Govt must be committed to pull Thailand

While saying that national reconciliation was key, panellists at a round-table discussion on "Political Impasses: Way Forward" said that, as a short-term measure, the government should help exporters find new markets because demand in the US was dropping and having a spillover effect on Europe and Japan, so that companies exporting to these countries should shift their focus elsewhere and increase competition for Thai products.

"Thai exports will suffer hugely next year, and this is critical given that exports generate 70 per cent of the gross domestic product. To minimise damage, the government should pay attention to the logistics of increased competitiveness and government-to-government trade deals," advised Dusit Nontanakorn, vice chairman of Thailand's Board of Trade.

He said economic growth could be given a more than 5-per-cent boost if the government paid some attention to the private sector. In the past six months, not a single politician has extended a welcome to the many trade missions from Japan, and private companies have been on their own, he said.

Dr Tawatchai Yongkittikul, secretary-general of the Thai Bankers' Association, said the financial crisis would hurt the real sector despite the limited direct impact on Thai financial institutions. Since the US damage is unfathomable, more asset sales will take place elsewhere later this year and next, he said, as American financial institutions mobilise funds back home to accommodate capital increases. It is in these circumstances that the Finance Ministry and Bank of Thailand should work closely to monitor liquidity, he said, and deflation could set in next year if tax collection remains higher than government spending, as it did this year.

Both Dusit and Tawatchai agree that the government should pay more attention to improving logistics, or the 19 per cent of gross domestic product spent on logistics will end up holding Thai companies back from becoming competitive. Though civil servants realise the importance of this, what is missing is commitment from politicians, they say. According to Tawatchai, there are several long-term issues to consider, be they the water shortage, which could disrupt manufacturing, or the lack of a national agenda on education, foreign labour and healthcare.

Munenori Yamada, president of the Japan External Trade Organisation, agreed that political instability was the major obstacle Thailand had to overcome to deal with global imbalances.

"Prolonged political conflicts are bad for Thailand at a time when exports are being hit. If this continues, it cannot become an Asean leader, and benefits will accrue to its neighbours," he said, adding that though protests took place everywhere, the seizure of Government House was very unusual and could not have come at a worse time. Thailand, he said, is in dire need of direct foreign investment and tourists and cannot explain to the rest of the world what is happening.

He noted that if the government could help the private export sector expand to new markets, more investments from Japan would flow in because Thailand's geographical location was perfect for bridging the distance between Japan and China, India, South Africa, Australia and New Zealand. He noted that some Japanese companies had already established regional headquarters here.

However, he admitted, "Thailand's economic growth does not depend solely on itself, but also on global conditions."

According to Dusit, the private sector could find the new government acceptable if it demonstrated team spirit. "Educational background does not prove anything if the ministers have the determination, and if the deputy prime minister in charge of economic ministries can ensure that all economic ministers are working in alignment," he said, referring to the appointment of ministers without economics degrees.

He also urged the new government to soften its stance, saying that to normalise conflicts it had to back down on the planned amendment of the Constitution for the benefit of a few.

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