Trouble in Thailand deeper than politics

After many years, Thailand has a civilian prime minister in business tycoon-turned-politician Srettha Thavisin, but it was not before he made a compromise with the military. That is unlike other Thai politicians who had been battling the influence of the army, Srettha has decided not to challenge the military, which is loyal to the monarchy above all. And he has been trying to put his business acumen to use by seeking free trade agreements with foreign governments, and trying to woo foreign investments in manufacturing. But it has not yielded any positive dividend. The plight of the ordinary Thais continues to worsen, and they are struggling to just survive. In a special story done by the news agency Al Jazeera, ordinary Thais and experts spoke about the real problems facing the country. For example, Kridsada Ahjed, 40, a motor-cycle taxi driver confesses, “I went to the loan-sharks because people like me – with no assets or savings – cannot qualify to get help from legitimate banks. Now almost everything I make in a day goes towards paying the interest on my debt.” According to Bank of Thailand, household debt accounts for 87 per cent of gross domestic product in 2023, and $1.5 billion of the debt is high-interest informal loans.

What is the reason for Thailand’s economic troubles that it lags behind other Association of South-East Asian Nations (ASEAN) members. One of the major reasons appears to be its not-well-educated and poorly skilled work force. A decade of military rule did not focus on skilling the national work force. As a consequence, Thais remain uncompetitive and comparatively unskilled. The second reason is that political turmoil – military rule has not been of much help in creating political stability – has made the country unattractive for the foreign investors. The investors saw Thailand as a risky investment destination. While countries like Malaysia, Indonesia, Vietnam, the Philippines are growing much faster clocking growth rates between 4 per cent and five per cent per annum. Thailand remains at the level of sub-three per cent annual growth rate.

Pavida Pananond, professor of international business at Thammasat Business School, said, “International trade is being driven more by value-added services that require higher local skills and capabilities. This requires a systemic upgrading of the labour force and local firms’ sophistication beyond shor-term handouts and investment incentives.” This in a way explains the real issues at stake. A World Bank report released last month said that two-thirds of Thai youth and adults were “below the threshold levels of foundational reading literacy.” And three-quarters had poor digital literacy skills. At a time when the world is getting more digitalized than ever, especially in the economy, this is not good news for Thai economy.

Pranee Sutthasri, member of the central bank’s Monetary Policy Department, says that Thailand has lost its competitive edge because it failed to invest in training the population for the digital economy. She says, “It will continue to lag behind if, instead of making products related to artificial intelligence technology, Thailand keeps making downstream electronics products that people no longer want.” That is a critical assessment of what is wrong with Thailand’s economy. Thailand was one of the most successful economies in south-east Asia with decades of high growth rates. But it fell back after Covid, and it has failed to recover. The slowing down of the Chinese economy and the war in Ukraine and in the Middle East have had their impact on Thailand. Economists are describing the crisis in Thai economy as the trap of middle income economy. It has had an initial success but to keep up the momentum it had to invest and innovate. Thailand did not.