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The Eleventh National Economic and Social Development Plan Arkhom Termpittayapaisith Secretary-General Office of the National Economic and Social Development Board (NESDB) Presented to the British Chamber of Commerce Thailand (BCCT) Thursday 2 nd October 2014, 1.00 – 1.30 pm Pushkara Ballroom, Sukhothai Hotel, Bangkok, Thailand 1 Presentation Outline 1 Overall Economic and Investment Climate 2 The 11th National Economic an Social Development Plan 3 Government Policy 4 Long-term and Medium-term Development Guideline 2 Thailand Economic Strength GDP Growth (%) Avg. 1980-2013 China 9.9 Singapore 6.8 Korea 6.2 8000 Malaysia 5.9 6000 Thailand 5.4 Indonesia 5.2 Vietnam 6.4 2000 World 3.5 0 Philippines 3.5 1980 Source: IMF Source: IMF 12000 10000 5th High level of level of employment (59% of total population) 5th High level of tourism receipts (7.6% of GDP) 7th Remuneration in services profession 4th Cost of Capital (survey) 9th Customer satisfaction (survey) 11th Low electricity cost ($ per kwh) 14th Employee training: is a high priority in companies Indonesia Philippines Malaysia Thailand 4000 1984 1988 1992 1996 2000 2004 2008 2012 Thailand: IMD World Competitiveness Overall Ranking Thailand’s Competitive advantages 2nd Banking and financial services GDP per capita (USD) 20 30 40 25 27 26 26 27 27 28 26 29 30 31 31 33 34 36 31 41 50 1997 1999 2001 2003 2005 2007 2009 2011 Source: IMD World Competitive Yearbook 2013 (rank out of 60 countries) 2013 3 Diversification is among the Strength of Thai Economy Real GDP Growth: Expenditure Side Unit: % (at 1988 price) Export Share by Destinations 2013 Q1/14 Q2/14 H1/14 Total Expenditure 1.1 -1.9 0.5 -0.7 - Household 0.3 -3.0 0.2 -1.4 - Government 4.9 4.2 1.9 3.0 -2.0 -9.3 -6.9 -8.1 - Government 1.3 -16.6 -6.7 -11.3 - Private -2.8 -7.4 -7.0 -7.2 Export 4.2 -0.5 -0.7 -0.6 Import 2.3 -8.6 -9.2 -8.9 2.9 -0.5 0.4 -0.1 Investment GDP Source: NESDB US 10% Other 33% 2013 Q1/14 Q2/14 Agriculture Mining 9% 2% H1/14 Agriculture 1.4 1.4 2.2 1.8 Manufacturing 0.1 -2.7 -1.6 -2.1 Construction 1.0 -11.9 -3.2 -7.5 Trade Transportation and Communication Hotel and Restaurant 3.2 -0.4 0.3 -0.1 8.0 3.4 5.3 4.3 12.2 -3.1 -4.2 -3.6 Finance 10.1 7.4 6.1 6.8 2.9 -0.5 0.4 -0.1 GDP Source: NESDB ASEAN5 17.6% GDP Structure Real GDP Growth: Production Side Unit: % (at 1988 price) Japan 10% China 12% CLMV 8% Source: MOC EU 9% Transportation 10% Hotels and Restaurants 4% Other 17% Trade 13% Construction 2% Source: NESDB Manufacturing 39% Electricity, Gas and Water Supply 4% 4 Thailand Strategic Location & Regional Connectivity Thailand Strategic Location & Regional Connectivity Competitive Economy Enhanced Connectivity & Efficient Logistics ASEAN Physical Connectivity: A Better Connected Regional Trade &Investment Openness Maritime and Port Road Network Rail Network Regional Connectivity GMS, IMT-GT, ACMECS, BIMSTEC ASEAN ASEAN+3 ASEAN+6 APEC Dawei Project 5 Economic Development: Thai economy grew 6.2% on average GDP Growth (at Constant Price %) 12 9 6 3 0 -3 -6 -9 -12 4.4 4.8 2.2 5.3 7.1 6.3 4.6 5.1 5.0 7.8 2.5 6.5 2.9 0.1 -1.4 -2.3 -10.5 Thai flood crisis Global Financial crisis Asian Financial crisis 1997 1998 1999 2000 GDP (billion BAHT) GDP (%YoY) Investment Private Government Total Expenditure Value of Export Inflation Source: NESDB 4.9 4.8 5.5 16.8 -9.3 4.8 67.9 1.6 2000 2001 5.1 2.2 1.1 4.9 -5.3 3.9 63.1 1.6 2001 2002 5.5 5.3 6.5 13.4 -6.2 4.8 66.1 0.7 2002 2003 5.9 7.1 12.1 17.7 -0.6 5.9 78.1 1.8 2003 2004 6.5 6.3 13.2 16.3 4.7 6.2 94.9 2.7 2004 2005 7.1 4.6 10.5 10.4 10.9 5.5 109.4 4.