Finally, provision of fast and efficient services for passengers is very important since a tourist’s goal is recreation. Business people focus on accommodation and speedy transportation. Services should be effective, quick and of good quality.


- Impressive services from the flight attendants to the ground staff, can affect the passenger’s decision to use one airline over another, even if the cost is   a little higher. A significant factor in having impressive service is of course staff training. Service with a smile, being hospitable to every group of passengers, can attract tourists to revisit Thailand.  In 2000, 47.72% of Thailand’s total tourists re-used the airline they had used on their first trip rather than using another airline they had never used before.


- Seasonal flight schedules can be implemented and adjusted according to climates in each country. Such a move would facilitate activities without wasted time or unnecessary waiting periods and delayed appointments. Business people prefer to manage their time effectively, because it is capital in their business. Consequently, airlines should adapt schedules to fit in with the seasons


- Because of their long-haul journey, tourists feel fatigued and prefer to reach their accommodation without unnecessary time wasting. Good cooperation and planning between flight attendants and ground staff to give passengers a baggage claim service within 10 minutes of their arrival should be considered. This is a good opportunity to build up an airline’s reputation so that other people will use that airline’s services in the future.
These are just a few examples of aviation policies that should be implemented to support tourism.


Initiating rules that enhance free competition in aviation markets, and issuing laws to prevent monopoly are also recommended. Aviation policies need to support the country’s other economic activities as well such as air transportation in the import and export sectors.

Social security for small businesses - losses and gains
Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak the expansion of tourism

Aviation policy should support the expansion of tourism to meet set goals and since the aviation industry has the potential to bring in a high income, I suggest three ways to enable it to support tourism:

The first recommendation involves the granting of more aviation rights to the main scenic attractions for tourist groups from around the world. So far as policies on aviation rights is concerned, the State should provide more than the 30% currently allowed. Thailand should focus its tourist efforts on the main tourist target group as well as other newer tourist sectors, such as the middle class and those with high purchasing power. China, for example, has about 300 million middle class people. More aviation routes can be opened up to major Chinese cities to facilitate transport to Thailand. The Chinese have high purchasing power and prefer traveling in Asian regions. Thailand has good relations with China and with co-operation it is possible to welcome more Chinese tourists to the country.

New aviation routes need to be opened up as direct routes save time and costs, thereby enabling airline businesses to meet the cost of each flight. The State should be encouraged to establish a tourism office in different countries and to disseminate advertisements to specific tourist groups so that the number of tourists are sufficient to fill each flight thereby earning the airlines ample income.

Secondly, an airfare price differentiation rate should be set for different consumer groups travelling to the same destination, since each group has different purchasing power. For instance, price discrimination for a flight from Bangkok to Chiang Mai can be made according to different groupings, such as children, students, the handicapped, disadvantaged, farmers, company staff, civil servants, business people, and politicians.

Price discrimination will increase the choices for service users while at the same time it provides airlines with another means of income growth not airfare price hikes only. Price adjusting and increases can detrimentally affect a passenger’s decision to fly. Moreover, price discrimination helps distribute the burdens of those with a low ability to pay to those with a higher ability to pay.

Besides price discrimination, prices can also be set in terms of purchasing practices, such as if purchasing two adult tickets, a free ticket will be given for a child, or if ten tickets have been purchased, one free ticket can be provided. Various forms of positive price discrimination can increase the demand on an airline’s service. Such a system can also attract Thais to use more air transportation.

Kriengsak Chareonwongsak A government plan to unify co-ordination

Based on different strategies of economic stimulation, a tourism drive is a possible means to sustain the economy this year. Income from foreign currencies can be raised, as seen in a double rise (from 5.48% to 10.03%) of GDP in 1991 and 2001 respectively.

