Economy
From The Report: Thailand 2012
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Thailand’s plans to climb the ladder toward becoming a high-economy country were put on hold by disastrous floods in late 2011. Real GDP contracted 9% and losses were estimated at $44.7bn, but recovery, particularly for the hard-hit industrial estates, has been relatively swift. The focus is now on mitigating Thailand’s dependence on low-cost manufacturing exports for growth, which is risky given the uncertain world economy. Policymakers are hoping that new investment incentives will help it move up the manufacturing value chain, although economists fear that a new minimum wage might drive manufacturers away before this transformation can take place.

This section includes interviews with Kittiratt Na-Ranong, Deputy Prime Minister and Minister of Finance; Boonsong Teriyapirom, Minister of Commerce; Atchaka Sibunruang, Secretary-General, Thailand Board of Investment (BOI); Minoru Furusawa, President, Japanese Chamber of Commerce (JCC), Bangkok; and Joe Hinrichs, President of Asia Pacific and Africa Region, Ford Motor Company.

Articles from this Chapter

Overview

The next chapter: Long-term focus is now on expanding the economic base and reducing reliance on exports
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Diversified and globally integrated to a high degree, Thailand’s economy has also proven itself to be resilient to shocks of recent years, both external and internal. The country’s decades-long incentives-based policy for attracting foreign direct investment (FDI) has been one of the great successes of developing-market economics, having boosted the country into the middle-income band of countries. In late 2011, before catastrophic flooding provided yet another economic shock to the country,…

Interview

Expanding opportunities: OBG talks to Kittiratt Na-Ranong, Deputy Prime Minister and Minister of Finance
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Interview: Kittiratt Na-Ranong What kind of role, in your opinion, will foreign investment play in the kingdom’s economy in 2015? KITTIRATT NA-RANONG: Foreign direct investment (FDI) has been key to the economic development of the Thai economy. With the ASEAN Economic Community (AEC) aiming to achieve regional economic integration by 2015, ASEAN countries should be even more attractive to foreign investors, given that the market will be larger and the production base more integrated. FDI should…

Interview

The right time: OBG talks to Boonsong Teriyapirom, Minister of Commerce
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Interview: Boonsong Teriyapirom What are Thailand’s priorities for its trade policy? BOONSONG TERIYAPIROM: We are on what I like to call a dual-track policy: we want to increase domestic consumption, and at the same time we are targeting a 15-20% year-on-year (y-o-y) increase in our total exports this year. We have been meeting with the leaders of our key trading partners and are aiming to double the size of our trade with partner countries in the next five years. This means we will actually…

Analysis

A different model: The hunt for new economic drivers is on
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Current economic strength has come from exports to the world’s most-developed economies; the result of decades of consistent economic policy on foreign investment. A combination of incentives for foreign manufacturers, low-cost labour and economic zones called industrial estates have attracted globalised firms, along with their suppliers in the automotive and electronics sectors in particular. NEW ECONOMIC HORIZONS: They have turned the estates into efficient and interconnected industrial…

Interview

OBG talks to Atchaka Sibunruang, Secretary-General, Thailand Board of Investment (BOI)
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Interview: Atchaka Sibunruang What do you see as the longer-term trend in terms of the origin of investments into Thailand? ATCHAKA SIBUNRUANG: Japan will continue to be our largest foreign investor for the foreseeable future. However, investment from emerging economies – China, India, Korea and ASEAN members – will increase gradually and will become another main investment source for Thailand within the next 10 years. Unlike Japanese investment, which is focused on the automotive and electronics…

Interview

OBG talks to Minoru Furusawa, President, Japanese Chamber of Commerce (JCC), Bangkok
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Interview: Minoru Furusawa Investor confidence indicators published by Japan External Trade Organisation have not shown a souring of investor sentiment in Thailand, despite the turmoil of recent years. How do you explain this? MINORU FURUSAWA: The JCC held 104 consultations for new expansions by Japanese firms from April to September 2011, 3.2 times up year-on-year. From October to December, during the floods, there were only 33 cases. In recent years Thailand has faced problems including political…

Analysis

Rebalancing wealth: The impact of the rise in the minimum wage
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One of the most important changes to the Thai economy expected for 2012 came on April 1, when the minimum wage in Bangkok and six other of Thailand’s 75 provinces was boosted from about BT220 ($7) to BT300 ($9.60) – a 36% jump. The wage hike will be applied to all provinces in January 2013, and will fulfil one of the current government’s major campaign promises. There are concerns about triggering inflation, the ability of small and medium-sized enterprises (SMEs) to cope, and questions…

Analysis

Reduced barriers: Economic integration of ASEAN nations moves a step forward with new initiatives
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Long-term trends have Thailand’s economy tilting ever closer to its own region, renewing a focus that had taken a back seat as the growth of manufacturing in the country led to a greater exposure to the world’s most developed economies. Natural market forces are one catalyst, as consumer demand in nearby countries such as China and Indonesia is on the rise. The regional focus comes from a top-down effort as well, primarily through the economic integration programmes of the Association of…

Interview

OBG talks to Joe Hinrichs, President of Asia Pacific and Africa Region, Ford Motor Company
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Interview: Joe Hinrichs What are the contributing factors in choosing Thailand as your key manufacturing base? JOE HINRICHS: When you assess the current growth of the Asia Pacific and Africa region (APA) for the automotive industry, this decade is a remarkable time. We currently have operations throughout the world, and China, India and Thailand are going to be the key markets for manufacturing. A recent estimate shows that between China, India and ASEAN well over 2bn people will have reached the…