Opening a seminar on “Thailand’s Investment Year – What’s New?”, held by the Board of Investment (BoI) with over 2,000 investors attending yesterday, Prayut said: “The government will continue with matters of investment and investment promotion for the rest of its term and the next government will certainly continue [the policy]. We hope that investors will take part in strengthening Thailand’s economy, which will benefit other countries in the region, with stability and sustainability.”

He said the country’s development was still reliant on investments from within the country and from other countries that have advanced technologies and innovation. The targeted industries have been chosen with a clear focus on promoting investments to upgrade industries with manufacturing bases in Thailand and also attracting investments in new industries.

“The government has also focused on laying the country’s foundations, while building up favourable factors for investment, improving potential industries, upgrading productivity and industrial plants’ efficiency, developing smart farmers, promoting alternative energy and renewable energy, and developing transportation infrastructure and special economic zones including the EEC,” the premier said.

In a special address to the same gathering on “The Year of Investment: Turning Challenges into Opportunities”, Deputy Prime Minister Somkid Jatusripitak said although all countries in the world have been confronting challenges and high uncertainties due to the slowing global economy and shrinking global trade and exports, Thailand’s internal factors remained strong as a result of economic stimulus, economic reforms and the new wave of domestic investment.

In 2018, the Thai economy grew 4.1 per cent with headline inflation at 1 per cent. Thailand’s current account enjoyed a surplus of over 7 per cent of the nation’s gross domestic product (GDP) while public debt was below 45 per cent of GDP.

He said winners of the bids for major infrastructure projects in the EEC are expected to be unveiled in April-May. The bid winner for the high-speed railway project that will connect the country’s three main airports – Don Mueang, Suvarnabhumi and U-tapao – is expected to be announced this month.

The third phase of the Map Ta Phut Port project is in the negotiation process with select private enterprises, while bids for the maintenance, repair and overhaul centre project and U-tapao airport project are expected to start this month with the winners announced in April.

Other infrastructure projects outside the EEC extend from four routes of heavy rail projects, six more routes of double-track railway projects, to light rail projects in Chiang Mai, Khon Kaen, Nakhon Ratchasima and Phuket provinces.

“It has never happened in the country’s history – such serious investment in both the nature and the size of investment as well as speed to drive [investment],” Somkid said.

“The election is a good thing as it will ensure certainty. I’m confident that after this election, we will have Prayut return to power and everyone will take part in building the country’s future,” he said.

BoI secretary-general Duangjai Asawachintachit said that the BoI’s two special measures in the investment year were boosting competitiveness and narrowing the gap, with the aim to increase investment in targeted industries and smart cities, and promote the grass-roots economy.

Under the grass-roots promotional measure, business operators must clearly follow the cooperative plan to support local organisations with a minimum investment of no less than Bt1 million in each project.

Also among measures to promote investment in Thailand are creating a knowledge base such as improvement of plant varieties or animal breeds, research and development of creative product design and development, electronic design, engineering design and software.

“Asean has done very little beyond lowering tariffs between countries,” argued Deunden Nikomborirak, research director in economic governance at the Thailand Development Research Institute (TDRI).

Deunden was speaking during a seminar discussion at the “Chevening Annual Talk 2019: Promoting a Strong Economic Partnership Towards a Resilient and Peaceful Asean Community,” held on February 28.

“To integrate into one single economic entity, Asean countries have to put the interest of the region before their own country,” she told the forum.

She expressed doubts about the realisation of such a vision, given the seeming unwillingness between Asean countries to liberalise their markets.

“We see that each Asean country is still protecting their own interests. For example, the Asean region is not working together to attract foreign investment but instead, competing amongst one another to offer benefits for foreign investors,” she said, citing each country’s board of investments competing to offer more generous tax exemptions to foreign investors.

Thailand’s Board of Investment (BoI) last November offered a package in which investors would get a tax exemption for up to eight years if they invested in the development of smart cities under the Thailand 4.0 initiative, such as spending on infrastructure, providing a “smart environment” or developing smart technology.

