This editorial appeared on bloomberg last week commenting on Thailand’s economy. here’s a few snippets and my comments.
Her government has subsidized rice prices, provided handouts to car buyers and favored megaprojects that will enrich the politically connected more than the masses. All this comes at the expense of long-term competitiveness and prosperity: Thailand should instead be investing in its future, especially education, if it wants to break out of the “middle-income trap” that befalls many developing nations.
Comment: Yes, the rice scheme has been poorly managed; the car buying scheme [conspiracy theory here] I believe was promised by the government to ensure that the large Japanese manufacturers would continue to use Thailand as a base for the region; the megaprojects, yes only enriches the politically connected in the short term however I think over time its a necessity for the country. If you remember in the early 90’s when I believe Samak was touting the highway projects, everyone lambasted them as crooks and taking advantange of the country, now could you today imagine Bangkok or Thailand without the road infrastructure that it has? Just like the highway projects then, the megaprojects now are a necessity for the country to continue growing, is there corruption? Absolutely! And if I had my way, yes we’d capture every corrupt politician and throw them in jail, yet alas this is the current system in Thailand and until it gets too out of hand it will remain to be so, however back to the point, I still genuinely believe that the infrastructure plans set forth by this government will ensure that Thailand is and remains to be an incredibly important logistics hub for the entire region.
“There is little sign that inadequate investment in human capital and the need for reform of the education system is recognized by the current government,” says economist Peter Warr at the Australian National University in Canberra. He’s done extensive research on Thailand’s economic growing pains.
Comment: Absolutely agree, education here is rubbish, there’s obvious talent within this country as Thai students do win regional and global competitions in Engineering and Mathematics, however on average its obvious that the education system here is still very poor.
This is a precarious moment for Thailand to be stuck at a per capita GDP of about $5,000. Global growth is tepid, China is slowing, and Indonesia, Philippines and Vietnam are winning jobs that Thailand (THGDPYOY) once took for granted.
Comment: Is Thailand losing businesses to other countries? Well its a yes/no answer here, without a doubt cheaper labour intensive manufacturing will leave Thailand but we’ve seen multiple manufacturing firms here now focusing on improving/investing in machinery to allow their businesses to run more efficiently and the Board of Investment numbers still continue to improve year on year.
Building a more entrepreneurial workforce requires big investments and political will, both of which are in short supply.
Comment: I disagree with this notion, I think this country has a massive entrepreneurial system, if you look at the non-government companies in the SET100 you can see business owners that have grown without the need for government outhands, if you walk around the streets of Thailand/Bangkok you’ll find locally owned businesses bustling. And of course with average salaries still so low in this country its no surprise that people are constantly looking for ways to start their own business, I can almost guarantee that at the very least 10% of every office/government employee in Bangkok has a side business at home whether it be a convenience shop or basic trading of goods.
Italtic text Source: Bloomberg