Supavud Saicheua, managing director of Phatra Securities, said the house’s 2016 growth forecast of 3.2 per cent was based on the junta’s strategy, which calls for the drafting process to be completed next quarter and draft laws later this year.

“The constitution confirms the transfer of power [to the people], leading to the election next year. If this process does not meet the road map, a significant downside risk is foreseeable,” he said at the Thai Institute of Directors’ briefing on the economic outlook.

This could exacerbate the economy’s poor performance, which is slated for the worst quarter of the year, taking into account the possibility of severe drought, the tourism industry’s low season, US interest-rate increases and possible devaluation of the Chinese yuan.

“Political risks carry the greatest weight. In this situation, private investment could be in a waiting mode,” he said.

Thailand is also warned of volatile commodity prices as well as risks in several emerging markets, chiefly China, as these will be the factors dictating global financial markets this year.

A lot depends on China’s future action on the dollar/yuan exchange rate as well as the economic situation.

Oil prices last week ended below the psychological threshold of US$30 per barrel. Reuters cited Oslo-based consultancy Rystad Energy as expecting global oil and gas investments this year to fall to their lowest in six years to $522 billion, following a 22-per-cent fall to $595 billion last year.

“Looking at the oil-price track record over the past 150 years, $30 is not unusual. Yet markets are concerned that a further fall in China’s demand could export deflation to |the world,” Supavud said.

At the event, former finance minister Chalongphob Sussangkarn expressed concern about Thailand’s economic fundamentals, which remain the weakest among Asean nations.

He cast doubt that the resurrection of the export sector, which has contracted in the past three years, would lift the economy, given the surge in import contents in manufacturing from 18 per cent per export unit in 1980 to 50 per cent.

Infrastructure projects also depend on high import content – more than 50 per cent in infrastructure mega-projects.

“This means the efficiency in driving the economy will remain low,” he said.

Exchange rates

Better management of exchange rates is crucial, as exports are likely to remain at the low end this year, Chalongphob said. Though the baht became weaker than 36 per dollar last year, its intrinsic value actually appreciated against trading partners’ currencies based on the nominal effective exchange rate.

With annual exports of more than $220 billion, actual depreciation by Bt1 per dollar could inject more than Bt220 billion into the economy.

While urging the government to refocus efforts on Thailand’s advantages – food and agriculture, as well as tourism – Chalongphob called for the leveraging of mega-project investment to deepen the country’s industrial structure.

“If we are to invest hugely on rail, without industrial support, import contents will remain high [leaving little benefit to the economy]. This requires a clear policy, which remains missing now,” he said.

Thailand also needs new niche products. For example, after the eco-car scheme, the government needs to discuss with automakers whether Thailand can become a manufacturing base for electric cars, Chalongphob said.

According to a survey of attendees at the Asian Financial Forum (AFF) in Hong Kong yesterday, financial experts from around the world have also expressed concerns about a Chinese economic slowdown, increased geopolitical tensions and an oil-price collapse.

On the other hand, they are still optimistic about the prospects of strong economic growth in the Asia-Pacific region over the next five years, supported by favourable factors such as China’s “Belt and Road Initiative” involving a development fund worth an estimated US$40 billion (Bt.145 trillion) as well as the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) agreements.

Dr Zeti Akhtar Aziz, governor of Bank Negara, Malaysia’s central bank, told the conference that capital outflows from the region and financial-market volatility after the US interest-rate increase were expected to be temporary, but Asian economies should take this opportunity to renew their structural-reform efforts, especially in education and labour, to achieve more innovation and productivity.

This would help Asian economies cope better with future external shocks, she said, adding that the global trend of low economic growth was likely to prevail for some time, so reforms and flexibility were crucial.

She also said the consequences of a global collapse of oil and commodity prices would linger for some years, but she expressed confidence that China’s economic-growth trajectory for the medium term remained sound.

