Mr Abhisit said he was optimistic that his idea of using yuan as a major trading currency in the region could materialise as the issue was discussed during summit of the Association of Southeast Asian Nations (ASEAN)
The just ended Group of 20 major economies meeting in South Korea failed to make headway as leaders set vague “indicative guidelines” for measuring imbalances and let details to be discussed in the first half of 2011.
Realising this, Mr Abhisit said he expected the APEC summit would discuss the issue of currency volatility, particularly regarding cooperation among countries in this region aimed at reducing effects from that volatility.
Mr Abhisit said another of his idea on setting up an ASEAN office to handle currency issues, arrived from the Chiang Mai Initiative, could probably “start operations soon.”
The office would be an important mechanism in working with the ADB in future, he added.
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Infrastructure services, if quickly improved, could promote a better investment climate in Thailand
During the protests this year and last, tourists in every part of Thailand, especially Phuket, Samui and Chiang Mai experienced no ill-treatment by Thai people, red shirt or yellow shirt – yet this was never publicised.
It is also important to understand that the recent political violence was most uncharacteristic of Thais. We all know Thai people to be warm, friendly, peace-loving and extremely welcoming to foreigners with genuine hospitality. I also know that Thais take great pride in the resilience and strength of their nation.
Citing the political unrest, S&P in April lowered Thailand’s long-term local currency debt rating to A minus from A. Fitch downgraded the long-term foreign currency rating to BBB from BBB+ that month, on the grounds that political strife undermined the ability of the Government to implement policies. The forecasts assume there are no disruptive changes in government in the forecast period and that fscal policy is implemented as planned. In addition to the frst fscal stimulus package, the Government has approved a second package that comprises public investment and that will cost B1.43 trillion ($42 billion) over 3 fscal years starting in October this year. This is equivalent to about 5% of GDP in each of the years.
Private consumption will benefit from a gradually firming labor market and forecast gains in prices of agricultural commodities. Strengthening economies abroad will raise demand for Thailand’s exports of automobiles, electronic and electrical goods, and agricultural products. Afer falling by a projected 18.0% in 2009, exports are forecast to recover by around 15% in 2010. Merchandise imports will rebound strongly if the public investment projects get under way as planned and if private investment rallies. A 28.0% bounce is forecast for imports in 2010. In services trade, tourism is expected to improve, with the pace of recovery depending in large part on the rebound in the international economy and on global eforts to contain the swine fu (H1N1) pandemic.
This is precisely the path on which Thailand’s government is embarked, and one in which the country will slowly move from being an attractive investment destination for its low cost high skilled manufacturing to a country that derives increasing prosperity from its innovative and creative economy.
The government in Thailand has implemented several measures in 2008 to mitigate the short run impact of rising inflation and falling incomes.In 2008, the government issued four sets of measures – three of them are aimed at mitigating the impact of the rise in food and oil prices on households and businesses and one in October aimed at mitigating the impact of the global financial crisis.
They include personal income and corporate tax reduction, tax deductions for investment, reduction in property sales transaction fees, subsidies on gasoline, water, electricity, and public buses and train services, direct transfers from the government to administrations at the grassroot level in Thailand, as well as loans by specialized state-owned financial institutions to SMEs and households. However, additional measures to assist affected workers and SMEs in improving their productivity and capacity would enable them to better cope and withstand future shocks in Thailand.
However, measures for the medium term that will enable Thailand to poise itself for higher and sustainable growth as the global economy recovers in the next few years are no less important. While coping and mitigating with the impact of the financial crisis in the short-run, it is equally important for all stake holders in Thailand to prepare for a recovery in global demand and ensure sustainable growth thereafter. The global economy is projected to recover over the next few years and, thereafter competition will intensify.
Clarity and continuity in policy directions and greater public infrastructure investments are needed not only to help stimulate growth in the short-run, but also improve productivity for the longer-term growth.Political stability would help to regain investors as well as assure them the clarity and continuity of policy directions.