Tourism can naturally and sufficiently distribute income to rural regions if more tourist attractions are opened in every province. A swift outcome can be achieved if the quality of tourist attractions is upgraded by encouraging private participation.
Thailand’s tourism industry is capable of bringing in foreign currency because of the country’s beauty, nature, tourist attractions, diversity of cuisine, and tropical fruits. Thailand incorporates a unique culture where the national demeanor is one of hospitality and friendship towards foreigners. Furthermore, Thailand is situated in a safe location, free from domestic turmoil and away from foreign wars. There is simple, effective transportation and adequate accommodation. Thus, tourism is a potentially good component for the country’s economic development.

If a goal is set to welcome 15 million foreign tourists this year (2002), it can bring a 15.71% increase in the inflow of foreign currencies for GDP. This will provide encouragement not only for the intermediate future but also for the economy’s recovery and growth.

A government plan to unify co-ordination between agencies to support the growth of tourism is essential. Both public and private sectors as well as educational institutes need to cooperate and be supportive of a tourism drive. These cover both direct tourism policies, such as policies to improve and open new tourist attractions, to enhance tourist’s safety, and indirect policies, such as commercial aviation policies, and staff training in management skills.

If we look at the relationship between commercial aviation and tourism, we can see that both Thai and foreign tourists can be facilitated by commercial aviation. Last year (2001), the proportion of all international tourist arrivals who traveled via air rose to 84.3%. In 1999, the number of Thai and foreign tourists who traveled by air to the 17 main tourist attractions in the Kingdom were 8% and 26% respectively. Therefore, commercial aviation can genuinely facilitate tourists inside the country.

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak Aviation can boost tourism

Aviation can boost tourism

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

This article was first published in The Bangkok Post in April 21, 2002 during a time when the Thai economy was in a stage of slowing down. The author of the article proposed some directions for improving commercial aviation; seemingly a small matter, which had been neglected. However, commercial aviation could be a great support to tourism without much investment.


Last year (2001), Thailand’s economic growth was only slight at 1.5% of GDP, which in itself created many challenges, and compelled the government to put greater effort into policies that would increase growth in the economy. Each economic impetus though faces many constraints, such as private consumption, which is currently saturated. The proportion of consumption for the first nine months of 2001 was 54.69% of GDP – similar to the 54.21% in 1996 before the economic crisis. This kind of situation hinders the stimulation of consumption, as there is increased unemployment and a slowdown of potential expenditure by the country.

Since Government expenditure has been used as the main mechanism of economic stimulation over the past three years it is now constrained by a public debt of 60%. Exportation expanded slightly due to pressure from the WTO’s inclusion of China and Taiwan whose membership affected many Thai export items. If we consider the constant rise of imports as seen in the first nine months of 2001 (44.1% of GDP), this trend could rise even higher to 49.12% of GDP, which is the pre-crisis figure.

Kriengsak Chareonwongsak Responsible debtors could lose

Responsible debtors could lose

Debt resolution could slow and some debtors escape bankruptcy, since pending NPL cases can be transferred to the TAMC. The debtors most likely to benefit would be those holding medium to large-size loans from multiple creditors. However, after such debts were transferred, the TAMC would be the sole creditor for them. This would facilitate more speedy decisions, as the TAMC has been given special powers to expedite the restructuring process. These special powers include debt to equity conversions, management changes and expedited foreclosure.

The drawback of this condition though is that group creditors would have no voice in the negotiations. Also, because the TAMC’s purpose is to rehabilitate, restructure, and increase liquidity according to national industrial and economic restructuring goals, some debtors could avoid bankruptcy. In theory, there is nothing wrong with this however, if the TAMC succumbs to political intervention there will be a tendency to induce corruption.  The moral hazard of the situation may become even worse as irresponsible debtors intentionally become strategic NPLs, as happened before. Also, the government still cannot create an incentive system to motivate financial institutions to expand credit and to narrow their interest rate spreads, after NPLs have been transferred. Undoubtedly, this could deprive responsible debtors from benefits, whilst giving irresponsible debtors, whose NPLs are transferred to the TAMC, privileges such as write-offs and reduced interest rates on their loans. 