“At the end of the day, it is the foreign investors that gain the benefits from investing in the Asean region, and not the Asean countries themselves,” Deunden said.

Other aspects of Asean trade which remain highly restricted are the trade in services and the flow of human capital, said Deunden, adding that there is a seeming lack of genuineness between Asean countries to tackle this issue.

“Thailand has negotiated 10 service sector liberalisation ‘packages’ with the Asean countries, and one of the service liberalisation sectors that Thailand committed to was the transportation of goods and services by man or animal,” she said. “Thailand only liberalised trade by means that are no longer used in the modern day.”

But Thailand is not alone. Deunden said other Asean countries are also choosing not to take market liberalisation in the regions as seriously as they could.

When it comes to the movement of human capital, the Asean region is again far from being integrated, Deunden contended.

“Thailand has a lot of mutual recognition agreement (MRA) laws with Asean countries to allow skilled labour – such as architects, engineers or doctors – to work in the different Asean nations. However, this does not guarantee that individuals in these professions can move freely in the Asean region,” she said. This is because the MRA is subject to the laws and regulations of each Asean country, and Thailand has made it a requirement that these individuals write exams in the Thai language.

This is just one example of how human capital flow remain highly restricted throughout the region due to the reluctance of Asean countries to open up their labour markets, she said.

Furthermore, even in the trade of goods, the Asean region faces various challenges

In 2018, 22.69 per cent of Thailand’s total trade went to Asean, valued at some Bt3.67 trillion, according to figures from the Ministry of Commerce.

Despite being Thailand’s largest trading partner, the Asean region’s share of Thailand’s total trade remains small when compared to the share of trade between countries in other trading blocs such as the European Union.

“In reality, intra-Asean trade is much smaller than 22 per cent. This is because the figures include a lot of business-to-business trade. If we look only at the trade in consumer goods, the share of Asean trade to Thailand’s total trade would be much smaller,” argued Santitarn Sathirathai, group chief economist at Sea Limited (Singapore).

“So it seems like there is a lot of economic integration in the Asean region, but a lot of that is merely supply-chain trade, such as auto-parts and electronic parts being shipped across Asean borders between foreign firms that are established in the region,” he said. Santitarn said non-tariff barriers and customs regulations have kept intra-Asean trade in consumer goods small.

“Thailand should make the lowering of non-tariff barriers in the Asean region a key economic priority as this year’s Asean chair,” concurred Prinn Panitchpakdi, managing director of CLSA Securities (Thailand) Limited.

Added Deunden: “The TDRI’s research found that the reason why intra-Asean trade remains so low is because the Asean Free Trade Agreement (Afta), is the only agreement that requires foreign products to have a rule of origin before they are imported into a country. In other free-trade agreements, goods are first imported before having their content origins verified.”

She explained that this creates a major disincentive for exporters and causes delays in goods that are moving across Asean borders, thus hindering intra-Asean trade.

Business leaders have ambitious plans to grow their revenue in the near and long term: 84 per cent reported they plan to grow an average of 36 per cent by 2020, and increasing to 47 per cent by 2030. They have similarly aggressive plans to grow headcount over the same time period: 80 per cent of organisations intend to increase headcount by an average of 37 per cent by 2020 to 48 per cent by 2030.

However, leaders in Thai organisations surveyed are more cautious about the availability of highly skilled talent than leaders in other nations: only 30 per cent of the top executives think there will be sufficient talent, or even a surplus, at 2030, as opposed to 48 per cent of leaders worldwide.

Still, they see technology as more important than talent in the future of work: 82 per cent believe technology will overtake people as their greatest value creator over the same time period, and 70 per cent ranked technology among their highest priorities when developing and executing their company’s strategy.

