Thailand’s Role in Asia and ASEAN in the 21^st Century

Located at the heart of ASEAN, Thailand is an ideal place for trade and investment. The country also has a good transportation networks with a strong banking system, developed infrastructure, and skilled labor force.

Regional connectivity is a top priority in the plan for formation of ASEAN Community in 2015. The strategically advantage in terms of geography enhances Thailand’s role as a key player in creating regional connectivity, thus Thailand has positioned itself as the regional connectivity hub and growth centre of ASEAN and Asia. Our commitment to integration to ASEAN Community in 2015 adds to the need of new investment in physical connectivity within and among ASEAN region which we are preparing to invest.

The ASEAN Economic Community's objective is to create a competitive market of over 600 million people in 10 ASEAN countries.  There will be free flow of goods, services, investment capital and skilled labor following the integration.  AEC is coming at a time when investors recognize that investment in emerging markets is attractive than in other part of the world.  Many businesses in Thailand have begun preparing themselves three years ahead of time to meet the challenges and opportunities of the ASEAN Community.  Many new areas of integration will also benefit Thailand such as tourism and health services. If the collaboration is extended to the Asia – Pacific region, the market will be bigger and the benefit will multiply.

In addition, subregional cooperation will serve as the mechanism to realize the goals of ASEAN Community.  Thailand has performed as proactive member of GMS and IMT-GT since the beginning of the programs in 1992 and 1993 respectively.  Thailand has also been a supportive development partner to our neighboring countries in both technical and financial assistances. These efforts have contributed to address fundamental development needs and also to bridge development gaps between the old and the new ASEAN member countries.

The Government and Competitiveness
In promoting Thailand's economic growth and development over the longer term, given the challenges, Thailand's public-private partnership legislation has been overhauled in order to encourage more joint-venture between the government and private investors for large infrastructure projects. The streamlined approval process will enhance transparency and ensure investor confidence, fairness and accountability.

Many large infrastructure projects are to be launched in the coming years, especially those dealing with rail transportation. Progress continues to be made on expanding the network of the mass transit system in and around Bangkok. Negotiations are under way to construct a railway network that would link up mainland Southeast Asia in which Thailand is an important hub. This will indeed be part and parcel of the effort to strengthen ASEAN connectivity. These will require considerable amounts of investment and expertise and need close collaboration between the government and the private sector. A streamlined and improved public-private partnership mechanism would greatly facilitate these future endeavors.

Government Policy
Urgent international policies to be implemented in the first year of present government was to expeditiously restore relations and develop cooperation with neighboring countries and other foreign countries so as to boost economic growth in the region, in particular expeditiously address border issues via diplomatic procedures based on relevant treaties and laws, pursue the obligation to integrate into an ASEAN Community in 2015 in the economic, social and security aspects, as well as link intra-regional and inter-regional transportation.

Policy on foreign affairs and international economic during the four-year term of the present government are namely to (1) expedite the promotion and development of relations with neighboring countries by enhancing cooperation between the public sector, private sector, people and the mass media in order to cultivate mutual understanding and instill closeness among all sectors which will lead to expanded cooperation in the areas of economics, trade, investment, tourism promotion, transportation and others under sub-regional frameworks so as to promote good neighborly relations; (2) create unity and promote cooperation among ASEAN members in order to realize the goal of creating an ASEAN Community, as well as promote cooperation with other countries in Asia through various cooperative frameworks, and prepare all sectors for the move towards becoming an ASEAN Community by 2015 in the economic, socio-cultural and security areas; and (3) utilize regional connectivity within the ASEAN region and sub-regions in order to expand the economic base in terms of production and investment, prioritizing the development of provinces and groups of provinces situated along the economic corridors and border areas.

The Prime Minister of Thailand has headed many missions to visit other countries in order to strengthen diplomatic ties and economic partnership.  We also received many similar visits by delegations from many countries.  We are also active in ASEAN forum in preparing for the formation of ASEAN Community in 2015. These activities will continue to be priorities this year and next year.

National Development Strategy and Planning
The sustainable development model has been integrated into Thailand’s five-year national economic and social development plans since the 8th, the 9th, the 10th and the 11th Plans of which His Majesty the King’s philosophy of sufficiency economy has been adopted in order to boost the country’s self-sustained immunity along with the conventional growth model.

In future development context, Thailand will have to face with several changes both in the external environment and of the internal situation. Seven changes are analyzed as challenges and risks of the country namely on changing global rules and regulations, shifting towards a global economy in the multi-polar world, ageing society, climate change, securing food and energy supplies, keeping pace with technological advancement, and safeguarding against international terrorism.

