going to run out of people who can afford to buy you products.

Thailand could increase wages and reduce the red - yellow divide while at the same time being competitive if corruption / patronage were reduced with the resulting benefits flowing into wages rather than hiso pockets.

[Thian]

Look at how they clean the beach in Hua Hin today, that says enough doesn't it?

Look at how they water the plants between mainroads in BKK (never heard of a sprinkler i guess?).

Look at how they clean the roads in BKK, how come all that sand will be back there in 3 days?

They should just grow up, who needs a submarine if he even can't clean the beach with a fast machine?

Investors would rather go to Malaysia, they are far more developed and treat westerners respectfull. And no need to worry about new rules or new coup.

Edited October 29, 2015 by Thian

[Time Traveller]

Maybe thailand could develop a tourism industry based around prostitution, counterfeit products and scams against foreigners?

Oh right, that's already been done.

[Tatsujin]

"Thailand requires an attitude change."

Says it all.

[Joe Brennan]

Labour costs high? availability of labour? in Thailand? who was the moron who said that? Structural weakness like this stops foreign investment...ummmm seriously the people promoting this crap are being paid to much, of course if you want to read between the lines its all about keeping the little person down by giving them an excuse why your wages are not going up.

Take note Big Business....if you keep screwing the middle class your going to run out of people who can afford to buy you products.

Oh I don't know. I think they should keep on doing exactly what they've been doing.

[Hawk]

Labour costs are high in the foreign owned factories plus Thai people do not like working in factories, and Thai workers tend to be very problematic. Difficult is a more accurate word.

Then there is the Thai bureaucratic nonsense that puts foreigners off from investing here.

This present government says its willing to tackle the economy but has no idea how to do it. Like the article stated, politics in Thailand are now the government's only priority. So we can only expect the economy to slide while the government is concentrating on its attitude adjustment program.

Import licenses, export licenses all involve some money under the table these days, so who wants to get theirselves involved in that? Doing business here is dangerous, officials can quickly become unfriendly and greedy.

[Praematura]

Thailand is on a downhill spiral. Manufactures in TPP countries will move manufacturing out of Thailand into a TPP member such as Vietnam. Thailand now has a bad reputation in the west as high profile tourists end up dead. The country is susceptible to climate change both geographically and economically. I do not see any area one would invest in there given the higher rate of return in neighboring countries.

[JackThompson]

One reason Thais receive decent pay, relative to places like China, is that they have family farms they Own, where they can go to both live and eat. The solution that the transnational-corporations would like to see is both simple and brutal - just take a page out of history.

The "enclosure acts" of Britain forced farmers off the land, and into slums in large cities, where they could be forced to work long-hours for low-pay - or starve. As the Lords at the time noted, a man could not be forced into such conditions if he had the option of going home and eating, so they simply took that option away. In Mexico, the same was accomplished with NAFTA, and flooding the nation with cheap (US-government subsidized) corn, until most family farms went bankrupt, leaving a massive supply of "surplus labor" that has driven down the cost of labor both there, and in the USA.

Fortunately, the Sustainability programs of Thailand aim to preserve family-farms, and protect the Thai citizens from being driven to the level of exploitation to which the comparison of "labor cost" is being made - China and Indonesia, to name two modern examples.

It is for this reason that multinationals operating factories in Thailand tend to operate using imported labor. The alternative would be to require higher wages at those jobs, which would result in their quick-relocation to other nations, whose citizens options are more limited. As it stands, Thailand can collect taxes on those businesses, and permit enough foreign-labor to make them economically viable in the global economy, but without allowing a flood of immigration which would drive up Thailand's unemployment rate. This seems like a reasonable compromise in the best interest of Thai people, from my perspective.

[chilli42]

In fact, Thai wages are high relative to competing countries in the region. The availability of labour is related to the fact that those available to work in Thailand are not eager to do so. Just on these two dimensions Vietnam wins hands down vs Thailand. That is where the new factories are being built.

[BestBitterPhuket]

Some of you only look at the "price" (labor cost) without looking at the product it buys. Is one kilo of sugar priced at 5bht cheaper than two kilos of sugar priced at 7bht?

[AlexRRR]

The 'high' in labour cost is measured to the labour productivity of Thai workers. And the proof is in the flood of skilled workers from neighbouring countries on all construction sites.

And the reason for this 'high' labour cost with no corresponding increase in labour productivity is the lack of rule of law and corruption leading to vote buying through populist policies.

