The International Monetary Fund projects that Thailand’s economy will expand by 2.5 percent in 2015, as the Southeast Asian country contends with military rule and a turbulent economy. The IMF also cut growth from 4.0 to 3.2 percent for 2016.
Corruption has existed in Thai society for a long time. It has contributed to the failure of government projects. The Klong-Dan water treatment scandal in the late 1990s spent around 23 billion baht (US$ 638 million) of public funds needlessly. More recently, the rice-pledging scheme suffered losses of around 700 billion baht (US$ 14 billion) but resulted in little concrete improvement in poor farmers’ welfare. These instances provide some evidence of the increasing magnitude of damages caused by corruption.
Share of SMEs in the Thai economy
Small and medium-sized enterprises (SMEs) play a significant role in the Thai economy. In 2012, there were 2.7 million SMEs in Thailand (see Figure 1) comprising 98.5% of total enterprises. In the same year, SMEs accounted for 37.0% of gross domestic product (GDP) and 80.4% of the workforce. Thai SMEs also contributed to 28.8% of total exports and 31.9% of total imports by value in 2012.
Thailand’s military-led government has invoked Article 44 of the interim constitution to replace martial law. The controversial article vests complete power and authority with Prime Minister General Prayut Chan-ocha in his capacity as head of the National Council for Peace and Order — Thailand’s junta that has governed through martial law for over 10 months so far. The replacement of martial law with Prayut’s absolute authority yields several immediate implications.
Thailand now stands on a tightrope among the major powers. Recently, Russian Prime Minister Dmitry Medvedev made a high-profile visit to Bangkok, hosted by the coup-appointed government of Prime Minister Prayut Chan-o-cha. Medvedev’s visit suggests that Thailand is now strategically courting authoritarian major powers, namely Russia and China, in defiance of Western criticism of Bangkok’s coup and military regime.
Thailand’s current development model may not be able to sustain growth in the long term. Thailand needs to make the shift to a knowledge-based, innovative economy — and this means that policy settings will need to change.
Thailand’s economic development derives mainly from cheap labour. The manufacturing sector relies upon foreign technology. With comparatively low labour costs, as well as government support for infrastructure and investment incentives, the Thai manufacturing sector has thrived as the main driver of economic growth over the past few decades.
In a move that affects an industry worth over $6 billion that stretches across two continents, the EU has warned Thailand that it must fix human rights abuses such as child slavery in its fishing industry.
Earlier this week, the EU said it would give the third largest seafood exporter in the world six months to fix human rights abuses in its fishing industry, or face a blanket ban that could cost over $500 million in lost sales to the economic bloc.
One of the largest Southeast Asian economies is weakening as trade slows and labor shortages hinder growth.
Thailand is likely to see 3.6% GDP growth in 2015, according to the Asian Development Bank, which revised downward its forecast on weak exports, high domestic private debt, and weakening commodity prices.
A quiet but increasingly deadly struggle is taking place in Thailand’s deep south.
But why has the security crisis in the three southernmost insurgency-affected provinces of Yala, Pattani and Narathiwat proved so intractable and drawn out? And why have the Thai authorities struggled to find a viable solution to the problem? What is it that makes the situation there so hard to understand and so long lasting? The answer is a confluence of factors.
The recent state visit by Thai Prime Minister Prayuth Chan-ocha to Cambodia represented part of the Thai military government’s uphill diplomatic battle to build and strengthen its legitimacy abroad. This visit occurred amid mounting diplomatic pressures from Europe and the US, calling for a rapid return to democracy.
