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Thaksin’s ‘visions’ could be blinding him

October 19, 2001

Thailand’s competitiveness ranking continues to slip, as shown by the latest survey of the World Economic Forum’s Global Competitiveness Report 2001. This is a real cause of concern, yet the Thai leadership has never addressed the problem seriously enough.

The report ranks Thailand’s competitiveness – which implies its best growth prospects over the next five years – in 33rd place this year, down from 30th last year. Finland emerges as the most competitive nation in the world from all the 75 countries under the survey, followed by the United States, Canada, Singapore, Australia, Norway, Taiwan, the Netherlands, Sweden and New Zealand.

The World Economic Forum’s report, cochaired by Professor Michael E Porter of Harvard Business School and Professor Jeffrey D Sachs, director of the Centre for International Development at Harvard University, designs a growth competitiveness index. This sets out to measure the factors that contribute to the future growth of an economy as measured by the rate of change of gross domestic product per person. Other key subindexes – the level of technology in an economy, the quality of public institutions and the macroeconomic conditions – are also taken into account.

Before leaving office as finance minister in 1999, Tarrin Nimmanahaeminda was mumbling about Thailand’s need to strengthen its competitiveness if it hoped to return to a growth path of prosperity. He expressed his regret that the then government, busy with tackling the immediate problems of the economic crisis, did not have enough time to work on the foundations for Thailand’s competitiveness.

“It is quite easy if you want to improve the competitiveness of a nation. You just develop a business plan, cut costs, put in the best people and run the business to meet the target,” he said. “But when you talk about the competitiveness of a nation, that is another story, a more complicated task, which involves political transparency, a sound macroeconomic environment, social equity and strong institutions.”

Judging by the performance of the Thaksin government over the past eight months, the present leadership has paid little attention to improving Thailand’s competitiveness. Prime Minister Thaksin Shinawatra’s decision last week to offload the education portfolio lent weight to growing doubts about his commitment to education reform. Strengthening Thai human resources is the foundation of future growth. Yet there has been no plan or commitment at all to increase the number of Thai technicians or Thai graduates in the fields of science, technology and engineering, much less providing a retraining programme for Thai workers to improve their skills.

Strengthening human resources will have to become the cornerstone of policymaking if the Thaksin government really wants to establish a new entrepreneurial class in Thailand. For the skills and technical knowledge of these people will give birth to small and mediumscale enterprises. As Dr Ammar Siamwalla, the wellknown economist, has suggested, “You cannot create SMEs by throwing money after them or giving them more debt [opportunities]. Money has never been the problem. You have to start with human resources, who then will find their way to create SMEs.”

A recent report by the International Monetary Fund on Thailand also indicates that if Thailand hopes to return to economic growth rates of at least 5 to 6 per cent a year in the medium term, it will need to focus on productivity growth. This drive toward productivity growth must be achieved at 3 to 4 per cent a year and further entails Thailand maintaining an open trade and investment regime, as well as investing more in human capital.

Alan Greenspan, the chairman of the US Federal Reserve, frequently points to the success of US productivity growth as the underlying factor contributing to healthy US economic growth. This high level of productivity growth is a product of the US commitment to investment in human capital, in science and technology.

Most important, the employment of technology to cut costs and to improve productivity has helped to keep the US as one of the world’s most competitive nations.

The Thai prime minister needs only one vision to become a successful political leader, and that is to devote all of his energy and attention to improving Thailand’s competitiveness.

This will require him to reform the education and legal framework, strengthen domestic institutions, adopt a liberal approach to trade and investment and nurture a friendly environment for the development of science and technology.

Unfortunately, by having too many “visions” Thaksin ends up having no vision at all.

Thanong Khanthong



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