Structural reforms, skill development of work force key challenge for Thai economy

They made the comments at the “Thailand Economic Outlook 2024: Change The Future Today” forum organised by Nation Group to commemorate the 36th anniversary of Krungthep Turakij.

During the opening session, Sethaput compared Thailand's economy to a patient in recovery, with the overall foundation, such as domestic consumption, fiscal discipline, unemployment rate, and number of tourists, in good shape.

As a result, the country is recovering rapidly.

However, given the new risks and challenges posed by geopolitical tensions, global recession, high inflation, and climate change, he said that Thailand must improve its potential alongside deep economic restructuring in order to avoid suffering from any severe chronic disease.

He explained that the country's chronic disease risks right now are a shortage of skilled workforce, complicated regulations, and high debt management.

To avoid any of the aforementioned risks, he pointed out that the kingdom must first address those issues before taking serious steps to transform the economic structure and models.

"Thailand should currently focus on two areas for long-term health and growth. The first is the need for a ‘regulatory guillotine’ to cut out the red tape that is impeding growth. The second was the need to upgrade the workforce through upskilling, reskilling, better education, and simulating research and development," the BOT governor said.

Sethaput, who is also a member of the National Economic and Social Development Council, highlighted that government stimulus programmes and other spending projects were not the primary solution for recovery.

On the contrary, he said many aspects of restructuring required only small budgets but would have large impacts.

Such reforms, he added, would provide the Thai economy with a long-term foundation for growth.

The governor also mentioned the risks that global geopolitical tensions pose to Thailand's export-dependent economy. Thailand's neutral stance within Asean and the global sphere, on the other hand, would allow it to maintain friendly relations with its trading partners, he said.

Supply chain realignment was still required to maintain productivity and trade, he noted.

He was laying out the path for the country’s economic recovery just two days after meeting Prime Minister and Finance Minister Srettha Thavisin as the World Bank cut its 2023 GDP forecast for Thailand from 3.6% to 3.4%.

His idea of deeply restructuring the country was supported by the other three leading economists who shared their thoughts during the panel discussion on “The Risks and Opportunities: Overcoming Risks to the Thai Economy 2024”.

The three panelists, Santitarn Sathirathai, group chief economist of Sea Group, Southeast Asia's leading digital platform; Kiatipong Ariyapruchya, senior country economist at the World Bank (Thailand); and Nonarit Bisonyabut, research fellow at Thailand Development Research Institute Foundation (TDRI), unanimously agreed that Thailand's current state is not bad but was not good enough to compete with others, including neighbouring Southeast Asian countries.

Santitarn compared Thailand to an “ageing athlete full of injuries”. As a result, the country's readiness to cope with the competition and attract investment undoubtedly lags behind others in the region.

He said that Thailand was no longer the first choice for foreign direct investment in Asean. Instead, Vietnam, Malaysia, and Indonesia are at the top of the list.

To become the first option among, he said that Thailand must modify its rules and regulations to make doing business easier while also implementing proactive policies.

Meanwhile, he encouraged the government to sign more bilateral cooperation agreements so that it could force the country to accelerate its own capabilities to meet global standards.

Furthermore, he said that reskilling workers in all sectors is essential as Thailand is an ageing society, adding that having capable smart players and driving the issue as a "national movement" to achieve transformation was crucial.

Besides, he urged all sectors to focus on green projects, as sustainability is an important factor for Thailand in attracting big foreign funds such as BlackRock.

According to Kiatipong Ariyapruchya, senior country economist at the World Bank (Thailand), an ageing society, geopolitics, and climate change are three major risks to the global economy, and Thailand must come up with appropriate solutions to address the issues.

He pointed out that Thailand's priority should be to transform the country so that it could be a part of the global value chain. Meanwhile, the country should work with all stakeholders to foster mutual cooperation, knowledge sharing, co-development, and technological transition.

He also urged the government to implement targeted strategic measures to prevent poverty among the elderly.

"When it comes to Thailand's macroeconomic picture, we [Thailand]vare not sick runners. Unfortunately, we have been hurt and are afraid. In fact, we can run faster than this. Many of these are limitations that we impose on ourselves. This can be resolved by enacting new policies," he said.

Nonarit Bisonyabut, research fellow at Thailand Development Research Institute Foundation (TDRI), urged Thailand to find a new theme for future growth that would meet the needs of the digital economy.
As an example of a new theme, he cited the green project, the Bio-Circular-Green Economy Model, and the low carbon economy.

He agreed with Kiatipong and Santitarn that the country's workforce urgently needed to be reskilled in order to embrace essential abilities that would improve efficiency and productivity.

Pakorn Peetathawatchai, president of the Stock Exchange of Thailand (SET), spoke of his ambitious goal of introducing the country's capital market to more international investors around the world.

He emphasised that, as a frontline regulator, the SET must transform itself by adjusting its regulations to be more cautious, embracing innovative technology such as Artificial Intelligence and Big Data to strengthen its efficiency, and provide a transparent platform that allows all parties to enter the market equally.

Meanwhile, he pointed out his intention to promote the SET as one of the best options for global investors to invest in the sustainability theme, citing the country's listed companies as the global leaders in sustainability solutions and management.

Prime Minister Srettha Thavisin, who delivered a keynote speech at the forum's afternoon session, backed up his goal.

Srettha said that his government should take the lead in promoting the country rather than relying on the private sector, as it had in the past.

This government must adapt to the new circumstances in order to boost the country's confidence and attract potential investors, he added.