The ADB blames constrained competition in the services sector for a failure of the Thai economy to reach its potential.

“Thailand is lagging behind its peers,” Shang-Jin Wei, chief economist at the Manila-based ADB, said in Bangkok, referring to the market liberalisation and competitiveness of the Kingdom’s services sector.

According to the ADB diagnostic report “Thailand: Industrialisation and Economic Catch-Up”, the importance of the services sector increases as a country moves through the middle-income stage of development.

In high-income economies in Asia and the Pacific, services account for about 70 per cent of gross domestic product. In Thailand, services last year accounted for 52 per cent of GDP.

The report says that as an economy grows and income per capita rises, the services sector caters to a growing middle class with increased purchasing power for hospitality, entertainment, tourism, health, education and personal services.

“Thailand needs to deregulate the financial sector as well as the public utilities sector,” said Cyn-Young Park, assistant chief economist at the ADB.

Public utilities such as electricity, gas, water and others are constrained by over-regulation and low competition, according to the bank.

The ADB looked into services in trade, hotels and restaurants, transport and storage, real estate and dwellings, communication, finance, business services, public administration, community, personal and other services.

There is high competition in some services in Thailand but overall, services have lost ground to industry, and productivity has been stagnant, says the report.

Shares of services in value-added of GDP fell from 50.9 per cent in 1990 to 43 per cent in 2010.

Thailand’s service sub-sectors now make up a smaller share of value-added than in most comparative countries, the exception being hotels and restaurants. Thailand is falling behind, particularly in the critical area of communication, finance, and business services, where valued-add shares have fallen 3.6 percentage points since 1990, says the report.

Business services – critical for productivity and innovation across the economy – play a small role in Thailand, accounting for about 6 per cent of total employment, the lowest among 17 Asian countries.

Thailand lags in productivity

While service-sector productivity is generally rising in Asia, Thailand is quite different. Between 2000 and 2010, annual labour-productivity growth in Thailand was 0.08 per cent, whereas in Malaysia it was 2.1 per cent and in India a hefty 7 per cent. For 12 Asian countries, the average was 3 per cent, according to the ADB.

The legal limit on foreign equity in the services sector in Thailand is 49 per cent of total shareholding, compared with 51 per cent in Malaysia.

According to the same ADB report, Thailand has successfully transformed itself into an upper-middle economy but its competitiveness and productivity have stagnated in recent years and it needs to embrace deeper structural reforms with supportive policies to become a high-income country.

“Thailand is now the second-largest economy in the Association of Southeast Asian Nations, and it is a major player in regional production networks for key manufacturing industries such as automobiles and electronics, as well as a regional hub for transport and logistics,” Wei said in the report.

“Thailand can benefit from moving to higher-productivity activities and by creating more high-quality jobs through measures like more intensive research and development, greater investment in higher education, and a more level playing field for business.”

Although Thailand is now well integrated into regional and global production networks, much of its industrial technology is imported rather than home-grown and its R&D spending is only 0.25 per cent of GDP.

Thailand’s policymakers have many options to boost productivity and propel the economy up the global value chain, the study says. These include stepping up support for R&D with help from the private sector, promoting the country as a high-tech centre for global firms, and improving the enforcement of intellectual-property rights.

Thailand trails many high-income neighbours in education outcomes, particularly in mathematics and science. To address the skill gaps, education spending should be raised above a minimum of 5 per cent of GDP, with greater focus on the quality of education in secondary and higher education and effective technical and vocational training, the ADB says.

Regulatory constraints, including restrictions on foreign investment in the services sector, inhibit competition. At the same time, a number of public services, including key utilities such as power, natural gas, and water supply, are led by state-owned enterprises.

Foreign ownership

Raising foreign-ownership thresholds in services to the target set for the new Asean Economic Community and promoting competition in the public service sectors could significantly lift the country’s economic competitiveness with better chances of creating more quality jobs.

More infrastructure investment, especially in transport and logistics, is another pressing need for the country to leverage its growing role as a regional hub, the ADB study says. Thailand’s spending on infrastructure as a share of GDP has been falling since the Asian financial crisis, with significant under-investment in rail transport and telecommunication.

In the dynamic regional economic setting, increased investments in transport in partnership with the private sector can help link Thailand more closely to its neighbours, allowing easy and low-cost movement of goods and people.

Small and medium-sized enterprises, which make up 99 per cent of companies and account for more than a third of GDP, struggle to be productive and innovative because of a lack of access to credit, talent and technology. Assistance is needed for competitive SMEs to attract the capital and know-how they need to grow, provide quality jobs, and become more innovative. Among the steps that can be taken are expanding coverage of the public credit bureau, improving financing support services for high-potential SMEs outside the Central region, and providing help for medium to larger enterprises to carry out technology upgrades.

