Prior to his speech in Parliament tomorrow, Prime Minister Srettha Thavisin's government has set an ambitious target of 5% annual GDP growth. That is a surmountable task judging from the fact that last year's GDP was 2.6%.
It needs to be stressed that the ambitious target was set after the state planning agency downgraded its prediction for annual GDP growth for 2023 from 2.3%–3.7% to 2.5%–3% due to a sluggish second quarter.
Some details on how the government plans to revive the economy were released in a draft policy speech, with an immediate focus on stimulus measures to boost domestic spending, after Mr Srettha and his cabinet were sworn into office last week.
So far, the promise of a 10,000-baht digital wallet handout for Thais aged over 16 has raised consumer confidence, but is it really enough to drive the economy forward in the years to come? Also, economists have started to question the source of the handout's funding.
To stimulate the economy, money must be moved from other development budgets.
The 10,000-baht digital wallet scheme, dubbed by economists as "helicopter money", is set to begin early next year. It aims to provide much-needed financial relief to the public and jump start economic recovery, but will it be the engine that maintains growth? What happens once this money runs its course? If no new jobs are created, people will tighten their purses as quickly as they loosened them.
Other government promises also focus on palliative measures, such as lowering electricity prices and delaying debt repayments, but again, all this does is kick the can down the road. While stimulus measures have a role to play in economic recovery, there should be a focus on long-term strategy, and it should not only involve tourism.
It is almost as if we are living in a tourism loop, as discussions are underway to ease visa rules for visitors from China and India. The policy, being touted for October to February, hopes to attract 5 million Chinese arrivals by the year-end, up from the current 1.8 million.
This tactic proved wildly successful in the latter half of 2019 until the Covid-19 pandemic put an end to it. But circumstances have changed, as this year, Chinese tourists have checked in less than expected. Therefore, it remains to be seen whether Chinese tourists will return on a larger scale this year as they have their own economic problems.
Also, let's not forget about how immigration crackdowns earlier this year targeted criminal elements who abused visas to live or do business in the country. Their conduct damaged Thailand's reputation as a safe and favourable destination among Chinese tourists.
While Thailand struggles to grow, its neighbours are enjoying better fortunes. Despite a slowing global economic climate, last year, Vietnam's GDP grew at 8%, Malaysia 8.7%, Indonesia 5.3% and the Philippines 7.6%.
So what are they doing right, and why is Thailand lagging? For one, domestic exports are down due to a global economic slowdown, and there has been a decline in investor confidence in Thailand in the months it took to form the new government. So, now is the time to reverse it.
Other Southeast Asian nations are focused on bringing in foreign investment by easing the rules for doing business. Supply chain challenges experienced during the pandemic and changing geopolitics have driven companies to diversify and no longer rely on one country to manufacture goods.
Vietnam is one of the biggest winners here -- Apple, Samsung, Xiaomi and others have moved assembly lines into the country, and more companies are mulling the move.
Over the years, Vietnam has gradually improved its regulatory environment, making operating businesses easier, and it has a healthy labour market.
Though Thailand has attracted some investments, restrictions on foreign ownership mean projects like the Eastern Economic Corridor, which were built with a vision to attract foreign investment and create a business-friendly environment, have failed to live up to their potential. Thailand has also been slow to sign foreign trade agreements.
But it is not too late. Interest in investing in Southeast Asia is only growing and Thailand should aim to grab a bigger piece of the pie.
There remain plenty of opportunities in many sectors, including farm products, services, innovation and startups.
After punching below its weight for the last nine years, Thailand should leverage its advantages and work on introducing new policies to change how it's perceived by the business community so investments flow in, along with jobs.
Let's not fall for the same traps of the past. Hopefully, the Srettha government will announce strong economic measures that focus on long-term growth.