The focus will be on 10 business clusters, Deputy Prime Minister Somkid Jatusripitak said yesterday as the steering committees reported their progress to Prime Minister Prayut Chan-o-cha.

The 10 clusters are robots for industry, medical hubs, logistics and aero-industry, biochemical industry, digital industry, alternative auto industry, innovative electronic industry, high value and health tourism, innovative agriculture and bio-technology, and food processing, he said.

“They will drive Thailand out of the middle-income trap to become a high-income country in 20 years under the country’s strategic-economy master plan,” he said.

To achieve the country’s goals, the public and private sectors have to collaborate on the Pracha Rath project, he said.

Legal reform is one of the ways to help the country achieve its targets, Kan Trakulhool, said co-chairman of the Pracha Rath steering committee on legal reform.

He said the legal reform group planned to propose the revision of 5,000 bills that affect business investment and long-term national development. This will be complete by August next year.

Meanwhile, the country needs to boost the investment in research and development to 1 per cent of gross domestic product by next year from 0.47 per cent in 2012, said Kan, who is also co-chairman of the Pracha Rath steering committee on innovation and productivity.

“We will join together to encourage big corporates, especially listed companies in SET50 and SET100 [indices], to include their investment in R&D in their annual reports. Investment in R&D will help increase the demand for researchers, of whom there are 70,000 now in Thailand.”

That number should increase significantly, he said.

Prasert Bunsumpun, head of the Pracha Rath steering committee on pushing new “S-curve” industries – new industries aimed at revitalising growth in the Thai economy – said his panel would focus on the petrochemical super-cluster and the bio-economy to serve the “new agriculture”.

The first phase will push for the development of the Eastern Seaboard as the petrochemical super-cluster by setting up an investment budget worth Bt380 billion from this year through 2020 funded by the private sector. This would need government support in the form of tax incentives and infrastructure.

The bio-economy will provide innovative means to process agricultural projects such as sugar cane and cassava into value-added products such as biodiesel. This will require an investment of up to Bt400 billion by the private sector over 10 years. The government’s role will be to establish a database on suitable agricultural locations.

Chartsiri Sophonpanich, head of the Pracha Rath steering committee on developing the country’s infrastructure, said the group was proposing a “science city” with the goal of being a hub for R&D to strengthen the bio-economy.

Chartsiri said the committee also believed that the Pracha Rath residential project should be extended into a second phase to help 2.7 million people own homes.

Other committees are working on education, export and investment, tourism, small and medium-sized enterprises and start-ups, and the rural economy.

“I will consider all of the proposals and also cooperate with all of the ministries to support the 12 Pracha Rath groups to drive the country to achieve the goals,” Prayut said.

Thailand will ask for more Thai goods to come under the United States’ Generalised System of Preferences (GSP).

Commerce Minister Apiradi Tantraporn said yesterday that she would lead a delegation to Washington, DC, from tomorrow to Friday.

Thailand will encourage the US to expand GSP for Thai goods since US brands would like to use Thailand as a manufacturing base for travel products and re-export them to the United States.

The US brands include Coach, Tumi, Michael Kors and Under Armour.

They support GSP for additional Thai goods, as that would lower the duties on their own products shipped to the US.

Thailand will also ask the US to expand tax privileges for coconut juice, as demand has surged after the product became known as a high-nutrition beverage.

During the visit, Apiradi will also meet with US Trade Representative Michael Froman, representatives from the American Chamber of Commerce and leading American buyers for possibly strengthening trade and investment.

Thailand will ask for in-depth information about the TPP, and raise its concerns about participating in the agreement.

This meeting should help Thailand consider whether to become a member.

Other issues are making the |US aware of Thailand’s progress |in raising awareness of intellectual-property rights and suppressing infringements, and the government’s action plans for trying to solve |its illegal-fishing and labour |problems.

The government hopes that the US will approve of its efforts and upgrade Thailand’s position on the Watch List when it revises rankings for trading-partner countries in the annual Special 301 Report.

Another area for future cooperation is alternative energy. The US would like to use Thailand as the hub for Asean investment.

The Commerce Ministry hopes the mission to Washington will help tighten trade and investment cooperation between the two countries since Thailand and the US suspended closer ties under the TIFA for 13 years.

With closer cooperation and the continuing economic recovery of the US, Thai exports to that key market should grow by 3 per cent this year, Apiradi said.

According to the Commerce Ministry, the US is Thailand’s third-largest trading partner, with two-way trade reaching US$37.92 billion (Bt1.329 trillion) last year, of which Thai exports to the US amounted to $24.05 billion, while imports were $13.86 billion.

