ASEAN KEY DESTINATIONS
Thailand's economy “needs second engine”
Thailand needs to develop a second engine of growth and reduce the economy's dependence on exports, Finance Minister Korn Chatikavanij says, as reported by the Bangkok Post.
Exports, which account for as much as 70percent of the economy, do not actually benefit many in the labour force and may actually contribute to a wider income gap, Mr Korn yesterday told the Asia 21 conference organised by the South Korean government and the International Monetary Fund. Corporate income tax revenues have doubled since the 1998 crisis, he said, while minimum wages have fallen when adjusted for inflation.
One course for the country may be in a new economic model based on tourism or auto clusters. This will help diversify the economy and narrow the income gap, he said.
"In the export sector, only the [company] owners or shareholders benefit from the earnings, while employees earn [minimum] wages," Mr Korn said.
"Yes, low wages are one key factor why foreign companies invest in Thailand. But in the end, low wages also contribute to the income gap."
The government has made the closing of the income gap and an increase in economic opportunities for the rural poor a key platform of its social and political reconciliation programme. The Thailand Development Research Institute says Thailand has one of the widest income gaps in the world, with 20 percent of the wealthiest people in charge of 55percent of the national income while the poorest 20 percent hold just 4.4 percent.
Mr. Korn said economic policy in Thailand has been developed mostly in a top-down fashion without consideration for the actual needs of people at the community level.
"For instance, longan farmers in Lamphun complain and protest about depressed prices, a lack of ovens and other nitty-gritty problems. This has nothing to do with macroeconomic planning at all. If we don't deal with it, next year, the longan planters will only complain again." Authorities must focus more on community needs in setting public policy.
Mr. Korn said that when it comes to tourism development, authorities will reach out to local businesses in Phuket and Krabi to discuss how best to support development in their provinces. "In the future, the government will have to consult and listen more to local companies. We'll be more in touch with the provincial chambers of commerce."
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