Thailand needs to ramp up collaboration with China to become a gateway for Chinese exports via the proposed land bridge project, says Finance Minister Pichai Chunhavajira.
Mr Pichai, in his role as deputy prime minister overseeing the economy, told the ACMA Business Forum 2024 on Monday that instead of competing with China on shipments, Thailand should cultivate a mutually beneficial trade relationship, as China is one of the world's largest exporters and importers.
Thailand, with its convenient logistics location, should leverage this strength to become a gateway for Chinese exports to the Andaman side of the country through the government's land bridge project, he said.
In addition to its geographical location, Mr Pichai pointed out that Thailand is a tropical country with vast plains suitable for agriculture, comprising 80-90% of its total area. In contrast, China has only one-third of its land available for cultivation.
Thailand's location could also enable it to become an aviation hub for aircraft with a flight range of 9-10 hours, he said.
Mr Pichai said that although Thailand is well-prepared in various aspects, there is a need to find ways to attract investments into the country, particularly foreign direct investment (FDI).
Even though FDI accounts for less than 20% of total investment in the country, it is crucial for bringing additional foreign investment -- particularly in the form of new technology -- into Thailand, which could lead to the development of related industries, including tier 2 or tier 3 industries.
He emphasised that while Thailand has a strong foundation to attract investment, the country still needs to improve its technology to produce goods that the market demands.
"We are fortunate the country has sufficient capital, although over the past 15 years, we have been slow to adapt. We need to speed up adjustments to allow the Thai economy to expand to support an aged society, which requires adequate funding," he said.
GREYING SOCIETY
Thailand has a population of 67 million, with roughly 500,000 births per year. In 2023, the country became an "aged" society, with the elderly accounting for 20% or more of the population.
The number of elderly people reached 13 million as of Dec 31, 2023, according to data from the Department of Older Persons.
Mr Pichai said the number of people aged 60 or older in the next 10 years is expected to increase to 30% of the population, meaning the working-age population will be roughly equal to the elderly population, excluding their own children. This ratio is projected to rise from a ratio of 0.5 elderly persons per working-age person at present, he said.
Mr Pichai said the sole reason for the country's declining birth rate is economic conditions.
To address social problems, the country must also tackle its economic issues, he said.
ISSUES WITH CHINA
Regarding the condition of Thailand's small and medium-sized enterprises (SMEs), Sangchai Theerakulvanich, president of the Federation of Thai SMEs, said they face seven impacts from Chinese capital, namely tax avoidance for Chinese goods, undermining the Thai economy; zero-dollar tour businesses run entirely by Chinese people, including Chinese tour buses, guides, restaurants and hotels; and low standard products lacking certification from state agencies such as the Thai Industrial Standards Institute and the Food and Drug Administration.
Chinese traders are monopolising Thailand's fruit trade by buying entire orchards or using nominees to own orchards, controlling prices and extending their reach to other agricultural products such as rubber, he said.
The construction industry is also being affected by an influx of cheap Chinese construction materials such as those used in home decor as well as furniture and steel, said Mr Sangchai.
In addition, the logistics industry is dominated by Chinese-owned fleets of trucks, he said.
According to Mr Sangchai, the emergence of the Temu platform, which offers direct access to cheap products from Chinese factories, is likely to have a detrimental impact on Thai products and Thai SMEs.
Sompop Manarungsan, president of the Panyapiwat Institute of Management and a specialist on the Chinese and US economies, said the new government should urgently address the perception that Chinese goods and investments are seen as negative by Thais before it escalates, affecting local exports and tourism.
He suggested that collaboration between China and Thailand could build a "win-win" trade model.
If the perception and attitude towards Chinese trade and investment are not addressed promptly, it could lead to trade confrontations with China, which would significantly impact Thailand's export and tourism sectors, said Mr Sompop.