Kiatchai Sophastienphong, Thailand’s vice minister for finance, told the AFF that the country now offered a long list of opportunities for international investors after the stabilisation of domestic politics, with a general election due in the next year and a half.

He said 2016 would be an important year for public and private investment projects as the government had offered many incentives to drive the country’s economic growth to 3-3.5 per cent.

Easing business operation

Thailand has also taken actions to make doing business in the country easier, while a total of 10 future industries including smart and green automobiles, electronics, healthcare and tourism are being promoted.

Kiatchai also said Thailand’s railway and highway linkages with neighbouring countries in the AseanEconomic Community (AEC) and southern China would offer new opportunities, as would the 600-million population of the AEC single market.

He also expressed Thailand’s support for the China-led Asian Infrastructure Investment Bank (AIIB), which started operations on Saturday.

The AIIB is expected to approve the first batch of loans for infrastructure projects in Asia within six months.

Leung Chun-ying, chief executive of Hong Kong, said the Asia-Pacific region had witnessed uncertainties after the US interest-rate rise and China’s stock-market rout at the start of 2016, but Asia still had strong potential to shape a new paradigm for global growth.

He cited China’s Belt and Road Initiative, the setting-up of a Silk Road development fund worth $40 billion and the AIIB as mechanisms to drive growth in coming years.

According to Leung, Hong Kong is being positioned to play a crucial role in connecting China with the rest of the world, especially in the wake of internationalisation of the Chinese yuan and its new status as a currency of the International Monetary Fund’s Special Drawing Rights facility.

Despite a slowdown of the Chinese economy, the world’s second-largest after the US, Pierre Gramegna, Luxembourg’s finance minister, said China’s growth rate of 6 per cent was still double the world’s average and more than double the United States’ forecast growth rates of 2.7-2.9 per cent for this year, making Asia the world’s fastest-growing region.

Arkady Dvorkovich, Russian deputy prime minister, told the conference that he believed in the strong economic potential of Asia and the Pacific.

Chinese Vice Foreign Minister Liu Zhenmin said the Belt and Road Initiative had been well received by 70 countries in Asia and Europe and would provide a win-win scenario for all parties concerned.

Liu said China and Russia had signed a Silk Road economic-zone agreement, while European countries and China had set up a joint fund to get involved in infrastructure development projects.

Aye Min, deputy director for thermal power planning, told the “Myanmar Electric Power Convention” last Thursday that most hydropower projects were located in the northern part of the country.

These projects are both time- and money-consuming, and also require investment in the grid to transmit power to the southern part of Myanmar, he said.

“Electricity demand will continue to rise annually, so we need more thermal power plants to meet the increasing demand. [Moreover], thermal power output does not rely on seasonal and site conditions,” he added.

Under the master plan, by 2030 coal will generate 7,940 megawatts or 33 per cent of installed capacity of 23,594MW, from 2 per cent at present from two coal-fired power plants – one with 120MW in Shan State and the other with 8MW in Tanintharyi Region.

Hydropower currently generates 69 per cent of installed capacity, with another 29 per cent accounted for by natural gas. By the end of the plan period, the ratio of hydropower will have fallen to 38 per cent (8,896MW), gas to 20 per cent (4,725MW), and renewable energy will account for 9 per cent (2,000MW).

“For the time being, our production largely depends on hydropower and gas. But we also need to find other sources such as coal and renewable energy to ensure 24-hour full electricity to the whole country, as targeted,” Aye Min said.

“Coal-fired power plants are a quick-win for our power production. We do not have another option. We do not have many options to get reliable power,” he added. Only 33 per cent of the population has access to electricity. Among the 10.88 million households in Myanmar, more than 7.34 million are yet to be electrified.

The government plans 100-per-cent electrification by 2030.

Installed capacity rose from 3,413MW in the 2010-11 fiscal year to 5,029MW as of last month.

Private-sector participation plays a crucial role in the master plan, the deputy director said.