Yuthasak Supasorn, governor of TAT, said the agency would increase tourism revenue and promote travel options by combining Thailand’s top destinations with neighbouring countries.

As such, he said TAT would take its premier travel trade show, “Thailand Travel Mart” in June, to the northern city of Chiang Mai and open the event to Asean members in support of the AseanEconomic Community.

Up until this year, the country’s trade event has been held in Bangkok.

“We will emphasise connectivity with Myanmar, Cambodia, Laos and Vietnam,” he said.

Overland trips will be promoted under the tagline “Crossing 2 Checkpoints, Travelling in 2 Countries” by initially combining historical attractions in Thailand and Cambodia. The initiative has identified attraction such as the Phanom Rung Historical Park in Buri Ram, the Village of Elephants and the Ban Tha Sawang Silk-weaving Village in Surin. Other identified attractions include Angkor Wat, Banteay Srei/Bayon and Ta Prohm in Cambodia, and Wat Pa Maha Chedi Kaew and Pha Mo E Dang in Thailand’s Si Sa Ket province.

Yuthasak said cross-boarder tour programmes had been designed in a way that allowed visitors to use new cross-border highways and international border checkpoints.

Addressing the media attending the Asean Tourism Forum yesterday, Yuthasak said TAT would strengthen niche tourism this year, particularly the weddings and honeymoon market in Asia, and promote green tourism to a global audience.

“This year we will focus less on visitor arrivals and more on achieving quality-tourism targets,” he explained.

TAT’s marking strategy for international markets will position the Kingdom as a quality leisure destination by promoting “Thainess”, he added.

He defined quality tourism as being measured by visitor expenditure, average length of stay and the overall delivery of a valuable visitor experience.

Yuthasak said Thailand had much potential and variety in terms of upscale products and services to accommodate high-end tourists in all dimensions, including the stylish boutiques and beachfront pool villas in Phuket and Koh Samui.

He said that offered an unrivalled holiday experience, while many fine-dining restaurants had been honoured with global awards such as those by Gaggan and Nahm.

Bangkok is also blessed with numerous high-class department stores like Central Embassy and EmQuartier with countless brand-name flagship stores, he said.

For luxury travel, there are well-equipped yachts in Phuket and Pattaya that accommodate those in need of something classy for island-hopping.

Thailand welcomes an average of about 100,000 cruise passengers per year, but is projecting more arrivals after the completion of an upgraded cruise-ship port in Phuket this year.

New cruise ports are planned for Krabi, Koh Samui, and Surat Thani in southern Thailand.

A super-yacht show in Phuket will be launched next month, while foreign investors will be invited to build more super-yacht marinas.

Compared with 2015, when the country earned Bt2.23 trillion in tourism (Bt1.44 trillion in international tourism and Bt790 billion in domestic tourism), this year TAT is forecasting tourism revenue of Bt2.41 trillion, with Bt1.56 trillion from international tourism and Bt850 billion from the domestic market.

In a bid to lure more high-spending visitors, Kobkarn Wattanavrangkul, minister of tourism and sports, said: “TAT is rebranding the tourism logo to maintain awareness of the country and strengthen the country. Thailand and Asean are united and are going to drive forward together for quality.”

Despite wanting to boost the number high-spending tourists entering the country this year, Kobkarn has not yet agreed with an idea to waive the valued-added tax for tourists.

She said waiving the VAT needed further study and the decision must be reached carefully.

The committee, chaired by Energy Minister Anantaporn Kanjanarat, agreed to let NGV’s pump |prices within 50 kilometres of Bangkok reflect NGV’s true cost.

The price will be reviewed on the 16th of every month.

For the next six months from today to July 15, it will seek PTT’s cooperation to keep the retail price of NGV for passenger vehicles at Bt13.50 per kilogram and to lower it when the cost comes down.

The NGV price for public passenger vehicles stays at Bt10 per kilogram.

On the LPG policy, the committee approved a schedule for opening up the market to allow more importers of LPG than PTT, which is the sole importer at present. It will monitor the results before liberalising the market fully in 12 months to give LPG traders – including petroleum refineries and importers – time to prepare.

According to the schedule, PTT has to allow its LPG infrastructure, including its jetties and storage depots, to be used by other importers. Cancelling the transport subsidy for regional depots has also been proposed.

The committee resolved to increase the Oil Fund’s levy on petrol, E-10 gasohol and high-speed diesel by Bt0.60 a litre in a bid to reduce the marketing margin of oil companies to an appropriate level and to pave the way for an increase in the excise tax on refined oil products in the future.

The adjustment will give the Bt42.2-billion Oil Fund an additional Bt1.15 billion stream of income per month.

