Thailand
Thailand: Industry urges longer-term solutions
Measures aimed at easing the impact of rising oil prices and the Russia-Ukraine war have won praise, but for many they represent a quick fix, write Lamonphet Apisitniran, Dusida Worrachaddejchai and Somruedi Banchongduang
The government should come up with not only short-term measures, but also medium and long-term plans to cope with the impact of the global oil price surge and the Russia-Ukraine war, according to industrialists in various sectors.
They propose the administration also focus on creating more jobs, redesigning national energy management, and making the business sector more self-reliant as ways to support the overall economy and help people survive the impact of economic uncertainties over the long haul.
BEYOND SHORT-TERM RELIEF
The cabinet recently approved a list of 10 measures to counterbalance the fuel price spike. The measures are expected to last from May until July.
Though it agrees with the measures, the Federation of Thai Industries (FTI) wants the government to start thinking about efforts that will enable businesses to be more self-reliant once the package of measures aimed at easing the cost of living expires.
The measures help households and businesses, especially those in the retail and transport sectors, but they are insufficient because the country needs medium and long-term plans to cope with the impact of the global oil price surge and the Russia-Ukraine war, said the federation.
These two problems have dealt a blow to the Thai economy, which is still staggering from the economic effects of the pandemic.
While an urgent economic cure is required for Thailand, it is more important that additional actions be taken to fully restore the economy, especially in terms of helping pandemic-ravaged tourism operators and small and medium-sized enterprises (SMEs), said Supant Mongkolsuthree, chairman of the FTI.
The business sector should eventually become more self-reliant, depending less on the state’s fiscal-monetary injections, he said.
“Don’t forget that if a huge amount of budget is spent to solve certain problems, authorities can hardly avoid causing a burden on the country’s coffers,” said Mr Supant.
This may result in a lack of opportunity in dealing with other problems, he said.
Mr Supant suggested the government help SMEs better cope with their debts so they can manage their money and keep operating their businesses over the long term.
The government should use the energy price crisis as an opportunity to redesign national energy management by using more renewable energy and reducing dependence on fossil fuels, he said.
In the tourism sector, authorities should seriously consider abandoning the mandatory Test & Go scheme, a Covid-19 screening measure that requires foreign travelers to undergo RT-PCR tests in Thailand, said Mr Supant.
This measure runs counter to the message of truly reopening Thailand to tourists, he said.
Foreign visitors who are fully vaccinated want unfettered travel that will not incur additional costs, said Mr Supant.
JOBS COME FIRST
Chamnan Srisawat, president of the Tourism Council of Thailand, said Thailand might receive only 5.6 million international tourists this year under the worst-case scenario — if the full reopening of the country is postponed until October or major markets such as China and Russia are unable to return this year.
It is impossible for tourism operators to survive on such a small number of foreign arrivals, so easing the cost of living burden amid the pandemic is necessary to enable the domestic market to sustain the tourism industry, said Mr Chamnan.
However, the most sustainable way to support people and the overall economy is to create more jobs by allowing more tourists to enter the country without obstacles, he said.
Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association, said the government’s financial aid will temporarily support daily living requirements, but might be insufficient for people to survive in the long run compared with long-term solutions such as creating more jobs.
Thailand is estimated to have 30,000 hotels, of which 15,000 properties operate formally, accounting for 800,000 rooms. There are many other hotels under development, she said.
However, in a stagnant market hoteliers continually pursue cost reduction, particularly in terms of the workforce, to sustain their businesses.
The country will not see 40 million tourists again — close to the tally in 2019 — anytime soon, said Mrs Marisa.
Somchai Lertsutiwong, chief executive of Advanced Info Service, the country’s biggest mobile operator by subscriber base, said the government’s fresh assistance measures to reduce people’s daily expenses are for the short term.
“It is like a headache pill or symptomatic treatment that cannot cure the disease effectively in the long run,” Mr Somchai said.
Several of Thailand’s economic engines are in trouble, especially tourism and domestic consumption, though exports have been in better shape since last year, he said.
One core engine that could help ease the country’s economic hardship is government spending in a way that could generate income, such as organising training sessions to boost knowledge and skills and create jobs, said Mr Somchai.
He gave as an example Japan’s Miyazawa fund, which was created in 1998 to help Asian countries through the economic crisis, saying the Thai government at that time used the fund to formulate upskilling programmes and create new jobs for people.
The government should quickly develop a long-term strategy to tackle economic problems and help critically affected parties via budget spending, said Mr Somchai.
ALL EYES ON INFLATION
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, hailed the government’s latest aid measures, suggesting the 10 items, including a cooking gas subsidy for three months for 3.6 million state welfare cardholders, will offer direct assistance to low-income earners.
According to Mr Sanan, the government’s measure to freeze the retail price of diesel at 30 baht per litre until the end of April will also help alleviate consumer hardship because diesel is an important factor in transport costs and product prices.
However, he said measures such as the diesel price freeze are only short term and the government needs to develop campaigns for people to reduce energy consumption.
Mr Sanan said the chamber told the government to monitor inflation and export performance because they are important factors in driving Thai economic growth this year.
The government should maintain a stable exchange rate for the benefit of the export sector, he said.
“The inflation rate is expected to remain high in the first half this year, which will affect people’s living costs,” said Mr Sanan.
Yunyong Thaicharoen, chief wholesale banking officer and economist at Siam Commercial Bank’s (SCB) Economic Intelligence Center, said the 10 state measures are appropriate by focusing on targeted groups within a specific time frame, allowing the government to maximise usage of the budget.
However, the measures will not cover all economic impacts because Thailand is dependent on fuel imports amid the fragile economic recovery, said Mr Yunyong.
He said over the longer term, the government should set up an economic reform roadmap and focus on an alternative energy development plan rather than capping fuel prices because the latter impacts both energy and economic structure in the future.
MAXIMISE RESOURCES
As part of the cabinet’s 10 measures, the fuel tariff will be reduced by 22 satang per unit from May to August for those who use less than 300 units of electricity per month.
Around 5,500 vendors and hawkers who hold state welfare cards will gain a 100-baht discount per month for three months for purchasing cooking gas.
Another measure is the retail price of NGV (natural gas for vehicles) is scheduled to be maintained at 15.59 baht per kilogramme for three months.
A source at the Finance Ministry who requested anonymity said the measures are aimed at specific targets as the government wants to maximise its financial resources.
The government has spent an estimated 164 billion baht on energy price subsidies for the general public since 2020 to maintain fuel prices at a low level.
Wichit Chantanusornsiri, Komsan Tortermvasana and Phusadee Arunmas
Source: https://www.bangkokpost.com/business/2289834/industry-urges-longer-term-solutions