Korn Chatikavanij resigned from the Democrat Party earlier this month after serving over a decade as a Democrat MP and also as Finance Minister in the Abhisit cabinet.
With the current government under pressure, we caught up with Korn to ask what kind of policies he would like to see the government pursue and what he thinks Thailand’s challenges are.
On US-China trade war and its impact on Thailand.
According to Korn, Thailand cannot assume that the trade war between the US and China will soon disappear since it is an election year and in the eyes of the American public, China-bashing is good optics.
“Since we are an open economy that is heavily reliant on global trade, there is no denying the fact that whenever something happens to the global economy, it is easiest for us to catch a cold.”
“This has already been reflected in the forecast that we are seeing by various agencies where six to eight months ago, people were talking 3.5 per cent GDP growth,” Korn said. “Now everyone is talking about 2.5 and that is a significant reduction in expectations.”
“An end to the trade conflict will be good news for trading nations but I do not expect a significant change in that space this year.”
“Something that the government should have done five years ago is to really focus on fixing the supply-side issue. We have spent far too much time talking demand stimulus, which as we have seen, provides a short-term remedy at best.”
He said that demand stimulus is costly and does not change the bigger picture. Korn said that while he understands the “political need” to engage in pumping up demand, he has yet to see a clear strategy on how to improve competitiveness through serious supply side policies.
On the labour force
Korn stressed the need for an educated, capable work force because of Thailand’s aging issues compared to its neighbours.
“We do not have the demographic dividends that some of our neighbours do, including the Philippines, Indonesia and Vietnam.”
Right now, not only does Thailand have fewer people employed, those who are employed are also less competitive than our neighbours based on their educational achievement, he said.
Korn said that other possible solutions to Thailand’s work force issue was to implement a better immigration policy.
By increasing the number of migrant workers over the past ten years to fill low-skilled jobs, Thailand has fixed some problems, but it also means keeping wages low in those sectors. It has also not helped increase productivity; employers have been able to delay investing in technology because they had access to cheap labour.
On education policies
One of the skills that will be required for any potential career within a number of industries will be the ability to speak a language other than Thai.
“Almost certainly, that is either going to be English or Mandarin,” he said. “And right now, Thai kids are one of the weakest in the region in their linguistic ability and that entirely has to do with the way that it is being taught.”
“Kids need to be taught by teachers who can actually speak the language, which is not the case at the moment,” he added.
Language needs to be taught as a communication skill, not as a grammatical test. It also has to be introduced to students at a very early stage when their brain is still capable of absorbing new languages faster.
“If you start now with a kid that is 3 years old, by the time they are 13, they will be able to speak it easily, or even before that, so, it is a matter of execution,” he added.
According to Korn, Thailand’s education system is flawed not because we do not know what to do but we lack people who are willing to do it.
On Thailand’s manufacturing sector
Thailand needs to maintain its manufacturing edge in certain sectors such as the automobile, food, and services sectors, according to the former finance minister.
The technology used within the automobile sector should be changed from internal combustion engines to either hydrogen or electric, but it is not happening right now.
“The fact that China is now the world’s leading manufacturer of electric vehicles is because they have no legacy automobile industry,” he said. “Japan and Thailand already have a lot invested and investors need to recuperate their gain.”
The ex-finance minister said that the current government is putting too much emphasis on physical infrastructure, which will undoubtedly bear fruit, but there is a need to concentrate on soft infrastructure as well.
While the urban transport development in Bangkok and the road projects are going to be beneficial for people in the capital and some people upcountry, the benefits from other projects such as the Sino-Thai high-speed railway and the link between the three major airports is “much more debatable” in terms of potential impact.
On allowing a fair environment for businesses
Korn said that a major issue facing the country is the high cost of doing business.
“This is partly because of corruption and inefficiency, which needs to be addressed,” he said.
“The major constraints on our ability to change and adapt is the mind-set of the civil service and lawmakers.”
Korn said the more important question is ‘how can a politician win an election with talk of education, eradication of corruption or reforming the civil service?’
“We [Thailand] are increasingly being dominated by big businesses.”
Large companies’ share of the country’s wealth and economic activities has exponentially increased. One way or another, the ability of individual Thai corporates / entrepreneurs to compete has been “gradually but surely eroded.”
The business environment in Thailand around 30 years ago was very exciting because of new capital that was coming into the country. People believed they could do anything businesswise.
“[But] that mood has completely disappeared,” he said. “The mood now depends on whether you have the ear of the big man in government or partnered up with big capital because if you don’t, you are not going to get a look in. There is no space for anybody else.”
“Basically, we need a start-up culture for the country as a whole,” he said. “We need to give them an environment that nurtures them legally with direct help, including access to data that will allow them to develop their business.”