TDRI: Tear down these trade walls


Thailand should allow free trade in the energy, telecommunications and financial sectors to drive competition and lower costs for business operators, says the Thailand Development Research Institute (TDRI).

TDRI president Somkiat Tangkitvanich said while the government has promoted the healthcare and tourism industries,it has not prioritised non-tradeable service sectors.

“This is because allowing free trade in these sectors will affect the business owners who have ties with politicians of various governments,” he said.

Instead, Thailand allows free trade in unconventional service sectors such as transporting people through space,bicycle food delivery, cleaning train cabins, daycare facilities for disabled children, and telegram, telex and voicemail services.

But if sectors that have a monopoly or semi-monopoly such as energy, telecommunications and finance are opened up, foreign competition would allow the price of related services to go down,said Mr Somkiat.

“Instead of solving the root of high costs, the government chooses to ask the Commerce Ministry to seek new markets for exporters,” he said.

While the government claims it does not allow free trade in these sectors in order to protect the interests of the country, doing so benefits only a handful of local businessmen, said Mr Somkiat.

“We should quickly open up these sectors and not wait for negotiations under the Asean Economic Community (AEC), because the government doesn’t take this issue seriously,” he said.

Mr Somkiat said Thailand’s political conflicts have caused the country to lose out on economic benefits, while various countries are negotiating free trade agreements (FTAs) such as the Trans-Pacific Partnership (TPP), the North American Free Trade Agreement (Nafta) and the Asean+6 pact.

TDRI reported Thai exporters received tax benefits of 118 billion baht last year under existing FTAs instead of 248 billion if tax privileges had been fully utilised. Inconvenience, a lack of tangible benefits and missing documentation are some reasons why exporters have not used FTAs.

Mr Somkiat called on businesses that do border trade with Cambodia, Laos,Myanmar and Vietnam to utilise tax benefits, because once the AEC is established in December 2015, land trade between these countries will become increasingly important compared to sea trade.

Independent researcher Somjai Phagaphasvivat said the government has been to slow to act on FTA negotiations.

“We have always adopted a reactive policy as opposed to a proactive one. If we don’t speed up the negotiations, we will lose out to other countries who are more prepared,” said Mr Somjai, also a former senator and former vice-rector of Thammasat University.


First published: Bangkok Post website on 21 November 2013