According to the chief of the Bank of Thailand, the long-term sustainability of Thailand’s economic growth will depend heavily on domestic resilience and the strength of the local economy, particularly in light of a decline in foreign direct investment (FDI).
During a seminar organized by Thai Publica on Friday, Central Bank Governor Sethaput Suthiwartnarueput highlighted that FDI in Thailand has been on a steady decline over the past two decades, unlike the positive growth experienced by neighboring countries.
Thailand currently holds a market share of approximately 0.63% of global FDI net inflows, which is a slight increase from the average of 0.57% between 2001 and 2005. In contrast, during the same timeframe, Indonesia’s market share rose from 0.07% to 1.39%, Vietnam’s increased from 0.16% to 1.01%, and Malaysia’s grew from 0.32% to 0.83%.
Given this situation, Mr. Sethaput advised that Thailand should concentrate more on internal growth rather than depending on external investments. He emphasized that urbanization and the expansion of local economies will play a crucial role in ensuring sustainable economic growth in the long run.
Additionally, he pointed out that economic scale is essential for developing the local economy. The focus should be on enhancing competitiveness and fostering global connectivity through a strategy he termed “globally competitive localism.” This approach encourages local entities to harness their unique strengths and qualities to compete on a global scale, recognizing the significance of local resources, culture, and community involvement while striving for international competitiveness.
Mr. Sethaput stressed that Thailand should prioritize the well-being and prosperity of its citizens over growth indicators such as GDP and FDI for long-term sustainability. Efforts in urbanization should aim to improve education, healthcare, and social equity.
He noted that certain government initiatives, like special economic zones, have not effectively enhanced the welfare of the population. For example, Thailand’s cross-border special economic zones have contributed only marginally to economic growth, adding merely 0.5 percentage points to GDP despite being in place for several years.
Kobsak Pootrakool, director and senior executive vice-president of Bangkok Bank, commented that government subsidies have not significantly improved household income; in fact, poverty levels have increased during the subsidy period. The number of households living below the poverty line surged from about 1 million in 2007 to roughly 4 million in 2011, with 64% of these households led by seniors, according to Mr. Kobsak.