Firms from different countries have been approved to build nine new gas turbines and waste-heat recovery boiler power plants in Yangon, Mandalay, Tanintharyi and Ayeyarwaddy regions.

Additionally, private companies – both local and foreign – will build 11 coal-fired plants in states and regions such as Shan, Mon, Yangon, Sagaing, Ayeyarwaddy and Tanintharyi.

Upon completion, Yangon Region will become home to major coal-fired plants.

Master plan

Than Naing Lin, deputy director for power development planning, said the master plan took into consideration demand forecasts and primary energy and power resources.

Some of the new projects under the plan will be financed by the Japanese government, the Asian Development Bank and South Korea’s EXIM Bank.

Building 230-kilovolt main stations and substations, in the Dawei and Thilawa special economic zone areas respectively, is part of the plan.

The Japan Investment Cooperation Agency, which has played a part in drafting the master plan, forecasts that Myanmar’s electricity demand could hit 14,542MW in 2030.

Tint Lwin Oo, deputy director for Myanmar’s hydro and renewable planning, added that foreign investors could do business in the energy sector by means of either joint ventures or as BOT (build, operate and transfer) schemes.

Theoretically, Myanmar has the potential to generate 108 gigawatts of hydropower from four major rivers – the Ayeyarwaddy, Thanlwin, Chindwin and Sittaung – he said.

He added that the ministry had signed a memorandum of understanding, with different firms, to implement three solar-power projects with a total installed capacity of 550MW, three wind-power projects with a combined installed capacity of 2,380MW, and a 200MW geothermal project.

The government, however, is maintaining its target of exports achieving 5-per-cent growth, as it expects the challenging goal to encourage closer collaboration among the private and state sectors to see that it has every chance of being met. After discussing the matter with private enterprises, Deputy Commerce Minister Suvit Maesincee said on Friday that exporters had agreed that export growth of 3 per cent was achievable this year.

The figure is higher than the private sector’s previous target of 2.2 per cent, and has been agreed on the basis that the government seriously help unlock export problems and take measures to drive shipments of farm crops. As a priority measure to help drive shipments, exporters called for the government to accelerate the release of rice from its stockpiles and export rice under government-to-government contracts as much as possible.

It also called for the government to facilitate added value for farm products from crops such as rubber, rice and tapioca, and for processed foods.

With the slowdown of economic growth in China, exporters have also asked for the government to support shipments to ‘new’ markets with good potential, with Cambodia, Laos, Myanmar and Vietnam being highlighted this year. Moreover, the government should support Thai companies in making their own products and creating their own brands, which would help increase the value of the Kingdom’s exports.

Under the long-term plan, Suvit said the country needed to restructure its export-sector structure, with a shift from relying mainly on multinational corporations to the involvement of more local companies in exporting. According to a study by the Commerce Ministry and the private sector, 43 per cent of export value is currently contributed by multinationals, 27 per cent by joint-venture companies, and only 30 per cent by Thai firms.

Of the purely Thai companies that are engaged in exports, about 90 per cent are original-equipment manufacturers or only make goods to order for exporting, while just 10 per cent have their own brand products. The deputy minister said Thailand needed to see a shift of export emphasis to local businesses, as multinational companies had their agendas set by their parent firms and, if they decided to move their manufacturing bases, the country’s shipments would be severely hit.

He said the government would therefore help support local enterprises to produce their own products and create brands for export, in order to ensure the country’s sustainable trading growth.

Services also in focus

Moreover, the government will support the export of services, which currently account for 25 per cent of gross domestic product.

Products and services in focus for driving future export growth are foods, gems and jewellery, fashion and lifestyle products, arts and crafts, education, logistics, hospitality services, and medical and healthcare services.

Meanwhile, Suvit said Deputy Prime Minister Somkid Jatusripitak would delay the private-sector mission he had planned to lead to Iran this month.

