Thailand Urged to Fortify Domestic Economy Amid Global Uncertainty

 

Thailand has been cautioned to prioritise strengthening its internal economy in the face of a volatile global landscape, according to former World Trade Organization (WTO) Director-General Supachai Panitchpakdi.

 

Speaking at the 150th anniversary of the Ministry of Finance on Saturday, Dr Supachai stressed the necessity of building a "House Complex" to enhance national resilience, rather than pursuing large-scale "Complex Projects".

 

Dr Supachai, also a former Deputy Prime Minister and Minister of Commerce, warned the Ministry of Finance to exercise fiscal prudence, urging them to maintain adequate fiscal space and avoid excessive borrowing.

 

He emphasised that the current multi-polar world demands a comprehensive overhaul of Thailand’s social and economic structures, encompassing industry, education, and agriculture.

 

"We already have a 20-year national strategy outlining the development and strengthening of Thailand from within. Therefore, we must continue to implement it, as it is necessary and addresses the country's sustainable development," Dr Supachai stated. "Simultaneously, we must thoroughly study the principles of the Sufficiency Economy to equip Thais with the resilience to face an uncertain world."

 

He advocated for increased investment in the socio-economic sector, education, clean energy, the green economy, and the elderly care sector, aligning with the evolving New World Order.
 

 

 

Dr Supachai highlighted the demographic shift towards an ageing population, suggesting a focus on projects that bolster individual and community strength.

 

"I want us to build a 'House Complex' rather than focusing on large projects. We need projects that empower the Thai people," he asserted.

 

The former WTO chief described the present global environment as "vulnerable, volatile and uncertain," marked by the rise of new power blocs challenging the previous dominance of the United States.

 

He noted that successive US administrations have sought to maintain their leading role through various policies, from the Trans-Pacific Partnership (TPP) under Barack Obama to the Inflation Reduction Act under Joe Biden, both aimed at managing the rise of other major powers like China. However, the approach under the current US administration involved more direct measures such as reciprocal tariffs.

 

Analysing these tariff policies, Dr Supachai argued that a purely economic perspective is insufficient, requiring a geopolitical understanding. He observed the US’s determination to retain its global leadership despite the increasing prominence of emerging economies in regions like Latin America and Asia.

 

The reluctance of the US to fully share its global role, coupled with China’s desire for this power-sharing to be acknowledged, has created a tense situation, raising concerns about potential proxy conflicts between the two nations.

 

Given Thailand's significant reliance on international trade, this context underscores the urgency of building domestic strength and self-reliance.
 

 

 

 

In terms of trade engagement, Dr Supachai advised Thailand to actively participate in the WTO framework, proposing a "mini trade round" focused specifically on tariffs.

 

This would provide a platform for the US to articulate its concerns about trade imbalances, while allowing other nations, including Thailand, to present their perspectives in pursuit of balanced resolutions.

 

"While engaging with the US, Thailand must also engage with China, emphasising that Thailand and ASEAN are neutral," he advised. "We want to trade with China, but we must also ensure that China understands that we will not allow them to exploit Thailand to disadvantage other countries, particularly in cases of product origin fraud. We welcome foreign investment but will not allow Thailand to be used as a manufacturing base to exploit tariffs from the US or other trading partners for the benefit of investors, including those from China."

 

Furthermore, Dr Supachai urged Thailand to collaborate with ASEAN nations to avoid detrimental practices like dumping and to establish mutually agreeable regulations, advocating for a unified ASEAN stance in trade negotiations.

 

He also stressed the importance of diversifying trade beyond major economies, exploring opportunities in smaller markets and revising regulations that currently impede developing countries.

 

Regarding fiscal management, Dr Supachai underscored the need for the Ministry of Finance to "maintain fiscal space" and build robust reserves, cautioning against exceeding debt ceilings. He suggested that these reserves may be crucial for future domestic needs.

 

 

He also called for reforms to tariff structures, customs regulations, and immigration procedures to reduce unnecessary complexity, noting that while Thailand’s tariffs are relatively low, complex customs processes are viewed as a trade barrier.

 

Finally, Dr Supachai highlighted the importance of strengthening measures against circumvention products to attract genuine Foreign Direct Investment without issues related to product origin fraud.

 

In his concluding remarks, Dr Supachai observed a global trade environment increasingly characterised by protectionism and intervention, with greater restrictions on labour mobility and heightened geopolitical instability.

 

Despite these challenges, he pointed out the WTO's track record of navigating past crises. He described US actions as contributing to a wider embrace of protectionist trade policies, with substantial economic repercussions.

 

Ultimately, he echoed the sentiment of former British Prime Minister Theresa May, advising to "Keep Calm and Keep Talking" in these uncertain times.