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2006 2007 2008 2009 2010 2011 2012 2013 2014f 7.8 5.1 3.9 4.1 3.1 3.0 127.9 4.7 8.5 5.0 1.5 0.4 4.9 2.9 151.3 2.3 9.1 2.5 1.2 3.2 -4.7 2.9 175.2 5.5 9.0 -2.3 -9.2 -13.1 2.7 0.1 150.8 -0.9 10.1 7.8 9.4 13.8 -2.2 5.1 191.6 3.3 10.5 0.1 3.3 7.2 -8.7 1.3 219.1 3.81 11.4 6.5 13.2 14.4 8.9 6.8 225.9 3.02 11.9 2.9 -2.0 -2.8 1.3 1.1 225.4 2.18 12.4 1.5-2.0 -2 -2.9 1.0 1.3 229.9 1.9-2.4 6 Economic Situation in Q2/2014 and Outlook for 2014 Thai Economy in Q2/2014: recovery prevailed • • • Thai economy in Q2/2014 expanded by 0.4 percent compared to a contraction of 0.5 percent in the first quarter contributed by the improvement in domestic consumption and export. After seasonal adjustment, Thai economy grew by 0.9 percent from the previous quarter (%QoQ sa). Economic stability remained favorable. Unemployment rate was 0.9 percent. Inflation rate was 2.5 percent. Current account was in a surplus of 17 billion Baht, which equaled to 0.6 percent of GDP. • Thai economy in 2014 is projected to grow by 1.5 – 2.0 percent, declining from 2.9 percent growth in 2013 due to the contraction in the first quarter. However, the continuing improvements in consumer and private confidences will lead to a significant recovery in domestic expenditure in the second half of the year. Meanwhile, the export sector is recovering slowly following sluggish global economy. • Economic stability remain favorable. Gross Domestic Product (GDP) 19.1 0.4 -0.5 Flood -8.9 Q2/14 Q1/14 Q4/13 Q3/13 Q2/13 Q1/13 Q4/12 Q3/12 Q2/12 Q1/12 Q4/11 Q3/11 Q2/11 Source: NESDB 5.4 2.9 2.7 0.6 0.4 4.4 3.1 3.2 2.7 3.7 Q1/11 30 20 10 0 -10 -20 Economic Outlook for 2014: recovery is expected for the remaining months of the years 2012 2013 2014f GDP 6.5 2.9 1.5-2.0 Private consumption 6.7 0.2 0.8 Total investment 13.2 -2.0 -2.0 Exports 3.1 -0.2 2.0 Inflation rate 3.0 2.2 1.9 – 2.4 CA/GDP -0.4 -0.6 2.6 Source: NESDB, 18th August 2014 7 Presentation Outline 1 Overall Economic and Investment Climate 2 The 11th National Economic an Social Development Plan 3 Government Policy 4 Long-term and Medium-term Development Guideline 8 Evolution of Thailand Development Plan 1st Plan 2nd Plan 3rd Plan 4th Plan 5th Plan 6th Plan 7th Plan 8th Plan 9th Plan 10th Plan 1961-66 1967-71 1972-76 1977-81 1982-86 1987-91 1992-96 1997-2001 2002-07 2007-11 Emphasize on economic growth and infrastructure development Emphasize on economic growth and social development Emphasize on economic stability and regional areas development Adoption of Philosophy of Sufficiency Economy; Peoplecentered development; Actively engaging civil society; Sustainable development Sectoral Plan Specialist Plan Multi-sectoral Plan Comprehensive Plan Strategic Plan Central Planning – Top-down Top-down and Bottom-up Planning 9 11th National Economic and Social Development Plan (2012 – 2016) : Assessing the Changing Situation and Impacts on Development Changes Tougher global rules, regulations and obligations especially on environment, humantrafficking & human rights Global ageing society Global climate change Higher risk in global food and security Technological advancement International terrorism Risks Ineffective public administration Economic structure remains vulnerable Demographic structure has changed with older persons increasing, while the younger and working populations have decreased. Deterioration in social values and traditions Natural resources have been depleted, and the environment degraded. National security: political unrests and terrorism 10 11th National Economic and Social Development Plan (2012 – 2016) “A happy society with equity, fairness and resilience” Targets Thai society will become a better place, characterized by harmony and the well-being of its people. All citizens will acquire lifelong learning and better health. The Thai economy will achieve inclusive growth at a moderate pace based on its potential: • Focus on upgrading total factor productivity (TFP) to be higher than 3 percent per annum • Improve Thailand’s competitiveness rank • Increase the contribution of SME’s to at least 40 percent of GDP Environmental quality will be improved to meet international standards. 