Somkid and Deputy PM Prawit Wongsuwan will instead lead official delegations and about 50 Thai companies to Iran in the near future with a view to tightening cooperation in the political, security and economic fields. Thailand will also strengthen cooperation in trade, investment and tourism with Iran, which should see United Nations sanctions unlocked by the end of this month.

Speaking at a forum entitled “Stability, Prosperity, and Sustainability: Community-Based Tourism as a Global Trend” held by Tourism Authority of Thailand (TAT), CBT experts said Thailand must offer tourists more experiences while they are staying in the Kingdom as well as push more domestic tourism by offering chances to learn about the people and culture in the provinces, instead of only visiting major cities.

“Thai tourism is already big, as the Kingdom has been offering many attractions. More foreign tourists are still coming, but it is challenged to develop CBT,” said Peter Richards, the tourism expert at Thailand’s Community Based Tourism Institute (CBT-I) located in Chiang Mai.

The Thai government last week announced plans to boost domestic tourism by asking every sub-district to promote their attractions.

TAT began emphasising Thainess as a new product in the global markets through its national campaign.

According to CBT-I, community-based tourism has been popular since 1980 in Western countries and later spread to many other countries including Kenya, Mongolia, Indonesia and Laos.

“CBT travellers are active senior persons, couples with no kids, and individual tourists. This will be the new trend for the next decade,” Richards added.

To initiate and promote a new product in each community, he suggested that key stakeholders like local people, government, and perhaps non-government organisations work together in a systematic way to build business and prepare activities for tourists.

They need to create marketing efforts to sell products and design communication to draw in customers living outside.

For example, visitors could explore a nature trail with an expert woodsman, cast a net with traditional fishers, or learn a local art, sport or recipe. Sometimes, community works in partnership with a tour operator to develop a more ambitious programme, like a community lodge or a multi-day trekking programme.

In addition to being a great cultural experience, CBT is designed to support social and environmental work, build local skills and distribute benefits.

CBT-I currently is providing training to local people in Myanmar in order to help open new CBT attractions.

Robert Basiuk, who lives in Sarawak, Malaysia, as a tourism and environmental management specialist said CBT had become a part of the service industry.

He said tourist behaviour had changed. They no longer just sit or sleep in a coach, but seek experiences rather than more than photo opportunities.

“With CBT, everybody will be employed. It can bring huge opportunities for women to work at home instead of going to work in city,”

Local communities often need support to work with government officers, responsible tour operators and hoteliers, and other partners to develop CBT services, prices, booking systems and other elements of a successful tour.

But, he was concerned about how to ensure that benefits would reach the community and how to encourage players to commit long-term. “It is not easy to work at the community level to develop tourism,” he said.

According to CBT-I, each community may aim CBT in different ways. Some common benefits of the CBT in Thailand have included improved knowledge and skills, including planning, management, hospitality skills, communication, negotiation, teamwork and hygienic villages.

Supant, co-head of one of the government’s 12 subcommittees in charge of reviving the economy, said in an interview with The Nation that strong SMEs and start-ups were crucial to sustainable economic growth.

Responsible for the SME sector, his subcommittee, whose members include private-sector chief executives and top government officials, is preparing an action plan for consideration by the executive committee headed Dr Somkid Jatusripitak, deputy prime minister for economic affairs.

Supant, who is also chairman of IT-equipment company Synnex (Thailand), said there were about 2.7 million SMEs and start-ups in this country providing more than 10 million jobs nationwide, but only 500,000-600,000 were registered with the Commerce Ministry. In total, these businesses are estimated to account for nearly 40 per cent of gross domestic products.

At the end of 2014, Thailand’s GDP totalled US$374 billion.

“If we want the economy to grow with stability, we need to balance it by boosting the SME share of GDP to 50 per cent in the future,” he said, adding that this was his subcommittee’s long-term target.

To achieve this goal, the sub-panel has set up three working groups, which focus respectively on established enterprises, start-ups, and a new category, social enterprises.

