BANGKOK: A high-speed train that glides from an expanded coastal airport handling 60 million passengers toward cavernous new stations in Bangkok. An infrastructure blitz that takes Thailand’s economy to new heights.
That’s the vision of the Thai military junta, which has ruled the South-East Asian nation since seizing control in a coup in 2014, and is now looking to bring its leader, Prayuth Chan-Ocha, back as prime minister in the March 24 election.
Its economic plan rests on a 1.7 trillion baht (US$54bil) spending push to revive competitiveness in an economy hamstrung by depressed business confidence and investment. Growth has lagged peers in the region, productivity has weakened and companies have been reluctant to invest in an environment of trade tensions and political uncertainty.
The return of democracy comes with its own risks: a possible messy exit from five years of repressive military rule that is clouding the economic outlook.
Thailand’s establishment elites have dueled for power with the populist alliance of former premier Thaksin Shinawatra for over a decade, a fault line that could bring gridlock to the next parliament. He or his supporters prevailed in each election since 2001, only to be unseated by the military or the courts.
The instability has weighed on competitiveness and investment, both of which the junta has struggled to turn around since taking power.
“Improving national competitiveness is super urgent,” said Somprawin Manprasert, the chief economist at Bank of Ayudhya Pcl, a Thai unit of Mitsubishi UFJ Financial Group. “Thailand can ill-afford another period of lagging behind from political disorder. I believe we’ve bottomed out as people realise we need to improve productivity.”
Thailand has dropped 10 places on the World Economic Forum’s global competitiveness index since 2007 - the biggest decline among South-East Asia’s top economies - to rank 38th out of 140 countries last year. The index measures everything from the openness of the economy and quality of infrastructure to the strength of institutions and innovation.
Investment as a share of GDP has also been steadily sliding over the years, capping the economy’s expansion. Growth is expected to trail the average for South-East Asia for a seventh year, reaching 3.9% in 2019 compared with 5.2% for the region, International Monetary Fund data shows.
Junta leader Prayuth - who deposed an elected administration in 2014 - made the so-called US$54bil Eastern Economic Corridor project the centrepiece of his push to close the economic gap. It calls for new transport infrastructure, businesses and skills by 2021 across an already-industrialised part of the eastern seaboard dotted with traditional automotive and electronics-parts exporters.
Prayuth has cut red tape, making Thailand one of the 10 most improved nations in the World Bank’s Doing Business 2018 rankings as it vies with neighbours such as Vietnam for investment. — Bloomberg