I think your holding the wrong end of the stick here, lets get it straight, no reform has been instigated by the government or have the employers wanted it to date, Australia went down that route back in the 80's workers embraced reform there and were rewarded, eventually productivity stalled as there was nothing left to trade for higher wages, wage growth has remained flat for years with any growth in income going to the top 20%.

Anyone who thinks Thais get paid to much are delusional, and if there were to be any reform needed employers would be pushing for it and there not. Since Your way off the mark over Thai salaries everything you have stated its farcical.

Migrant workers fill a void that isn't being met by Thai's i would hardly think these Burmese are skilled, you can argue the toss but as the population gets better educated there not going to want to dig up roads and build sky scrapers.

[Joe Brennan]

"It has such great underlying strength,"

Really? What strength is that? Thailand is crippled by its very lack of strength. With a population comparable to the UK and many times larger than Australia, Thai accomplishments in any field except thieving are almost vanishingly modest. Their education system is among thw worst in the world, their law is among the most disregarded in the world, their industry relies upon a plentiful supply of cheap labour and their social policies are back in the mediaeval era. So much for enlightened leadership then. Thais could usefully learn to do what Singapore did instead of concentrating on their own self-esteem, for which there is very little actual basis.

Motherhood statements are always useful - until that's all you have left, then they're not so good.

Edited October 29, 2015 by Joe Brennan

[AlexRRR]

Look at how they clean the beach in Hua Hin today, that says enough doesn't it?

Look at how they water the plants between mainroads in BKK (never heard of a sprinkler i guess?).

Look at how they clean the roads in BKK, how come all that sand will be back there in 3 days?

They should just grow up, who needs a submarine if he even can't clean the beach with a fast machine?

Investors would rather go to Malaysia, they are far more developed and treat westerners respectfull. And no need to worry about new rules or new coup.

The Malaysian Prime Minster certainly is more developed in the art of corruption a cool 700 million dollars ended up in one of his accounts.........Brushes off all questions yes man if i was an investor thats where i would go.

[heybruce]

One reason Thais receive decent pay, relative to places like China, is that they have family farms they Own, where they can go to both live and eat. The solution that the transnational-corporations would like to see is both simple and brutal - just take a page out of history.

The "enclosure acts" of Britain forced farmers off the land, and into slums in large cities, where they could be forced to work long-hours for low-pay - or starve. As the Lords at the time noted, a man could not be forced into such conditions if he had the option of going home and eating, so they simply took that option away. In Mexico, the same was accomplished with NAFTA, and flooding the nation with cheap (US-government subsidized) corn, until most family farms went bankrupt, leaving a massive supply of "surplus labor" that has driven down the cost of labor both there, and in the USA.

Fortunately, the Sustainability programs of Thailand aim to preserve family-farms, and protect the Thai citizens from being driven to the level of exploitation to which the comparison of "labor cost" is being made - China and Indonesia, to name two modern examples.

It is for this reason that multinationals operating factories in Thailand tend to operate using imported labor. The alternative would be to require higher wages at those jobs, which would result in their quick-relocation to other nations, whose citizens options are more limited. As it stands, Thailand can collect taxes on those businesses, and permit enough foreign-labor to make them economically viable in the global economy, but without allowing a flood of immigration which would drive up Thailand's unemployment rate. This seems like a reasonable compromise in the best interest of Thai people, from my perspective.

"One reason Thais receive decent pay, relative to places like China, is that they have family farms they Own, where they can go to both live and eat."

Are you claiming subsistence farmers are well off?

I'd love to see what you base that claim on!

[Joe Brennan]

Look at how they clean the beach in Hua Hin today, that says enough doesn't it?

Look at how they water the plants between mainroads in BKK (never heard of a sprinkler i guess?).

Look at how they clean the roads in BKK, how come all that sand will be back there in 3 days?

They should just grow up, who needs a submarine if he even can't clean the beach with a fast machine?

Investors would rather go to Malaysia, they are far more developed and treat westerners respectfull. And no need to worry about new rules or new coup.

The Malaysian Prime Minster certainly is more developed in the art of corruption a cool 700 million dollars ended up in one of his accounts.........Brushes off all questions yes man if i was an investor thats where i would go.

Hmmm. Was he democratically elected? If he was then corrupt or not, he was the people's choice and they deserve what they elect. If not then he's no better than any other thug that acquires power dishonestly or because he's got a bunch of morons with guns that think it's cool to follow the orders of a criminal.

