“Stop and go.” “Sway and swing.” Those were among the phrases that officials voiced at a recent seminar in Bangkok organized by the Thailand Board of Investment (BOI). Contrast that with their use of words like “continuity” and “security” to describe the junta-run government’s economic policies since it seized power.
Thailand’s rulers, led by Prime Minister General Prayut Chan-o-cha, are waging an all-out campaign to attract foreign investment to the country’s infrastructure and industrial sectors. It’s part of a wildly ambitious plan to supercharge the economy and transform Thailand into a major, modernized force in Southeast Asia over the next 20 years.
Officials are frank about the need for a jumpstart. Kobsak Pootrakool, who holds the title of minister attached to the prime minister’s office, told the investment seminar that Thailand’s international competitiveness has been on the decline in recent years. GDP growth lags that of Malaysia, Indonesia, the Philippines and Vietnam. In the 2018 edition of the Bloomberg Innovation Index, Thailand ranked 45th. With a population of around 69 million, it can’t compete with China and India as an attractive target for large amounts of foreign investment.
None of this is stopping Thailand from embarking on a journey to achieve that very goal. Deputy Prime Minister Somkid Jatusripitak laid out the broad outlines of a three-pronged investment strategy, involving mega-projects, development of the country’s Eastern Economic Corridor (EEC), and creation of digital infrastructures.
Projects to improve physical networks include substantial investments in electric and high-speed trains, double-tracking of railways, and the development of multiple airports, all intended to support both tourism and the movement of freight. Energy initiatives are targeting the construction of natural gas pipelines and development of new forms of alternative power.
Infrastructure investment will reach $32bn between 2017 and 2021, with electricity projects worth more than $224bn over that time, Jatusripitak said.
The EEC is a special investment zone targeted by the government for aggressive development. Projects within the region are intended to beef up and streamline the movement of goods via multiple modes, both domestically and between neighboring countries. Jatusripitak said the work will transform the EEC into “a smart logistics hub.”
Investment in digital infrastructure is a major element of the overall investment scheme. Planners have dubbed the project “Thailand 4.0,” involving the extension of broadband access to cover some 75,000 villages, as well as the encouragement of new technologies through generous grants, tax incentives and development aid. Targeted sectors include automotive, aviation, medical and bio-based energy and chemicals. The nation’s goal is to rank in the top half of the Bloomberg Innovation Index “within a few years,” said Kan Trakulhoon, a member of the policy committee overseeing development of the EEC.
Transportation alone, encompassing air, rail, road and maritime, will account for a substantial portion of the projected work. Thailand has come up with a multi-phased Transport System Development Strategy that stretches from 2017 through 2036. A number of big projects are already underway, with $50bn earmarked in 2016, $25bn in 2017, and another $6bn to be spent in fiscal 2018, according to Deputy Minister of Transportation Pailin Chuchottaworn.
At the highest level, Thailand has announced a 20-year national strategy that promises reform in 13 distinct areas, ranging from politics and law to police and education. Complicating that effort is the question of when the junta will allow new elections. The ruling National Council for Peace and Order is approaching the four-year mark in power, yet remains determined to protect its ambitious investment program against opposition interests. Officials had promised elections by late 2018, but recent squabbling over the details of a parliamentary election bill could stretch that to as late as February of 2019.
The junta clearly understands the importance of playing a larger role in Southeast Asia’s regional economy. Last month, Jatusripitak said the government is looking into the possibility of joining the 11-member Trans-Pacific Partnership (recently rebranded as the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership”). Why Thailand failed to get on board with the pact in the first place remains unclear, but it could be related to the unrest and uncertainty that arose around the time of the coup. Still, critics have argued that Thailand won’t achieve its goal of participating more fully in regional free trade until democracy is restored.
Government officials point to some recent positive numbers as signs that the post-coup Thailand has become a more stable and vibrant performer. In the past two years, Jatusripitak said, economic growth has risen from 2.8 percent to 4 percent. Export value has increased by more than 10 percent, to $236bn. And foreign investment has grown from 537 projects with a total value of $3bn to 818 projects worth $9bn.
Thailand is now engaged in a concerted effort to boost those numbers. The recent seminar in Bangkok, entitled “Thailand Taking Off to New Heights,” was just one of many events and meetings to be staged for foreign investors, who will be expected to shoulder a hefty portion of the price tag for the nation’s 20-year development plan. (Public-private partnerships are expected to account for up to 70 percent of investments within the EEC, depending on the project.)
Whether the nation’s current political situation will help or hamper those efforts remain to be seen. But the government’s message is clear. At a recent presentation at the U-Tapao International Airport in the eastern province of Rayong, it asked prospective investors: “What are you waiting for?”
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