Page 2 of 2 ASIA
HAND Thailand's new economic
logic By Shawn W Crispin
can no longer find efficient ways
to allocate all of the US dollars it is earning
through record levels of exports. He argues that
with exports now accounting for 70% of GDP - more
than double China's 34% ratio, and well over the
world 24% average - Thailand is long overdue for a
structural economic adjustment.
To be
sure, buoyant exports sparked economic growth and
helped
to restore the national
accounts after the 1997 financial crisis, allowing
Thailand to pay back the International Monetary
Fund two years ahead of schedule, and shave
external debt down from a crisis high ratio of 90%
of GDP to its current level of about 34%.
With those external bills now paid, and
the previous government's various import-intensive
infrastructure spending plans put on ice, exports
are now arguably generating more dollars than the
Thai economy can efficiently absorb - similar to
the inrush of foreign capital that inflated
Thailand's 1997 bubble, yet different in that the
foreign-denominated flows are being earned rather
than borrowed.
Equitable economics
Enter King Bhumibol's "sufficiency
economy" concept into Thailand's new policy mix.
The government's precise ideas for implementing
the revered monarch's widely misunderstood
philosophy are now starting to come into sharper
focus. And they appear to jibe with the wider
academic literature dedicated to sustainable
economic development, which contrary to Western
capitalism's drive for short-term maximum profits,
strive for the long-term optimal use of resources.
It's literature that's just now beginning
to get a serious second reading, with the emerging
global consensus surrounding the risks of
greenhouse-gas-driven global warming, and related
realizations that multinational manufacturers'
operations often recklessly degrade the natural
environment of less litigious and lightly
regulated developing countries. [1]
"The
sufficiency-economy philosophy is a Thai model for
sustainability, the importance of which is only
now becoming recognized around the world," Surayud
said last week to a meeting of the Joint Foreign
Chambers of Commerce. "As an early adopter of a
sustainable approach to development, Thailand
should, I believe, be praised, for it is on a path
down which every country or company will have to
travel sooner rather than later."
This
week, Surayud called on Thai industrialists to
begin implementing the monarch's concept, namely
through risk-management tools that allow for
greater flexibility and minimize debts, greater
investment in human resources and research and
development, and setting business targets focused
more on long-term rather than short-term returns.
The royalist premier also suggested that -
contrary to the global capitalist order - Thai
factory owners should refrain from taking
advantage of consumers, labor, or material
suppliers.
Significantly, Surayud's
government is re-exerting sovereignty over
Thailand's future economic direction from a
position of economic and financial strength -
providing crucial insulation to a market backlash
against its contrarian philosophy. While imposing
capital controls on certain types of foreign
inflows, the Bank of Thailand in January more
quietly eased longtime restrictions on Thai
nationals investing abroad, allowing mutual funds
and securities companies to invest as much as $50
million offshore without central-bank permission.
Depending on the eventual implementation, Thailand
could soon emerge as a net exporter, rather than
net importer, of capital.
At the same
time, the combination of capital controls,
amendments to the Foreign Business Act, and the
rescinding of government concessions to Thaksin's
publicly listed companies will all inevitably
spook certain investors and lead to less
short-term capital inflow. It's clearly a risk a
more discerning Thailand is willing to take in the
pursuit of more sustainable growth and protection
against foreigners exporting future economic
volatility from Western to Thai shores.
For better or worse, Thailand's emerging
economic model is one many regional governments
will likely give a long, hard look in the months
and years to come.
Note 1.
Thailand's predominantly foreign-invested
electronics sector contributes a substantial 35%
to total national exports, but independent studies
have found that few properly dispose of their
toxic waste. As of 2001, less than 10% of the
hazardous industrial waste produced in Thailand
was properly stabilized, processed and disposed
of.
Shawn W Crispin is Asia
Times Online's Southeast Asia editor.
(Copyright 2007 Asia Times Online Ltd. All
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