New Year Special: Vital for Thailand to adjust, develop to be competitive

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NEW YEAR SPECIAL
Vital for Kingdom to adjust, develop to be competitive
Petchanet Pratruangkrai
The Nation



BANGKOK: -- No matter how many free-trade pacts Thailand has already signed up to, or decides to negotiate in the future, of greater importance is how the country develops and adjusts to prepare itself for the "new normal" and changing landscape in an increasingly globalised economy.

This is naturally also crucial when it comes to reaping the benefits from each agreement in which the country participates.

During the past year, there was much debate as to whether Thailand should join the Trans-Pacific Partnership (TPP) or move ahead with participation in the Regional Comprehensive Economic Partnership (RCEP), while the Kingdom also needed to finalise preparations for the Asean Economic Community (AEC), which came into effect on Friday.

With so many countries moving towards closer trade and economic cooperation, Thailand should no longer necessarily join one pact at the expense of another, as each has its own advantages, while also presenting challenges in terms of national adjustment.

The key point is not how many free-trade pacts Thailand will have, as all concerned sectors - and the private sector, in particular - have agreed that the Kingdom needs to upgrade its trade standard, laws and regulations, as well as develop each industry in regard to the use of high technology and innovation.

Pornsilp Patchrintanakul, adviser to the Board of Trade of Thailand, said that in the final analysis, whether Thailand chose to join the TPP or focus only on Asean, the RCEP or bilateral free-trade agreements, it was vital that the country developed and adjusted itself and its industrial and service sectors to ensure international competitiveness.

Government and private enterprises alike must adjust to the "new normal", he said.

When comparing each of the three major international trade and economic pacts, he said the TPP was a top-level free-trade agreement requiring a high standard to ensure beneficial participation, and therefore one that the country should not turn away from, as it would lead to new development.

The RCEP, meanwhile, is a different animal as it has been put together on more of a compromise basis, with less market liberalisation than the TPP, as every potential participant is still focused on market protection for certain sectors, he said.

This is also the case in respect of the AEC, he added.

Nopporn Thepsithar, chairman of the Thai National Shippers' Council, said that as international traders foresaw the TPP as being |the largest market, more orders were now expected to shift this year towards TPP members, such as Vietnam and Malaysia, that produce similar raw materials and products to Thailand.

In the longer term, the Kingdom's non-participation in the TPP would negatively affect overall trade and investment, as the pact calls for more technology transfer and support among member countries, he said.

More important, the TPP will force each member nation to develop its overall trading standards.

Whether or not Thailand eventually opts to join the TPP, to be internationally competitive the country needs to develop its standards in the areas of labour and environmental protection, government procurement, and the adoption of new technology in the industrial sector, he stressed.

Protectionism will not help the nation on the path to further development, Nopporn said, adding that Thailand had protected its service sector for too long - yet it was still less developed than other countries.

TPP and RCEP in numbers

Countries that have signed up for the TPP encompass about 40 per cent of global trade, or US$295 trillion a year, with a combined gross domestic product of $28.3 trillion, which represents 38 per cent of the world's GDP.

The combined population of the TPP countries is roughly 800 million, or 11 per cent of the world's total.

Thai shipments to the 12 TPP countries were valued at $92 billion in 2014, accounting for 40.4 per cent of the country's exports, while imports amounted to $83.4 billion, or 36.6 per cent of the total.

In 2014, TPP members represented 45 per cent of Thailand's overall foreign direct investment (FDI).

According to a study, if the Kingdom did not join the partnership, its GDP could be reduced by 0.4-0.6 per cent.

In comparison, the RCEP's 16 member countries represent 29 per cent of global trade, or $10.7 trillion, and have a combined GDP of $21.2 trillion - 28 per cent of the world's GDP.

Meanwhile, the RCEP's combined population is 3.4 billion, or roughly half the number of people on the planet.

Thailand's exports to RCEP countries reached $127 billion in 2014, representing 56 per cent of total export value. Imports totalled $133 billion, or 58 per cent of the country's imports.

RCEP members accounted for 70 per cent of FDI in Thailand in 2014.

Thailand, Asean in the AEC era

Thailand continued to strengthen ties with the other nine Asean member states in the build-up to AEC implementation, and in the context of closer cooperation among the 10 countries under the 10-year master plan from 2016 to 2025.

Asean now has a single market with the implementation of the AEC.

