Secretary General of the Thai Chamber of Commerce Vichai Assarasakorn enlightens us on his country’s role in ASEAN, the ongoing issue of raising minimum wage and rooting out corruption, and the private sector’s role in national reconstruction
I would like to understand the structure of the Chamber of Commerce better. How does it work?
The Thai Chamber of Commerce will be celebrating its 80th anniversary in November this year. We started off representing the national business community. As our economy grew and became more involved in international trade, the Board of Trade of Thailand was created. At present, there are 67 members sitting on the Board of Trade of Thailand. The first seven members are from the State Enterprise while another 60 members come from four components equally. Those four components are the Foreign Chambers of Commerce out of which 15 members are selected; another 15 members come from our current 118 Trade Associations who are registered with the Chamber of Commerce; 15 more members are elected from our 77 Provincial Chambers of Commerce and the last 15 members come from the actual Chamber of Commerce of Thailand.
At present we have more than 60,000 members registered with Thai Chamber of Commerce and we work closely with them. Over the years, Thailand has become an export economy, so we are also working very closely with the 30 Foreign Chambers of Commerce located in Bangkok.
Is the Board of Trade there to simply assist international companies doing business in Thailand, or does it also develop links for Thai companies in international markets?
We do both. We conduct several seminars and workshops annually so that big and successful companies could share their information and best practices. We occasionally organise business trips to neighbouring countries seeking opportunities and interacting with potential investors. Each year, we organise several activities aimed at helping our Small and Medium Enterprises, which are still lagging behind in terms of information. Our big and small companies co-exist in the supply chain since the big companies do not produce everything in-house. So, they need small companies as their sub-contractors.
Moving onto Thailand as a place to do business, it is ranked as being very competitive by the World Economic Forum and the World Bank. What are your views on Thailand as a place to do business and what sort of feedback do you get from your membership in terms of the positives and negatives of operating in this country?
We have conducted several surveys on the subject. It depends very much on the period of time. In the last four to five years, foreign companies were concerned over our political situation caused by several demonstrations. But now, with the new Government in power, headed for the first time in Thai history by a woman Prime Minister who has been working very hard, the situation has become more stable. We are in the process of reconciliation. However, people in the business sector would like to see the Government getting the priorities straight. The Government should give more importance to economic matters such as the rising cost of living, income disparity and the well-being of the Thai people at large. Another challenge facing us is to join ASEAN Economic Community in 2015. We will need to take a close look at our system and to amend our laws and regulations, for example with regards to the tax structure. It is our strong belief that once the Government addresses the economic problems, thus bringing better well-being and happiness to the people, they will have no cause to go out on the streets to demonstrate, and reconciliation will come naturally.
One of the flagship policies of the new government is the minimum wage. This affects businesses in different ways, depending on your market. What has been the general response of your members to the introduction of the minimum wage?
We have to discuss the subject on both levels, from the point of view of the Board of Trade, the Thai Chamber of Commerce and business organisations and from the point of view of the members. Of course, the members have not responded well to this policy since it will mean the raise in their cost production, especially the Small and Medium Enterprises who represents about 80% to 90% of the total business in Thailand. But at the same time, for the Board of Trade and the Thai Chamber if Commerce as business institutions, we do agree with the Government, but with certain conditions. We think that while it is compulsory to raise the wages in order to cope with the rising cost of living, the Government must, at the same time, increase productivity. Programmes must be organised to increase productivity, skills, knowledge, creativity and design. The Government and the private sector must work together to create a win-win solution where the workers get better wages while the companies must remain competitive.
With that in mind, how would you evaluate Thailand’s competitive position as the ASEAN (Association of Southeast Asian Nations) Economic Community rolls forward in 2015?
Geographically, Thailand is centrally located as the centre of ASEAN. So, we should take advantage of that. At the same time, we should not take things for granted and we must look at the greater picture. With the increase of minimum wages, we have to find ways to remain competitive. So, we may have to change our way of thinking. The Thai Chamber of Commerce has been discussing this matter and other related issues with the Government and has proposed to the Government to consider creating a win-win solution with our neighbouring countries. We may consider relocating our production bases to our neighbouring countries to take advantage of their still low labour cost, for example.
This has worked very well for Taiwan and China.
We can enjoy the best of both worlds. We can use their labour resources and better their wages while still enjoying the mutual benefit. This will be a win-win situation for both Thailand and our neighbouring countries. The Chamber of Commerce has also made several other proposals to the Government, amongst them the issue of climate change. The flood last year has made this issue very real. Our country has had floods from time immemorial, but the amount of water now is nothing like what we have seen in the past. The Industrial Zones and even the inner city have been affected, and the damage calculated last year was 1.4 trillion baht, bringing our GDP down to a shocking 0.1% as released officially by the Government recently.
What are your views on the Government’s work towards making Thailand a logistics hub and secondly, what would you like to see done to prevent future flooding?
We have proposed several projects to the Government. Though Thailand is logistically the centre of ASEAN, we still have a lot of work to do. Thailand could play the integral role in developing logistics in ASEAN and beyond, namely ASEAN + 3 and ASEAN + 6. With China and India growing rapidly, they will need to move their cargo as well as people. This is where Thailand can work together with them, but we need clear vision and good planning, otherwise, instead of complementing each other, we may end up competing with each other. A good example in point is the deep-sea port in Myanmar. While Thailand would like to see Dawei as the main deep-sea port, China is looking at another site north of Dawei and working its way eastward to Laos and Vietnam. Since the route will have to pass through Thailand, our political leaders will have to take action on this matter and cooperate closely with China instead of competing with them. Another example is our proposal to the Government to build high-speed train from Bangkok to Chiangmai which will make transportation of goods as well as people cheaper than going by air. We should study how Europe planned their logistics and take a lesson from that in order to reap mutual benefits and taking advantage of our geographical location.
How is the private sector in Thailand engaging in the reconstruction and the redevelopment of the country’s infrastructure after the flooding? A huge budget has been approved and I am interested in seeing how the private sector will be working on this.
We have proposed to the Government to address the problem of flood at four levels. Most importantly is to get accurate knowledge and information. With modern technology, we can forecast what will happen this year or next year. First and foremost, we need a plan on the national level, which will be the master plan. This will be followed by provincial level as subsequent plans. The third level will be the plan for Industrial Estates and the clusters of industry. The last, but not least important is the level of the people which will give the general guidelines of what needs to be done with their houses, whether or not to raise their houses, and if so, to what height. The Government has now come up with the master plan. We need to expedite the plan and to see to it that the plan is carried out efficiently and transparently.
What final thoughts do you have on eradicating corruption? What is being done and what would you like to see being done?
The Thai Chamber of Commerce has initiated an anti-corruption movement and up to now we have more than 30 partners joining us. We organised the March against Corruption, which was presided over by the Prime Minister and attended by the opposition leader together with lots of prominent people in both the public and private sectors. It has been estimated that corruption cost the country from 1 to 2% of our GDP. This year, our economy is predicted to enjoy 5 to 7% growth. So, if corruption is entirely eradicated, it could grow 1 to 2% more. It is our strong belief that corruption does not only affect GDP, but it also affects the mentality of the people who want to compete fairly. It is not healthy for the country and if not properly addressed, the county cannot be competitive. The issue of corruption needs serious attention and we have to start from the beginning: through education. Our young generation must grow up with the conviction that corruption is wrong. If we can install anti-corruption consciousness in the mind of our youngsters, our anti-corruption campaign will be completely successful and we will have truly achieved our goal.
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