Thailand’s push toward its 4.0 economic model gained a lot of momentum in 2018, as the government made investments and policy changes in countless areas to smooth the way for business. The way forward is clear on most fronts, and the next decade is sure to be an exciting one for Thailand and the advanced manufacturing and digital economy that is well on its way.
Yet uncertainty continues to cloud some issues. 2019 could prove to be a pivotal year in determining how Thailand deals with some of its longer-term questions.
The final numbers are yet to be recorded, but most estimates put Thailand’s 2018 economic growth at around 4%. This healthy growth rate is expected to continue into 2019, where estimates tend to cluster around the 3.5–4% range.
But how this growth occurs, and what effect it has on the country’s population, will depend in large part on the trends we see in 2019. Put simply: will Thailand continue to focus on the flashy and new, or will the government also divert resources to slower-moving projects that are less exciting to contemplate? The latter are unlikely to inspire headlines, but are equally necessary to achieving a stable foundation for the country’s future.
Novelty vs maintenance
Investors are continuing to view Thailand in a positive light thanks to the country’s strong fundamentals and heavy investment in new infrastructure. With all the attention focused on the expanding airport and proposed high-speed railway in the eastern economic corridor, however, it appears the state of the country’s existing infrastructure has been relatively overlooked.
Aging expressways, train lines and public transport systems continue to clog commutes in and around Bangkok unnecessarily, slowing down the city’s potential for day-to-day business. Time will tell whether this or future governments are willing to commit enough resources to these types of essential (but less sensational) projects.
Ensuring a soft landing
In a similar vein, much ink has been spilled over the new digital economy the country plans to embrace, as well as the advanced manufacturing industries being courted by tax holidays and other incentives. Lost amid the predictions and excitement is a realistic assessment of Thailand’s existing industries that don’t have the plans or resources necessary to make the qualitative leap into the digital and automated realm.
Thailand’s shift towards an advanced economy is accelerating at every opportunity, but the faster things change, the harder it will be for current businesses to keep up. Progress and efficiency are worthy goals, to be sure; but the lack of a path forward for many established companies could lead to some painful realisations in the years ahead, unless help becomes available from official bodies.
By the same token, those who receive the necessary education will find themselves in great demand as new factories open up lucrative positions for people with the right skillsets. But not everybody receives this education and, indeed, many commentators have pointed out that Thailand’s learning institutions are unable to adequately prepare students for employment in the digital age.
With many of the outstanding business and infrastructure-related issues now on their way to being resolved, 2019 will show whether the government in Thailand will rise to meet the challenge of upgrading schools as quickly as it wants to upgrade the economy.
Some international educational organisations have begun entering the Thai market in order to meet the demand for skilled workers. This process will need to be accelerated soon if the domestic workforce is to stay in tune with the coming economic changes.
The dichotomy of leadership
The pattern in each of the above cases is that a focus on newness can lead to a neglect of the old. Likewise, even though business drives the economy, an over-commitment of resources to industry can leave the rest of society behind.
This very phenomenon was recently highlighted in the Bangkok Post, which openly chastised the government for dodging the implications of the latest annual Global Wealth Report by Credit Suisse:
- The report highlights that in 2018, Thailand's richest 1% controlled 66.9% of the national wealth, overtaking their peers in Russia, whose share of all wealth fell from 78% to 57.1%. In 2016, the 1% owned 58.0% of Thai wealth.
- Banyong Pongpanich, a financier and a former member of the State Enterprise Policy Commission, studied the statistics and concluded that Thailand's inequality gap has become the worst in the world.
- This prompted the government and relevant state agencies issue a response to refute the claim. [But] the fact is that the inequality gap is one of the critical and chronic problems that have obstructed the country's sustainable development…. To narrow the inequality gap, the government has to start by accepting the painful truth that we have a deep-rooted problem.
The upcoming elections will play a large role in determining how the government responds to this and many other issues affecting long-term progress and development in Thailand. Although the success of the business community sets the parameters of economic progress for the entire nation, that success also depends on a cohesive society where opportunity is equal, hard work is rewarded and resources are spent efficiently.
The engine of Thailand 4.0 has started at last, and the wheels are already in motion. A remarkable future is surely waiting as we rise together to meet it. The decisions made in 2019 will determine whether the road ahead is clear or bumpy, and how quickly we reach our destination.