Guided by the Philosophy of the Sufficiency Economy, the Eleventh National Development Plan (2012-2016) is geared to foster people-centred development and broad-based participation to meet the objective of balanced, integrated, and holistic development by pursuing the shared vision of “a happy society with equity, fairness and resilience”. The Plan introduced the green economy and green society as its additional mechanism to gear towards the country’s ultimate goal of the sustainable development. Six development strategies with high priority are indicated as follows:

• First Strategy: promoting the just society. Objectives of the strategy are to create opportunity for all to access to funding, resources, and income earnings; to increase income and social security; to assist the poor, the underprivileged, foreign labor and labor force in the informal sector, and the ethnic groups to gain access to social services on equity basis, and to support all concerned development partners to participate in the inequality alleviation and conflict resolution process in an efficient manner and to jointly develop the country towards a society with quality.

• Second strategy: Developing human resources to build a lifelong learning society. Objectives of the strategy are to increase potential of all Thais based on human development towards the disciplined mind, the synthesizing mind, the creative mind, the respectful mind and the ethical mind, and to develop a family, community and social environment that is conducive to human development and in accordance with economic and social changes.

• Third strategy: Balancing food and energy security. This strategy aims to strengthen the agricultural sector to provide quality food for domestic consumption and secure farmers’ income including the conservation of herbal plants; and to balance production of foodstuffs and alternative energy from agricultural commodities so that needs be fulfilled and domestic demands met.

• Fourth strategy: Creating the knowledge-based economy and enabling economic environment. This strategy aims to promote Thailand as the regional hub of creative and innovative products. Knowledge technology and creativity will become crucial factors driving the country towards the inclusive, balanced and sustainable growth. In this connection, value-added and value creation will be embedded in every stage of the supply chain of goods and services. The favorable environment needs to be facilitated with enabling factors, in particular a freer and fairer market mechanism, to encourage efficient trade and investment, develop new entrepreneurs, create quality infrastructure and logistics networks, and develop economic risk management.

• Fifth strategy: Strengthening regional economic and security cooperation. This strategy is set up in order to prepare and adapt to the global and regional challenges, entering the ASEAN Community in particular, promote the economic competitive advantage and emphasize role of the nation in the international arenas as well as alleviate negative impacts and international problems

• Sixth strategy: Managing natural resources and the environment towards sustainability. This strategy is focused on conserving and restoring natural resources, harnessing the production and consumption patterns towards the environmentally friendly society, and gearing up for the climate change adaptation.

Thailand’s Strategy on Country’s New Growth Model
Under the current global economic climate, it is unavoidable that our attention is focused on keeping our economy growing and making sure that the impact from the global economic slowdown is minimized and under control. Therefore, it is more important than before that we remind one another of the need to look beyond the next 5 to 10 years, or even 20 years, and think about what kind of a world we will leave for the generations to come.

It is clear that creating competitiveness is the first step towards the sustainable development of Thailand together with neighboring countries particularly in East Asia. For Thailand is one among the ten ASEAN members, the 3 pillars of ASEAN Community and the Master Plan on ASEAN Connectivity will facilitate the formation of single market and production base. This will generate regional supply chain and will enhance the competitiveness of the ASEAN economies. Even though each ASEAN country has its own competitive-edge, only through enhanced connectivity can ASEAN truly achieve a higher level of competitiveness as a group and realize our full potential as a region.

Even with the satisfactory growth in 2012, Thailand must do more to ensure that it can achieve consistent growth rates of around 5.0 - 6.0 percent in the long term. Thailand’s fundamentals need to be addressed in order to promote sustainable development growth in the long term and build a better Thailand for future generations. To achieve this, it needs to move up each of the value chain to enhance productivity while creating new competitive advantage in sustainable way.

It has become apparent that we need to revise our growth model that has relied so heavily on exports. Simply relying on our natural resource abundance and cheap labor will not be sufficient for letting us evolve the current “middle income trap”. Thailand economy needs to be restructured towards skill-based production and innovation. More investment is needed on education, skill trainings, technology and R&D so that our growth can be more sustainable in the future.

This requires new approaches in agriculture and industry. Thailand’s economic and industrial development in the next stage will adjust the investment promotion policy for the restructuring of Thai economy towards sustainable economic growth in order to enable the country to depart from “middle-income trap”, by emphasizing on knowledge base and high technology production activities especially for value-added industrial sectors and green growth.

Presently, Thailand gives importance to laying down foundation for national development in order to escape the so-called “Middle Income Trap” and become an advanced country in the future. The Royal Thai Government has recently announced “Country Development Strategies” as Thailand‘s new growth model focusing on increasing competitiveness, inclusive growth and green growth, and better internal process.

