In the global race for prosperity, Thailand's competitiveness is increasing. But the bad news is other nations are moving faster.

This is the message from Stephane Garelli, a professor at the International Institute for Management Development (IMD), whose World Competitiveness Centre has been a pioneer in the study of competitiveness since 1989. Thailand's ranking in world competitiveness has slipped five places this year, from 27th to 32nd, out of 61 countries in the survey.

In 2002, Thailand ranked 31st, before improving to 30th in 2003, 29th in 2004 and 27th last year. But this year, its ranking dropped five places, because performance by other countries picked up steam.

"Thailand's competitiveness is not falling sharply. The point is that other countries are doing better," said Garelli.

Thailand, South Korea (from 29th last year to 38th this year), New Zealand (from 16th to 22nd), France (from 30th to 35th), Chile (from 19th to 24th) and Italy (from 53rd to 56th) are among the worst performers. The top performers include China (from 31st to 19th), India (from 39th to 29th), Malaysia (from 28th to 23rd), Austria (17th to 13th), Japan (21st to 17th) and Mexico (56th to 53rd).

The IMD World Competitiveness ranking is widely used as a benchmark for nations to improve their competitiveness, which translates into prosperity. The ranking is calculated by combining four factors: economic performance, government efficiency, business efficiency and infrastructure. Some 312 criteria are used to gauge these four competitiveness factors.

Suzanne Rosselet-McCauley, a senior economist at the IMD, said investors' concerns about political instability in Thailand and delays in public spending were two factors that contributed to the Kingdom's decline in the competitiveness ranking this year.

The IMD also pointed out several challenges facing Thailand this year. The country must reform its export and import structure; improve its energy-consumption efficiency, in order to reduce dependency on imported energy; and improve the quality of labour, to suit new demands by the industrial sector. It must also improve the competitiveness of the industries by; for example, by lowering logistics costs and improving laws and regulations.

Rosselet-McCauley said next year would be "quite important" for Thailand in terms of improving its competitiveness.

This year, the IMD survey highlighted the gap between the contribution of government and the contribution of the economy to a country's overall competitiveness. Thailand's declining ranking has to do with the current political stalemate, which is putting a drag on the economy and affecting business and investor confidence. Privatisations have also been put on hold indefinitely.

The IMD said the governments of Venezuela, Argentina, Brazil, Mexico and Italy were the weakest performers. These governments performed badly in terms of budget deficits, debt, taxes and bureaucracy.

The world's most competitive nation remains the United States, but it is losing ground, due to a weak government. The US and France are the two industrial nations that show the biggest difference between the performance of their governments and the performance of their economies.

The IMD said India and China also experience a gap between government and economic performance. They must work on economic and social imbalances if they want to meet the expectations of their buoyant economies.

Both Hong Kong (whose ranking of 2nd remained unchanged) and Singapore (unchanged at 3rd) improved government performance to catch up with the performance of their respective economies.

"Hong Kong and Singapore and catching up with the US, because their governments are more in synchronisation with economic performance. Finland and Denmark also fare well, others less [so]. A growing gap between governments and economic performance is always a bad omen for the future," said the IMD.

Garelli also suggested that Thailand draft a blueprint for developing its competitiveness and stick to it, for better or for worse, in order to create confidence or a sense of certainty.

"You need a blueprint. And you need to make a choice and then stick to it, whether it is good or bad. You can't change all the time," he said.

"Malaysia is not so business-friendly, but you know what they are doing. China also has rules," said Garelli. He added that India was changing left and right, while South Korea was making changes that were confusing.

Thanong Khanthong,

Achara Deboonme

The Nation