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NEWS UPDATES Asean Affairs           22   July  2011

Thailand needs change to compete

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Reforms in strategic sectors and education are needed for Thailand to maintain competitiveness with other regional economies, as the new government's policies threaten to make the country less attractive to foreign investors, say business leaders.

Nandor von der Luehe, chairman of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), said Thailand is slipping regionally in sectors other than manufacturing and tourism.

Thailand has not taken steps to boost its capacity and capabilities in strategic sectors to capitalise on regional economic integration when the Asean Economic Community (AEC) starts in 2015, he said.

"Relevant agreements under the AEC framework targeted allowing 51 percent foreign equity in all service sectors by the end of 2010, but there appears to have been little progress as far as Thailand is concerned," Mr. von der Luehe.

"We see competing economies moving ahead of Thailand and thus attracting capital and skills in important sectors."

Mr. von der Luehe pointed to Malaysia, saying it had moved very quickly in opening up its service sector.

Thailand slipped from 16th place to 19th out of 183 countries surveyed for the World Bank's "Ease of Doing Business" report, but to start a business, it ranks a very poor 95th, he said.

Hiking the daily minimum wage to 300 baht as promised by the Pheu Thai Party, which won a majority in the July 3 general election, will make Thailand less attractive to labour-intensive firms.

Increasing the minimum wage to 300 baht would be acceptable if the government ensured productivity was raised too, said Mr van der Luehe.

"Otherwise, we'll have to pay more and see costs increase without getting anything in return," he added.

Mathew Verghis, the World Bank's lead economist, said Pheu Thai's proposed corporate income tax cut to 23 percent from 30 percent is unrelated to the wage hike.

Thailand needs to open up its service sector, which would largely involve amending the Foreign Business Act, and reform its education system to keep pace with regional competition, he said.

Prasarn Trairatvorakul, governor of the Bank of Thailand, said 2011 will be a year of normalisation for the Thai economy in several regards.

"Moving ahead amid tough global competition will mean looking beyond what is merely normal," he said.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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