Thai private sector signals SOS, warning local economy may crash
March 28, 2014 00:00
Thailand's private sector on Friday called for the formation of a permanent government as soon as possible, or the country will be overtaken by neighbouring countries.
Isara Vongkusolkit, chairman of the Thai Chamber of Commerce (TCC) and Board of Trade of Thailand (BOT), said a general election and a new government will speed public spending and stimulate the economy which has been stagnant for the past several months, Thai News Agency reported.
He expressed hope that the new government should take office in the third quarter to push for economic growth at 2.53 per cent, or the growth will be less than 2.5 per cent if formation of a new administration takes longer.
He said exports and tourism are two driving elements for the Thai economy while border trade also generates income for the country.
The political stalemate should end as soon as possible and negotiations should concentrate on the future of Thailand, he said, calling for the appointment of an interim prime minister to run the country in parallel with national reform which should take about a year.
He said the political turmoil and absence of a permanent government to issue investmentattracting policy has diminished Thailand’s opportunity and foreign companies are relocating their manufacturing base from Thailand to neighbouring countries such as Indonesia.
The Indonesian government has attracted foreign investors with an investment of over Bt17 trillion for infrastructure development – seven times more than Thailand’s earlier project which has been suspended, he said.
Thailand is lacking sufficient skilled labour and the government lacks transparency in its administration, while other Southeast Asian countries are speeding up development to take advantage of investment opportunities in place of Thailand, he said.
Isara said he received the latest report about the relocation of Japanese manufacturers of electronics products and automobiles from Thailand to Indonesia, partly thanks to the neighbouring country’s large population and market.
Pornsilp Patcharintanakul, TCC deputy secretary general, called on the government to step down to pave the way for negotiations which should lead to national reform within three months.
After that, Parliament should restart to materialise significant issues into legislation, he said, adding that he doubted if the political crisis will end this year.
If Thailand has a new government early next year, the economy and investment will spring back in the third quarter of next year, he said.
He said Thailand’s economic future is rather bleak as the caretaker government cannot initiate new investment and the private sector will neither jump into new investment.
Thailand has lost about Bt500 billion a year from foreign investment now that the Board of Investment cannot fully operate, he said.
Thailand’s exports this year will expand less than 5 per cent since the economies of trading countries have yet to pick up and the risk from a political encounter among Russia, the US and Europe remains, he said.
The Thai baht has weakened but manufacturing costs are high, he said.