JTBF Mission to Thailand 2010 (2/01-2/04)

Visit to Japanese Embassy

reported by Takashi FUSE (Representative of JTBF Bangkok Branch)

Kitayama: Today, mission members visited BOI and TNSC. I myself and Mr. Motomura visited Ministry of Finance. There, Mr. Korn informed us that he, TCC (Thai Chambers of Commerse) and FTI (Federation of Thai Industries) plan to visit Japanese government, Japan Federation of Economic Organizations and other concerned organizations to explain “Map Ta Phut” problem in the middle of March.

Today, I would appreciate having your view of an over all situation and outlook of Thailand.

Ambassador: Thai economy is on a track to recovery. World Bank and Asia Bank have a strong prediction of 3.5% or higher growth for 2010.

Concerned is the domestic political instability. The supreme court will decide a case of asset freeze of former prime minister Thaksin on Feb. 26. If the decision is disadvantageous for Thaksin, pro-Thaksin group will provoke a backlash. There is a rumor of coup d'etat also. It is something like a psychological war between pro- and anti-Thaksin groups. I have to say it is quite difficult to predict a future of political turmoil.

“Map Ta Phut” is concerned. While we must honor legal judgment in line with principle of separation of powers, we are requesting to Thai government to set up a clear road map of the solution to avoid a negative impact to the recovering economy.

Regarding state of tension between Thailand and Cambodia and a concerned affect to Mekhong projects, it must be noted that both Thailand and Cambodia are still keeping a economic tie. I believe Asean countries cooperate each other in promoting Mekhong projects. Prime minister Abhisit chaired Asean-America summit of last November and he was successful in taking initiative.

Movement to integration of Asean countries will be unchanged basically, while it is necessary to fill up gaps among some countries. Thailand will continue to take initiative.

Motomura: As associated with Thailand Cambodia economic relation, it looks China is becoming influential by enhancing economical supports to Cambodia. I am afraid Japan will be left behind.

Ambassador: In fact, China and Korea are rushing into Cambodia. Laos is in the same situation. As for Japan, it is quite important to takes a positive role in Mekhong development projects. I believe it is the way to cope with China and Korea.

Motomura: Baht appreciation was concerned in today’s meeting with TNSC (Thai National Shippers’Council). It is 5% higher than one year ago. This year alone, it has increased by 1% already. Governor of Bank of Thailand also referred to the status. I wonder there might be an official intervention to lead milder appreciation.

Ambassador: I am not familiar with currency exchange. But, I remember that Mr. Bunyasit (Saha group) predicted this baht appreciation last fall.

Kitayama: China does not upvalue Yuan, Korea is suffering from sudden depreciation of Won. Vietnam devalued Dong. Thailand is surrounded by all of these difficulties.

Motomura: Baht appreciation is affecting Japanese market also, where Thai goods are losing price competitiveness and replaced by Chinese goods. As one of Thai favored person, I worry about it.

Economic Minister: There may be a case that Thailand can not afford to accept quite a big volume order of agricultural products and that the order is converted to China.

Again regarding to “Map Ta Phut”, Thai government is requested to assume responsibility of solving the fundamental problems. It is one of necessary steps for Thailand to prove as a reliable country.

Thailand is also entering aging society. From now on they will start to face several problems such as premature pension system.

Okamoto: I am afraid labor situation might drag on the economy recovery. I have seen several car makers which had to stop operation due to labor shortage. They once fired workers to a large number, and then tried to reemploy them to cope with demand recovery. But, those workers did not come back. Some maker of car parts tried to hire 100 workers, but only 3 applied. Workers are getting off from low-paying jobs.

Economic Minister: Some labor problems were appealed to us in the past. We wonder Thailand has a mechanism to solve labor problems.

Okamoto: Labor court is a sort of the mechanism. But, it is not appreciated by Japanese enterprises because they tend to give a decision favorable for Thai side.

Economic Minister: A neutral judicial-type body such as Central Committee on Labor Affairs of Japan is required indeed.

Again regarding to “Map Ta Phut”, it is necessary to establish a sustainable solution system. Thailand might learn from a history of overcoming pollution problems of Japan. We have invited 2 specialists from JAICA and holding seminars to introduce solution examples of Japan. In any way, a standard or a rule must be established to define allowable emission level of pollution substances.

Labor problems or “Map Ta Phut”, we would like to seek any possible supports to Thailand.

Ambassador: Big projects such as constructions of blast furnace, nuclear power generation, high-speed railway, etc. do not progress unless they are driven by a sort of political judgment. But, in case of Thailand, those projects tend to progress very slow. In Vietnam, they have a very aggressive plan to construct high-speed railway, which is a typical example to show how “political judgment” works. We, Japan, are ready to cooperate with Thailand to promote high-speed railway projects Bangkok – Rayong, Bangkok – Chiangmai. But, it seems difficult to proceed under today’s political instability.

Yoshida: King Bhumibol often refers to the moderate economy (so called “know-sufficiency” economy). Is this a denial of Thaksin’s policy ?

Ambassador: Prime minister also referred to “know-sufficiency” economy in his speech at United Nations. But details are unknown. It might not go with the current policy of stimulating domestic consumption.