Somkid talks up economic growth
Drastic reform still key to completing picture
Favourable geopolitics and drastic reform are the key factors driving Thailand's prosperity as it aims for well-balanced and sustainable growth over the long term, says Deputy Prime Minister Somkid Jatusripitak.
He said economic growth in 2018 will be higher than the 4.5% forecast by several organisations because of mainly economic factors. "I believe that they [predictors] have to revise their predictions higher," Mr Somkid said.
The deputy prime minister expressed his confidence about the economy at Thailand Focus 2018, the annual seminar organised by the Stock Exchange of Thailand.
He said all indicators reflected Thailand's economic strengths. Both consumer confidence or industrial sector confidence were at an historical high.
In the first six months of this year, exports rose by more than 10% with a trend towards continued growth, compared with 8% under previous projections.
Private investment was also on the road to recovery with applications to the Board of Investment (BoI) jumping to US$19 billion in 2017, up from $6 billion in 2015. Meanwhile, foreign reserves are as high as US$200 billion.
He said the government accomplished the first mission to restore investors' confidence while the second was to accelerate economic structural reform to enhance Thailand's competitiveness.
He said it had already been three years and the first mission was accomplished. "I can tell that Thailand's economy has fully recovered," he said.
"But a key problem which needs to be further solved is inequality."
Mr Somkid said economic recovery, however, is not an ultimate goal of the government, but "economic balancing and sustainability" are.
"The key factor which will make us to reach that goal is major reform," he said.
The major component that offers a great opportunity to Thailand to utilise its strengths and step into a better future is favourable geopolitics.
Thailand is the centre of CLMVT sub-region (Cambodia, Laos, Myanmar, Vietnam and Thailand).
With a population of more than 200 million and 6-8% annual economic growth on average, the CLMVT is becoming the "star" of Asia, particularly at the time of a sluggish economy in Europe and the America First policy in the United States.
CLMVT lies at the centre geographically of major economic initiatives hatched by many countries.
They include China's One Belt One Road, Japan's Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Indo-Pacific partnership pushed by the US, Japan and India and the Regional Comprehensive Economic Partnership comprising Asean plus six.
The RCEP grouping, with half the world's population, is expected to be implemented by the end of this year.
He said there are three main transformation strategies which Thailand must undertake to fully realise its potential and narrow income disparity.
First, major investment in basic infrastructure which Thailand has lacked for decades. The last major investment of its kind was the Eastern Seaboard 30 years ago. One of the few electric train lines in the country is the BTS which was constructed about 20 years ago.
Now the government has pushed forward various major investments including 10 mass transit plans, 10 double track railways and an investment of US$50 billion or 1.7 trillion baht of infrastructure in the Eastern Economic Corridor (EEC) in the next five years.
Private investment in the EEC in the first two and a half years was 670 billion baht while many projects are expected to settle in the EEC over the next two to three years.
He said investment in infrastructure will not affect the discipline of public debt not exceeding more than 40-50% of GDP because the investments will come from the government budget, the Public Private Partnership (PPP), and Thailand Future Fund which will be sold to the public in October or November.
Second, Thailand is undergoing agricultural and industrial reforms aimed at boosting the value of products through incorporating technology, innovation, quality enhancement, cultural content and creative design.
Third, the transformation into a digital economy in accordance with Thailand 4.0 policy will bring the country into a new development dimension.
"In the past, Thai politics was not favourable for the country having a long-term strategy but with the stability we have gained in the past four years, we can pivot towards fundamental reform for the future," Mr Somkid said.
Industry Minister Uttama Savanayana said the government will launch the terms of reference (ToR) for the U-tapao airport expansion and Map Ta Phut seaport phase three in October, which would help make the EEC scheme more viable.