Bangkok--5 Oct--Siam Commercial Bank
As Thailand gears up for an unprecedented process of major reforms, SCB Economic Intelligence Center (EIC)'s annual conference will explore how the nation and its industries can overcome the structural impediments that have slowed GDP growth to sub-par levels during the past eight years. Titled “Thailand in Transformation,” the event will feature top executives and experts in the fields of banking, economics and business.
Keynote speaker will be Dr.Prasarn Trairatvorakul, governor of the Bank of Thailand, who will discuss “Retooling Thailand’s monetary and fiscal engines to uplift our growth potential.” SCB chief economist and first executive vice president Dr.Sutapa Amornvivat will speak on “Thailand at a structural crossroads, where do we go from here?”
A panel discussion will address “Focusing on strategic game plans amid national reforms.” The talk will feature four top executives: Dr. Vichit Suraphongchai, chief executive officer of Siam Commercial Bank PCL; Mr. Isara Vongkusolkit, chairman of the Thai Chamber of Commerce; Mr. Boonchai Chokwatana, chairman of Saha Pathanapibul PLC; and Ms.Supaluck Umpujh, vice-chairwoman of The Mall Group. Their discussion will propose ways for businesses to improve strategy as Thailand works to optimize its growth potential.
“This seminar will focus on the absolutely crucial issue of Thailand's underlying growth potential, analyzing both opportunities and threats from coming changes that include the nation's demographic structure, its labor force and the structure of its export industries," said Dr.Vichit.
"These discussions will present concrete proposals on how the private sector, banks and government can undertake policies and reforms that will solve the nation’s structural problems, so that Thailand can strengthen its economic leadership in ASEAN,” Dr. Vichit added.
Dr.Sutapa observed, “Thailand is at an important crossroads. The economy's recently uneven growth was impaired by various obstacles, including the global financial crisis of 2008, nationwide floods in 2011 and political instability. But these temporary factors have masked the true underlying problem of a decrease in Thailand's potential growth. In other words, the economy's fundamental, structural strength and capacity to grow has declined during recent years, although this has not yet been widely recognized."
She added, "Moreover, coming changes in the economic environment, such as the rising cost of borrowing, China’s economic rebalancing, intensifying competition from ASEAN countries, and the high level of household debt in Thailand, will weaken factors that have previously been major drivers of the economy. These changes will therefore expose more of Thailand’s fundamental weaknesses.”
EIC estimates that Thailand’s potential growth rate in the medium term will average only 3.5% per year, because the labor force is shrinking and lacks needed skills; infrastructure investments during the past two decades have been inadequate; and productivity growth has slowed. Thus Thailand must confront the question of how to lift growth.
EIC proposes three strategies to boost potential growth based on analysis of Thailand’s strengths and weaknesses:
1. Move up the value chain toward more innovative technology. The government should lead the way in promoting investments in technology that corresponds to global demand and encourage businesses to spend more on R&D using policies, such as establishing product test centers.
2. Search for new markets. Government should adopt policies to help SMEs better compete abroad. For example, the Board of Investment (BOI) should be restructured to provide the tools that businesses need to penetrate nearby high-potential markets, such as the CLMV countries (Cambodia, Laos, Myanmar and Vietnam) and Asia's growing market of middle-class consumers (including expats and tourists), who demand increasingly sophisticated products.
3. Adapt to changes in market demographics. Businesses need to adjust their strategies to changes in demand shaped by aging of the population, on the one hand, and on the other hand, by Generation-Y consumers (born during 1981-2000), who now account for 28% of Thailand's populace. This group of young consumers has different spending behavior than others.“EIC hopes that the conference will help businesses spot new insights and opportunities among the ideas discussed by Thailand’s top executives. We also hope it will encourage companies to invest in increasing their competitiveness and capacity, thereby supporting the nation's sustainable growth,” said Dr. Sutapa.