Thailand should undertake reforms to beef up competitiveness in preparation for the fast-approaching Asean Economic Community (AEC), says Somkid Jatusripitak, chairman of the advisory board to the prime minister.
The AEC, which is set to kick off late this year, should become a part of the national agenda, Mr Somkid said while giving the keynote address at yesterday's AEC Business Forum seminar entitled "2015: The Year of AEC", hosted by Bangkok Bank (BBL).
He said accelerated development of planned special economic zones (SEZs) and intensifying small and medium-sized enterprise (SME) development were the main priorities for sharpening the country's competitiveness.
Development of SEZs is crucial to facilitate increased border trade in the AEC, said the former deputy prime minister.
"Thailand has leapt forward the past 30 years thanks to developments such as the Map Ta Phut Industrial Estate in Rayong, and we need to continue these type of projects,” he said.
Thailand hopes to open two SEZs close to the border this year, offering investors tax breaks and other incentives. They are set for Tak's Mae Sot district and Sa Kaeo's Aranyaprathet district, with other SEZs planned for Nong Khai, Trat, Mukdahan and Songkhla provinces.
Investment incentives include Board of Investment privileges but also consider the labour force and land, as these factors are instrumental for developing SEZs, Mr Somkid said.
He said Thailand needed to establish business clusters focused on specific business segments in each province, Mr Somkid said. Clusters could include high-end technological products, tourism and processed farm products.
He said Thailand must improve its railway connectivity to emerge as a regional strategic hub, focusing on the East-West Economic Corridor. Ports and airports also require upgrades for the country to be a hub.
Maintaining political stability is important to keep investors interested in Thailand in order to demonstrate to the global community the country can manage its domestic affairs, Mr Somkid said.
He said a national campaign to prepare Thai SMEs for the AEC was needed so they would change their business mentality to cope with greater competition.
Mr Somkid said Japan had the “Three Musketeers” to support its SMEs' foreign expansion — the Japan External Trade Organization; loans and guidance from Japanese financial institutions; and networking between SMEs and large corporations.
Thailand also has these musketeers, but their direction is not unified and the execution process lacks intensity, he said. Thai SMEs should place greater emphasis on e-commerce development and technology-based advancement to reap benefits from the AEC.
Wirat Sirikajornkij, executive director for tax and legal services at KPMG Phoomchai Tax Ltd, said Thailand’s corporate income tax was at an appropriate level compared with its Asean peers, but the government could mull adopting a one-tier system for it. Some advantages include simplified tax calculation and improved tax profits for corporations.
Raising the value-added tax depends on economic conditions and effects related to private consumption, he said.
Meanwhile, BBL executive vice-president Kobsak Pootrakul warned the central bank's rate-setting committee against cutting the policy rate at its meeting next Wednesday, as the move might not cause the baht to depreciate.
He cited the greenback’s gains despite the US Federal Reserve's low rate.
Private consumption is already weak from ballooning household debt and low farm prices, Mr Kobsak said.