NESDB: Ties with Cambodia to improve

July 7, 2011
Source: Bangkok Post

The relationship between Thailand and Cambodia is likely to improve once the incoming Pheu Thai-led government takes power, National Economic and Social Development Board (NESDB) member Narongchai Akraseranee said Thursday.

Mr Narongchai was speaking at a seminar on “Moving Forward to Investment in the Asean Economic Community (AEC)” held by the NESDB office this morning.

Member countries of the Association of Southeast Asian Nations (Asean) now have less concern about political problem in Thailand as the July 3 general election passed through without any situation, he said.

They also believed the PheuThai-led administration would be able to improve ties with the neighbour that has turned sour for two years, the economist said.

The improved relationship between Thailand and Cambodia would allow the Asean to move smoothly ahead with its plan to establish the Asean Economic Community (AEC) in 2015, he said.

Mr Narongchai said Thai manufacturers must prepare for being part of the AEC in the fields of logistic management, foreign languages and the investment-related laws of other countries.

Public and private agencies must help provide information about the AEC and assist manufacturers that want to make overseas investments.

Overseas investment promotion is a policy set down in the 11th National Economic and Social Development plan to be unveiled today, Mr Narongchai said.

Under the 11th plan, the government will support private firms to invest in foreign countries after the large industrial projects in Thailand faced problems of environmental impact and opposition by local people, he added.

He said he could not tell at the moment how the 300 baht daily minimum wage policy promised by the Pheu Thai Party would affect the industry sector and have to wait and see.

On the concern that this policy would weaken trade competitiveness of Thai manufacturers, the business sector would make its own judgment.

"If labour cost is increased but workers are skilled labourers, it would be acceptable. Otherwise there would be problems," said Mr Narongchai.

An academic at the University of the Thai Chamber of Commerce Thai (UTCC) said manufacturers were confident that the country's gross domestic product in the second half of this year would grow at 5.0 to 6.0 per cent.

UTCC's Economic and Business Forecasting Centre director Thanavath Phonvichai said economic expansion for 2011 is projected at 4.0 to 5.0 per cent.

The centre conducted an opinion survey on the new government's policies and economic and business prospects immediately after the July 3 election, on July 4 and 5, seeking points of view of 820 manufacturers.

Mr Thanavath said most respondents had more confidence in the economic policies of the incoming administration and in political stability.

The business sector was also confident that Pheu Thai's victory, winning more than half of the total House seats, would help increase political stability.

As a result, the business sector had come up with business and investment expansion plans, believing Thailand has strong economic fundamentals without any sign of economic slowdown. However, manufacturers were worried about political instability, which could hurt their business plans, he said.

He suggested the Pheu Thai-led coalition government act to rapidly bring about political stability. Political certainty would make the private sector more confident about investing more, people would spend more and foreign investors would be drawn to Thailand.

He warned that if political situation worsened, it would trim economic growth for the year to only 2.5 to 3.5 per cent.

On the question about confidence that the publicized policies would be implemented, 81.8 per cent of the respondents said positive, only 19.2 per cent negative.

The respondents said the new government should give top priority to the problem of social divisions in order to bring about reconciliation, followed by problems of corruption, high production costs, high living costs, drug trafficking, border dispute and weak trade competitiveness of the private sector.

The policy to increase people’s income should be set as a national agenda, said Mr Thanavath.