6 Development Strategies Create Human and Social Quality Strategy 1 Strategy 2 Create a just society Develop knowledge-based society Restructuring the Economy Strategy 3 Strategy 4 Strategy 5 Strengthening the agricultural sector as well as food and security Restructure the economy toward more balanced and sustainability Create regional connectivity for social and economic stability Natural Resources Management Strategy 6 Manage natural resources and the environment towards sustainability 11 Create Human and Social Quality (Strategy 1 & 2) Strategy 1: Creating a just society All people must have social and economic security Provide social services for all in accordance with fundamental rights Empower all sectors with the ability to make choices Enhance social interactions that recognize shared values and accountable public administration Strategy 2: Develop knowledge-based society Improve the demographic structure and population distribution Enhance social Immune to oppose with changes Reduce health risk factors in a holistic manner Promote lifelong learning Reinforce social institutions 12 Restructuring the Economy (Strategy 3, 4 & 5) Strategy 3: Strategy 4: Strengthening the agricultural sector as well as food and security Restructure the economy toward more balanced and sustainability Develop the natural resource base to strengthen the agricultural sector Priorities to increase agricultural productivity Create value added for agricultural products throughout the supply chain Restructure the economy towards inclusive growth and sustainability Develop science, technology, research and innovation Develop efficient, equal and fair competitiveness for the country Manage the macroeconomy to ensure economic stability Strategy 5: Restructure the economy toward more balanced and sustainability Establish agricultural employment and income security Establish food security and develop bio-energy at the household and community level Secure bio-energy production to support the country’s development Reform governmental management for sustainability Develop connectivity in transport and logistic systems Developing investment-bases by improving competitiveness in the Mekong sub-region Prepare for the ASEAN Economic Community Contribute to the international community’s efforts in the fight against terrorism, international crimes, drug trafficking, natural disasters and epidemics Support foreign investors’ use of Thailand as a business base and to develop the region Accelerate the use of currently effective free trade agreements Strengthen domestic development partners to prepare to join global development initiatives 13 Natural Resources Management (Strategy 6) Strategy 6: Manage natural resources and environment towards sustainability Restore, conserve and create security for the natural resource base and the environment Shift the development paradigm and steer the country towards an environmentally Enhancement of adaptive capacity to handle climate change Protect trade subject to environmental conditions and climate change Enhance the country’s role in international arenas where environmental commitments are involved Control pollution Respond to natural disaster Enhance natural resource management systems so they are more efficient 14 Presentation Outline 1 Overall Economic and Investment Climate 2 The 11th National Economic an Social Development Plan 3 Government Policy 4 Long-term and Medium-term Development Guideline 15 NCPO’s Road Map for Public Administration Phase ระยะที ่3 3 • To hold a democratic election • To modernized law and legal system • To reformed rules and regulation 9 Phase 2 ระยะที ่2 9 Phase 1 • To tackle urgent issues • To push public administration towards reform • To create unity and to return happiness to the people. • To draw up temporary Constitution • To form National Legislative Council • find a Prime Minister and form the cabinet • To draw up a draft Constitution, and to form a Reform Council within 1 year. 16 Government Policy in Brief Key Principle Development Strategy which follows the King’s Strategy Eleven policies to be implemented : Government Policy Philosophy of Sufficiency Economy 11th National Economic and Social Development Plan Deliver to National Legislative Assembly 1. To Protect and Defend the Monarchy 2. To Maintain domestic and international security 3. To Reduce social inequality and enhance access to government services 4. To promote education and learning, to maintain religions, art and culture 5. To improve healthcare services and public health 6. To improve Thailand's economic potential 7. To promote the role of and to utilize opportunities in ASEAN 8. To develop and promote the use of science, technology, research and