Given the large proportion of railways in the Bt1.8-trillion mega-project investment plan, at 63 per cent, more trains will be operational within six years.

“It is time that Thailand has a railway regulatory body, to be in charge of licensing and monitoring service quality,” he said.

But private companies should be allowed to take part in services.

“This would actively change the environment,” he said.

Sumeth noted that as things stand, the operators of the railway -the State Railway of Thailand(SRT), BTS and MRT – also exercised licensing power. While other public-transport drivers need licences particular to their functions, train drivers do not need to seek licences from any agency. Without a central body, service quality checks are neglected. His comments follow hiccups in |train services over the past few months.

On March 21, Airport Rail Link stopped for hours, forcing passengers in some carriages to get out and walk to the nearest station. On his Facebook page, Assistant Professor Pramual Suteecharuwat said the Airport Rail Link was in crisis and safety was not guaranteed.

In February, BTS suffered a switching glitch. No punitive actions were launched against the operator of Bangkok’s Skytrain.

But Sumeth said there could be more such incidents when more train lines are in operation.

“Roads and railroads serve different uses. With roads, the government can just have them built and users can freely use them. But railroads need proper operation, and this requires proper oversight,” the academic said.

According to a government transport body chaired by Deputy Prime Minister Somkid Jatusripitak, at least 10 mass-transit projects planned for Bangkok will be put to tender between this year and 2019. About five are part of the Bt1.8-trillion mega-project programme, which includes high-speed rail.

Delayed investment

Sumeth also commented on the government’s plan to invest in the first part of the high-speed-rail project, which will cover 250 of the total 873 kilometres of the plan. The route is eventually to connect with China via Laos, but for now the terminus will be Nakhon Ratchasima.

“It’s very certain that the construction will be delayed until next year,” he said.

He said it would take at least five months to complete design evaluation and screening of project bidders.

Transport Minister Arkhom Termpittayapaisith has said the construction may start four to five months after the previous schedule of May.

Another concern is that it remains unclear who would call for bids – SRT or the Transport Ministry.

The Democrat Party late last month submitted a petition to the government, urging the establishment of a joint venture to carry out the project, not the SRT.

It also cited the high development cost now that the route has been shortened. Returns on investment for the project would depend mainly on the expected increase in rail passengers from China.

It also urged the government to speed up development of other routes to enhance the country’s logistics competitiveness, as the Bangkok-Nong Khai route is mainly to serve passengers, not cargo.

Dasta took along hotel and tourism operators from the island to meet with their counterparts in Europe at both tourism fairs.

Some companies have already sent tourists to the island while some are working on such plans.

“This year, we will continue pushing Koh Mak and maybe more low-carbon destinations. There’s a huge niche market in Europe,” he said.

Last year, Koh Mak received fewer than 1.5 million tourists, 90 per cent of them domestic travellers. Only 10 per cent came from overseas, especially Europe.

“Dasta found that only 10 per cent of tourists visiting Thailand are concerned about the low-carbon issue, so there’s a greater opportunity to increase such niche markets,” he said.

Dasta has been developing other destinations as low-carbon destinations such as Sukhothai Historical Park, villages in Nan and Loei, and a fishing village near Pattaya.

Dasta will ask the government for approval to draw up plans for new low-carbon destinations – Hua Hin/Cha-am on the Gulf of Thailand coast and Chiang Saen in the North.

Its project in Chiang Mai, Baan Rai Gong King Village, was recognised by the Pacific |Asia Travel Association for a |small community that has turned around from an unhealthy community to a health and wellness destination.

The community was selected for gastronomic tourism research commissioned by the Thailand Research Fund, aimed at designing a living interpretation through food.

The launch marks South Korea’s latest step towards all but eliminating paper cash, something it wants to do by the end of the decade. The culture of “pali-pali!”, which means “faster!”, is widespread in the country, where people are quick to embrace new technologies.

South Korea may be leading the way, but it is not alone in its efforts to do away with paper cash. The rise of new and more convenient payment methods in the last few years is driving countries across Asia to seriously consider going cashless.

“Ten years from now, most developed societies will be heavily cashless. Consumer usage models (show) that consumers are now pulling for a cashless society,” said Zennon Kapron, founder of Kapronasia — an Asia-focused consultancy that gives strategic advice to financial technology firms.

“When you look at e-payments across Asia, certainly Asia is ahead in digital payments. Many countries are shifting beyond the Internet. By and large, people shift to mobile payments quite quickly.”

Kapron said South Korea’s shift away from cash is being led by consumers. “When you have such an efficient credit-card infrastructure, there’s less incentive to use cash.”

