Thailand's competitive advantages are being distorted by the failures of the political system, according to Abhisit Vejjajiva, the leader of the opposition Democrat Party. Mr Abhisit, speaking at a conference organised yesterday by the Thai Investors Association, said Thailand's economy was very open to the global economy, both in terms of trade and investment.
This openness meant the domestic economy was exposed to higher risk in the event of a global economic downturn or rising market volatility as seen over the past several months.
Thai exporters, who have seen shipments rise to all-time highs this year, should be prepared for slower growth as the US and Europe slip into recession.
Mr Abhisit said the government needed to step up its efforts to develop new markets for Thai goods, and also develop domestic demand by restructuring the agricultural sector to improve irrigation systems, soil quality, production yields and quality.
''The government has yet to tackle the problems of the agricultural sector in earnest. Instead, we only interfere in the pricing mechanism and offer subsidies, which fails to address the root of the problem,'' he said.
He said new initiatives to help stabilise the capital market, including temporary tax incentives for long-term savings, encouraging share buybacks by listed companies and the establishment of new matching funds to invest in oversold stocks were welcome considering the sharp declines in the exchange this year. The Stock Exchange of Thailand has fallen by nearly 40% this year due to domestic political uncertainties and a slowing economic environment.
But Mr Abhisit said the capital market was not the only important cog of the economy, and that other measures were needed to comprehensively tackle the difficulties faced by sectors such as exports and tourism.
''It's not clear what the government's strategy is for improving tourism and exports. As for the infrastructure megaprojects, it remains very confusing how these new investments will be financed, particularly given the volatility in the international markets,'' he said.
The Samak Sundaravej government pledged to invest 1.7 trillion baht in new energy, transport, irrigation and public service programmes over the next several years, including 770 billion in nine new mass-transit routes in Bangkok. But progress on the megaprojects has been stalled by bureaucratic inertia and policy changes by the political leadership.
Mr Abhisit said the government should consider on a sector-by-sector basis the impact the slowing global economy would have on the Thai economy.
Politics, meanwhile, remained a considerable constraint on the country. ''The political differences are as wide as ever. It's impossible that a discussion between five or six people can solve the problems.''
Consumer and business confidence, which jumped in the first quarter following the December 2007 elections, has fallen steadily since followers of the People's Alliance for Democracy started protesting against the government.
The PAD leaders, who led similar protests against former prime minister Thaksin Shinawatra in mid-2006, have vowed to continue their opposition to the current government and Premier Somchai Wongsawat. The PAD argues that Mr Somchai, who is Mr Thaksin's brother-in-law, is a proxy for the exiled former premier.
Mr Abhisit repeated his stance that a dissolution of Parliament and move to new elections was the most likely scenario, although not necessarily the best one. He warned that if the government insisted on prolonging the current standoff through next month, further violence could occur, to the detriment of the entire country.
''It's a pity considering that Thailand has many strengths that give us a competitive advantage, whether it is in agriculture or industrial development,'' Mr Abhisit said. ''But these strengths have been erased by the failure of our political system.''
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This openness meant the domestic economy was exposed to higher risk in the event of a global economic downturn or rising market volatility as seen over the past several months.
Thai exporters, who have seen shipments rise to all-time highs this year, should be prepared for slower growth as the US and Europe slip into recession.
Mr Abhisit said the government needed to step up its efforts to develop new markets for Thai goods, and also develop domestic demand by restructuring the agricultural sector to improve irrigation systems, soil quality, production yields and quality.
''The government has yet to tackle the problems of the agricultural sector in earnest. Instead, we only interfere in the pricing mechanism and offer subsidies, which fails to address the root of the problem,'' he said.
He said new initiatives to help stabilise the capital market, including temporary tax incentives for long-term savings, encouraging share buybacks by listed companies and the establishment of new matching funds to invest in oversold stocks were welcome considering the sharp declines in the exchange this year. The Stock Exchange of Thailand has fallen by nearly 40% this year due to domestic political uncertainties and a slowing economic environment.
But Mr Abhisit said the capital market was not the only important cog of the economy, and that other measures were needed to comprehensively tackle the difficulties faced by sectors such as exports and tourism.
''It's not clear what the government's strategy is for improving tourism and exports. As for the infrastructure megaprojects, it remains very confusing how these new investments will be financed, particularly given the volatility in the international markets,'' he said.
The Samak Sundaravej government pledged to invest 1.7 trillion baht in new energy, transport, irrigation and public service programmes over the next several years, including 770 billion in nine new mass-transit routes in Bangkok. But progress on the megaprojects has been stalled by bureaucratic inertia and policy changes by the political leadership.
Mr Abhisit said the government should consider on a sector-by-sector basis the impact the slowing global economy would have on the Thai economy.
Politics, meanwhile, remained a considerable constraint on the country. ''The political differences are as wide as ever. It's impossible that a discussion between five or six people can solve the problems.''
Consumer and business confidence, which jumped in the first quarter following the December 2007 elections, has fallen steadily since followers of the People's Alliance for Democracy started protesting against the government.
The PAD leaders, who led similar protests against former prime minister Thaksin Shinawatra in mid-2006, have vowed to continue their opposition to the current government and Premier Somchai Wongsawat. The PAD argues that Mr Somchai, who is Mr Thaksin's brother-in-law, is a proxy for the exiled former premier.
Mr Abhisit repeated his stance that a dissolution of Parliament and move to new elections was the most likely scenario, although not necessarily the best one. He warned that if the government insisted on prolonging the current standoff through next month, further violence could occur, to the detriment of the entire country.
''It's a pity considering that Thailand has many strengths that give us a competitive advantage, whether it is in agriculture or industrial development,'' Mr Abhisit said. ''But these strengths have been erased by the failure of our political system.''
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