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ECONOMY
CHATRUDEE THEPARAT
Thailand needs to overhaul its economic structure to increase the service sector's contribution to gross domestic product (GDP) to about 70% to ensure the kingdom's long-term competitiveness, said a government think tank.
Ampon Kittiampon, the secretary-general of the National Economic and Social Development Board (NESDB), said Thailand must expand its service sector from 45% to at least 70% of GDP to stay afloat in the competitive world economy.
Currently, manufacturing plays a greater role in Thailand's economy, providing 55% of GDP. But in developed countries, the service sector accounts for up to 80% of GDP.
"Thailand is no longer in a position to compete in manufacturing with neighbouring countries and China, where labour costs are much cheaper," said Mr Ampon. "The kingdom needs therefore to build up co-operation with neighbours in order to move production to those countries."
He added that boosting the service sector would utilise Thai culture and expertise and help safeguard Thailand against the world financial crisis.
"Thailand is in a perfect position to be developed as the centre of medical and health tourism in the region and as a financial hub for neighbouring countries including Laos, Burma, Cambodia and Vietnam," he said.
However, he warned that development needed consistency to create confidence in investors and consumers, whether or not the government changes.
Thailand also needs to speed up investment projects including human resources, education, health and infrastructure to help strengthen its long-term competitiveness, he said.
In the short term, Mr Ampon said the government should patch up internal conflicts fast to regain the confidence of investors and consumers.
Deputy Prime Minister Olarn Chaipravat suggested the government should stimulate economic growth by speeding up fiscal budget disbursement, extending loans to agricultural producers and providing sufficient loans to small and medium-sized enterprises (SME).
Economic policies should also benefit investing in the country, while investment in megaprojects needs to go ahead as planned without delays, he said.
He added that roadshows to new markets such as India, the Middle East, China and Africa are desperately needed - especially for export products such as garments, leather goods and furniture that are likely to be affected by the US financial crisis and anticipated troubles in the EU and Japan.
"Fortunately, Thailand's export reliance on the US and EU markets has dropped significantly over the last eight years," said Dr Olarn. "We expect healthy growth from new markets will help offset slower exports to these two destinations."
Currently, he added, exports to the US make up around 10% of total exports, compared with 18-19% in 2000.
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