Sorry buddy but implying that Prayuth is OK or somehow less of a criminal because there's someone else corrupt somewhere else or (as some would have it) that Thaksin was a thief, is a bit of a stretch in educated company.

Edited October 29, 2015 by Joe Brennan

[heybruce]

The 'high' in labour cost is measured to the labour productivity of Thai workers. And the proof is in the flood of skilled workers from neighbouring countries on all construction sites.

And the reason for this 'high' labour cost with no corresponding increase in labour productivity is the lack of rule of law and corruption leading to vote buying through populist policies.

Yeah, 72% of government public spending on the 17% of the population living in Bangkok is unaffordable populism http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/05/09/000333037_20120509003158/Rendered/PDF/685510ESW00PUB0y0Note0master0120501.pdf.

The government needs to cut off the sinking city.

[IMA_FARANG]

Simple..... increase the tax fate for the top10% of the Thais who earn over 1 million Baht a year.

And adopt the punishment of removal of the right hand fort those who are convicted of corruption.

Not that such a punishment would necessarily stop corruption, but it would make those convicted once much easier to identify.

[hakuho]

in what other nation do you find an actual Brick and Mortar "Museum of Corruption"? LOL

Corruption is a way of life here; hard-coded into a national mentality which is both tribal and superstitious----Falangs will never understand the trifecta of control as evidenced by the workings of the Big Three: Monarchy, Military and the Religious penumbra. ...best not to worry about it; may pen ray.

[JackThompson]

One reason Thais receive decent pay, relative to places like China, is that they have family farms they Own, where they can go to both live and eat. The solution that the transnational-corporations would like to see is both simple and brutal - just take a page out of history.

The "enclosure acts" of Britain forced farmers off the land, and into slums in large cities, where they could be forced to work long-hours for low-pay - or starve. As the Lords at the time noted, a man could not be forced into such conditions if he had the option of going home and eating, so they simply took that option away. ...

"One reason Thais receive decent pay, relative to places like China, is that they have family farms they Own, where they can go to both live and eat."

Are you claiming subsistence farmers are well off?

I'd love to see what you base that claim on!

Better off than those with no where to go or eat absent a paycheck? Yes - much better off. Family farmers don't have to worry about how they will "pay rent" for permission to "be" somewhere on Earth. Most people in developed nations do not experience that after childhood. Thailand has managed to both develop, and retain many individual's "right to exist" without being "deemed useful" or "efficient" to a corporate entity.

This is not to in any way suggest a luxurious lifestyle, or to diminish the benefits of becoming a part of a middle-class and working for a business which offers a good standard of living, benefits, etc. More of that would be better, but this is not on offer from those building the new factories in Vietnam.

Knowing that farm-life is the "worst case," if the job / economy fails, does provide a peace of mind not experienced by people who have no right to live anywhere, except under the conditions dictated by, and obedience to, someone else. In the context of this article, this means Thais can decline poor pay and working-conditions, which may be worse than what is available on their farm. Compared to a Chinese sweatshop, the farm, family, etc, is a big step up.

Edited October 29, 2015 by JackThompson

[Thai at Heart]

Labour costs high? availability of labour? in Thailand? who was the moron who said that? Structural weakness like this stops foreign investment...ummmm seriously the people promoting this crap are being paid to much, of course if you want to read between the lines its all about keeping the little person down by giving them an excuse why your wages are not going up.

Take note Big Business....if you keep screwing the middle class your going to run out of people who can afford to buy you products.

Their wages are higher than their neighbours and they have millions of imported labour. What is your point about low wages and labour availability.

[JackThompson]

in what other nation do you find an actual Brick and Mortar "Museum of Corruption"? LOL

Corruption is a way of life here; hard-coded into a national mentality which is both tribal and superstitious----Falangs will never understand the trifecta of control as evidenced by the workings of the Big Three: Monarchy, Military and the Religious penumbra. ...best not to worry about it; may pen ray.

In my country, we have different names for the controlling entities, and the corruption has been "legalized" with regulations, the political-corporate revolving door, and outright payoffs to politicians as "campaign donations" (unlimited, if made through Super-PACs). Say what you will about its prevalence, but such behaviour is, at least, still criminal, here.

I find the positions of the Monarchy in Thailand, a nation without an Imperialist element, to be a positive thing. This entity would gain no benefit from strip-mining their own country, unlike the leaders of my own (who are doing so). Hence, the Sustainability doctrine, the Royal Projects, and similar efforts, with which I find no parallel in the USA.

