Bangkok--11 Mar--Verve
The European Association for Business and Commerce (EABC) today hosted a panel discussion to set forth European business position towards the Thai economy in 2015. It strongly suggests that Thailand should embrace innovation as the mean to break loose from middle income trap, and gives five key recommendations to drive Thailand towards a more competitive economy and greater attractiveness to European investment when ASEAN Economic Community (AEC) is fully implemented. Thailand is urged to develop more favorable economic factors and structures in order to gain full privileges from free trade agreements (FTA) and World Trade Organization (WTO) agreements – a move that will compensate losses from the exit of Thailand from Generalized System of Preferences (GSP) scheme early this year.
Mr. Rolf-Dieter Daniel, President of EABC, said: “It’s delightful to see Thailand joining the upper-middle income economies as classified by the World Bank. It means that the Thai citizen is enjoying better quality of life and the country has the potentials to become a developed country in the future. However, the new status brings new challenges, including the loss of GSP privileges and concerns that Thailand is entering the so-called stage of middle income trap where a developing country struggles to step over an efficiency-driven economy and achieve an innovation-driven economy to become a high income country.”
“With confidence in Thailand’s potential, the EABC has organized and facilitated 10 advocacy working groups, representing leading European companies in Thailand, in order to put together the EABC’s policy recommendations in the European Business Position Paper 2015. In addition, we are holding a panel discussion with our EABC representatives and honorable discussants on “Strengthening Thai-European Economic Relations towards a More Competitive Thai Economy” to collect and put forward business issues and recommendations, aiming to strengthening Thai business sectors and building a strong foundation for sustainable economic development,” Mr. Daniel added.
“Thailand is facing challenges, due to economic turbulence, national instability, and increasingly competitive environment in the regional and global markets, in developing new strategies to maintain its attractiveness as a leading investment destination in ASEAN. The Free Trade Agreement (FTA) negotiations between Thailand and EU can be one imperative factor that will bring mutual benefits to both economies. Gains from the completion of FTA negotiations are expected to improve Thailand’s social welfare and resource allocation as European can bring in capital, high technology, expertise, innovation, and improvement in regulatory standards and procedures,” said Mrs. Lyn Kok, EABC Vice President and Chairperson of EABC Cross Sectoral Issues Working Group.
“Thailand ranks as the third largest trading partner of the EU while the EU is the second largest source of foreign direct investment (FDI) to Thailand. The EU is willing to support and open its door for innovative products from Thailand. However, regulatory difficulties in investing in Thailand still exist. Thailand needs to enhance transparency in policymaking and implementation of rules and regulations such as customs and other trade and investment restrictions. In addition, Thailand should consider having a relaxation of foreign ownership restriction and progressive liberalization of services sector to create a fair competition for European businesses as well as easing employment procedures to facilitate free flow of skilled workers to support national development,” added Mrs. Lyn Kok.
Under the national agenda of economic development, Mr. Viriya Chongphaisal, the EABC Representative suggested that: “Thailand should gear towards an innovation-driven economy with more infusion of innovation and technology into its products and services or the manufacturing process to create value added to its export and GDP. Thailand must also develop its economic and infrastructure development to boost its competitiveness in the global economy. The country should also provide more R&D funds and facilitate more R&D applicationto stimulate technology and innovation development. Thailand’s R&D's investment has remained relatively low compared to other countries e.g., Singapore and Malaysia. Perhaps, the government should set innovation as one of its top priorities.”
The EABC, as a voice of the European business community in Thailand, has adopted Policy Advocacy Working Groups in its structure and proposes the following five key recommendations for the Thai authorities to move the economy forward:
1. Improvement in trade-related standardizations and alignment with internationally-accepted standards, such as product testing, environment, transportation systems, and IPR laws. The move will not only enable Thailand to diversify its export products and expand its export markets in Europe, but will also boost investors’ confidence in Thailand and attract more investment from Europe to support innovation R&D in the future.
2. Customs reforms towards transparency and efficiency in customs procedures through clearer and more transparent policymaking and standardization of rules and regulations among government agencies. International compliance standards should be adopted to facilitate foreign investors.
3. Progressive liberalization of services sector and relaxation of foreign ownership restriction to encourage foreign investment and facilitate transfer of technologies, skills and expertise from the EU for economic and skill development to achieve R&D and innovation upgrading.
4. Amendments of legislations related to Information and Communication Technology (ICT) security and Intellectual Property Rights (IPR) to boost investors’ confidence and thrive on Digital Economy, in which digital and ICT technologies can greatly enhance efficiency and increase Thailand’s GDP towards knowledge-based and creative economies. In addition, the government should put in place trusted internet and cyber security to ensure investors’ confidence through better civil security and governance for business, individuals and the economy.
5. Identify sources of renewable energy as Thailand will face a challenge of energy shortage in the near future. The government should support development of technology and innovation for alternative and renewal energies. The European business sector is ready to support establishment of Thailand as the regional energy hub of ASEAN.
“The 2015 Position Paper is continuing to be a source of information from the EU and European Member States to facilitate the cooperation with Thai policymakers and authorities. EABC is hopeful that Thai businesses, media, and academics will find this Position Paper useful in their trade-and-economic related future use,” concluded Mr. Rolf-Dieter Daniel, President of EABC.