Later this week Prime Minister Abhisit Vejjajiva will be in Switzerland to take part in the World Economic Forum. About a decade ago, the Davos-based World Economic Forum had named Abhisit as one of the promising global young leaders. This prophesy has been fulfilled. Now it is Abhisit's turn to deliver by showing whether he fits the mould of a global young leader.
Understandably, Abhisit would like to restore Thailand's positive image and to boost confidence in his leadership. At home, it is still too early to assess his leadership but most Thais are willing to give Abhisit a chance to put the country back on a normal path of growth and stability. On the international front, the premier is still a newcomer, who needs to prove his mettle and vision among regional leaders. Nonetheless, he should not worry too much over how other countries are perceiving Thailand because most of them have deeper and far more serious problems than ours. He should only tell his international audience how he plans to lead Thailand into the future and at the same time work towards national reconciliation.
Abhisit is a good speaker and a nice politician. But after a series of talk shops, he would need to show the way out for Thailand and deliver results. Otherwise, people will be asking: "Where's the beef?" His quick attempt to push the economic stimulus package is daring. The deficit spending might hit 5 per cent of gross domestic product. But most of the money goes towards consumption that might prop up the economy in the short run. The stimulus lacks enough public investment of the kind that really creates jobs or boosts the economy in the longer run.
Paul Samuelson, Nobel laureate and an American neo-classical economist, has said a government with its deficit spending cannot simply boost the economy without a purpose. Otherwise, it would be able to load the money into an aircraft and scatter the money, hoping it would do some good to the people who pick it up. For deficit spending to work, it must go mostly to public investment. When the government invests in a bridge, it must lead or connect to somewhere that creates economic activity. It will be foolish for the government to build a bridge on the mountain that leads to nowhere.
Samuelson expects the US recovery would not happen until 2012. If that is to be the case, we are going to face depression economics over the next several years. Any hope of a quick Thai recovery is illusive.
Instead of resorting to the old formula of weakening the baht to boost exports, Abhisit and his policy-makers should rather focus on how to save Thailand through sufficiency economics. In sufficiency economics, we will try to survive and keep the country afloat amid the global depression and shocks. Since demand from the outside is disappearing fast, only demand from the inside can keep the country moving.
Only if the Abhisit government holds this pessimistic view about the global depression, can it can work on a policy framework to stabilise the economy and restore social harmony.
First, the Abhisit government must realise it cannot do much to save industries. Chinese industries are waiting to dump their prices in the worst-case scenarios. Thailand's industries can't compete with the Chinese. There will be massive unemployment in Thai industries.
Second, the Abhisit government must look at the core strength of the country. It must concentrate on improving the quality of products and services in the sectors where we enjoy comparative advantage. Apart from tourism and other hospitality services and healthcare, agriculture is the country's strength. If unemployment were to rise to four million, it must find a way to rely on agriculture to absorb the unemployed. The government may come up with training programmes, research and development for enhanced product quality and marketing to help the people in the agriculture sector. If Thailand means business, we can compete against any nation on earth in agriculture because Thai rice, vegetables and fruit are already the best. Agricultural exports should be the future of Thailand. We must be able to compete against the Chinese in agriculture exports because our quality is superior.
Third, there is no more time to waste on saving energy. It is unacceptable that we continue to import oil costing Bt400 billion to Bt500 billion a year for transport and wasteful consumption. It is time to develop indigenous energy alternatives. Thailand is blessed with palm and other crops that can yield energy which is cheaper, cleaner and more efficient. Palm oil will be the future of Thailand. Once the Bt400 billion to Bt500 billion in annual oil imports is saved, the money will not flow out of the country but will remain inside the country to stimulate consumption in a multiplier effect.
If the Abhisit government and Thai people put all efforts into improving our tourism, hospitality and healthcare services, agriculture and alternative energy, Thailand will survive through sufficiency economics while most other countries will be stuck in deep water. We already have all the resources. We only lack the vision and proper management to put these blessings into reality.