Thailand 'poised to soar'
Moving away from export dependency, closer investment ties in region lie ahead, says Somkid.
Thailand is poised to soar in the global market with heightened investment attraction and a massive budget earmarked to rejuvenate the economy in the fourth quarter, as the Covid-19 pandemic eases, according to Deputy Prime Minister Somkid Jatusripitak.
In an exclusive interview with the Bangkok Post, Mr Somkid said the government also plans to enhance financial cooperation with China and Hong Kong that will lead to business expansion in CLMV countries (Cambodia, Laos, Myanmar and Vietnam).
Mr Somkid said the country needs to solve economic woes caused by the Covid-19 crisis and prepare the country for the post-pandemic recovery.
The direction lies with sustaining the economy so it can progress through the invocation of executive decrees initiated by the Finance Ministry and the Bank of Thailand (BoT).
One decree sponsored by the Finance Ministry involves the procurement of a one-trillion-baht loan to pay for public health defences against the pandemic and relief money to aid people who have been hit by the crisis.
The BoT also came up with two other decrees for the disbursement of a 900-billion-baht fund drawn from the central bank itself to keep small and medium enterprises (SMEs) and the financial market afloat.
Billions set for year-end boost
Mr Somkid said relief money worth 500 billion baht has reached people and is being circulated in the economy from April until next month.
Another 400 billion baht of aid is afoot, and is being vetted by the National Economic and Social Development Council (NESDC). This portion of the fund will be injected into the grassroots economy and create employment for those who returned to the provinces during the pandemic.
The fund will be spent effectively as it is subject to the NESDC's examination and monitoring by the public and organisations such as the United Nations Development Programme (UNDP).
Projects approved for financing under the fund are posted at thaime.nesdc.go.th for greater transparency and public monitoring.
Mr Somkid said the fund will help cushion the blow to the economy and generate jobs. Disbursements will get underway starting next month and run until the end of the year.
However, he said some economic sectors, such as exports, will not contribute much to the economy this year. He has directed the Budget Bureau to find an additional fund of 200 billion baht to help the economy.
The fund may also be utilised as a financial remedy where necessary, especially in the case of a resurgence of the pandemic or when other funds for sustaining the economy fall short from the end of the year to early next year when the Covid-19 problem is expected to subside.
"The 200-billion-baht fund is set aside from the current fiscal year budget. Of this, 80 billion baht is expected to be obtained for use starting next month," Mr Somkid said.
"Separate tranches valued at 40 billion baht and 90 billion baht are drawn from next fiscal year's budget," he added.
Luring foreign investors
Mr Somkid said the investments may not be of significant help to the economy this year because the entire world is experiencing a downturn due to Covid-19.
The government expects overseas investment proposals to the Board of Investment (BoI) this year to halve on last year's level, amounting to about 756 billion baht from 1,624 projects.
The deputy premier said the BoI has been assigned to review investment promotion plans with more focus on the service sector, which is Thailand's biggest strength. The sector has managed well during the pandemic containment programme as it thrives in providing medical and tourism services.
Thailand has caught the attention of several countries and territories looking to relocate their production, including China, Taiwan, Hong Kong and Japan. They are attracted by potential investments in food production, farm product processing and medical equipment manufacturing, which has shown to be Thailand's strong point.
The country has fared well in containing Covid-19 transmission, an encouraging prospect for investors. The BoI has been instructed to prepare investment packages to help businesses relocating to Thailand.
The packages must ease developments in smart farming and logistics. Details will be fleshed out and presented the BoI board for consideration.
Apart from an offer of tax privileges, other means of promoting investments are on the table, including the potential to tap into the Competitiveness Enhancement Fund worth 10 billion baht.
Criteria were recently tweaked to allow foreign investment projects valued at 100 million baht or less to be approved by an investment negotiation panel without having to be submitted to the BoI board. This will bring in more overseas investments.
Mr Somkid said he has issued a directive where the BoI will play a role in changing the economy's structure. Rather than heavily embracing the net export sector, the country would rely more on the production and domestic service sectors with increasing investment promotions given to local start-ups which come up with innovations.
The BoI is to support start-up businesses to grow in five years into "unicorns" with revenue of 30 billion baht or more per year.
"The production clusters in targeted industries are strong while the service sector is steadily expanding," Mr Somkid said.
"We need to bring that strength on par with what has been achieved in England, where the production sector developed into the services sector like education, and financial hubs were established," he added.
"That represented a shift in the production base which saw the economy grow from the services sector. Thailand must build on a similar structure which involves moving away from being a part of the supply chain and producing more of what makes us self-reliant. To get to that, though, we need a conceptual map," he said.
Mr Somkid said spurring domestic travel via the incentives recently approved by cabinet will help with the tourism recovery to a certain extent.
At the same time, Thailand is planning to attract quality tourists from overseas possibly in the last quarter of this year. The Covid-19 situation in the tourists' origin countries will be considered.
"We are most confident Thailand will re-emerge as the favourite choice of destination for tourists, thanks to the government's success in combating the outbreak," Mr Somkid said.
"When the country will re-open is a matter to be assessed. We need a secure system for public health management which can prevent a new virus scourge," he added.
Mr Somkid said he has told the BoI and state agencies to maintain the competitiveness of targeted industries, such as those of the S-curve, and be kind to investments from other countries like China and Taiwan while highlighting Thailand's appeal as the gateway to the CLMV.
"We also have to accelerate our investments in the Eastern Economic Corridor as well as the Southern Economic Corridor, the Northern Economic Corridor and the Northeast Economic Corridor," he said.
The cabinet last week appointed a special steering committee to direct investments in the economic zones and the special economic zones across 10 provinces.
Fund to assist SMEs
Mr Somkid acknowledged that releasing soft loans to SMEs using the BoT fund and low-interest loans by commercial banks has run into problems. Small-scale business operators have little access to the loans.
A fund worth 100 billion baht has thus been established to lend directly to SMEs, not via banks. The lending will be handled by the Office of Small and Medium Enterprises Promotion as Deputy Prime Minister Wissanu Krea-ngam will assist in sorting out legal hurdles.
Thailand as a CLMV financial hub
Mr Somkid said the Stock Exchange of Thailand (SET) will implement financial service cooperation previously reached with Hong Kong and the Chinese city of Shenzhen with the joint listings on course to being clinched so shares can be traded in Thailand or in the CLMV, which are countries with robust growth of between 5-6% annually.
The setting up of a bond fund will also be hastened. The fund will consist of bonds of various qualities that are not of investment-grade but still have financial potential. Through the fund, the investment will be raised and put out as loans to help struggling private-sector businesses survive the crunch. This will be overseen by the Securities and Exchange Commission, the SET and the BoT.