Reform, reform, reform: 3 gates to growth

Reform, reform, reform: 3 gates to growth

In two weeks, Prime Minister Prayut Chan-o-cha will tell the Bangkok Post Forum and the nation how he sees Sustainable Reform Transforming Thailand.
In two weeks, Prime Minister Prayut Chan-o-cha will tell the Bangkok Post Forum and the nation how he sees Sustainable Reform Transforming Thailand.

Thailand's economic growth has been bogged down in the past decade by political instability. Since the 2014 coup, the military government of Gen Prayut Chan-o-cha has managed to stabilise the political climate. But uncertainty prevails when it comes to the country's political future.

On Aug 25, all eyes will be on the court's verdict in a malfeasance lawsuit against ousted prime minister Yingluck Shinawatra, who stands accused of dereliction of duty in the implementation of her government's "loss-ridden" rice-pledging scheme. Seen as a historic case with major political implications, observers will wait and see what kind of impact the case has in the wake of judgement day.

One day ahead of the ruling, Gen Prayut is scheduled to share his insights, which could relate to political reform, with business people and executives from the public sector at the Bangkok Post Forum 2017, which will under the "Sustainable Reform Transforming Thailand" banner.

Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.

Thailand has many areas in need of transformation but political reform is a pressing concern given the ramifications this would have on driving economic development.

However, economic, social, political and administrative reforms must all be made to help Thailand shift to developed-country status.

Per-capita GDP is a key indicator of how a country is developing. To earn the coveted 'developed country' status, Thailand needs to hit a figure of US$12,476 -- quite a leap from its current level of $5,908.

A Finance Ministry study indicates that to reach that goal Thailand must achieve annual economic growth of at least 6% for a continuous period of 20 years. In reality, growth has hovered below 4% for many years, suggesting a failure to realise the country's economic potential.

Political instability as a result of political conflict over the past decade is a key factor ham-stringing economic growth. This has downgraded the nation's competitiveness and ranked it below other Southeast Asian countries.

Investors, especially foreign companies, are losing interest. In the last 10 years, investment has edged up 2-3%, a far cry from the 10% expansion witnessed a decade earlier. Such a drastic reduction is a key factor impeding growth.

The government's mission of reforming and transforming Thailand is nothing if not an uphill task. Without political stability and a strong political commitment, the Prayut administration will find it hard to achieve its agenda.

Since it ascended to power three years ago the regime has sparked a mild recovery -- a welcome relief after a period of economic contraction during the former Yingluck administration due to political instability, huge floods in 2011 and shrinking exports.

Under Gen Prayut the economy has got back on its feet thanks in no small part to ongoing political stability. The mobilisation of vast troves of public financing has also helped reverse the country's economic trajectory. Noteworthy measures include the decision to inject hundreds of billion of baht into the grassroots economy, the agriculture sector and SMEs.

The regime's economists have also worked hard to improve Thailand's competitiveness. This year, the IMD world competitiveness ranking moved Thailand to No 27 on the list, up from No 28 in 2016. Thailand's individual score rose to 80.095 from 74.81.

Critics will say the economic recovery has not been felt in all sectors, especially among low-income people, farmers, industries, trade and SMEs -- and they would be correct.

It remains to be seen how long political stability will last, especially after the general election that is expected in the middle of next year or later. No one knows exactly how the nation will be transformed. Thailand's future political landscape has yet to be written, the reforms probably led by a new prime minister.

Regardless of what kind of political landscape takes shape, the country needs to move away from the vicious cycle of political instability and military coups, and reform is the bridge to a better and different future.

Without effecting such change, Thailand will fail to achieve its goal of becoming a developed state. More importantly, we may lose our status as a middle-income country, slipping down the ranks to become a "less developed" or -- gulp -- "poor" country.

Wichit Chantanusornsiri

Senior economics reporter

Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.

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