development, and innovation 9. To preserve natural resource sustainability, and to create a balance between preservation and sustainable use of resources 10. To promote good governance and to prevent corruption and misconduct in public sector 11. To reform laws and justice system on 12th September 2014 People’s Needs 17 Policy for Thailand’s Economic Potential Enhancement Urgent Phase 1 Expediting disbursement of remaining FY2014 budget 2 To monitor FY2015 budget disbursement 3 4 5 6 Tourism • To reduce impact of martial law on tourism in some areas. • To give incentives and facilitation for tourism • To promote tourism to cover areas with attractions or a group of areas Investment • To improve existing tourist destinations • To speed up BOI’s approval process for investment project • To use infrastructure project with good returns to form PPP • To formulate long-term investment plan • and to develop new ones To ensure reasonable farm income Export • To find potential markets • To reduce obstacles for export • To improve security in life and property, to control quality and price of goods and services • To regulate and make sure tourist destinations are clean and presentable 7 To resolve flooding and drought • To build small reservoirs to cover farm areas • To hold public discussion about sustainable water resource management 18 Policy for Thailand’s Economic Potential Enhancement Next Phase: To solve remaining problems and form new foundation 1 2 3 To reform structure of fuel prices Fuel prices are to reflect real cost. Fuel tax will be used to help promote renewable energy. Additional source of energy will be found. 4 • To develop agricultural zoning • To promote role of agricultural cooperation as sales representative, and for processing and exporting To reform tax collection • To maintain income tax at present level, for both personal and corporate • To reform Commercial Taxes structure and expand tax base by using new taxes • To abolish tax exemption which favor the wealthy • To form farm learning centers in every districts and provinces 5 To develop transport infrastructure • To develop urban rail service for Bangkok and Metropolitan area • To develop Suvarnabhumi Airport Phase 2, Don Mueang Airport, and regional International Airports • To develop aviation industry park in Thailand • To develop piers and ports at Laemchabang port, ports on Gulf of Thailand and Andaman Sea • To promote utilization of ports in Chao Phraya and Pa Sak rivers Agriculture 6 Industry • To support development of industries that match Thailand’s potential • To support high-tech industries • To support industries that use design and innovation Digital Economy • To build foundation for digital economy • To produce and trade digital goods directly • To use digital economy to service financial sector, service sector, and creative economy 19 Policy to promote and utilize the opportunities in ASEAN To prepare for the ASEAN Economic Community To develop transport and logistics connectivity under regional cooperations and ASEAN To enhance competitiveness of Thai entrepreneurs To develop Special Economic Zones To develop labor skills in industrial sector to prepare for AEC 20 Presentation Outline 1 Overall Economic and Investment Climate 2 The 11th National Economic an Social Development Plan 3 Government Policy 4 Long-term and Medium-term Development Guideline 21 The 11th Plan & Long-term and Medium-term Development Guideline The 11th National Economic and Social Development Plan is a part of Thailand’s Long-term Vision (2027) which positions Thailand to move up higher development trajectory. For the economic aspect, as Thailand is now a middle income country, the long term goal is to lift the country up to high-income country. Thailand is positioned to be a high-income country by 2027 (average growth of 5% per year) Thai GNI per Capita Target : 1. Maintain GDP growth at 5 % 2. Achieve GNI per capita of 12,000 USD (Atlas method) by 2026 USD 18,000 Avg. Growth 5% High Income Country (HIC) 16,000 14,000 12,000 10,000 Half transition from 8,000 UMIC to HIC 6,000 Upper Middle Income Country (UMIC) 4,000 2,000 2013 (per cap) GNI = $5370 GDP = $5779 