TPay is unique in that it links Bluetooth low energy (BLE)-enabled mobile payments to carrier billing. BLE consumes considerably less power while maintaining the short-range data transfer capability of the original Bluetooth system. It allows users to make purchases without touching their phones.

The app, which was launched by SK Telecom in partnership with Korea Smart Card Corp, provides the service that makes it possible to make payments of as much as 500,000 won ($435) per month without a mobile wallet or even a customer’s financial details.

The average South Korean carries less cash around every year. Last year, the average amount was 74,000 won, down 3,000 won from 2014. This has caused a steady drop in the number of automated teller machines (ATMs) across the country.

A business report published by five major banks in the country stated that the number of ATMs dropped in 2015 by 1,378, or 4.4 per cent, compared to 2014. And the speed of elimination is rising. In 2014, banks closed 899 ATMs. With cash being used less and less, the Bank of Korea announced this year plans to go cashless by 2020.

Adoption of a cashless system is likely to be skewed, with more developed economies — with more affluent shoppers and more sophisticated businesses — likely to forge ahead as these can more easily absorb the costs of maintaining the necessary infrastructure to eliminate cash.

“Developed societies will take the lead because there are fees associated with cashless transactions,” said Ben Simpfendorfer, an economist, author and founder of consultancy Silk Road Associates.

The cost of maintaining paper cash is high but it is fully covered by governments and central banks that produce the cash, print it and distribute it, not to mention store excess reserves.

McKinsey & Company, a global management consultancy, said cashless societies are cheaper to run, with cost cuts equivalent to between 0.1 and 1.1 per cent of GDP. Rather, it is the private sector that takes the burden of developing and maintaining the infrastructure necessary to eliminate paper.

“I’m thinking about Hong Kong taxi drivers, who refuse to use mobile payments because they are more expensive,” said Simpfendorfer.

The Chinese mainland is less likely than South Korea to go cashless any time soon, but the intent is there too. Cheaper mobile phones and the growth of third-party payment systems like Alipay make this a real possibility.

“Although the People’s Bank of China is talking about digital currencies and potentially going cashless, they’re a little bit lacking in infrastructure for now. The drive in China comes from third parties, instead of governments,” said Kapron of Kapronasia.

China will have to address a number of infrastructural hurdles before it can truly think about eliminating cash altogether. The country has the largest share in the world of people using their mobile phones to make payments, both online and for physical purchases.

In mid-2015, China had 359 million online payment users, up almost 18 per cent in six months, according to the State-backed China Internet Network Information Center. Mobile transactions were valued at about 9.3 trillion yuan ($1.4 trillion) last year, up 57 per cent year-on-year, according to one industry estimate.

The dominant mobile and online payment providers are e-commerce giant Alibaba, with nearly three-fourths of the market, followed by Tencent, the operator of the popular messaging app WeChat, with some 17 per cent of the market, according to Beijing-based BigData Research.

This move away from paper cash is particularly visible in larger cities. Cheap items like fresh vegetables, milk and movie tickets can all be bought online, which creates fewer incentives for tech-savvy younger people to use cash.

There are dangers, however. And one that worries some people is an erosion of privacy. A solution to this concern could lie in technology, said Roger Ver, a Bitcoin investor who believes cryptocurrencies (such as Bitcoin, which use cryptography to secure the transactions) could help economies go cashless without invasive government controls.

Ver said there are two ways for a society to go cashless. One, where every single transaction is tracked, controlled and monitored by the government. Another, which he prefers, is where everybody has the ability to be as private as they want to be in their financial transactions. “I think Bitcoin is more likely to bring this about,” said Ver.

“I would much rather live in a world where I have access to an anonymous quantity of cash instead of a world where every single transaction done by every single human being is controlled by other human beings. I think that’s kind of a scary world,” he said.

The shift to a cashless society is likely to take a while. In smaller and less-developed cities, cash is still king. The same is true of many of Asia’s least-developed countries, where technological leaps can be uneven and clearly delineated between urban and rural areas.

In less advanced markets such as India, cash on delivery is still the common practice among a high percentage of online shoppers. Interestingly, India also has the highest share of online shoppers willing to use digital currencies.

Indian shoppers are rapidly jumping on to the mobile wallet bandwagon. A mobile wallet is the digital equivalent of the physical wallet. It stores digitized value for authorization, which grants permission for access to goods, services or places. The number of mobile wallet users in India has already surpassed the number of credit card users.

The Reserve Bank of India (RBI) said that there were 22 million credit cards issued by 55 banks as of November 2015 but 100 million mobile wallet users.

By 2020, the mobile wallet market in India is projected to be worth $6.6 billion.

