Global investors can be assured of Thailand's economic resilience in light of the eurozone crisis, which may prompt the Bank of Thailand to slash the policy rate and trade authorities to come up with measures to help the export sector, the central bank'
Altogether 122 global fund managers attended the Stock Exchange of Thailand’s conference on “Thailand Focus 2012: Positioning Thailand for the Next Growth Phase” – more than double the 60 managers present last year.
Despite the euro-zone crisis, which has plunged economies in many parts of the world into the doldrums, Thailand has maintained solid economic growth.
The three-day event is co-hosted by Phatra Securities and Bank of America Merrill Lynch.
In his speech on the challenges induced by the crisis, Bank of Thailand Governor Prasarn Trairatvorakul expressed satisfaction with the country’s economic resilience. Acknow-ledging that it is an uphill task for the government to achieve an annual export-growth target of 7 per cent after the 0.4-per-cent contraction in the first seven months, he said the central bank was ready to relax monetary policy should the global economy perform worse than expected.
“The policy rate can move in two directions, up or down, and the central bank will ensure that it is at an appropriate level,” he told the audience. Referring to the zero rate in the US, which is low but fails to boost the economy, he said Thailand’s policy rate at 3 per cent still could accommodate economic expansion.
As for exporters, they should not rely on something else, such as a weak baht, as the unit is tending to rise against the US dollar after capital started returning to Thailand last month, he said.
To achieve 7-per-cent export growth this year will be difficult, as that would require exports to exceed US$22 billion each remaining month. If exports run lower than $20 billion a month, the growth rate for the whole year would be only 4 per cent, he said.
The central bank recently revised its 2012 economic growth forecast from 6 per cent to 5.7 per cent, with support coming mainly from domestic consumption and investment.
HSBC forecasts a 0.6-per-cent contraction in the euro-zone economy this year. Global houses including the International Monetary Fund expect the euro public debt fiasco to drag the zone down further next year.
Deputy Prime Minister Kittiratt Na-Ranong told the seminar that the Thai economy had continued gaining momentum despite the euro-zone crisis. The government is trying to strike an economic balance by depending more on domestic purchasing power and boosting foreign investment via tax measures instead of leaning mainly on exports to drive the economy.
Aphinant Klewpatinond, chief executive of Phatra Securities, was pleased by the overwhelming interest of foreign investors in the conference.
“Foreign investors are now seeking low-risk markets with growth opportunities. Thailand is one of them, with low risk, high growth, low debt to GDP and rising political stability,” he said.
Much of the conference focused on Thailand’s economic affairs and advantages to be brought about by the Asean Economic Community. Aphi-nant remarked that this year, global investors did not raise questions on politics, though they expressed concerns over the implementation of government policies.
Assadej Kongsiri, investment banking chief of Bank of America Merrill Lynch, said foreign investors were impressed with the solid economic growth. Notably, for now, their attention is spreading to all industries and the potential benefits that Thai-land will reap from the AEC.
In the afternoon seminar, industrialists agreed that Thailand remained attractive to foreign investors thanks to its infrastructure and investment incentives. Local producers need to keep up through improvement in productivity and innovation, as Thailand is no longer a cheap-labour haven, they said.
Kobkarn Wattanavrangkul, chairwoman of Bangkadi Industrial Park, noted that Thailand had the capacity to accommodate more industrial investment, chiefly because of its trustworthy and flexible workers.
Thailand can be used as the export-oriented production base for the region, she said. Proper infrastructure – education, hospitals and food – is another thing that keeps attracting foreign investment, particularly from Japan. Despite the 2011 flood, Thai-land will remain a key part of the global supply chain.
On investors’ concern over the skilled-labour shortage and wage escalation, Viboon Kromadit, chief operating officer of Amata Corpora-tion, suggested that companies offer job training to students and prospective workers in cooperation with government agencies. More skilled labour would increase productivity, which should help them cope with the higher wage.
Arkhom Termpittayapaisith, secretary-general of the National Economic and Social Development Board (NESDB), said Thailand had to invest more in basic and logistics infrastructure, to establish linkages with neighbours and maintain competitiveness.
Because of a sharp decrease in public investment compared with the past 30 years, the country’s logistics cost is now 15 per cent of GDP against the average 10 per cent in neighbouring countries. The Kingdom needs more railroads, which should win half of the available budget, to link cities. Of the $80 billion budgeted for basic infrastructure, the NESDB and the Trans-port Ministry agree that 64 per cent would be allocated for land-transport improvement.
The construction of a road link from Thailand to Kanchanaburi will start within 12 months, while the North-to-South high-speed railroad will be completed next year.
The NESDB will also finalise details of the linkages of Bangkok to Chiang Mai and Nong Khai within 12 months, he said.
Supachai Panitchpakdi, secretary-general of Unctad, said Thailand should also adopt computerised international customs procedures to boost trade and investment as well as reduce human errors.