Lower Middle Income Country 2030 2026 2022 2018 2014 2010 2006 2002 1998 1994 1990 1986 1982 1978 Source: NESDB, World Bank 1974 1970 1966 1962 0 22 Stage of Development & Current Thailand Position Preindustrialization Initial FDI absorption Internalizing parts & components Technology absorption Arrival of manufacturing FDI Agglomeration Stage II Stage I Monoculture, subsistence agriculture, aid dependency Low Income Source: NESDB Simple manufacturing under foreign guidance Vietnam Stage III Have supporting industries, but remains Under foreign guidance Malaysia Thailand Middle Income Internalizing skills & technology Creativity Stage IV Management technology mastered, can produce high quality goods Korea Taiwan Internalizing innovation Stage V Full capability in innovation and product design as global leader Japan, US, Germany France Italy High Income Glass ceiling for ASEAN countries (Middle income trap) 23 Thailand’s New Growth Model: To pursue a stronger, sustainable and more balanced growth Growth & Competitiveness • Move up the value chain towards high-tech industries • Create value add in agricultural and services sectors Maintain supportive environment by (i) ensure macroeconomic stability, (ii) encourage R&D and innovation, (iii) sound legal framework, (iv) skilled and readily available workforce and (v) infrastructure and logistics network Leverage on ASEAN Economic Community • • Inclusive Growth • • • • Enhance opportunities to access natural resources and supporting infrastructure to promote jobs and stable incomes Access to judicial system with fair and equitable legal protection for Thais and foreign workers in preparation for AEC Development of labor standard in preparation for movement of skilled labors among ASEAN countries Access to quality public health and social safety net Green Growth • Reduce energy usages in industrial sector logistics and households • More usages of clean energy • Upgrade to low-carbon production technology • Expansion of forestry area to absorb green house gas • ASEAN collaboration in the encouragement of green growth 24 Key Economic Policy : Transportation Development The new transportation development strategies (2015-2022) consists of 5 key programs, aiming to reduce cost of logistics and transportation, which in turn improve the competitiveness of the economy. New transportation development strategies 2015-2022 1. Inter-city rail network Railway • Upgrade rail infrastructure and overall system • Build double-track in 6 main rails with their extension to respective borders 2. Capacity enhancement for highway network to link with key areas in the country and with neighboring countries 3. Public transportation network development plan for Bangkok Metropolitan Region Road network • Develop 4 lane-road networks linking Thailand’s key economic regions and borders areas • Construct new motor ways • Develop facilities along the main roads such as container yards 4. Air transport capacity enhancement Mass Transit in BKK & vicinity • Extend mass transit railway system in Bangkok and vicinity • Improve quality of service and safety of mass transit bus as well as to enhance its environment standard 5. Maritime transport development Water and Air transport • Improve seaport on both Thai gulf and Andaman sea • Enhance capacity of airports to be the regional center of air transportation • Establish the aviation industrial estates 25 BOI’s Investment Promotion Strategy New BOI’s Investment promotion plan for 2015 – 2021 will shift from Broad-based to Focus & Prioritized promotion to support economic restructuring, high-income creation & sustainable growth. The investment promotion plan is under the consideration of the Board of Investment. Key Industries to be focused on and promoted Basic infrastructure and logistics • • • • • Industrial zones Power generation from natural gas Tap water or water resources for industrial purposes, Transportation and mass transit, Commercial airports and logistics centre Basic Industry • • • Biotechnology Nanotechnology Advanced material technology Medical devices, Medicine Medical food Scientific equipment • • • • Alternative energy and environmental