11 July 2024

While Thailand aims to improve its economic performance, to be that of a high-income country by 2037, the government needs to overcome several major issues. A policy ensuring climate-resilient development is indispensable in sustaining economic growth, as increased flooding in Thailand has had a huge impact on the economy.

In an exclusive interview with Thai PBS World, World Bank Vice President for East Asia and Pacific, Manuela V. Ferro, said that a joining of forces between the Thai government and the World Bank could expedite the completion of a flood management project in the Chao Phraya River basin.

World Bank Vice President for East Asia and Pacific visited Royal Irrigation Bureau for a water management project in Ayutthaya on 22 March. Photo credit: World Bank

“Thailand’s government is implementing a huge, complex and ambitious project to manage flooding, which requires resources and know-how. The World Bank is ready to help and support Thailand’s government to complete this project. This is an investment that, if it’s only done using government resources, would take 20 years but, if it’s done by pulling in other resources, it can be completed in 6 to 7 years,” the Vice President said.

Ferro pointed out that Thailand is highly vulnerable to natural disasters and the increasingly frequent floods have negatively affected Thailand’s economic performance, threatening millions of people’s lives and the country’s competitiveness. Significant events were the 2011 floods, which affected 13 million people and led to economic losses worth an estimated US$46.5 billion, equivalent to 12.6% of GDP.

Photo credit: World Bank

“Digital wallet” scheme could cause inflation

“The scheme could cause inflation, which prompts the Central Bank to increase interest rates. Eventually, the economy could slow down. The government needs to think about alternative uses of this budget, since resources and the budget are limited.”

While it takes long-term engagement to achieve efficient flood control, Prime Minister Srettha plans to revitalise the economy with the much publicised digital wallet scheme, distributing 10,000 baht to Thai citizens. Ferro said it would make sense if the cash were to be targeted at people in need. In terms of a long-term development strategy, however, the scheme doesn’t necessarily work.

“Optimising the budget in improving the quality of education, investment in engineering schools or flood controls in areas where the economy is important for the country, could be an alternative,” Ferro said.

Investment in education is vital

In addition to climate-resilient capabilities, Ferro highlighted the importance of education and skilled labour during a meeting with the prime minister, Srettha Thavisin. Thailand has a lot of opportunities during the reset of the global supply chain, but Ferro said the government has to plan what Thailand could offer in terms of new investment.

“We talked about how to seize these opportunities by attracting more investment, which is a priority for the Prime Minister. We also discussed what Thailand could offer. Thailand can offer a better business environment,” noted Ferro, adding “For example, if the labour force is skilled, educated and able to contribute, with the desire of the country to move up in the value chain, which needs more engineers, skills and services, it means that the country needs to invest more in education. We also believe that there is a potential to become a greener economy, through energy transition and renewable energy.”

From left to right, Franc Han Shih and Manuela Ferro

Thailand has a geographic advantage in ASEAN

With the strategy heavily dependent on tourism, Thailand’s economy has stagnated since the pandemic. To incentivise economic growth, the Vice President said that simplifying the complexity of doing business and expanding critical infrastructure are crucial.

Prime minister Srettha, who also serves as a salesman for Thailand, is putting effort into attracting country leaders and business giants for future investment in the country, while neighbouring countries, including Vietnam, provide tempting incentives and attractive business environment for investors.

The Vice President said, however, that Thailand has an advantage in its geographic location, which connects to China, Southeast and South Asia easily, and offering a more sophisticated environment.

“Thailand has a strategic location, but the question is how the country is positioning itself to attract more investment, because there are many countries which, after growing quite fast, plateau. Thailand has to ensure that this is not the case,” noted Ferro, adding “This is a critical period, when the government needs determined policy-making. There is an appetite to grow in the business sector. As Thailand is well-connected to several countries in this region, the government could invest more in connectivity through transport and regional trade in energy.”

“Also, digital connectivity is important. Broadband in Thailand is quite costly, so the government could bring the price down,” Ferro said.

The Vice President concluded the trip on a note of optimism about the economy, stating that the World Bank will continue to bolster infrastructural projects and flood management after a 75-year partnership with Thailand. Ferro added that Thailand is ready to host the 2026 Annual Meeting of the International Monetary Fund and the World Bank Group, which helps Thailand gain more international exposure.

By Franc Han Shih, Thai PBS World

 

Full interview: