Remarks by H.E. Mr. Alongkorn Ponlaboot Deputy Minister of Commerce at the Meeting with Chiefs of Economics and Trade Missions and Heads of Foreign Chambers of Commerce on the Effects of the Political Situation and Foreign Trade and Investment in Thailand 8 June 2010, Ministry of Commerce -------------------------------------------
Good afternoon, Excellencies, Heads of Foreign Chambers of Commerce, Distinguished Guests,
It is my pleasure to welcome you to the Ministry of Commerce. I apologise for rescheduling the meeting. If you will recall, last week the Prime Minister met with the diplomatic corps, heads of international organizations, and presidents of foreign chambers of commerce to explain Thailand’s political situation. Today’s meeting is a similar exercise but with a focus on the Thai economy and the Ministry of Commerce’s plans to assist and aid affected businesses. In particular, I have invited you here today so that we could sit down and discuss the effects of the political situation on the foreign business community in Thailand. I would like to listen to your concerns and suggestions, as Thailand’s business partners, on the types of assistance that would be most helpful to members of the foreign business community. 1
Before I open the floor to all of you, please allow me to briefly update you on three issues: first, the political situation in Thailand and its effects on the economy; second, the Ministry of Commerce’s plans to assist and aid affected businesses by the political situation; and third, an outlook on the Thai economy.
Return to Normalcy
I am pleased to inform you that the country has returned to normalcy. We are in the process of rehabilitation and reconciliation. In the short run, our priority is healing the affected people and restoring public security. A censure debate against the government took place on the 31st May and 1st June which is a good sign of the general acceptance of the parliamentary process by the vast majority of the Thai people. Moreover, the government succeeded in clarifying all issues claimed by the opposition and won the no-confidence vote.
Both the government and private sector are working closely together to rehabilitate the country. The “Big Cleaning Day” where thousands of volunteers joined the Bangkok Metropolitan Administration (BMA) for a mass clean up of the ravaged city center, is an excellent example. Another is the “Thonglor Walking Street Sale” where a 14-rai sports compound was transformed by its proprietor into a rent-free outlet for businesses affected by the political situation. I commend these joint 2
public and private efforts to move us forward. Most importantly these actions show that Thai people are compassionate and willing to make sacrifices for the good of others and the country.
I understand that most of you are concerned about the political situationâ€™s impacts on the Thai economy and whether it will affect our trade and investment policies. Almost everyone from importers and exporters, to local convenient stores, establishment owners, and tourists were affected. The Fiscal Policy Officeâ€™s monthly report for April 2010 states that economic indicators for the month reflected a continual expansion when compared with the same period last year, particularly in export and domestic spending, while there were signs of a slow down due to the recent political turmoil.
The Thai economy in April 2010 steadily expanded at 12 percent when compared with the same period last year, but slowed down slightly when compared with March 2010. Export figure for the month was still encouraging with a growth of 35.2 percent year on year. Similarly, private investment as represented by capital goods import grew at 39.4 percent. The number of in-bound tourists decreased, a first in seven month, from 1.45 million persons in March 2010 to 1.1 million people in April. The situation is estimated to cost the Thai economy 145 billion baht or 1.5 percent of the countryâ€™s GDP . 3
The Ministry of Commerce is well aware of the negative impact and loss of opportunity for trade and investment caused by the political turmoil. Accordingly, we have already started to implement series of measures in order to mitigate damage and bring about a speedy economic recovery.
MOC Economic Rehabilitation Program
Short term measures have already been introduced
by the Ministry. This type of assistance aims to help business operators affected by the political turmoil achieve a speedy recovery, through trade facilitation measures and stimulation of domestic consumption. These measures include extending the deadline for businesses to submit their financial statements by one month; deploying of mobile units to receive business registration applications; and organizing additional trade fairs and best buy markets, including bargain price sales such as the “Blue Flag” consumer products festival. During 28-29 May, the Ministry of Commerce in cooperation with the Bangkok Metropolitan Administration and the Royal Thai Police organized a “Together We Can Grand Sales” on Silom Road. More than 1,600 business operators affected by the political situation participated in this event which attracted more than 400,000 people. Sales during this twoday-event amounted to around 140 million baht.
Within the next month we will also provide assistance with respect to business matching through the organization of two trade fairs, namely, “Thailand Best Friend” and “Thaifex” which will be held in Bangkok during the end of June and early July, respectively.
Medium term assistant provided by the
Ministry of Commerce aims to stimulate domestic consumption and regain global confidence in the Thai economy. We have also instructed our overseas offices and representatives to explain and provide accurate information about the situation in Thailand to the foreign press. The Ministry will organize international trade exhibitions in Thailand and participate in trade fairs overseas as previously planned, so that the country’s exports and economic growth meet their preset target.
I would like to take this opportunity to reaffirm
our commitment under international and bilateral trade obligations and that the Ministry of Commerce will continue to promote and facilitate trade and investment through consistent and transparent trade policies. We believe that maintaining our open approach to trade and investment liberalization is a better way to cope with the impact of recent events and to regain global confidence than to adopt a protectionist stance.
Outlook on Thai Economy
Lastly, I would like to give a brief overview of the outlook on the Thai economy. As all of you live and work here, I am sure you must realize that the Thai economy has very sound economic fundamentals. Accordingly, I believe the political situation will affect trade and investment only in the short run. With the government and private sector working together, I believe the Thai economy will pick up quickly. It already has a very good recovery going and during the first quarter of this year, our GDP expanded at an annual rate of 12 percent, a 15 year record high. This was due to increase of exports of goods and services which benefited from the recovery of the global economy. We believe export growth for the year will be at least 14 percent. Looking ahead, we hope to see a 4-5 percent growth in the economy this year.
Asean, the US, the EU and Japan continue to be important markets for Thailand’s exports. The Ministry will continue to seek out new potentials especially in emerging markets around the world.
Thailand is located in the heart of the Southeast Asian region which makes it an ideal transport and logistics hub to countries within the region and vice versa for other regions. In order to boost trade with its trading partners in the region, Thailand employs an “ASEAN First”, and a “Three Rings, Five Doors” strategy.
Thailand is located at the center and is surrounded by its partners from the following “Three Rings” or three FTAs. The first ring is the ASEAN FTA. The second ring is “ASEAN+3” or the ASEAN-China-JapanKorea FTA. The third ring is “ASEAN+6” or the ASEAN-China-JapanKorea-India-Australia-New Zealand FTA. Hence the “three rings.” Airborne transport with these countries generally does not exceed 6 hours. Furthermore, different modes of transport across these counties are well linked which ensure speedy movement of goods and people. Thailand’s strategic location complements its FTAs with ASEAN member countries and countries mentioned above and vice-versa.
Thailand shares its borders with Cambodia, Laos, Malaysia and Myanmar. Thailand’s five regions will be developed into special development zones which will facilitate trade with our neighbors. Hence the “Five Doors.” Before concluding, allow me to briefly touch upon the topic of “Creative Economy” which will be the future of the Thai economy. In short, Thailand’s rich cultural diversity will be effectively utilized to add value to our goods and services, protected by intellectual property rights.
In concluding, I would like to thank all of you for your attention and for your continued support to the Ministry of Commerce. Now I would like to open the floor for discussion. -------------------------------7