Past success led to complacency and lethargy
Thai businesses bemoan the fact they are unprepared for the advent of the AEC, but they have had plenty of time to prepare for regional competition.Ironically, while one can hardly miss news of the Asean Economic Community (AEC) in the newspapers in Thailand these days, most in the Thai business sector say they are not ready to deal with direct competition from other Southeast Asian countries when the AEC comes into effect in 2015.
The latest survey by Thai Chamber of Commerce University shows that a majority of businesses admit they aren't ready for the AEC and want to see Thailand's AEC accession delayed from January 1, 2015, to the end of that year.
They have many concerns about the advent of the AEC. A majority said they were concerned about duty-free imports of cheaper goods from other countries.
While such concerns are valid, they highlight the unsatisfactory pace of development among Thai industries. Small and medium-sized industries have been weakened partly because of policies that have resulted in uneven development. With the minimum-wage hike, small and medium-sized companies now face higher business costs.
The government's financial assistance schemes for small and medium-sized businesses go to those firms with connections - they are not based on the recipients' merits. This has resulted in excessive non-performing loans from the Small and Medium Enterprises Bank. Bigger companies, meanwhile, tend to receive support from the government through monopolistic contracts or tax cuts.
At a recent seminar, low-skilled and low-income earners also voiced concern over the potential influx of migrant workers from neighbouring countries to fill jobs here. In fact, market integration under the AEC should lead to an increased demand for skilled workers to add value to the production base.
The reaction from the private sector is ironic because Thailand should be in the best position to benefit from the AEC. Thailand is one of the founding members of Asean and a core member of the Asean Free Trade Area (Afta). In the 1990s other countries in the region were afraid of the higher competitive value of Thai products in both the manufacturing and agricultural sectors. Thailand then asked for a temporary exclusion of a small number of products, such as palm oil, in which it had less of an advantage, from the AFTA tariff cut during the start-up period.
Thailand has had plenty of time to prepare for the AEC and take advantage of its strengths to boost business opportunities. However, the reaction from the private sector suggests it has not. The pessimism emanating from the private sector might be exaggerated, since some firms would want government subsidies and other support. However, it might also demonstrate that the development of our industries over the past decade has not matched that of our neighbours.
Thai industries' concerns over inadequate employees also reflect the deterioration of the education system and its drop in international rankings. In addition, in the past couple of years Thailand has lost its position as the world's leading exporter of rice, which had long been a source of national pride.
The AEC could force a reality check on Thailand, making us reflect on where we've failed in the past decade. Perhaps we're too complacent in thinking we can still reap benefits from continuing an industrial policy set out 40 years ago under the national economic and social development plan and industrial promotion under the Board of Investment.
Over the past decade Thailand has had few new initiatives. Campaigns such as the "creative economy" are simply marketing gimmicks that offer no concrete action. At the same time, our neighbours have quickly transformed into rapidly emerging economies with resources, high productivity and an enthusiastic labour force and business sector more eager to capitalise on the regional market.
It is futile for Thai businesses to ask for a delay in AEC accession. Conversely, the AEC should be seen as a blessing in disguise and a reason to work harder. If Thais cannot survive the new regional competition, it will be even more difficult to survive the global battlefield. Thai businesses are concerned that they might not be ready for the AEC, and this shows that it's imperative for them to change their way of doing business now.