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Politics and Economics of Thailand Development

Narongchai Akrasanee, Ph.D.

I would like to make a confession.
I committed sin for half a year, from about December 2013.
I am about to commit another sin, that is to be involved in politics, so I
need to make a confession.
What sin?
I was thinking about wanting to see a coup dtat, about the militarys
taking over.
To me, thinking like that was a sin.
According to my professional upbringing, I was brought up with the ideal
of democracy.
51 Years ago I learned the politics of democracy at this Faculty of
Political Science.
Then in Australia I learned the English history of the Tudor, the Stuart,
Oliver Cromwell and the fight between the Parliament and the Palace.
In the US, at JHU, I learned about the American war of independence of
1776.
The Boston Tea Party and the idea of no taxation without representation,
no legislation without representation.
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I should also mention the French series of revolution from 1789, turning
back and forth from absolute monarchy to representative government.
The ideas of Liberty, Equality, Fraternity.
Why did I have that sinful thought, of having the militarys taking over
the administration of the country?
Because,
Political conflicts were growing without control, with sporadic violence
and casualties.
The economy was disrupted more and more seriously.
And democratic solutions by means of general election were fading away.
Then we had the incidence of 22 May, 2014.
In retrospect, that sinful thought occurred to me many times before.
There are reasons for this, both politics and economics.

For politics, Thailand has not achieved a stable political system since the
major change of 1932.
We were given the ideology of democracy at that time. We were led to
believe in the principle of representative government. As mentioned before; no
legislation without representation; no taxation without representation. Such are
the ideal of democracy.
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Since then we have been alternating between bureaucratism / militarism
democracy, and capitalism / populism democracy, or the combination of both.
At times we had coup dtat to affect the changes.
We have had two forces at work, market forces and social forces.
The market forces were driving for growth, while the social forces were
for equity.
We thought democracy should be the solution. But there are differences
of opinions, in terms of priority.
Some want democracy with accountability.
Others give higher priority to democracy with opportunities, to share in
power and resources.
We have tried to develop a system that would deliver both.
Apparently we have failed.
And it just happened that when the military intervened we could see
changes that were good for the economy.
We achieved industrialization in the 1980s under the governments with
military involvement, following the coup dtat of 1977.
We began the process of globalization from 1991, after the coup dtat of
that year.
The longest time the fully elected governments lasted was from 1993 to
2006, about 13 years. The political design was to have elected governments
with functioning governance. But that was not achieved. There was a coup
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dtat in 2006. And after representative governments during 2008 2013, again
the militarys taking over the administration of the country on 22 May, 2014, at
the same time trying to implement major reforms.
So it seems we have lived with the burden of ideology (of democracy)
without the luxury of choices.
Such unstable political system has affected long term investment plan for
the country, thus affecting sustainable growth. Over the last 15 years, GDP
growth rates fluctuated from about 2 to 7%, with most years averaging below
5%, much below.
What we had achieved was only the way the economy was to function.
From 1960, we adopted market economic system. We continued to open
the economy, and to integrate with other economies, particularly neighboring
Asian countries and the Oceania.
Our foreign trade volume of goods and services now stands at about 1.4
times of GDP, or about US$ 560 Billion.
Foreign investment including FDI & PFI are substantial.
And tourist arrivals now number about 27 million.
Because of political conflicts, growth this year is expected to be about 1.5
2.0 %, due to the negative growth during the first half.
Prospects of the future look better now.
With political conflicts being managed by strong persuasion (and
seduction), and the promise of reform on most areas as demanded by all parties,
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we can expect first a more efficient decision making, particularly concerning
investment.
The military supported government, to be in office by September, is
expected to follow the same market economic system, open to foreign
participation and competition in trade and investment.
What is hoped is that the government will begin the process of
transforming the economy towards a more value adding / value creating
economic activities, and with more integration with the neighboring economies
particularly the GMS, ASEAN and East Asia.
This direction is necessary because of the shortage of labor and energy
resources.
The transformation is to be achieved by investment in the new learning
and producing paradigm relying more on digital technology, and in the new
generation infrastructure that would provide connectivity with the neighboring
countries, and reinforcing domestic connectivity. Such infrastructure would
facilitate independent works, and would allow many major cities around the
country to grow, and to become the new growth engine of the economy.
For the digital technology to be fully utilized a major reform and
reorganization is needed, in the areas of supervision, regulation, promotion, and
services provision. We need an integrated system that would allow every sector
of the economy and society to apply this technology, which is evolving very
rapidly, to improve its productivity and efficiency.
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Another area with priority for reform and reorganization is the labor
market, particularly the migrant workers. The need for migrant workers is
obvious. The supply and demand for migrant workers create a very big market,
and also opportunity for exploitation. A system must be put in place that would
minimize exploitation, and at the same time satisfy security concern of the
military.
Finally, the country cannot achieve sustainable growth and development
without fiscal sustainability. Major tax reform is on the agenda, together with
the reform of state enterprises particularly the ones with propensity of loss
making.
Thailand, like any other developing countries, needs a more sustainable
growth so that the people can live a better life. Ideally, this should be achieved
under the system of representative government. What is more important is a
system of good governance. Unless we operate with good governance, we will
continue to be faced with political and economic instability.
I do not want to commit another sinful thought in the near future.