Huawei has signed a three-year framework with the Science and Technology Ministry to develop the “digital economy” and smart cities nationwide, beginning with Bangkok.

Deputy Prime Minister Somkid Jatusripitak, who is visiting China this week, said yesterday that the agreement would also aim to help develop Thai agriculture and tourism.

The project will enjoy a corporate-income-tax deduction of up to triple the expenses.

The centre is expected to be established this year and with the hopes of opening up about 80 local jobs.

Besides Huawei, Somkid also met with executives from Baidu to discuss their expansion plans in Thailand.

Baidu recently launched a Chinese-language virtual map and travel-information application in Thailand to serve nearly 8 million Chinese travelling to Thailand each year.

Industrial corridor

Zhao Hongjin, president of overseas business at China Fortune Land Development Co, a developer of industrial parks and other real estate, said the company was interested in investing in a smart city in an industrial corridor in Thailand as well as in the CLMV (Cambodia, Laos, Myanmar and Vietnam) region.

The Board of Investment of Thailand will later host an investment forum for Chinese investors.

Li Zhigang, senior vice president of the Industrial and Commercial Bank of China, expressed interest in Thailand.

The bank will encourage its 5 million investors to expand in Thailand.

During his visit to Beijing, Somkid presided over the inking of an agreement for a submarine cable and terrestrial network by CAT Telecom and China Telecom Global.

The two parties will work on the submarine-cable project that the Thai Cabinet has already approved.

China Telecom Global will help CAT develop a high-speed Internet network for all countries in the region.

The Cabinet has approved |a budget of nearly Bt20 billion for broadband Internet development.

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Duangporn Rodphaya, director-general of the Foreign Trade Department, said that with demand for rice rising in the market, the government could gain a good price from the latest auction.

The traders were among the 64 that joined the year’s fourth round of bidding for 2.23 million tonnes of rice.

The government has managed to dispose of 6.59 million tonnes of its rice worth Bt69 billion via tender in the past two years, leaving 9.5 million tonnes in its inventory. It will try to unload as much of this rice as possible this year. The government will continue to release rice via many methods including open general auctions to serve both domestic and overseas consumption during the drought.

“The drought has caused lower rice supplies. The government will try to manage rice stocks efficiently and be aware of the impact on the rice price in the market,” Duangporn said.

Commerce Minister Apiradi Tantraporn said the government planned to continue selling rice under government-to-government contracts with many countries.

Recently, the Philippines and Indonesia showed strong interest in placing a big order for rice from Thailand – for more than a million tonnes combined.

The ministry will send a mission to promote rice sales to many markets with potential, including Singapore, South Africa, Mozambique and Oman, which is seen as the gateway to East African countries.

“To strengthen the economy for the long term, Thailand needs more high-end industries such as research and development, and Chinese companies can provide these,” Deputy Prime Minister Somkid Jatusripitak said yesterday. On Sunday, he took representatives of the private sector to China to seek more investment. The delegation will be there until Thursday, visiting Beijing and Shanghai.

He will talk with eight to 10 start-ups about setting up in Thailand as part of their overseas expansion. The Board of Investment of Thailand will offer them incentives.

Somkid is scheduled to meet with more than 300 Chinese investors tomorrow at a conference on “Thailand: Moving Forward |to Sustainable Growth”. The event aims to pinpoint investment opportunities especially in the |ICT, auto, electronics, parts, tourism, telecommunications-equipment and machinery industries.

Southeast Asia, including Thailand, is now well positioned for more investment from China because of the current uncertainty in Europe, the government believes.

While the political tension in the Kingdom may not bother investors in the short term, it will be good in the long term if the country returns to full democracy, Somkid said.

From 2010-14, 172 investment projects worth Bt85.3 billion from China were approved. The top destinations were the machinery, automotive and solar-cell industries.

Last year, the government approved 81 projects worth Bt28 billion, up from 40 projects in 2014.

From January to April this year, 27 projects valued at Bt5.9 billion received approval.

This year, Thailand is targeting more investment in high-end endeavours such as natural rubber, machinery and parts, automotive, rail, aviation maintenance, biotechnology, tourism, software parks, data centres and cloud service.

The Commerce Ministry reported that investment from Thailand in China in 2013 consisted of 37 projects, down 32 per cent from 2012, but up by more than 500 per cent in value.

In 2014, investment value from Thailand declined by 87 per cent. From January to October last year, Thailand invested about Bt1 billion in China, mostly in retail, banking and finance, and aviation.

Deputy Prime Minister Somkid Jatusripitak will be talking to the private sector in Beijing and Shanghai on a five-day trip that began yesterday to seek more investment.

Somkid will be talking to 8-10 start-up companies to invest in Thailand as part of their overseas expansion. The Office of the Board of Investment will be following up on the investments, offering special incentives and privileges.

Somkid is also scheduled to meet more than 300 Chinese investors on Wednesday at an investment conference entitled “Thailand: Moving Forward to Sustainable Growth”.

The event is set to pinpoint investment opportunities, especially in information and communications technology, automobiles, electronics parts, tourism sector, telecommunications equipment, and machinery sectors.

According to official statistics, from 2010-14, 172 investment projects worth Bt85.3 billion from China had been approved. Top areas of investment were machinery, automobiles, solar cells, and car assembly. Last year, the government approved 81 projects worth Bt28 billion, up from 40 projects in 2014.

