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Thaksin Shinawatra in Private Discussion
World Policy Institute Global Leader Briefing Series Thinking Points
World Policy Institute, 9th March 2016, New York
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Excellencies, Distinguished Guests, Ladies and Gentlemen,
I must thank you World Policy Institute for providing me an opportunity to share my thought on the challenges that revolve around the economic, regional and global implications of how Thailand will make its way through a period of transition and change.
We all know that no society in the twenty-first century can sustain any form of “progress” in the well-being of its people without at least two basic foundations:
The first one is political stability. The second one is the ability to create economic activities that allow growth and readiness to shift its creativities to sustain wealth.
Ladies and Gentlemen,
Let me tell you the tale of the two cities, which is not written by Charles Dickens. It is the tale of parallel progress of Washington D.C. and Beijing. Each has its own history, pain and loathing. As the years go by, the two cities have been seen as rivals which offers competing models for growth and prosperity.
One is Free Market-Capitalism with the so-called “Open Democracy” as the foundation of its economic model. The other one is State-Led Capitalism with the central control system by one party.
Both of the models have proven to be successful in a very dramatic way from the past to the present. Admitting that the Chinese model was fitting to the change of attitude among the leadership of the country at that time, in parallel with the change of economic model in the West, in which the definition of “free trade” benefits China’s shifting position from a close market to a semi-open market.
But we must admit also that both models are now having to adjust itself to the new reality; the reality of dramatic change in speed and character of technology for industrial production; the change from “a country-based product” to “network of global design, global sourcing,and global production for just one product”. This extraordinary change upends the “normal” internal economic adjustment of the country and made it very difficult to find a simple economic adjustment.
We must recognize that advancement in the wealth management technique and technology also upend the normal linkage between capital and changes in production. However, we probably agree, that one common threat for survival in this present so-called “New Normal” is either you have the ability and willingness to change or you don’t. Thailand, like the other countries, cannot get away from this New Normal in the international context.
Ladies and Gentleman,
There is a tale of a poor English teacher in China who soared to the list of the world’s wealthiest people. He neither built a big factory nor invested in any production facility. But, people paid for his service simply to reach the network of supply and demand on a grand scale. I believe, he must feel thank you to the internet.
Ladies and Gentleman,
Amid the global economic slowdown, the pattern of trade has significantly changed. Due to the development of information technology infrastructure and increasing number of population who is able to access to the internet, e-commerce has become a new engine that sustains growth for both developed and developing economies. According to UNCTAD’s report last year, the value of global business-to-business (B2B) e-commerce in 2013 exceeded $15 trillion USD. While global business-to-consumer (B2C) e-commerce still accounted for an estimated $1.2 trillion USD, this segment has grown at a rapid pace; especially in the Asia and Oceania region where B2C segment is expected to surge from 20 to 37 percent between 2013 to 2018. Due to the incremental growth of cross-border e-commerce trade, international postal deliveries of small packets and parcels have risen by 48 percent between 2011 to 2014 globally.
For both Asia and the West, I believe these numbers provide us with clues for the new growth opportunities where “access to networks” is the key: meaning, the networks of consumers and factors of production across geographical boundaries. Unlike the economy of twentieth century when “access to centers” is the rules of the game, today, businessmen who do not have big factories and are not the owners of multinational corporations, can manage to reach and satisfy the needs of their customers worldwide through networks of production and distribution with an assist of the new communication technology. Today’s economy is increasingly decentralized. Consumption and production are more and more dispersed. We could imagine that an American producers can sell their products online directly to consumers in the western part of China without having to spend business hours in Beijing or Shanghai. Vice versa, a Chinese producer can bypass New York to offer their products to customers in New England and Mid-Atlantic states. The network economy has provided the people, both in small and large businesses, with the ability to produce and access to consumers at lower costs. We, as a global community, must put special emphasis on how each country can invest and share risk with the people to create growth collectively.
Ladies and Gentleman,
Another tale is about the rebirth of a road that nobody cares since the Portuguese discovered a possible sea route from Europe to Asia. The Portuguese did offer an alternative trade route with substantial margins for the goods carried. Although you might lose half of the cargoes on the way, you still did not lose your shirt. Since the demand for spices were overwhelming, the merchant marines heavily charge everybody.