The start-up group is headed by the president of the University of the Thai Chamber of Commerce, Saowanee Thairungroj, while the CEO of Flynow Group, Preecha Songwattana, is head of the established-SME group.

Wiwan Tharahirunchote is head of the social-enterprise group.

The three working groups will identify business models and strategies to guide SMEs, start-ups and social enterprises into a healthy long-term future.

Basically, the experts will focus on four areas for improvement. These are marketing strategy, efficiency on how to cut costs and increase revenue, financial support for expansion, and innovation to boost business value.

“We will find a suitable business model for them to drive growth and submit our recommendations to the government via Deputy Prime Minister Somkid Jatusripitak,” Supant said.

The SME subcommittee’s findings will be integrated with those of the other 11 sub-panels. It is hoped that this will lead to a new set of measures to revive the economy.

The government targets GDP to grow by 3-3.5 per cent this year, up from 2.8 per cent in 2015.

It is estimated that the larger companies in the SME category number around 27,000, providing 3 million jobs. Of the 2.7 million SMEs and start-ups of all sizes, 600,000 are registered as various types of juristic people and the rest as individuals.

It is believed that when the country’s SMEs and start-ups are strong, they provide a cushion to the economy, especially during critical times.

Supant said most SMEs in Thailand were in the agriculture and agro-industrial sectors, which currently face an oversupply and price slumps, so they need help from the government to restructure their businesses.

“We have to integrate our findings and recommendations and work with other subcommittees to upgrade SMEs. For example, in agriculture, they need more irrigation and water-management system as well as innovative farming, marketing and other know-how,” he said.

In addition, there will be a mechanism for SMEs, start-ups and social enterprises to get help from big companies.

Supant said the government and the private sector were working hard to boost economic expansion, but bureaucrats are still reluctant because some policies require the reallocation of state budgets.

“We believe that big companies are ready to support SMEs, but we also need state budgets to finance these measures, which may affect the bureaucracy’s status quo,” he said.

“Our economic strategy is to support collaboration between the private sector and the public sector to boost the quality of life of lower-income people in the country under the ‘Pracha Rath’ programme,” he said.

The PM added that the capital market had 640 listed firms with combined revenue of up to Bt12 trillion, equivalent to 91 per cent of gross domestic product, and paid corporate income tax worth more than Bt200 billion – 37 per cent of total tax income – a year, according to what SET chairman Chaiwat Wibulsawasdi had reported.

“We hope listed firms will help the government to support the country’s SMEs and start-up businesses, and also support low-income people to have a better quality of life for the long term,” he said.

To support corporates in the conduct of their business and ensuring they have the ability to support SMEs, start-ups and low-income members of the public, the government will revise those rules that are obstacles to doing business, he pledged.

“We want to create an environment that supports the private sector to expand their investment within the country, both corporates and small and medium-sized firms alike, because they are the key to driving economic growth for the long term,”Prayut said.

Meanwhile, Somchai Satjapong, permanent secretary of the Finance Ministry, said the capital market now had a five-year plan to make it one of the leading markets in the region, challenging both domestic and foreign investors to expand their investment.

Ctrip, an online travel service, released its tourism outlook for Spring Festival on Thursday. The report said more than 60 per cent of Chinese tourists would spend the holiday overseas. The most distant destination is the Antarctic.

Spring Festival is one of the peak seasons for the Chinese outbound tourism industry. Despite being a traditional season for family reunions, many have chosen to spend the holiday travelling.

According to the China National Tourism Admin-istration, Chinese tourists paid more than 120 million visits overseas last year, with 5.18 million of those paid to foreign countries and regions during Spring Festival, an increase of 10 per cent year on year. The reasons behind the rise are loosened visa requirements for Chinese, better flight connections and preferential policies to facilitate overseas consumption.

“Those overseas destinations that have simplified the visa-application process for Chinese have seen more bookings, including the United States, Singapore, Thailand, Japan and Vietnam,” said Yan Xin, a publicity officer at Ctrip.

