Thai economic trends after the National Council for Peace and Order era (part 2)


In the previous article, in the first section I have presented the Thai economic trends after the NCPO, including the growth of the economy along the borders, the lack of skilled labor, and an increasing labor wage. In this article, I will be presenting further Thai economic trends after the NCPO era as the following issues.

The forth trend: ?An expansion of E-Business?

The business transactions made through the Internet will expand; including marketing and advertising through online media; purchasing products and services via the ?internet such as Tesco Lotus that has entered into e-retail business; paying through electronic systems (e-payment) including paying via mobile devices and tablets.

Important factors that lead to an expansion in E-Business are as follows:

(1) An expansion of internet users: According to the survey on the Telecommunications Consumption Survey of Thailand 2012-2013, a significant increase in the use of internet connection in every media was found. Presently, there are 25 million Internet users in Thailand.

(2) An increasing number of internet users through mobile devices: This makes it easier for ?the consumers to be able to approach online media anywhere at any time, which increases the transactions taking place via the Internet.

(3) The start of 4G system mobile: the National Broadcasting and Telecommunications Commission (NBTC) have agreed on the auction of licenses for fourth-generation (4G) mobile broadband services between August 2014 and September 2015. Henceforth, if the country will be developing its 4G telecommunication, business transactions via Internet network connections will be more effective, convenient and faster to accomplish

The fifth trend: ?A growth of media and advertising businesses?

It is not long till we will be seeing a large expansion of media and advertising businesses such as digital TV and signal detector suppliers, TV program producers, advertising companies, and creative advertising media suppliers etc. Many small-medium size businesses can easily ?advertise on television ?as the cost of advertising has reduced greatly. ?The spring of digital television is expected to increase the advertising budget for television to 5%. However, a number of problems need to deal with prior to implementing it such as dealing with s the lack of operating media persons.

One important factor that affects the growth of media and advertising businesses is the entering of digital TV era. It is expected that the signal-sending network will approach all Thai households in the year 2015, in which there will be a large investment on digital TV. For example, the budget for bidding 24 digital television channels costs 50,862 million baht, the investment on the network costs 5,000-10,000 million baht, broadcasting devices cost 8,000 million baht, and the TV displays cost up to 10,000 million baht.

Moreover, the increase in the number of television stations from 6 to 24 channels has increased the supply of air time. ?This reduces the rate of advertising cost as we see that businesses which never use television media have more chances to enter this kind of advertising media. As a result of an aggressive ?increase in competition among digital televisions, various TV show programs focus on target audience.

The sixth trend: ?The development of economic area along new transportation routes?

The development of economic areas along the upcoming transportation routes are as follows:

(1) The increase of condominiums, real estate projects, and offices along mass transit systems.

(2) The emergance of new economic areas, business hubs and new industries around rural areas, and in provinces that have transportation lines cut through.

Important factors that cause the development of new economic areas are as follows:

(1) The development on cross border transportation infrastructure according to the Master Plan on ASEAN Connectivity.

(2) The investment on infrastructure according to the NCPO policy

(3) The investment on mass transit systems in the Bangkok Metropolitan Region

The seventh trend: ?An increase in the outflow of investment onto neighboring countries?

Thai businesses tend to invest more in neighboring countries especially in terms of the investment to the CLMV. Important factors affecting the outflow of investment to neighboring countries is as follows: .

(1) The investment liberalization under the AEC agreements: The result of the agreement is to help reduce law and regulation limitations on foreign investment, more opportunities to invest in ASEAN countries, gain the benefits of lower ?costs of production and labor costs, gain rich resources in neighboring countries, and enter larger market in ASEAN.

(2) The low ability to compete in some kind of industry especially the labor-intensive industry: The result is the shift of production plants to neighboring countries because labor costs in Thailand are higher than countries nearby. At the same time, the cost of hiring foreign neighbors increases, resulting in a lack of labor ?due to the backflow of foreign labor.

The eighth trend: ?The transformations of resource management system?

The transformations on the resource management that will be occurring are as follows:

(1) The change of the energy business structure in the country including, the change of energy pricing structure, energy market structure, and energy resource allocation.

(2) The change in the land use in the country: This is so to diversify the ownership of land and increase the quality of land utilization.

Important factors that cause the transformation of resource management system are as follows:

(1) The NCPO policy on the change of energy management structure, which is in the process of drafting the energy reformation plan and will be working on it in the upcoming 3-6 months. Especially the restructuring of oil and gas prices so to be justified for consumers.

(2) The NCPO policy on the amendment of Act on Taxation of Land and Buildings. There will be taxation on land and buildings instead of land tax and house and land tax. This is so to expand the tax collections to be more thorough; the local administrations can collect taxes as to distribute incomes, and reduce the grabbing of land by big business owners.

The change that will be occurring after the coming of the NCPO is expected to cause changes to occur from the era where the politicians ruled the country. Along with the change in regional rules and regulations, international economic structures and technology will make the condition and environment in conducting economic and business activities ?completely different from what it was in the past.. This period of time, therefore, will prove to one full of opportunities and threats for individuals and organizations. It could lead to opportunities for those who have realized and are ?prepared for the change, but also be a danger for those who still hang onto the benefits they used to attain from the past with respect to the old condition and structure of economics, society and politics.

Kriengsak Chareonwongsak
Senior Fellow at Harvard University?s Center of Business and Government.,?
Source :?amthaipaperissue0083