Ladies and Gentleman,
The heavy-load transport through the sea has been with us till now, and the land routes from Asia to Europe have been neglected. If the world’s economy is thriving like the good old days, probably, not so many people would be interested in finding an alternative in life. But, since the situation goes awry, I believe, any country should consider all possibilities.
Ladies and Gentlemen,
Today, there are two major initiatives that, I think, have great potential to accelerate growth and leverage “quality of growth” that brought into being by the emergence of network economy. One is the China-led “One Belt, One Road” (OBOR) plan to develop transport and logistics connectivity encompassed some 60 countries, which include about 50 percent of the world’s GDP. And, the other is the US-led Trans-Pacific Partnership Agreement (TPP) between 12 Pacific Rim countries, which account for more than 40 percent of the world’s GDP. I have not seen these two initiatives as antagonistic, but rather a kind of two parallel processes that, at a certain point, will create mutual economic benefits for Asia and the West.
We must overcome the stereotype that perceive China and the US as merely the two opposing political superpowers. In reality, the economic development during the past decade has shown us how far these two major economies are interdependent. China is the largest foreign holder of US government securities with $1.24 trillion USD worth. With the total trade volume of $521 billion USD in 2014, the US is China’s biggest trade partner. Total US foreign direct investment (FDI) in China stood at $65.77 billion USD at the end of 2014, while the Chinese FDI in the US is estimated to have reach $11.9 billion USD.
Given this interdependence in mind, I believe Southeast Asia- the region that sits in between the two great initiatives of the two major economies- must put special emphasis on how to enhance the mutual economic benefits with its counterparts. For Southeast Asia in the twenty-first century, the geopolitics should be about how to reinforce the networks of wealth creation for the people that stretch across national and regional borders.
Ladies and Gentlemen,
Let me tell you the last tale about a Thai restaurant. No matter how many times the master chef tries to teach his protege, the young man keeps making mistakes in mixing the ingredients. Customers are kept waiting, hungry and mad. Once the customers are served, half of them get diarrhea afterward. The moral of this tale is one must make the written recipe right.
Ladies and gentlemen,
While some people may underline the unique characteristics of Thailand in terms of its history and developmental path, the country itself cannot avoid to come to terms with the global challenges of the twenty-first century. For half a century, the Thai economy has incrementally integrated into global economy. Values of Thailand’s exports per GDP and FDI in the country have shown us clearly how far the growth of Thai economy has been interwoven with the fate of global economy.
Against this context, we shall consider Thailand’s draft constitution with a very simple question: will the latest draft constitution “enable” the country to grow and become stronger in the present world? Or, will the latest draft constitution provide Thailand with a sufficient institutional infrastructure for investment, production, cooperation, and businesses?
Ladies and Gentlemen,
Due to the framework set out by the latest draft constitution, it is difficult to foresee a government that is responsive to the people and the challenges of the twenty-first century. According to the new draft, the 200-seat upper house, or Senate, will be appointed by the so-called “experts”. The Senate will also have greater powers to block legislation. Regarding the Constitutional Court, its scope of jurisdiction will be expanded. The Court will have the power to examine cases based on petitions filed directly by individuals, without the requirement that an actual dispute being brought by political organs or other courts.
If we consider the doctrine of separation of powers as the foundation for growth and stability, the critical issue that we shall examine is whether the judicial power will trespass the provinces of legislature/ and executive or not? For a government to be able to manage the economy against the global slowdown, I do hope that there will be no over-enforcement of the judicial power. Experiences of several countries show us that, if unchecked, judicial review can be inappropriately used as “delaying tactic”; thus, in turn, become an impediment to economic policy implementation.
Ladies and Gentlemen,
I believe that the foundation for the country to create growth and prosperity is to build trust in the global community. The constitution shall protect the rule of law and provide at least a minimum level of freedom of speech that facilitates economic cooperation between the people and the global community. Trade and investment cannot flourish if there is no certain degree of confidence provided by the rule of law. Against the transition and change, Thailand must reevaluate its strength and weakness. The country shall find a sensible way to regain its political stability and economic dynamism. I have only proposed the way of how should we think of the phenomena that is the world today.
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