Domestic resilience and the strength of the local economy will be key to sustaining Thailand's economic growth in the long term, especially amid a slowdown in foreign direct investment (FDI), according to the Bank of Thailand chief.
Speaking on Friday at a seminar hosted by Thai Publica, central bank governor Sethaput Suthiwartnarueput said FDI in Thailand has steadily declined during the last 20 years compared with positive growth among regional peers.
Thailand's market share of global FDI net inflows is around 0.63%, up slightly from an average of 0.57% per year from 2001 to 2005.
During the same period, Indonesia's market share surged from 0.07% to 1.39%, Vietnam's jumped from 0.16% to 1.01%, and Malaysia's grew from 0.32% to 0.83%.
Given this trend, Thailand should pay more attention to internal expansion rather than relying on external growth, said Mr Sethaput.
Urbanisation and local economic expansion will be critical in supporting sustainable long-term economic growth, he said.
Economic scale is another key factor in developing the local economy, said Mr Sethaput.
Local economic growth must focus on competitiveness and global connectivity, a concept known as "globally competitive localism", to strengthen and sustain Thailand's economic expansion, he said.
The concept of globally competitive localism refers to a strategic approach where local entities leverage their unique strengths and characteristics to compete effectively in the global marketplace. The model recognises the importance of local resources, culture and community engagement, while aiming for global competitiveness.
Mr Sethaput said Thailand should prioritise the well-being and wealth of its citizens, rather than chasing growth metrics such as GDP and FDI, to ensure long-term sustainability.
Urbanisation efforts should focus on improving education, healthcare and social equality.
He said some government projects, such as special economic zones, have not effectively supported the well-being of the people. For instance, Thailand's cross-border special economic zones have contributed marginally to the economy, adding just 0.5 percentage points to GDP growth despite being implemented for several years.
Kobsak Pootrakool, director and senior executive vice-president of Bangkok Bank, said government subsidies have failed to significantly improve household income. In fact, the number of households in poverty has increased during the time of these subsidies, he said.
Households with incomes below the poverty line rose from around 1 million in 2007 to around 4 million in 2011. Notably, 64% of these households have seniors as the head, said Mr Kobsak.