“Although the global economy and some trading partners such as China are slowing down, opportunities await for us [officials and exporters] to promote more trade.

“The country needs to deepen its marketing strategy to focus on particular markets and the demands of each group of consumers,” he said.

After meeting with 61 representatives of Thai Trade Offices overseas, Somkid said that despite many negative factors, Thailand should not lower its export working target, which is set at 5-per-cent expansion to US$225 billion (Bt8.1 billion).

He instructed trade officials to penetrate markets with high purchasing power, mainly mainland China, Hong Kong, India and Japan, plus Cambodia, Laos, Myanmar and Vietnam.

Although China’s economy has been expanding more slowly, this market still has strong purchasing power as people there have strong demand for many goods and services from Thailand.

To penetrate this market, Thailand needs to increase human resources to work on the export campaign and reach the target group of customers. For instance, Thailand now has only six officials in China.

More officials, or local staff, are needed to work on the market-penetration strategy to drive trade in each market, Somkid said.

Reducing the number of officers or cutting the export-promotion budget is useless, as exports are still the country’s key economic engine. Thailand needs to inject more money into driving export growth, he said.

Thailand should also draw up a long-term export agenda to ensure sustainable growth in trade and promote not only trade, but also service businesses and outward investment.

Export promotion is not only the Commerce Ministry’s responsibility, but also other ministries and the private sector, he said. The Information and Communications Technology Ministry needs to work closely with the Commerce Ministry in facilitating more trade in the cyber world.

The ICT Ministry will set up an e-commerce trading centre in three months for marketing Thai goods online.

According to the ICT Ministry, e-commerce trade in Thailand was worth Bt2.1 trillion last year.

The establishment of Thai grocery stores abroad should be encouraged to increase the sales of agricultural products, One Tambon One Product wares and One SME merchandise, as the shops can be centres for distributing Thai goods to local consumers in each market, Somkid said.

Many Thai goods, especially foods, can be promoted more in many countries, mainly India, Japan and countries in Asean.

Commerce Minister Apiradi Tantraporn said the ministry would next week ask for an additional budget allocation of Bt700 million from the Cabinet for setting up a distribution centre for agricultural products under a three-year plan.

The project aims to reduce the role of middlemen and directly link farmers to consumers.

Initially, the government will be a facilitator in supporting soft loans, developing investment projects and providing information. It will allow a company to operate the distribution centre.

The provinces eyed for locating the distribution centre, warehouses and cold-storage facilities are engaged in border crop trading, such as Udon Ratchathani, Ratchaburi, Nakhon Sri Thammarat, Chiang Rai and Chantaburi.

Pansy Ho, managing director of Shun Tak Holdings, urged women not be afraid of their own power: “Instead of controlling and constraining our abilities, we need to learn how to utilise them to achieve not just for ourselves but also for our wider communities.”

Chadatip Chutrakul, chief executive officer of Siam Piwat Co, said: “Thai women are lucky, because we don’t have the gender issue.

“I believe whatever we do, it’s up to us to prove ourselves.”

Miriam Yeung, a celebrated actress and singer, said she put her success down to “a mix of commitment, persistence and courage”.

“I believe nothing is impossible. I will never give up my career. There will always be a way,” she said.

Christine Loh, undersecretary for the environment of the Hong Kong government, told the gathering that no one had to do anything, “but remember, whatever you choose to do, you have to do it very well”. “It’s important to be adaptive. Sometimes you just need to go with the flow, and that could be great learning opportunity.”

Dianna Lee, group CEO at Country Heights Holdings, Malaysia, devoted her words to the importance of hard work, adding that it was now important that all women work to change workplace perceptions, by making sure everything they do is result-driven.

“As long as you can deliver, you are a good worker,” she said.

Jing Ulrich, vice chairwoman for Asia-Pacific at JPMorgan Chase & Co, underlined that for younger women, the key was “having faith in yourself and finding what you love to do”.

“For me, success is about passion, perseverance and confidence.”

Benedicte Nolens, head of risk and strategy at the Hong Kong Securities and Futures Commission, said: “Women are equal to men, until they need to have babies.”

She added that she believed females needed to find a solid work-life balance to achieve success.

“I turned to other women in the finance community. Together we have a supportive network and it allowed me to get over a challenging career period while combining work with raising two young children.”

Rebecca Brosnan, head of product development at Hong Kong Exchanges and Clearing Ltd, told the audience that 30 per cent of married Hong Kong women left the workforce to have children, look after ageing parents or take care of other family obligations.

“If woman are cut off midway [through their careers], it’s really difficult to get back.”

She said the Hong Kong bourse ran what it calls its Back to Work Programme for women, which is now in its third year, and “I would encourage all talented females to go back to work”.