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak Private financial institutions will benefit

Private financial institutions will benefit

Here, the phrase “private financial institutions” includes foreign creditors who are major shareholders in Thai financial institutions.

The first benefit gained by financial institutions is public participation in debt repayment. In other words, public taxes would be used to cover NPL losses. Under provision of the TAMC outlined above, private financial institutions would have to shoulder a maximum of 30% losses on NBV. Hence, up to 70% of losses on NBV could be borne by the TAMC.
Because of this, financial institutions could begin to transfer their worst NPLs – those that cannot be restructured – to the TAMC. Why keep NPLs that – either in their own hands or in the hands of the TAMC – would result in guaranteed losses? Thus, in most likelihood, NPLs that have a high probability of losses greater than 40% would be transferred first. As a result, financial institutions may begin to view the TAMC as an easy way out of heavy financial losses.

Second, by transferring NPLs to TAMC, financial institutions could gain greater stability in the short term. Transferring NPLs to the TAMC would ease pressures on private financial institutions to recapitalize, since – according to the Capital Adequacy Ratio (CAR) established by the previous government – each financial institution was responsible to recapitalize to 11.5% of their assets, a standard higher than the Bank for International Settlement (BIS) standard. Thus, by transferring NPLs, there would be less need to worry about recapitalization over an intermediate period of time.

The last advantage gained by the terms of the TAMC is they can gain better rates of return by treating TAMC interest notes as cash in hand. And how would this be done? Financial institutions that transfer their NPLs to the TAMC are guaranteed interest in the form of interest notes from the TAMC. Because these notes could be viewed as tradable funds, financial institutions could – in a pinch – use their TAMC notes in lieu of cash. As a result, financial institutions have more with which to make a profit. 

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak The government will benefit

The government will benefit

The first advantage gained by the government would be enhanced credibility in the eyes of the international community and domestic interests alike. Establishing the TAMC would fulfill one of the government’s election promises, namely, to establish a national-level AMC to cope with chronic NPL problems.

However, persuading private financial institutions to transfer bad debts to the TAMC may be easier said than done. The success of the TAMC is contingent on the new government’s ability to loosen overly stringent regulations that robbed the previous AMC of success. If the present government holds to its strict criteria in the early stages of establishing its TAMC – such as purchasing NPLs at 10-20% lower than NBV or penalizing only private financial institutions in the case of losses – private financial institutions will be sure to withhold their cooperation. If this happens, the government will be forced to revert to the NPL coping measures used by the previous government, which allowed each bank to operate its own private AMC. This would, in effect, cancel the political benefit obtained by the current government from its Urgent Policy List, considered one of its core economic recovery strategies. 

Second, if the TAMC solution works, the government would shield itself somewhat from accusations of using public taxes to subsidize financial institutions. Creating the TAMC could decrease strain on the budget. Under the old National AMC proposed plan, the government assumed full responsibility for all NPLs within the AMC network. However, under the new TAMC scheme, the government is only partially responsible for private institution NPLs; its responsibility only partially begins when loses on NPLs have reached the 21% mark-of-NBV. Structuring liabilities on NPL losses in such a way places a heavier responsibility on private financial institutions compared with the previous proposed National AMC scheme.

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak Non-performing assets

This is no measly sum. Non-performing assets in state financial institutions eligible for transfer to the TAMC are estimated at Bt1.1 trillion. The estimated book value of private sector loans is Bt250 billion (2001). Even though transfer of debts from the Krungthai Bank to Sukhumvit AMC occurred when the loans were worth 80% less than their book value, in the present case they would be transferred to the TAMC at Net Book Value (NBV), that is, 100% of the assessed worth of the collateral. 

