Tuesday, August 30, 2011

Thirachai vows focus on competition

Published: 30/08/2011 at 12:00 AM
  • Newspaper section: Business

The new government has vowed to move quickly to restore political and economic stability, cooperate with the private sector and fight corruption to strengthen the country's competitiveness.
Thirachai Phuvanatnaranubala, the finance minister, said yesterday that reconciliation and political stability are among the priorities of the Pheu Thai-led government.
Mr Thirachai, a former secretary-general of the Securities and Exchange Commission, said fiscal and monetary policies would be coordinated to ensure economic stability.
"The government will maintain fiscal discipline. But in the short term, we have to accept that expenses will be higher than income," the minister told the Thailand Competitiveness Conference 2011, co-hosted by the Thailand Management Association (TMA).
"We want strong financial institutions that can compete fairly," he said.
Mr Thirachai affirmed that the government would act as a facilitator for the private sector and continue to invest in public infrastructure, including railways connecting different parts of Thailand and other countries in the region, to lower logistics costs.
As well, he said the Yingluck Shinawatra administration would appoint a committee to address the corruption that has the business sector so worried.
Arkhom Termpittayapaisith, the secretary-general of the National Economic and Social Development Board, said Thailand has barely improved in terms of competitiveness, moving from 28th place in 2003 to 27th this year in the world ranking of the International Institute for Management Development (IMD).
Significant weaknesses include infrastructure, human capital and research and development.
"We have seen investments falling considerably, now standing at 18-19% of gross domestic product compared with 40% in the past," Mr Arkhom said.
Low investment means the country has little chance to generate more income in the future. Thus the private sector has roles to play in boosting investments in the areas of water, medicine and sport, he said.
Stephane Garelli, who directs the World Competitiveness Centre at the Switzerland-based IMD, cautioned the new government to balance the two likely effects of a minimum wage hike to 300 baht a day.
Raising the minimum wage normally increases domestic consumption because consumers have more disposable income to spend. On the other hand it can spur inflation, which is back on the radar screen in many countries.
"Government spending [to support populist policies] should not be higher than the revenue it can generate," said Prof Garelli. "Also, do not confuse spending and investment, especially on infrastructure, which is the key to boosting the country's competitiveness."
Noting the world's growing concern about public debt, Prof Garelli said Thailand's public debt, now at 40% of gross domestic product, should not rise to more than 60% of the GDP.
Suzanne Rosselet, the deputy director of the World Competitive Centre, said that if Thailand can address its major weaknesses, it has the potential to move up 10 places in the world competitive ranking to 17th place, remaining between Malaysia and China.
Within Asean, Thailand ranks third behind Singapore and Malaysia.
While the country has been doing well in basic infrastructure, there are shortfalls in technological and scientific infrastructure, as well as health care and education, Dr Rosselet said.
Among the challenges ahead are accelerating budget disbursement in major public infrastructure investment, tackling labour shortages in the production sector, enhancing the green economy and taming commodity prices.
The strategy for Thailand includes maintaining export competitiveness, emphasising R&D and innovation to develop indigenous technologies, and improving the ease of doing business.


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