From January to April this year, 27 projects had already received approval, valued at Bt5.9 billion.

This year, Thailand is targeting more investment from high-end products of natural rubber, machinery and parts, automobiles, train and tram, aviation maintenance, biotechnology, tourism activity and software park data centre.

The Thai Ministry of Commerce said Thai investments in 2013 covered 37 projects, down 32 per cent from the earlier year, but the value jumped more than 500 per cent. In 2014, total investment value from Thailand declined by 87 per cent. From January to October last year, Thai investment in China was valued at about Bt1 billion mostly in retail, banking and finance, and aviation.

That is the opinion of Natchathorn Manopanjasiri, Thailand’s consul of the Commercial Affairs Office at the Royal Thai Consulate-General in the province’s capital, Kunming.

“Chinese people in Yunnan province have an interest in buying Thai products,” she said. “Many of them have expanded their investments into logistic businesses in Northern Thailand to import Thai products, especially agriculture food products. There is potential in the province for Thai investors to expand their investments here.”

Natchathorn said the investment potential for Thai companies in Yunnan stemmed from the province’s higher consumer purchasing power when compared to many other Chinese provinces.

In 2015, the trade value between Thailand and Yunnan was US$975 million (Bt34.4 billion) and Thailand’s trade deficit with the province was $500 million. In the first five months of this year the trade value between the two was $150 million.

“Thailand’s trade deficit was because we imported fresh fruit, flowers, and agricultural products from Yunnan,” she said.

Natchathorn said Thai investors eyeing China needed to find local partners and do their homework before investing.

Pinnat Charoenphol, director and chief representative of the Tourism Authority of Thailand’s Kunming office, which also covers Guizhou and Guangxi, said Thailand also benefited greatly from tourists coming to the country from Yunnan, with 12 per cent of the total 7.8 million Chinese tourists who visited Thailand in 2015 coming from Yunnan and Guizhou, and Guangxi provinces.

“Kunming city has several direct flights to Thailand, especially to tourist destinations such as Bangkok, Chiang Mai, Chiang Rai, Koh Samui, Krabi, Phuket. The number of tourists from Yunnan to Thailand is rising,” Pinnat said.

The challenge for Thai investors is to establish a foothold in the tourism industry in Kunming, Pinnat added. The TAT aims to boost Chinese tourism arrivals in the Kingdom to 10 million this year, with 14 per cent coming from Yunnan, Guizhou, and Guangxi.

Chinese tourists’ purchasing power in Thailand has increased from Bt30,000 per trip in the previous two years to an average of Bt45,000 this year. She said most Chinese tourists who visited Thailand were quality tourists who bought branded products.

In a speech to the University of Thai Chamber of Commerce’s executive programme, Supachai foresaw more crises stemming from shale gas explorers’ debt in light of persistently low oil prices, financial hardships of oil companies in Russia, geopolitical conflicts in Europe, and conflicts in the South China Sea.

Trade would become the mechanism for countries involved to vent their spleen at each other. A myriad of non-tariff barriers would be invented.

He saw the Trans-Pacific Partnership as a good example as “there is no real free trade deal in this world”.

Even in the Asean Economic Community barriers exist to block the true movement of labour. Under the scheme allowing free movement in eight professions, no single Asean citizen has reaped benefits from it, he said.

“Global trade would no longer be influenced by economic policies but political policies, and the benefits will depend on whose side you are on,” said Supachai, who was former director-general of the World Trade Organisation and former Unctad secretary-general.

A scenario was imminent where no particular country would have absolute control over the global economy. It all started with the “financialisation”, which boosted the financial sector to the disadvantage of the real sector and led to the 2008 financial crisis.

“The world lacks an economic steering. We can’t rely on the conventional, useless leaders. What the world needs is common governance to address structural problems [that underline global conflicts]. These could be tackled by freer trade and equality,” he said.

Supachai said global problems are born mainly from ethnic conflicts, economic volatility and inequality. While ethnic conflicts heighten, major economies still maintain relaxed monetary policies and try to defend their economic powers. Inequality – whether within a country or among countries – will widen.

The West itself is faltering, growing their economies mainly through the services sector while maintaining huge subsidies on agricultural products and tax incentives for the manufacturing sector. Without the subsidies, the agricultural sector would flop. Without the tax incentives, manufacturers would have left for Asia, he said.

He said the 2008 financial crisis, Brexit, the Orlando shooting and migrant crisis all stemmed from inequality.

He noted that these structural problems need to be addressed or it would spur more imbalances in the world – including a stronger sense of protectionism in some countries and more migration of people to more promising countries; and economic nationalism – the opposite of liberalisation. And these were not a good answer.

Supachai said countries in the West still denied this fact, and were trying to block migration.

“Japan suffered from two lost decades. The EU is facing a lost decade and this will drag on. Migration will remain a global crisis. If we can’t fix inequality, we can’t fix the global economic woes,” he noted.

All chaos was interconnected and Asia, including Thailand, could not be spared, he warned.

In his comment after Britain voted to leave the European Union, Frederic Neumann, co-head of HSBC’s Asian Economic Research, said: “The fragility of the West, economically as well as politically, is a reminder that Asia can’t count on an export rebound any time soon to lift ailing growth. Reforms are urgently needed to put local demand growth on a more sustainable path.”