Provisions on gain and loss sharing were clearly defined. Future losses of up to 20% NBV would be the responsibility of financial institutions that had transferred the NPLs. Additional losses on the next 20% NBV would be shared evenly between the private financial institution and the TAMC. Further losses would be borne by the TAMC. Future gains on the NBV would be shared in the following manner: gains amounting to 20% NBV would be shared evenly between the private bank and the TAMC, whilst gains thereafter would accrue entirely to the private financial institutions. Settlement of losses and gains would occur sometime between the 5th and 10th year after the establishment of the TAMC. Payment for losses could be made either by cash or stocks of the private financial institution. The TAMC would issue 10 year notes to banks as payment for their NPLs. The TAMC would pay annual interest, calculated from the weighted average of all deposits in the banking system. Interest rates would be adjusted on a monthly basis. 

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak ChareonwongsakThe government established

Establishing the Thai Asset Management Corporation (TAMC):
Who wins, who loses?

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

 

The government established the Thai Asset Management Corporation (TAMC) in 2001 in order to solve the problem of non-performing loans (NPLs) in the financial institution system. However, even though the NPLs in financial institutions could be reduced drastically, the author argued that the problem itself has not been solved completely because the arrangement was merely to transfer the NPLs from financial institutions to other groups of people.    


The Thai Asset Management Corporation (TAMC) is a mutation of the last government’s Asset Management Corporation (AMC). Its formation comes as the result of many concessions and benefit sharing between private financial institutions and the government. Although the establishment of this institution could bring huge windfalls to Thai and foreign creditors as well as Thai debtors, it would be at the expense of the taxpayers in general.
The government plans to use the TAMC, founded to promote efficient management of non-performing assets and for the minimization of losses, to purchase non-performing loans (NPLs) from both public and private financial institutions. For private banks and private AMCs, transferable NPLs are defined as multiple creditor loans, which are fully provisioned and transferable NPLs pending in court.

Kriengsak Chareonwongsak the effect on the government

Third, the effect on the government. In the short term, the government will subsidize social security funds for six types of beneficial compensation, at the rate of 2% of the employee’s wage in 2002. This scheme will involve 9,480 million baht, higher than the current government’s contribution of 1,490 million baht. However, the scheme will encourage employers and employees to become responsible for the cost burden, rather than simply leaving it to the government. So, in the long term, the scheme will lessen the state’s burden. It will compel employees in workplaces with one to nine employees to join social security programs and to be responsible jointly for the costs with their employers, rather than, for example, relying on the afore-mentioned 30-baht project.
    Fourth, the effect on taxpayers. The scheme still does not cover some groups, such as farmers, because of many limitations in collecting. The goal is to get employers and employees to take on the responsibility (as they will receive the benefits) – without drawing on limited public taxes.
It has been found that employees still have the ability to pay their contributions, based on their resources, without any detrimental effect on their standard of living. If we use 165 baht as the minimum wage per day (2002), an employee will receive 4,950 baht a month, or 59,400 baht a year. This amount is higher than 1989’s average poverty line for the country -  10,932 baht a year. Moreover, if we add the average cost of public health per se, that is, 3,691.2 baht, the lowest ceiling will be 14,623.2 baht. If we use this amount to be the minimum criteria for living, we find that an employee’s minimum annual income is still higher than the survival level.
Every effort should be made to address the problem of those outside of the social security net. This arises because of the non-registration of vendors and stalls to social security schemes, and the difficulty in measuring farmers’ income. An information center should be established to register all occupations whereby income can be properly assessed and everyone encouraged to enter into the social security system. When this happens, the equity of every group in society will be reinforced.

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak medical costs

These increased costs however, may be offset in the long term by two factors – increased productivity and fewer resignations. Productivity is likely to increase through better welfare for the employees as they will be healthier. The increased productivity will decrease per unit costs and as a result, employers will be able to sell more goods to offset their social security contributions.

At the same time, employees will be comforted by the knowledge that their medical bills will no longer be a huge drain on them. In the past, they did not have any welfare such as the present 30 baht hospital card. Previously, whenever they were sick, they had to pay for all medical costs, and employees tended to look for work, which provided better welfare.
However, the new scheme will increase the administrative costs of small operators, as they will have to deal with the government sector and compile reports. Hence, employers should be allowed to share the resources of a private company to be responsible for such documentation and accounting.

