Supachai lays out vision for the future
Supachai Panitchpakdi, the secretary-general of the UN Conference on Trade and Development, feels productivity improvement and speedy regional integration must be the top priorities of Asian countries to raise their well-being and help create a more stable world economy.
He made the remarks at a forum hosted yesterday by the Thai-China Business Council, adding that Asean countries could speed up their cooperation process with their external partners under existing various frameworks. Developed nations have employed a strategy of aligning with some fast-growing economies to revive their stagnant economies through trade pacts such as the Trans-Pacific Partnership, which clashes with Asean and its cooperation in the region.
"Most of the debate has focused on finance and economic factors such as strong versus weak currencies and low versus high interest rates, which lack a rule of thumb. But it is productivity, technology and education that will help any country to compete," said Mr Supachai.
The stark disparity in the growth rate of 1-2% in high-income countries and 5-6% in developing economies could pose a risk to the world economy, he said. The ongoing rally of financial assets worldwide and near-zero interest rates in developed economies have built a bubble and could have damaging effects in the short run.
"Interest rates are low worldwide, stock and property prices are rising, and the oil price is low. Euphoria is all around. But in prosperity, there will always be the seeds of disaster. This is a dangerous period," said Mr Supachai.
He said Thailand is on the right path in embarking on a new large-scale transportation network, but it must pay close attention to other issues such as energy and telecommunications in addition to increasing the budget for R&D from a meagre 0.2%.
Meanwhile, the government is being urged to cut the corporate income tax and personal income tax to 16% in a bold move to raise Thailand's competitiveness and allow the government to earn more tax revenue.
"Singapore, for instance, charges only 17% for corporate income tax, and its property is relatively expensive, so a steep tax cut will help the Thai property, rental and related sectors," said Dhanin Chearavanont, the chief executive and chairman of the Charoen Pokphand (CP) Group, the country's agricultural giant.
"This will eventually lead the government to collect more in tax revenue from growing businesses."
Thailand's long-standing corporate tax rate of 30% was cut to 23% last year and drops to 20% this year.
The Thai billionaire also suggested the government promote Thailand as a shopping hub for international brand-name products, with the particular goal of luring well-heeled Chinese tourists and other affluent shoppers.
Given their high purchasing power and the mainland's growing economy, Chinese shoppers are very active global shoppers, making up 63% of brand-name purchases sold in Europe.
"The government should set up a special economic zone dedicated to selling international brand-name products," he said.
Mr Dhanin also expressed concern about the prospects of the Thai automotive sector, given the rapid growth in that sector in Indonesia.
"Indonesia will possibly outpace Thailand in the automotive sector in the near future. Thailand must step up its development of technicians and mechanics," he said.
He also urged Thai investors to explore more opportunities in the US and Europe, where distressed assets are available and the economies are starting recover. Other target investment areas include emerging countries and China.
"The CP Group is looking to invest in the US retail and food sectors, with negotiations now pending," he said.
Banthoon Lamsam, the chief executive of Kasikornbank, told the forum that Thailand must improve its cost management, branding and communication skills if it wants to retain its competitiveness.
However, he warned the government to be wary of overspending, which will raise public debt to a dangerous percentage of gross domestic product.
"Don't do anything to weaken the fiscal and monetary policies, as the burden will be passed on to future generations," said Mr Banthoon.