Mr. Apisak Tantivorawong
Minister of Finance
70% of of all Thai economy comes from the export industry, with a very high percentage of this being obtained from local products. Apisak Tantivorawong, Minister of Finance, discusses 2016 as the year for investment, Thai economic zones and future plans for the country's financial industry.
FDI Spotlight: You have stated that 2016 is the year for investment. In which key areas are you prioritising the budget for this year and how do you get the right balance between urban and rural areas?
65-70% of all Thai economy comes from the export industry, with a very high percentage of this being obtained from local products. This means that we are creating a position in which we can have a local economy. This is ideal because the global economy is unstable. It is estimated that on average, 500 million Thai Baht is spent by the private sector each year, with this figure estimated to rise to 700 million this year. This is a key engine in the economic growth of the country. The government is sticking to the infrastructure projects, for example the railways, the airports and the seaports. All of these industries have a total investment of 1.7 trillion Thai Baht. This year the Government plans to spend 800 billion Thai Baht on the economy.
FDI Spotlight: Despite tremors in global economics, are you still confident in Thailand’s fundamentals?
Our debt to GDP is only 44-45% which allows a lot of room for spending. Of all of Thailand’s debt, only 6% of it is foreign debt. 94% of Thailand’s debt is local and therefore is unlikely to be affected by any problems with the international market. This puts Thailand in a very strong and independent position.
FDI Spotlight: The big subject of 2015-2016 was the special economic zones proposed around Thailand in strategically located positions close to the borders. In these zones there are five existing sectors and five innovative sectors. In what ways have the ministry of finance helped to recognise these areas of growth and how are you helping to stimulate these key industries?
We try to support the industries by giving them fiscal benefits. Tax exemptions are offered for ten to twenty years and we also give support for investment into these industries.
FDI Spotlight These super clusters are positioned at borders to capitalise on the growth of the ASEAN. How do you feature regionalisation into ongoing plans and would you like to see Thailand as the gateway to the greater Mekong region?
Thailand is in a very good position as the location is so ideal, at the centre of the ASEAN. Logistically it has a very good position compared to the neighbouring countries. Thailand is more developed economically than a lot of the adjoining countries, which puts Thailand in a position to assist and help these countries to build up their own economies and become stronger as a region.
Naturally Thailand must compete with Singapore and Malaysia as they have bigger banking systems than we do. However, the banking system of Thailand is very strong and the risks in the financial system here are very low which is mostly due to the cautious nature ever since the financial crisis. This puts Thailand in a very strong position to invest in the neighbouring countries.
FDI Spotlight Thailand has the largest volume in the sub-market. In terms of banking systems, how do you intend to improve the strength of the banking institutions so that they can truly compete with Singapore and Malaysia?
The only factor making Thailand’s banking system weaker than those of Malaysia and Singapore, is the size. The simple solution to this is to merge the banks to form a larger group. Most Thai banks are comfortable with their size and are under no pressure to merge and grow. The market will always lead the way in these instances. If in the future it becomes apparent that the size of our banks is a problem and growth needs to happen, then I believe the market will develop to reflect this.
FDI Spotlight: In what ways are you trying to help Thailand by improving education so that people can take the steps up the ladder to financial development?
Financial education is key for all areas, especially for those wishing to no longer be in a state of poverty. There are many people who do not fully understand the consequences of incorrect financial decisions. They spend more money than what they have the ability to pay for and accumulate a lot of debt. On average, 70-80% of Thai households have household debt. This debt could be greatly reduced if people were better educated about finances. However an important point to note is that most of the people borrowing money to support their households are doing so out of necessity. This is an acceptable reason to need extra finances and can be maintained as long as the Thai economy ensures a low rate of unemployment.
FDI Spotlight: Are you planning on working together with the ministry of ICT in terms of the use of the eCommerce and the internet to attain this financial literacy?
We aim to reduce the use of cash as a means of payment as it is very expensive to maintain. This is a national project which will hopefully result in everybody paying by card instead of cash. We aim to put an EDC machine in every shop in Thailand within the next 1-1.5 years. Using an ecommerce system will benefit everybody, not just the banks.
FDI Spotlight: How are you looking to ease the burden of the small and medium-sized enterprises (SME) and how will you help support them in their ongoing endeavours?
We want to support SME’s as we believe they are vital in the future of the Thai economy. We have implemented a few measures already, for example, we offer a 4% loan and also a guarantee scheme for funds. We are trying to encourage everybody in Thailand to have one single income. If people keep correct accounts and send them to the revenue then they should have easy access to loans in the future.
FDI Spotlight: As you already quoted, ‘2016 is the year for investment’. With the eyes of the world moving away from Europe, the USA and China, they are looking for a more sustainable investment destination. What is your message of confidence for Thailand, why should an international investor come and explore Thailand with their own eyes?
Thailand offers lots of opportunities to any investor as there is a big market to look at when you consider all of the connections the ASEAN economic community brings. It is important to remember that people usually want to invest in a country they feel comfortable in themselves. This further supports why investment in Thailand is a secure choice because most foreign investors will usually come and live in the country as well.
FDI Spotlight: As Minister of Finance, which top two sectors do you see the fastest growth in? Which are ready for investment and which have a lot of growth potential?
We are currently at the end of the S-curve of growth and therefore we are in need of a new direction and focus. I would support the fact that the robotic industry is a fast growing industry, especially with regards to auto manufacturing. The aviation industry is another fast growing opportunity for investment due to the new airport. The medical industry has always been very strong within Thailand and it continues to grow. We also offer all of the same tax exemptions to the appropriate cases even for foreign investors, therefore investors from all over the world can benefit from these advantages.