Second, the effect on employees. In the past, employees had to be responsible for their own medical costs, now the public sector and employers will pay contributions for them. This will increase work productivity because of better sanitary, welfare and basic health assurance. This in turn will build security for employees who previously were not able to join a health assurance program or to join social security programs. As a result, fewer people are likely to change jobs, as they will have increased security.

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak ChareonwongsakThis fund covers workplaces

This fund covers workplaces, which have between one and nine employees, or 68.9% of the total number of workplaces in the country. The three biggest sectors are retailers and wholesalers, restaurants, and hotels, which account for 33.3% of the country’s total workplaces; followed by the manufacturing sector, at 17.0%, and finally public, social and individual services, with 11.1% of the country’s total workplaces.

Almost 10.9% of the total number of employees at workplaces throughout the country will get higher social security benefits.

The fund will affect many groups of people in different ways:
Firstly, effect on employers or owners of workplaces. In the short term, the operational costs of Small to Medium Size Enterprises (SMEs) will increase as employers have to pay a contribution of at least 3.2% of the employee’s wage, but not more than 4%, depending on the risks at the workplace. A higher number of workplaces will now be involved in contributions, from 108,745 to 1,239,000,
Examples of workplaces that have the highest risks are mining, bomb production, fireworks, and construction. On the other hand, those businesses with the lowest risk burden are medical professionals, finance, and banking.

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak losses and gains

Social security for small businesses - losses and gains

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

This article analyzes the arguments for and against changes to the 2001 Social Security policy. Previously, Social Security applied only in work places with more than nine employees; however, it now applies wherever there is just one employee in the workplace.

Last many year (2001), the Thai cabinet agreed to expand the scope of social security to cover workplaces with one to nine employees; a decision promulgated on April 1, 2001. The legislation, however, does not cover employees of the Thai Red Cross Society, state enterprizes, the agriculture sector, and housewives.
This decision was more than likely propelled by two aims - to extend the social security net throughout the country according to the current constitution, and to earn increased income from the contributions of employers and employees.

Employers need to contribute to the scheme as they have a strong influence on the risks, both directly and indirectly, to which the employees are exposed. Direct risk, for instance, involves harm at the workplace itself. In such cases, only the employer pays a contribution to the social security fund once a year, on average, 0.2-1% of the employee’s wage.

Indirect risk is risk not related directly to the work place, and includes sickness, maternity leave, death, child allowances and aged pensions. In such cases, the employers are responsible for a proportion of the contributions to the social security fund to relieve the burden on employees - this is considered a form of welfare on the part of the employers. Employers and employees pay contributions at the rate of approximately 3% of wages. In addition, the government pays a part, normally an equal amount.

Kriengsak Chareonwongsak Thailand

Thailand, therefore, needs to train a breed of business people to cope with this opportunity such as the ablity to speak Chinese, a thorough knowledge of all investment issues, policy and relevant laws, in addition to being able to meet the cultural demands of China's consumers.

Of particular importance here is the ability to speak Chinese. Although there are many Chinese descendants in Thailand most cannot speak Chinese adequately. This results from their parents not encouraging them to learn at home and the Thai education system not supporting the study of the Chinese language. Chinese schools in Thailand are not as popular as they were in the past as most rich Thai-Chinese children are sent abroad to study in Western schools. In addition, Chinese schools in Thailand generally provide education up to primary level only, and universities do not include Chinese as an alternative in entrance examinations.

To address this situation, short-term and long-term plans need to be developed for Thailand's people to become involved in conducting trade with China. Examples of a short-term plan are exchanging instructors, sending Thai students to study in China, adding Chinese as an alternative in university entrance examinations, providing business administrative courses in Chinese, organizing intensive courses in Chinese studies at the higher education level, and supporting research pertaining to Chinese trade and other related issues.

In the long term, information systems about China should be established and a new breed of qualified Sinologists nurtured in specific professional fields.

