OVERDRIVE
Lack of good governance will hold us back
Has Thailand improved in its structural reforms over the past five years? Not quite. You could even say that it is now even worse.
A regional economist from Singapore who visited Bangkok recently for a private meeting said the Thai economy has the potential to grow at 7 per cent a year if it removes all the barriers to businesses and investment. These barriers do not involve only visas or employment documents for foreigners, but all kinds of regulations and red tape created and insisted upon by the ministries and government agencies all the way down to provincial governments. He was citing the result of a World Bank survey of some 2,500 companies doing business in Thailand, conducted some time ago.And how have the Thai authorities responded? You could say that nothing has changed in any significant way. The impression of the regional economist is that the Thaksin government has done very little in terms of structural reforms over the past five years to improve Thailand's long-term competitiveness. The Thai growth story is not unique but reflects the Asia-wide export-led recovery on the back of a favourable global environment, as well as the China factor. But to ensure long-term prosperity, Thailand has to strengthen its competitiveness in virtually all areas, particularly education. The economist warned that Thailand should give Vietnam serious consideration as this neighbouring country is emerging fast through reform and liberalisation. "The fact that the three largest banks in Vietnam are foreign-owned sends a strong message that this country is very much pro-growth," he said. Along Vietnam's coastline, which stretches more than three thousand kilometres, resorts and new investments are popping up. Vietnam is now taking in foreign investment and will prove to be a strong competitor to other Southeast Asian nations. Once Vietnam's electronics industry takes hold, the Philippines will become the first casualty of the competition, followed by other countries such as Malaysia and Thailand. Further undermining Thailand's competitiveness is rampant corruption and the deterioration of good governance. Daniel Kaufmann, the World Bank's director for global programmes and governance, cited a bank study that found that between 1996 and 2004, Thailand suffered a major deterioration in the rule of law. Serbia, Mozambique and Estonia have overtaken Thailand as the countries with better respect for the rule of law. The statistics on Thai corruption are quite significant, he added. The message from the World Bank is clear: any country that fails to combat corruption and improve governance will suffer a loss of competitiveness. And to combat corruption and implement governance, countries need a strong political leadership. Unfortunately for Thailand, the Thaksin government has left a legacy of corruption scandals and poor governance practices. This has caused a problem for the whole country. Most of the independent institutions enshrined in the Constitution are not doing what they are supposed to do. That's why we are facing a political crisis at the moment. We cannot blame Thaksin Shinawatra alone for his alleged attempt to trample on the independent institutions. For the members of these independent institutions have rushed to extend him a red carpet. Thaksin retreated from the premiership as a result of growing pressure over his alleged lack of ethical conduct in office. The consensus is that the country needs another round of political reform in order to ensure transparency, checks and balances and good governance in the conduct of public policy. This political vacuum should not be allowed to drag on because the crisis has already damaged the country. We are badly in need of a new constitution that can really keep an eye on politicians and public figures. Good governance must improve to restore confidence. If we can't overcome the current hiccup, we'll certainly fall behind Vietnam in the next two decades. Thanong Khanthong The Nation
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