But the majority of leaders in Thailand do not see the future as a simple battle of man versus machine: 88 per cent also said their companies will need more highly skilled workers as a proportion of the future workforce, with the same number agreeing that technology itself will create the need for more highly skilled jobs.

To deliver their strategies, 86 per cent of leaders in Thailand have a formal forecast for their skilled talent needs – but only 9 per cent have plans that extend through to 2030. Although they are anticipating which roles will have the largest impact in the future of work, 82 per cent say they find it easier to create action plans around technology and other tangible assets, citing pressure from shareholders for quick returns and the short leadership tenures as contributing factors.

“The explosion in technology has vastly hastened the pace of business development. Flexible forecasting and business modelling are now more relevant than the traditional models, such as five-year plans,” said Michael Distefano, Korn Ferry president for Asia Pacific.

“While scenario planning is critical to business growth, this rarely extends to a ‘people plan’. As skilled workers become the lever of growth in the new economy, organisations must shift this mindset to become more agile and adopt a long-term approach when devising their talent strategy.”

“Despite India’s concerns about its trade deficits with Asean countries and China, it would be missing out on a key economic opportunity to establish a presence in the fast-growing Asean region if it did not join the RCEP,” said Piyanat Soikham, lecturer in politics and international relations at Ubon Ratchathani University, during an exclusive interview with The Nation.

If negotiations succeeded, RCEP would be the largest multilateral trade pact in history – encompassing China, India, Japan, South Korea, Australia, New Zealand and the 10 Asean nations.

In 2018, Thailand posted a Bt85.571 billion trade surplus with India, with Bt243.477 billion in exports compared with a mere Bt158 billion of imports, according to the Thai Commerce Ministry.

“The Asean region, and the CLMVT (Cambodia, Laos, Myanmar, Vietnam and Thailand) subregion, in particular, is the geopolitical centre of Asia,” explained Piyanat, noting that the region connects East Asia with South Asia, a link between the two economic powers of China and India.

He commented that India’s trade strategy complements that of the Asean region, both championing multilateralism over unilateralism in trade negotiation processes.

“Furthermore, the RCEP represents the notion of ‘Asean Centrality’, and with India’s ‘Act East’ policy, it is important that India does not lose out on this opportunity to further integrate with the Asean region to reap the economic benefits of multilateral trade,” he said.

As Asean chair, Thailand has prioritised the completion of RCEP negotiations this year in its regional economic agenda.

But Piyanat has expressed concerns about Thailand’s own internal issues in regards to achieving this goal.

“Thailand’s upcoming election will have an impact on the Kingdom’s foreign affair ambitions, including the RCEP talks,” he said.  “The polls may hinder efforts of the  Commerce Ministry towards conclusion of the RCEP negotiations this year.”

However, Piyanat said the talks may indirectly hasten progress of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), which has been in existence since 1997.

BIMSTEC is a multinational organisation comprising Thailand, Myanmar, India, Sri Lanka, Nepal, Bhutan and Bangladesh.

“The conversation surrounding India-Asean relations through the RCEP talks may reinvigorate initiatives to increase regional cooperation in the BIMSTEC, which goes beyond trade,” Piyanat claimed.

Cooperation between BIMSTEC countries may strengthen in the areas of cross-border environment and disaster management, counterterrorism and transnational crime, as well as fisheries, he said.

Trilateral highway, a flagship project between India and the Asean region, is expected to  be completed this year connecting Moreh in India with Mae Sot in Thailand through Myanmar, Piyanat said.

“The trilateral highway, a realisation of India’s ‘Act East’ policy, represents a physical connection between India and Thailand, which lies in the centre of the Asean region,” he said, adding that up to 90 per cent of the construction process has been completed.

With the final negotiation of the trilateral highway being border regulations, the construction of the trilateral highway suggested that India is ready to open up her market to foreign goods and deepen its economic integration with the Asean region.

This gives the RCEP negotiations a positive prospect going forward, Piyanat said.