With China marching towards the status of a super power, Thailand needs to be in a position to fully capitalize on this for the maximum benefit of both countries. Plans needs to be drawn up now to define relations between the two regions, and, as mentioned above, the groundwork needs to be laid for a new generation of Sinologists to make sure these plans are fully implemented.

All roads lead to China

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak Against this backdrop

Against this backdrop, it can be expected that Thailand will receive all the cooperation it needs from China. During last year's Sino-Thai trade negotiations over Beijing's WTO membership, China proposed tariff reductions for Thailand on 136 items, a decrease in the average rate from 30.2 percent to 13.1 percent (by simple average).

China’s WTO membership, then, will affect the expansion of the quotas for agricultural products until they are eliminated, as well as the liberalization of trade in goods and services, especially in hotel and restaurant businesses, where Thailand is particularly competitive.

Although Thai-Chinese trade will continue to rise with further economic recovery - to the point that Thailand will be in surplus, Thailand’s trade volume in the overall Chinese market remains very low. China's imports from Thailand rank 11th, with a market share of 1.97 percent, a slight increase over the previous year's (2000) figure of 1.89 percent.

In terms of the structure of agricultural goods and industry, China and Thailand are rivals. Hence, to successfully improve trade cooperation with China, Thailand should urgently improve its competitiveness. The Thai private sector should participate in China’s economic growth as a partner for progress, and not as a rival. This involves more targeted investment in China, becoming a bigger and more influential trading partner, and in enhancing tourism cooperation.

In order to increase Thailand's market share in China some barriers need to be overcome, including the uniqueness of Chinese laws, differences across the Chinese provinces, and an underdeveloped banking system.

All roads lead to China

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak the World Trade Organization (WTO)

Last year China was the seventh largest exporter in the world, and the eighth biggest importer. Significantly, China is tipped to be one of the few countries that will be able to sustain its economic growth in the short term.

The country's admission into the World Trade Organization (WTO), formalized on November 12, 2001, will unlock a treasure trove of trade opportunities for many regions, including Thailand, while Beijing will play an important role as the representative of developing countries in bargaining on the world trade stage.

Moreover, as China's foreign policy is based on peaceful coexistence, both at home and broad, to ensure economic stability, the country's development is inextricably linked to that of other Asian countries.

This nexus can be seen from the economic crisis that broke in Asia in mid-1997, with Thailand being the first victim. The US alone was not able to assist the country, rather it was left to the International Monetary Fund (IMF) to put together a rescue package. A key element of this was the approximately US$1 billion that came from China.

Further, with regional currencies in a downward spiral, Beijing resisted the temptation to devalue the yuan, which would have placed increased pressure on the competitiveness of exports from Asian countries.

All roads lead to China

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak All roads lead to China

All roads lead to China

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th

This article was first published in the Bangkok Post on December 16, 2001 after the events of 9-11 when the US was attacked by terrorists causing the US economy to slow down. In this article the author suggested that the Thai government place more importance on trade between Thailand and China because of the high earnings potential of the Chinese economy. Later, in October 2003, the Thai government made its first bilateral agreement on FTA with China. 

The effects of the slowdown in the world economy, exacerbated by the attacks on the United States in September, have been felt in Thailand, which for many years has relied on the US and its partners as major trading allies.

With an upturn in these traditional markets not expected in the short term, and with the benefits of the ASEAN Free Trade Area (AFTA) likely to be limited, Thailand needs to look elsewhere for trading partners on its road to economic recovery.

Right now (2001), one of the most interesting markets is offered by China. With a population of close to 1.2 billion people, it is the biggest in the world, offering a broad economic base with high consumption and production potential.

Kriengsak Chareonwongsak Myanmar’s internal, tumultuous agenda

Coping with the Thai-Burmese conflict
Thai-Burmese conflicts have been in the news for the past few years and many Thai government agencies dealing with issues such as foreign affairs and national security, have endeavored to resolve the conflicts, but often to no avail. While this lack of progress is often blamed on the Burmese government, but at the same time, Thailand is some times equally culpable.