The RBI has already started working toward making India a cashless economy and to bring in accountability and transparency for each financial transaction.

Among the major players in this space are Paytm, Mobikwik, Freecharge, PayU, Oxigen and Citrus Pay. Mobikwik alone has a user base of more than 25 million.

Overall, emerging markets in Asia Pacific are ahead of developed markets when it comes to the adoption of innovative payment methods, according to research by yStats.com. Making payments with the wave of a credit card over a reader or a digital wallet such as PayPal is common.

In Singapore, 45 per cent of shoppers use contactless payments that bypass paper cash. In Taiwan, the figure is 41 per cent and in Hong Kong, 32 per cent — all of which are above the 26 per cent average globally.

In Indonesia, about two-thirds of shoppers rely on direct bank transfers to avoid using paper cash. The central bank in the Philippines plans to issue its own digital currency. India and Israel have considered the same idea.

Asia is leapfrogging the West in the push to eliminate cash.

In 2014, Visa and MasterCard processed $3.5 trillion worth of credit card transactions in the United States alone but, despite the enormous transaction volume, payments made directly from smartphones (without the use of a physical credit card) represent less than 0.5 per cent of the market.

Accenture reported that while 52 per cent of North Americans are “extremely aware” of mobile payments, only 18 per cent use these on a regular basis. Europe too lags behind Asia.

“Europeans were the first ones to get into mobiles, so it kind of makes sense that Europe should be ahead of it, but there’s been a real struggle. One of the challenges is the fact that it has 20-something countries with different banks, and each has its own standards. Things in the West have moved much slower as a result,” said Kapron.

China, which has almost twice as many people but a single regulator, can progress much faster.

For regulators, there are a number of benefits to eliminating paper cash. At the top of the list is transparency in financial transactions, which can help minimize crime.

McKinsey said that countries where the ratio of cash payments falls below 50 per cent tend to have a more transparent financial environment, with the size of the shadow economy falling to below 12 per cent of GDP.

They will also be confronted with an ambitious proposal from Europe’s top five economies in reaction to the Panama Papers scandal that has exposed the extent of banking secrecy worldwide.

Germany, Britain, France, Spain and Italy released a proposal Thursday calling for an international registry of the beneficial owners of anonymous shell companies to help fight tax evasion and money laundering.

The move was a reaction to the leak of millions of documents on anonymously owned shell companies from Mossack Fonseca, a Panamanian law firm that specialized in setting up such firms.

The trove showed the use of shell companies by prominent politicians including close associates of Russian President Vladimir Putin, family members of Chinese leaders, British Premier David Cameron, and the leaders of Iceland and Argentina.

“The current events show that identifying the ultimate beneficial owner behind corporate structures is key to fighting tax evasion, money laundering and illicit finance effectively,” German Finance Minister Wolfgang Schaeuble said in a news conference.

That could put the countries of the elite group at odds amongst themselves: some, including the United States, allow company owners to hide their identities in anonymous companies and trusts.

The concern about tax havens stirred a reaction from Panama, which has been singled out in the wake of the Panama Papers as non-cooperative.

“Panama’s path to financial transparency is irreversible,” Isabel De Saint Malo, Panama’s vice president and foreign minister, said in a statement.

“To that end, we willingly and actively support diplomatic dialogue and domestic reform to address this global challenge,” she said.

Warnings over slow growth

The G20 though will also have to answer to the broad worries voiced by the World Bank and IMF that world growth could slow to “stall speed” if nothing is done.

Earlier this week the IMF cut its world growth forecast for the third time in six months, to 3.2 percent, and said there were significant risks of a further slowdown.

The two powerful institutions said demand for financial support from struggling governments has risen to levels normally seen during crises.

“In the global economy, there are not many bright spots,” said World Bank President Jim Yong Kim. “The weakening global economy threatens our progress toward ending extreme poverty by 2030.”

The emerging economies of the G24 group said that things have not improved for them.

“We continue to face weaker global demand, tighter financial conditions, more volatile capital flows, and heightened security challenges. These headwinds could further weaken our growth outlook and contribution to global growth,” the group said.

Brexit and marriage

IMF Managing Director Christine Lagarde warned that the specter of Brexit — Britain’s exit from the European Union — was already hurting economic activity in the runup to the June 23 referendum there on whether to stay or go.

She said the regional and world economy will be better off if Britain remains in the EU.

“It’s been a long marriage between members of the European Union,” she said. “It’s really my personal hope that it doesn’t break.

“Because keeping Europe together after what it has gone through over the last century, and what the risks are on the horizon…. is actually a huge asset which is vastly underrated in my view.”

– AFP