Thailand's investment challenges
- Published: 26/10/2010 at 03:05 PM
- Online news:
An interview with Finance Minister Korn Chatikavanij covering all the important investment issues for Thailand in the near future.
Today's article deals with many important topics.
Past Bangkok Post articles have explored almost every aspect of the issues discussed in this interview.
They are an important resource for student research papers that explore government policy.
The issues discussed run as follows, in order of presentation:
1. Issue of baht appreciation (See #1 (18-10-2010), #2 (13-10-2010), #3 (11-10-2010), #4 (14-09-2010) and archives for 2007 appreciation crisis)
2. Thailand's failure to utilize ASEAN investment opportunities (Read article)
3. Investment in a high-speed rail system (Read article #1 (31-09-2010) and #2 (22-06-2009))
4. An ageing society in Thailand (Read articles #1 (25-11-2009), #2 (16-10-2009), #3 (29-09-2009) and #4 (25-01-2008))
5. The global financial crisis and the international fiscal stimulus remedy
6. The problem of balancing the government budget again after fiscal stimulus
7. The need for public-private investment (See articles #1 (30-06-2010) #2 (19-01-2010) #3 (10-11-2009), #4 (17-08-2009) and #5 (06-07-2009))
8. The problem of an outdated telecommunications system (and failure to move forward to 3G)
9. Opening Thailand to investment by foreigners (See Foreign Business Act and Foreign Direct Investment in the archives)
The interview is quite long so only the important highlights are included below. Read the whole interview here.
Click button to listen to Thailand Investment Challenges and rightclick to download
Building up strength: Investment and infrastructure among many challenges for Thailand as it seeks to keep pace by Wichit Chantanusornsiri
In recent months, Thailand, like other Asian countries, has been beset by a flood of liquidity into the region, putting pressure on the currency to appreciate and to the dismay of exporters. At the same time, the country's needs and challenges to raising medium-term competitiveness remain, whether in the areas of education, physical and human infrastructure or technology development. Finance Minister Korn Chatikavanij discusses the country's investment challenges in an exclusive interview with Wichit Chantanusornsiri.
Why has public investment gone so slowly?
This is the main macroeconomic problem facing us right now. We have the money, but we don't know how to invest ...We will have an Asean Economic Community within the next four to five years. Asean will become a single market. But the awareness among Thai companies about these opportunities, if you were to compare with, say, Malaysian or Singaporean companies, is low...
And we can't look only at Asean. We need to consider Bimstec [a grouping comprising Bangladesh, India, Burma, Sri Lanka, Thailand, Bhutan and Nepal] and other markets that we can penetrate and create value, particularly Africa.
We will be investing some 200 billion baht over the next five years in our rail system. Everyone wants to see the high-speed rail system. ...Consider that the State Railway of Thailand hasn't made any real investments for 60 years. Now we are telling it to invest the equivalent of its entire asset base. It can't adjust as quickly as we would hope.
One major change in the global market has been increased volatility in the money markets. We already see the impact, and it will get worse. The amount of money that moves in the international markets is massive, much more than that of, say, 20 years ago.
Two decades ago, the amount of money moving in the markets was worth perhaps 5% of [global] gross domestic product. But now this has climbed to some 20%. Financial assets have skyrocketed to 400% of GDP. So even small movements represent massive flows of capital. The impact on the global markets during the  Tom Yum Kung crisis was nothing compared to what we are seeing today.
Another issue we must face is growing competition with the growth of global trade. Right now, there are an estimated 450 free-trade agreements in place around the world, four times the number that existed 20 years ago. Before, we mostly competed within the domestic economy. But now, everything that we manufacture, others do also. We have to adjust.
A third issue we must face are the challenges of an ageing society. Within 40 years, the proportion of the elderly will more than double to 17% worldwide. But for Thailand, in just 20 years, the elderly will double to 22% of the population. The burden faced by the entire workforce will increase.
What are the main challenges for investment?