I am just beginning to learn about the role of the Buddhist factor (I suspect it will take a lifetime). But I do recall that Monks were helpful in encouraging the payoff of loans to the IMF (or was it the World Bank). The "economic medicine" that comes with those loans can wreck a country.

The military, as well, has been a force for preserving Thai independence from foreign control, including politicians who are aligned with foreign-powers and/or attempting to incite national-divison, to increase their personal power. Again, I do not claim to be a scholar on the full history and scope of all this - I am only reporting on what I have noticed, thus far.

Find me a nation, or organization, where there is no corruption, and I can only be sure it is devoid of people.

[Thai at Heart]

in what other nation do you find an actual Brick and Mortar "Museum of Corruption"? LOL

Corruption is a way of life here; hard-coded into a national mentality which is both tribal and superstitious----Falangs will never understand the trifecta of control as evidenced by the workings of the Big Three: Monarchy, Military and the Religious penumbra. ...best not to worry about it; may pen ray.

In my country, we have different names for the controlling entities, and the corruption has been "legalized" with regulations, the political-corporate revolving door, and outright payoffs to politicians as "campaign donations" (unlimited, if made through Super-PACs). Say what you will about its prevalence, but such behaviour is, at least, still criminal, here.

I find the positions of the Monarchy in Thailand, a nation without an Imperialist element, to be a positive thing. This entity would gain no benefit from strip-mining their own country, unlike the leaders of my own (who are doing so). Hence, the Sustainability doctrine, the Royal Projects, and similar efforts, with which I find no parallel in the USA.

I am just beginning to learn about the role of the Buddhist factor (I suspect it will take a lifetime). But I do recall that Monks were helpful in encouraging the payoff of loans to the IMF (or was it the World Bank). The "economic medicine" that comes with those loans can wreck a country.

The military, as well, has been a force for preserving Thai independence from foreign control, including politicians who are aligned with foreign-powers and/or attempting to incite national-divison, to increase their personal power. Again, I do not claim to be a scholar on the full history and scope of all this - I am only reporting on what I have noticed, thus far.

Find me a nation, or organization, where there is no corruption, and I can only be sure it is devoid of people.

Ever heard of Siam cement?

[heybruce]

One reason Thais receive decent pay, relative to places like China, is that they have family farms they Own, where they can go to both live and eat. The solution that the transnational-corporations would like to see is both simple and brutal - just take a page out of history.

The "enclosure acts" of Britain forced farmers off the land, and into slums in large cities, where they could be forced to work long-hours for low-pay - or starve. As the Lords at the time noted, a man could not be forced into such conditions if he had the option of going home and eating, so they simply took that option away. ...

"One reason Thais receive decent pay, relative to places like China, is that they have family farms they Own, where they can go to both live and eat."

Are you claiming subsistence farmers are well off?

I'd love to see what you base that claim on!

Better off than those with no where to go or eat absent a paycheck? Yes - much better off. Family farmers don't have to worry about how they will "pay rent" for permission to "be" somewhere on Earth. Most people in developed nations do not experience that after childhood. Thailand has managed to both develop, and retain many individual's "right to exist" without being "deemed useful" or "efficient" to a corporate entity.

This is not to in any way suggest a luxurious lifestyle, or to diminish the benefits of becoming a part of a middle-class and working for a business which offers a good standard of living, benefits, etc. More of that would be better, but this is not on offer from those building the new factories in Vietnam.

Knowing that farm-life is the "worst case," if the job / economy fails, does provide a peace of mind not experienced by people who have no right to live anywhere, except under the conditions dictated by, and obedience to, someone else. In the context of this article, this means Thais can decline poor pay and working-conditions, which may be worse than what is available on their farm. Compared to a Chinese sweatshop, the farm, family, etc, is a big step up.

And yet in China people abandon their farms to go work in sweatshops, as they do in every other nation when subsistence farmers are given any other option.

Family farmers have to worry about how they will pay for seeds and fertilizer, and sometimes send their daughters to brothels in order to get the money. People raised in subsistence farms often have stunted growth from a protein deficient diet. The stoop labor of non-mechanized farming in any situation is hard, this kind of labor in tropical heat, ankle deep in muddy water, in a land full of mosquito borne diseases, parasites, and poisonous snakes is miserable. I assume you have never experienced anything like this life or you wouldn't have such an idealized view of it.