1. Growth and Competitiveness is aimed at maintaining the economic growth rate and enhancing the competitiveness in order for the country to escape the “middle-income trap” and to enter into the high-income country category in the future. The economic growth rate in the long term is aimed to expand at 5.0 - 6.0 percent. Key measures include:

• Strengthen the existing industries and develop future industries as a new source of income

• Create value added to agricultural and service sectors to secure country’s main source of income and employers

• Promote enabling environment by ensuring macroeconomic stability; investing in science, technology and innovation to create value-added; developing legal frameworks that encourage national competitiveness; and providing world class quality workforce, infrastructure, logistic  network and ICT.

• Increase the competitiveness by leveraging benefits from ASEAN integration

2. Inclusive Growth is aimed at reducing the inequality and distributing benefits from inclusive growth. Key measures include:

• Create opportunity for access to resources and infrastructures in order to create job and secure income
• Provide opportunity to accessing quality social services
• Equalize access to justice system
• Protect the rights of Thai workers to prepare for entering ASEAN community
• Establish international labor standard to support future labor migration
• Build a good cooperation in the prevention of terrorism, crime, drugs, disaster and  epidemic spread
3. Green Growth is focusing on the environmental friendly growth. Key measures include: 
• Reduce energy consumption in industrial sectors, transportation sectors and households
• Increase the use of clean energy
• Transit the manufacture process to a low-carbon practice
• Conserve natural resources and increase forest area to absorb green house gas
• Acclimatize  and cope with global climate change
• Build a good collaboration  in the region to support the economic growth with ethical and no environmental impacts
4. Internal process is aimed at reforming the public administration system for better internal process. Key measures include:
• Integrate strategies at all levels to address sole management to aligned target and integrated approach
• Connect agenda based with area-based strategy derived from local needs to offer social welfare throughout Life cycle
• Prepare government manpower and improve advanced rules and regulations together with an effective justice system that correspond with economic development and the ASEAN integration.
The need to improve infrastructures after the floods was essential to recovering trust in Thailand as an attractive investment destination. Thailand’s mega-flood in 2011 caused severe damages to economy and society with the reduction of GDP in most sectors, especially in the central plain where most factories are located as well as cutting transport and logistics system in and around Bangkok and vicinities. The estimated losses in GDP were about USD 10 billion resulting in contraction of Thai economy in the last quarter of 2011 by -8.9%, wiping out almost all income earned during the first nine months. Thus, Thai economy could grow by only 0.1%, nearly zero growth. As compared to the natural disasters around the globe, this mega-flood was perhaps ranked the fourth since 2005, and it was also the one among others that brought considerably damage in 2011, only second to Japan’s Tsunami incident attacking earlier in March of the same year.

Thai government has put enormous efforts to alleviate sufferings of the affected people and provide support in rehabilitating their damaged properties.  We have also been actively assisting the affected industries for their rapidly recoveries.  At present, 100% of affected industries have already resumed full operations and help make a great contribution to our economy and exports in the first quarter of 2013.

We are preparing to invest in our infrastructure and flood prevention system for the future.  The Royal Decree on Investment Loan for Water Resource Management and Future Development, in the amount of 350 billion Baht, was approved by the parliament and the bidding process will be completed by June.

With regard to investments in transportation and logistics, Thailand has long underinvested in this sector and has had to rely on roads for around 86 percent of its transportation. This is very high when compared with other countries, and it has led to high energy costs, thus reducing Thailand’s competitiveness.

The Draft Act on Investment Loan for Transport Connectivity Infrastructure, in the amount of 2.2 trillion Baht (USD 66.7 billion) has passed the parliament.  This act will support the investment in infrastructure over the next seven years. The objectives of this investment program are to increase the country’s competitiveness, reduce logistic cost and build connectivity to our neighboring countries. The program consists of, for example, new high speed railways and dual train track development, upgrading existing rail system, completing 10 mass transit rail lines in Bangkok, a better overall road network for connecting ASEAN economic corridors, improved sea ports, and more border facilities to enhance border trade, and motorway to the western border to connect with the planned Dawei deep-sea port in Myanmar.

The shift from road to rail will significantly reduce time and cost of transportation of products to Thailand’s neighbors and Asia. Better linkages will lead to development of new towns, cities, and regional hubs in other parts of Thailand, and ultimately, neighboring countries, the ASEAN Community, and beyond. This will generate more income and consolidate Thailand’s role as the region’s connectivity and logistics hub.
Better infrastructure can boost demand and support long-term growth by linking various revenue-generating zones, from industrial areas to agricultural zones, new areas for tourists, and border areas. Living standards and quality of life of all citizens should increase through reduction of traffic and pollution in city areas. Faster and more convenient transportation to work leads to better productivity.

Conclusion
The goals of sustainable development can be pursued in the ‘Asian Way’. The philosophy of ‘Sufficiency Economy’ emphasizes the importance of middle path. The recent economic crisis in the US and the current trouble in Europe remind us how important it is to pursue a goal of sustainable development. A fast pace of growth is justified only if it is also contributing to sustainability and equitability.