Thai economy faces new challenges, should focus on localism for sustainable growth – BOT Governor

BANGKOK, Thailand – Bank of Thailand Governor, Sethaput Suthiwartnarueput, addressed the seminar “Big Heart Big Impact: Creating Opportunities for the Small… Power of Partnership,” emphasizing the need for a shift in Thailand’s economic growth strategy, September 13. In his keynote speech titled “Building a Strong Thailand Through Localism: The Future of Thailand,” he outlined the challenges facing the country and proposed solutions for sustainable development.

Challenges Facing Thailand’s Economic Growth:

1. Stagnant GDP Growth: Over the past decade, Thailand’s GDP growth has not translated into increased household wealth. Despite nominal GDP rising from 100 to 180, household income has not seen a proportional increase, indicating structural issues. The GDP growth rate is expected to slow down further.
2. Economic Concentration: There is a high concentration of income within a few large businesses, with the top 5% generating 80-90% of the revenue. Small and new businesses are closing at a higher rate, highlighting a lack of dynamism in the economy.
3. Dependence on Foreign Investment: Thailand’s reliance on foreign direct investment (FDI) is no longer effective. While FDI share was once higher than neighboring countries like Vietnam and Indonesia, it has remained stagnant, indicating a decline in Thailand’s attractiveness for foreign investors.

Call for a New Growth Model:

Governor Sethaput argued that Thailand cannot continue to pursue growth based solely on GDP and FDI metrics. Instead, the focus should shift to improving household wealth and living standards through a more sustainable and locally driven approach.



Key Recommendations for Localism:

1. Local Economic Development: Emphasize growth in local areas outside Bangkok and its vicinity, where 80% of the population and 80% of businesses are located. There is a significant gap between capital and provincial regions.
2. Competitive Localism: Ensure that local growth is competitive on a global scale. This involves addressing challenges such as local population density, small-scale businesses, and diverse geopolitical factors.
3. Building Local Strengths: Promote local uniqueness and create value through distinct characteristics, resources, and history. This includes enhancing local market connections via online platforms and fostering partnerships between small and large entities.
4. Regional Development: Focus on developing secondary cities and ensuring effective local governance. Create new economic hubs and enhance access to these areas.
5. Competitiveness Monitoring: Implement systems to track local competitiveness, including investor feedback on regulations and obstacles. This is crucial for improving regional investment climates.