According to the Commerce Ministry's Trade Negotiations Department, as of the end of October, the 10-member bloc had accomplished 79 per cent of the blueprint for regional integration, while Thailand had achieved 85.4 per cent.

For priority measures, Asean had achieved 92.7 per cent of the blueprint, while the Kingdom had accomplished 95.3 per cent.

Sirinart Jaimun, director-general of the department, said one of the reasons that Asean may be slow in accomplishing parts of the regional-integration agenda was that some of it involved huge investment projects, such as pipelines for gas transfer, and electronics plants.

However, Now that the AEC has come into effect, Asean will continue to complete the blueprint, and will also move forward with its 10-year mission, said Sirinart Jaimun, director-general of the Commerce Ministry's Trade Negotiations Department.

Under the 10-year mission, the regional grouping will move to eliminate non-tariff barriers after bringing down tariffs for trade in goods and services, continue to liberalise services and investments, and set up a single standard for facilitating more trade, service and investment growth.

Asean will also strengthen cooperation in each sector; promote development and cooperation for small and medium-sized enterprises; and support innovation, plus research and development in many sectors in order to increase the competitiveness of every industry in the region.

Tariffs for 95 per cent of trade in goods among Asean members have now been brought down to zero, except for items in "highly sensitive" or "sensitive" lists, for which tariffs remain at about 5 per cent.

In services, Asean will now also permit a 70-per-cent shareholding for Asean citizens in 128 fields across 10 sets of service businesses.

For investment, each Asean member state will allow other Asean investors to hold between 49 and 100 per cent in five sectors: agriculture, fishery, forestry, mining, and production.

For related production services, Thailand will not allow other countries to hold a share of more than 49 per cent, under current law.

In terms of investment liberalisation, Asean still has to work on eliminating some barriers to allow a freer flow of investment, such as in the areas of land ownership, minimum investment-capital requirement, and the number of foreign board members in each company.

Asean and the professions

Asean has also agreed on liberalisation in seven professional fields, plus one tourism-related career.

They are: medical practitioners, dental practitioners, nursing services, architectural services, surveying qualifications, accountancy services, engineering services, and tourism professionals, excluding tour guides.

Under Mutual Recognition Arrangements (MRAs), the AEC now facilitates the free flow of skilled labour within Asean member countries.

However, this alone does not mean that there will now be an influx of skilled workers and professionals working freely in the Kingdom. The MRAs are only a single standard for Asean professionals in terms of getting a work permit and operating licence, and they will still need to meet the specific requirements of each profession before taking up a position, Sirinart stressed.

"The MRAs on professionals do not mean there will be an influx of other Asean professionals working in the country, as there are still regulations for each career. The MRAs are just like a core competency for helping to develop each professional standard, in case Asean professionals would like to work across the AEC," she explained.

Thai professionals will similarly have to pass other Asean members' requirements if they want to work in another country, she added.

The procedure is that professionals in the seven fields have to get a work permit and licence in each Asean nation in which they wish to practise, while also passing a language-skills test for some careers, such as nursing.

The Commerce Ministry's regulations, meanwhile, do not allow the liberalisation of some careers in service businesses that are protected under the Foreign Business Act, or under a specific law covering the business in question. The MRA on professionals has only created a single standard for Asean professionals, and should not in itself present problems for Thai professionals when it comes to competing with their counterparts from other countries, she suggested.

Now that the AEC has come into effect, Asean will also discuss the establishment of a similar standard for other professions, in order to increase human development across the region, she said.

Source: http://www.nationmultimedia.com/business/Vital-for-Kingdom-to-adjust-develop-to-be-competit-30276047.html


-- The Nation 2016-01-04

[z42]

Shame I can't bet that the newly reformed Thailand won't have anything close to relaxation of the highly protectionist laws it has. If ony they could see how just some relaxation would stimulate growth and move the country on in a better direction

[sawadee1947]

so many "MUSTS" and a long "to do" list. And nobody capable to accomplish....I can't see any "moving forward".

[Srikcir]

"TPP was a top-level free-trade agreement requiring a high standard to ensure beneficial participation"

That might be an insurmountable barrier for Thailand.

[Plutojames88]

The difficulty is the moral dilemma in approaching trade with a nation that is increasingly ""out of touch "" with reality , and paranoid.

Getting information that reflects truth is hard these days.

Thailand also might need to lift its human abuse rights tier.

It's close to red card which will reflect badly in it not just with seafood.

A sluggish economic reality does not support it's propaganda media releases