There were two seminal political developments in 2016: the UK’s vote to exit the European Union and Donald Trump’s victory in the US presidential election. While diverse dynamics drove each development, a key factor in both countries appeared to be diminished public support for deeper international integration, reflected in growing hostility to cross-border flows of goods and people, which are core elements of what we have come to know as globalisation.
These developments have also taken place amid technological disruption. The widespread distribution of accessible and affordable technology has almost completely changed the way we live, work, communicate and provide value. Given the presence of a new regime in the United States, the ongoing Brexit negotiations and the double-edged sword of technological advancement, it is fair to say that we are moving headlong into a new world order.
As highlighted in Baker McKenzie’s new report, Globalisation 3.0: How to Survive and Thrive in a New Era of Trade, Tax and Political Uncertainty, multinational companies are facing a new era of globalisation, characterised by the polarised forces of cooperation and competition. It identifies four key areas in particular where these forces are in play: trade and investment, tax transparency, data privacy and security, and labour and human rights.
The trade and investment policy environment is shaped by the need to reconcile various complex factors, from cybersecurity threats to geopolitical risks. The global tax system is being reshaped by new business models, the rise of the digital economy and tax reforms by individual nations.
In the area of data privacy, there are a host of legal and operational risks associated with data that companies have to face and manage. Last but not least, there are increasingly demanding human rights standards that companies need to uphold in order to avoid legal and reputational risks.
In light of these complexities, Thailand itself has undergone significant changes over the years. There have been genuine efforts to improve laws and regulations in various areas aimed mostly at responding to global standards and challenges. The forces driving these changes come from various sources — from the need to catch up with neighbouring countries, to our commitments to various international treaties and agreements. We have been running to catch up with the (old) world.
The key challenge for Thailand is deciding whether we need to do more to recognise and tap into the opportunities arising from new global political developments and digital technology. Since no opportunities come without associated risks, we need to also consider ring-fencing any areas where possible pitfalls could adversely affect the public and businesses.
Various government agencies are currently considering numerous pieces of legislation to bring the country up to speed with new trends, and no doubt more laws will soon be in the pipeline. Given new political developments and technological disruption, ultimately the current and future efforts to shape our own policies should at least ensure the following key elements: transparency; consistency of policies and their enforcement across various government agencies; movement of talent, especially in the industries targeted by government master plans; and a holistic review of digital technology and its integration into relevant laws, processes and procedures.
Peerapan Tungsuwan is a partner with Baker McKenzie in Bangkok, email peerapan. tungsuwan@bakermckenzie.com