Magazine article Business Asia

Thailand at the Crossroads

Magazine article Business Asia

Thailand at the Crossroads

Article excerpt

THAILAND MUST shift from crisis management of its economy to fundamental reforms if it is to fulfil its growth potential in the years ahead, according to a new report by a respected Australian government think-tank.

The East Asia Analytical Unit (EAAU) of the Department of Foreign Affairs and Trade says that, without continued structural reform, growth could fall as much as two percentage points short of its long-term potential of 7 to 8 per cent a year.

"Thailand's economic policy-making is at the crossroads in 2000; choices made now will determine the pace and nature of growth over the next decade," the report says. "It is too early to pick which path Thailand will choose."

Although Thailand's recovery from its 1997 currency crisis is still gaining momentum, the report says "easy growth" based on using existing capacity more fully will be exhausted as early as next year in some sectors.

After that, growth will depend mainly on new investment and increased productivity. The latter calls for better education, more efficient infrastructure and a more market-driven economy open to foreign trade and investment, the EAAU said.

"This will require less government ownership and intervention in resource allocation, a financial system capable of efficiently intermediating Thai savings and a more transparent, efficient and predictable bureaucracy and legal system.

"If Thailand could achieve these structural reforms, its prospects would be very bright," says the report, entitled Transforming Thailand. …

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