Every country in the world is facing growing budget pressures. Thailand, with public debt of 43% of GDP, still has room [to spend]. We expect to return to a balanced budget position within five years.
But the big problem for budgetary management is the fact that our current expenditures are high, with little left for investment if we run a balanced budget. So others, meaning the private sector, must make the investments. The private sector must invest in those projects which in the past were made by the public sector. Or the private sector must join with the public sector to co-invest. We will draft a new public-private investment law to increase the efficiency of investment projects and reduce risks for the private sector.
But is it a risk to allow basic infrastructure to be dominated by foreign investors.
We are speaking about basic infrastructure that will help strengthen the country's competitiveness. Put it this way: We have an outdated telecommunications system with [consumer] prices higher than they should be. But it belongs to Thais. And when I say this, I mean that [the companies] belong to a handful of families. When we say 'belonging to Thais', it doesn't mean belonging to all the Thai people. Why should we protect these families? What is the purpose?
In contrast, if we allow the world's leading companies to invest cutting-edge technology, to invest considerable funds in the country, we will see the fruits of investment faster, with better, faster services and at lower cost. But these projects won't belong to Thais. So choose. Everyone has the right to choose. Our challenge is to explain this to society.
(Source: Bangkok Post, Economics, ON the RECORD, Building up strength, Investment and infrastructure among many challenges for Thailand as it seeks to keep pace, 26/10/2010, Wichit Chantanusornsiri, link)
flood - large amounts of something flowing into a place (example: a flood of water from the Chao Phraya, a flood of information from the internet)
infrastructure - the high-cost facilities that everyone in the economy shares (water, roads, electricity, trains, telecoms network) สาธารณูปโภค (See Google Definitions)
challenges - new and difficult problems to solve, that require effort and determination
pace - the speed at which something happens ท่างทำนอง ย่างก้าว จังหวะ ที่สิ่งต่างๆ ดำเนินไป (See glossary)
beset - to cause someone difficult or danger over a period of time รุมเร้าด้วยปัญหา
liquidity - the availability of cash in the economy (through loans) to businesses and consumers (to meet their needs) สภาพคล่อง
pressure - a force causing change
currency - a widely used the money accepted for exchange of goods in an economy เงินตรา (See Wikipedia)
dismay - a feeling of being very unhappy and disappointed ท้อใจ, ผิดหวัง
medium-term - over a period of time that is 2-10 years into the future
competitiveness - how well a business can do compared to other firms (does it have lower price or higher quality?) การแข่งขัน
physical - real things that can be touched and seen (not just an idea or in imagination)
development - the gradual growth and formation of something
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
exclusive - something available only to one person or a limited group of people แต่ผู้เดียว
interview - to ask someone questions in a meeting for a newspaper article, television show, etc. The noun form is also interview สัมภาษณ์, การสัมภาษณ์
macroeconomic - dealing with the whole economy (all money related issues) of a country
awareness - knowing about something การรับรู้, การทราบ
opportunities - situations in which it is possible to do what you want or need to do, benefits or profit that it is possible to get
Bimstec - the "Bay of Bengal Initiative for MultiSectoral Technical and Economic Cooperation" is an international organisation of countries in South Asia and South East Asia including: Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal. Six priority sectors of cooperation include:1. Trade and Investment 2. Transport and Communication 3. Energy 4. Tourism 5. Technology 6. Fisheries, seven new sectors were added: 7. Agriculture 8. Public Health 9. Poverty Alleviation 10. Counter-Terrorism and Transnational Crime 11. Environment and Natural Disaster Management 12. Culture 13. People to People contact (See Wikipedia)
comprising - consisting of ประกอบด้วย
equivalent - the same as เท่าเทียมกันกับ
asset - something owned by a person, company etc., particularly money and property ทรัพย์สิน