Myanmar’s internal, tumultuous agenda
It is difficult to ignore Burma’s sizeable domestic troubles. About 16 minority groups, most of who live along the Thai-Burmese border, have declared their independence from Burma. Thailand is often caught in the middle between these groups and the Burmese government itself. In the past, Burma has accused Thailand of fostering anti-government sentiments within these groups, while Thailand has accused Burma of using the groups to smuggle illegal drugs into Thailand. On several occasions, these tit-for-tat altercations resulted in Burma postponing Township Border Committee meetings.

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
 kriengsak@kriengsak.com, http://www.ifd.or.th

Kriengsak Chareonwongsak Thailand’s relationship

Restoring Thai-Burma relations will bring advantages to both parties. Thailand’s relationship with Burma has become increasingly strained in recent times. Tensions between the two nations have increased mostly because of security issues such as amphetamines smuggled into Thailand, illegal Burmese workers, and Burmese minorities camped along the 2,400 kilometers of shared borderline. Poor relations with Burma have resulted in a number of Thai civilian deaths, damage to cities and towns within reach of Burma’s munitions, and other significant losses.

However, border trade worth about 10 billion baht per year would be lost if relations between the two were not restored. When Burma closed the Ta Kee Lek border crossing, over the last 4 months (March-June 2001) it resulted in a loss of more than 2,000 million Baht in revenue and was the cause of many business owners, in Thailand’s adjoining Mae Sai District, incurring huge financial losses. Similarly, closure of other border crossings would result in the loss of valuable tourism income to the merchants in those other areas.

Other industries have likewise been affected also. For example, the fishing industry has been severely affected by the withdrawal, for an indeterminable period of time, of international fishing concessions given to Thai fishing boats. Instead, the Burmese government welcomes Taiwanese, South Korean and Chinese fishing boats into its territorial waters. Consumer product industries are also affected and closure of border crossings cuts off Burma’s access to goods available in Thailand. As a result, Burma is looking increasingly to China, Singapore, India, and Japan for the consumer goods they used to buy from Thailand. This is despite the fact that when relations between the nations were normal, Thailand was a favored trading partner because trade with Thailand put the least amount of strain on Burma’s deficient transportation infrastructure.

Thailand will suffer long-term disadvantage from a continuing poor relationship with Burma. In the past, Burma supplied cheap raw materials and labor supplies to Thailand. If Burma’s internal transportation infrastructures were improved Thailand could use Burma as an industry base for exporting goods to China, India and other parts of the South Asian region. However, while Thailand pays scant attention to Burma, other nations such as Japan, Australia, and Singapore have increased their investments in the country.
Although the Thai government has tried to improve relations with Burma, conflicts have only seemed to increase a fact that could result in long-term drawbacks for both sides.

Burma as a strategic economic partner

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
 kriengsak@kriengsak.com, http://www.ifd.or.th

Professor Dr. Kriengsak Chareonwongsak Burma as a strategic economic partner

Burma as a strategic economic partner

Professor Dr Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development (IFD)
 kriengsak@kriengsak.com, http://www.ifd.or.th

This article was first published in the Bangkok Post on July 8th 2001 during a period of considerable conflict between Thailand and Myanmar, so much so that the border between the two countries was closed.


The recent decision by the Thai Prime Minister to visit Burma on 19 – 20 June 2001, in the midst of ongoing tense relations between both countries, was highly risky. It was particularly risky in light of the fact that some parts of Burmese history textbooks were amended to negatively accuse the Thai royal institution, thus further igniting anti-Burmese sentiment. Yet, the result of these negotiations will prove that Thailand’s leader has a world-wide vision, looking at the advantages of good, Thai-Burma relations. What is especially significant about this visit to Burma is that it marks a significant step towards the better recovery of the conundrum between the two countries. It builds upon and at the same time, builds up, the intentions of both nations to eliminate drug smuggling and to open border trade both at Tah Kee Lek border crossing and at the border of Mae Sai District of Thailand from 24 June 2001.