(caption) “RCEP represents the notion of ‘Asean Centrality’, and with India’s ‘Act East’ policy, it is important that India does not lose out on this opportunity to further integrate with the Asean region to reap the economic benefits of multilateral trade,” said Piyanat Soikham, lecturer in politics and international relations at Ubon Ratchathani University.

Political parties face formidable challenges if they intend to pursue their generous welfare pledges in earnest. If they are elected to govern, they’ll have to deal with a shortfall in tax revenues, inevitable coalition horse-trading and the inherent difficulties of trimming the defence budget.

The Future Forward Party has pledged to spend Bt650 billion annually on comprehensive social welfare, tacking Bt300 billion more on top of the current outlay. The party is promising monthly cash grants for children, youth and the elderly.

The proposal echoes a scheme once suggested by independent economist Somchai Jitsuchon, who also suggested boosting cradle-to-grave social welfare expenditures by Bt300 billion.

The Democrat Party has pledged universal grants of Bt1,000 per month for children up to age eight. Its plan for free education through vocational level is equally ambitious, since so many parents currently have to borrow from the Student Loan Fund to afford tuition fees, burdening them and often resulting in loans going unpaid.

The Pheu Thai Party has promised subsidies for rice farmers of Bt5,000 per tonne per family, up to a maximum output of 15 tonnes. It also vows to boost the minimum wage to help low-income earners. The party has done won all of the most recent elections, thanks in large part to its populist policies.

The Phalang Pracharat Party has pledged to cut the personal income tax rate by 10 per cent and increase wages.

The Action Coalition for Thailand Party is proffering cash transfers for underprivileged families, 12 months’ compensation for the unemployed and free vocational education.

Shortfalls in government revenues, however, are likely to render most if not all of these promises impractical.

Thai governments have run fiscal deficits ever since the 1997 Asian financial crisis, pushing public debt to 42 per cent of gross domestic product currently. That figure is expected to rise to 48.5 per cent in 2023 due to accelerated investment in major infrastructure.

That severely limits any additional spending on social welfare.

Future Forward has proposed higher land and building taxes as one solution to overcome budget constraints, arguing that the rates set out in legislation passed recently by the National Legislative Assembly were low.

Chatu Mongol Sonakul, leader of the Action Coalition, advocates merging the Revenue, Customs and Excise departments for more efficient collection of taxes.

Pairoj Vongvipanond, former dean of economics at Chulalongkorn University, agreed that land and building taxes could be higher, but the idea could prove unpopular among partners in any coalition government.

Chatu Mongol did not endorse a tax hike on land and property, because he said some people do not generate income from their real estate.

Somchai has long urged governments to increase the value-added tax from the current 7 per cent to 8 or 10 per cent to generate more funds for welfare schemes. No major political party has as yet dared support the notion, though, fearing damage to their popularity.

Constitutional requirements are likely to result in rival parties attempting to form a governing coalition, necessitating compromises over their stated policies.

Ambitious welfare proposals by some parties could thus fail to be implemented.

“They may have different proposals, but they’ll have to compromise if they join a coalition government,” said Chatu Mongol, who is also a former finance permanent secretary.

Fiscal prudence ought to also curb government spending, which is a good outcome, said Chatu Mongol.

Current permanent secretary for finance Prasong Poontaneathas said  the government set the budget deficit for the fiscal 2019 at Bt450 billion and said the next government could have an additional deficit of Bt260 billion under fiscal-discipline law which allows a maximum deficit of Bt710 billion.

Pisit Puanpan, a senior economist at the Fiscal Policy Office specialising in macroeconomic policy, said the State Fiscal and Financial Disciplines Act 2061 (2018) set the debt ceiling at 60 per cent of GDP and restricts the budget deficit to 20 per cent of annual expenditures. It also limits fiscal obligation to 30 per cent of annual expenditures to prevent excessive off-budget spending.

Future Forward and other parties have promised to prioritise spending, for example by reallocating defence funding to social welfare.