“In the seven days of the holiday, Chinese tourists will visit more than 100 countries and regions, with the farthest [away] being the Antarctic.”

According to Ctrip, eight of the 10 most popular overseas destinations are in Asia, including Thailand, Japan and South Korea.

Zhang Ying, 28, from Wuxi, Jiangsu province, said she would visit Thailand with her family during Spring Festival because of the holiday spirit in the Kingdom.

“Some of the Asian countries share a similar Spring Festival culture with China, and that’s what I don’t want to miss during my holiday,” Zhang said.

“It is exciting to experience a different Spring Festival in another Asian country.”

Deputy Foreign Affairs Minister Alounkeo Kittikhoun remarked on the success of the projects at a meeting in Vientiane on Thursday to review the implementation of the Japan-Asean Integration Fund.

The JAIF was established on March 27, 2006, with Japan pledging to contribute 7.5 billion yen to support Asean countries, for the realisation of the Asean Community and efforts for internal integration.

“Since the establishment of the JAIF in 2006, the fund has contributed significantly to Asean, supporting more than 30 projects that have been carried out successfully in Laos, including the programme to support Laos’ Asean chairmanship in 2016,” Alounkeo said.

Alounkeo, who is also Asean Senior Officials Meeting head for Laos, thanked the JAIF as well as the government and people of Japan for the support and assistance. He said he hoped that more assistance would be provided to Asean as well as to Laos in the future to continue to contribute to building of the Asean Community.

The JAIF is expected to strengthen Asean-Japan relations by implementing various projects such as the stockpile of half a million courses of Tamiflu in the area of avian influenza, and projects in the areas of counter-terrorism, economic integration, youth exchanges, and others.

As a tailor-made outreach activity to increase awareness and partnership among senior government officials, the private sector and other relevant stakeholders on the achievements of JAIF-supported projects, the First JAIF Caravan was held last September in Nay Pyi Taw, Myanmar.

The Second JAIF Caravan, which continued yesterday in Vientiane, aims to explore and create working relationships between relevant ministries and JAIF public-sector partners via a demonstration of the success and effectiveness of JAIF-supported projects.

The meeting also aimed to disseminate knowledge of JAIF application, implementation and completion procedures and methodology among proponents and implementing agencies, to derive maximum possible benefits from JAIF-supported projects and aid the integration efforts of the AseanCommunity.

Speaking at the meeting, Japan’s ambassador to Asean, Koichi Aiboshi, commemorating the cordial friendship between the two nations, reaffirmed his country’s continued support for the Aseanchairmanship of Laos, focusing on eight priority areas such as narrowing the development gap, trade facilitation, enhancing connectivity and strengthening small and medium-sized enterprises.

He said Japan looked forward to receiving applications for the JAIF in these areas in order to help materialise the Laotian chairmanship’s priorities.

The event was co-organised by the Laotian Foreign Affairs Ministry and the JAIF Management Team of the Asean Secretariat.

Governor of Pakxong district Khamsy Piengvolavong told Vientiane Times Thursday that Tangchaleun Group Co Ltd signed a land concessional agreement with local authorities last week and it will take at least two months to carry out an economic study before they commence official work on construction of the market. “Actually, we already have an existing market but the company is interested in developing it with more facilities to become an attractive market in the district,” he said. According to the company’s plan, they will develop the existing market into townhouses and underneath will be a market where vendors are selling a variety of products, Khamsy said.

The company agreed with local authorities for a 70 years concessional period on a total of 4 hectares and construction of this newly-signed project will be completed within two years.

Khamsy said that the government will not only earn income from a land concession but it will also earn income from tax collection as well as from domestic and foreign tourists who are visiting the district. “Developing tourist sites is one of the strategic plans of the local authorities of Pakxong district because visitors are increasing every year,” he said.

Currently the number of visitors is recorded at more than 300,000 people and it is expected to increase at 10 per cent.