science • • • • Advanced core technologies • • • Steel petrochemical Pulp and paper Machinery Medical devices and scientific equipment Food and agricultural processing industry • • • • • • Processed foods Food additives Herbal extracts Plant propagation and development Products from natural rubber Bio-fuel Hospitality and wellness • • • Tourisms & sports promotion activities Dedicated health centres Retirement homes and care centre Power generation from renewable energy Recycling Wastewater treatment and industrial waste disposal services Energy services Services that support the industrial sector • • • • • • Automotive and other transport equipment • • • • • • Cars Motorcycles Trains Electric trains Aircraft, Shipbuilding and maintenance R&D HRD Engineering design Software Calibration services Trade and investment support offices Electric and electrical appliances • • • • • Electronic design Organics and printed electronics HDD and SSD and parts Solar cells White goods 26 Key Economic Policy : Measures for Research and Development R&D spending, 1999 – 2013 (% per GDP) Short-medium term measures 1. To use incentive and to support SMEs to invest in R&D, e.g. innovation coupon for SMEs capacity improvement under AEC. 2. To promote R&D commercial application 3. To set the focus of R&D per size of business and industry 4. Create university-Industry linkages 5. To set research question to improve Thailand’s competitiveness 6. To set system for participation and evaluation 7. To promote sharing of science, technology, and innovation to local area and community Since 2010, Thai R&D spending had improved, standing at 0.37% per GDP in 2013, which is lower than the 1% per year target by 2016. Meanwhile, public-private investment ratio changes from 41:59 in 2009 to 51:49 in 2013, Nonetheless, the target for such ratio is set at 70:30 by 2016. Source: NRCT, NSTDA, STI, and IMD (2013) Long term measures 1. To promote and encourage large-scale R&D investment in Thailand 2. To revise structure and role of R&D related agencies 3. To promote wide application of technology and innovation and to prepare the necessary infrastructure 27 Key Economic Policy : Development Strategies for New Economic Areas/Zones Key strategies Current development Development of new economic areas during the early stage by focusing on the border economic zones and border towns as an economic gateway connecting with neighboring countries. Outward investment promotion by supporting Thai SMEs and existing investors to investment in neighboring countries Tighten law enforcement on illegal labor and illegal cross-border trade particularly agricultural products Setting up the Policy Committee on Special Economic Zone Development Attempt to improve the livelihood of people living along the border and promote border trade by establishing 5 Special Economic Zones: • Mae Sot • Aranyaprathet • Trat • Mukdahan • Sadao-Padang Besar Other 6 potential zones in the 2nd Phrase: • Mae-sai • Chiang Khong • Sangkhla Buri • Nakhon Phanom • Nong Khai • Su-ngai Kolok 28 Key Economic Policy : ASEAN Integration Create ASEAN awareness Training / using publications For each target group Increase proficiency in English and other ASEAN languages Development of border towns and border checkpoint Expedite the opening up of Ban Phu Numron gateway and the full operation of National Single window Create infrastructure network to promote trade and investment Construct ASEAN HW in Thailand through 11 key border checkpoints / purchasing power from ASEAN/ ICT / develop disaster warning system Immediate Mission to be done within 2015 Improved quality of goods and services Expand MRA for goods and services inspection and certification Improve quality and standard of manpower Education Adjust opening and close session to Match ASEAN university calendar / and create ASEAN curriculum HRD in public sector Identify standard for professional skill labor establish ASEAN Unit in public sector and develop communication skill and knowledge of ASEAN Improve the efficiency and coverage of welfare Strengthen security within ASEAN Justice system/ illegal migration / anti-terrorism 29 Thank You www.nesdb.go.th 30