But they are expected to face strong opposition from the Army. When parties including Pheu Thai recently proposed a 10-per-cent trim in defence spending, it drew strong protests from the military top brass. The military maintains significant political clout, so the elected government could find it hard to channel defence funding to other causes.

“How well the parties can advance their agendas depends on how strong a mandate they get from the voters,” Pairoj said.

The event will also feature a business matching activity for four sectors, which expects to result in immediate trade worth over Bt30 million, and a talk offering tips on how to enter the Cambodian market.

According to Adul Chotinisakorn, DFT director general, the Thailand-Cambodia Border Economic Partnership will be held on March 25 and 26, with the aim of boosting bilateral ties at the local level and expanding trade at the borders. This event follows from the Growth Strategy of Border Provinces’ Economic Cooperation, which was signed by the Thai and Cambodian commerce ministers last year.

This year, high-ranking officials from Cambodia’s Commerce Ministry as well as representatives from the government and private sectors from border provinces in both countries are expected to join the meeting. Their task is to identify the best approach in stimulating and promoting border trade and investment as well as cooperation on different aspects.

Adul listed several activities at the event, including a business-matching session between 80 Thai and Cambodian entrepreneurs from four sectors: food and beverages (including food supplements), consumer goods (including health and beauty products), agricultural machinery, and automotive (including motorcycle and automotive parts). He expects this activity to result in immediate trade deals worth Bt30 million, highlighting food and beverages and consumer goods sectors as having the greatest potential.

In addition, there will be a seminar on “How to Conduct Business to Win Cambodians’ Hearts”, in which a Cambodian marketing expert will share tips on conducting business in Cambodia and will give advice on entering the Cambodian market.

On the sidelines, the DFT will lead a group of Cambodian delegates to visit Eiamburapa Co, Ltd to check out its cassava-processing technology.

“This is the first time that high-ranking officials from the Cambodian Commerce Ministry will visit Thailand and participate in an event. The DFT is confident the event will further strengthen the longstanding Thai-Cambodian relations and our partnership with Cambodia as an important border trade partner in particular,” Adul said.

Border trade between the two countries has enjoyed robust growth over the past few years. Last year, Thai-Cambodian border trade was worth Bt145.79 billion, marking an increase of 16 pr cent. The DFT believes the Thailand-Cambodia Border Economic Partnership event will not only boost the economies of the two countries, but will also increase the value of border trade.

At the event, held at the Hornbill Garden on Rama VI Road, Jaresak Khamsawat, Hornbill Brand Manager, and Professor Emeritus Dr Pilai Poonsawat took to the stage to accept the prototype image created by “Kru Pe Sinam” (Unnop Srisajja) for “Hornbill Sweetheart T-shirts” which were for sale at the event.

All proceeds went to support the Hornbill Research Foundation.

Also attending the event were Assoc Prof Dr Vijak Chimchom, Secretary-General of the Foundation, Niramol Medhisuwakul, Chayapol Sornsilp and Pimjai Duangnetr.

Addressing the opening ceremony, Hong Kong’s Chief Executive Carrie Lam said the establishment of the Bangkok office is a clear and compelling statement of the importance of Asean to Hong Kong.

The Bangkok office is the third ETO established by the Hong Kong Special Administrative Region in the Asean region after Jakarta and Singapore.

Lam said she expected the office to play the role of facilitator to connect businesses and organisations between Hong Kong and Thailand, and serve as a catalyst to take the cooperation of both sides to new heights and fresh directions.

Somkid Jatusripitak, Thailand’s deputy prime minister in charge of the country’s economy affairs, said Thailand aims to use Hong Kong as a gateway to China’s Guangdong-Hong Kong-Macao Greater Bay Area.

He said Thailand expected more investment from the Greater Bay Area.

Lam also met Thai Prime Minister Prayut Chan-o-cha on Thursday and Foreign Minister Don Pramudwinai.