base - a secure foundation or starting place for a building, project or activity, a place or set of resources from which a project or activity can begin พื้นฐานasset base - a set of assets that supports some activity (here: the operation of a railway)
adjust - to change something slightly, especially to make it more correct, effective, or suitable ปรับ
global - throughout the world ทั่วโลก
volatility - going up and down by large amounts in unpredictable ways, a measure of risk in financial markets, the degree to which asset prices swing up and down (See The Economist and glossary) อัตราความเสี่ยงต่อการลงทุนทางการเงิน
impact - an effect or influence ผลกระทบ
international - between countries ระหว่างประเทศ
massive - very large in size, amount or numberใหญ่โต, มหาศาล
decades - periods of ten years เป็นสิบๆปี
domestic - ในประเทศ within the country ภายในประเทศ
Gross Domestic Product - GDP, a measure of economic activity in a country, the value of the country's output of goods and services. GDP is defined roughly as: GDP = Household Consumption + Business Investment + Change in Inventories + (Government Spending - Taxes) + (Exports - Imports) (See Economist Glossary)
assets - a thing of value with an owner (stocks, bonds, real estate, loans to others, or money) ทรัพย์สิน (See Economist glossary) ทรัพย์สิน
skyrocketed - increased suddenly by a very large amount ที่สูงขึ้นมาก
X represents Y - X means Y
capital - money invested in a business (See glossary)
crisis - an urgent, difficult or dangerous situation วิกฤต
issue - a problem that needs to be considered ประเด็น
trade - the buying and selling of goods การค้าขาย
elderly - older people, over 65 สูงวัย, อาวุโส, อายุมาก
double - to become twice as big, twice as much or twice as many เพิ่มเป็นสองเท่า
population - all the people living in a country or area of the country
burden - a responsibility, a difficult thing that must be done, a heavy load to carry ภาระ (See glossary)
workforce - all the people in an area or country available for work, all the people who work for a company แรงงาน
budget - the amounts of money that an organisation has available to spend on different things during a period งบประมาณ (See Wikipedia)
debt - an amount of money borrowed, money owed to others หนี้
has room - has many choices open for action, has flexibility for action (not restricted or constrained much)
balanced budget - when money going out of organization (spending) is equal to money coming into organization (income, revenue, tax collections)
current - of the present time ปัจจุบัน
expenditures - money spent on things
sector - a part of the economy (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) ภาคเศรษฐกิจของประเทศ (See Wikipedia)
co-invest - make an investment together with someone else
draft - write up and create a document
public-private investment - when privately owned companies invest in businesses together with the government, such businesses are called a "private public partnership" (PPP)
private public partnership (PPP) - a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies (See Wikipedia)
efficiency - waste little time, energy and resources in doing a task (minimize time, energy and resources in performing a task) (See glossary) การทำงานอย่างมีประสิทธิภาพ คุ้มค่าเวลาและใช้พลังงานหรือต้นทุนในการผลิตน้อย เพื่อให้ได้ผลผลิตมาก
efficiency - doing a task well without wasting time, money, resources
risk - a danger, the possibility that some bad event might happen ความเสี่ยง
dominated - controlled ถูกควบคุม ถูกชักใย บงการ
outdated - old and no longer suitable or useful, old-fashioned
telecommunications - telephone and other forms of long-distance electronic communication, communications by radio waves using mobile phones, TV, radio, broadband internet.. (See Wikipedia)
consumer - someone who buys and uses goods and services ผู้บริโภค
handful - a small number (could fit in your hand) จำนวนน้อยมาก
contrast - a noticeable difference between two things when you compare them ความแตกต่าง
cutting-edge - the most advanced
considerable - large; of noticeable importance จำนวนมาก
funds - money needed or available to spend on something เงินทุน
fruits - benefits that appear from efforts (only after waiting a period of time, just like waiting for a fruit to grow)
challenge - something that needs a lot of skill, energy, and determination to deal with or achieve สิ่งที่ท้าทาย, การท้าทาย
About the author
- Writer: Jon Fernquest
Position: Assistent Manager Educational services