Thailand Needs to Invest in People, Not Rice – Bloomberg 07-11-13

Salient to Investors:

William Pesek writes:

  • Thailand has 5.3 percent growth, a young and expanding population, and a surprising level of political stability. Yet Thailand has subsidized rice prices, provided handouts to car buyers and favored mega projects that will enrich the politically connected – all at the expense of long-term competitiveness and prosperity.
  • Thailand last week abandoned its plan to end hoarding rice at above-market rates: a practice that jeopardizes its fiscal position and warps commodity markets. Moody’s says the subsidies damage Thailand’s credit rating.
  • Thailand needs to invest billions in education and training to improve the quality of the labor force and raise productivity. Indonesia, Philippines and Vietnam are winning jobs that Thailand once took for granted. Thailand lags at the primary, secondary and at the tertiary levels of the education process. Thailand’s focus on rote learning gives short shrift to creative and critical thinking and English proficiency.
  • Peter Warr at the Australian National University sees little sign that inadequate investment in human capital and the need for reform of the education system is recognized by the government. Warr says there are few if any kickbacks available from investment in education, unlike physical infrastructure.
  • Thailand matters because it’s a role model in the region – Myanmar, Cambodia, Laos and Vietnam look to Thailand for direction and financing.
  • Piti Disyatat at Bank of Thailand says per-capita GDP has been stuck around 15 percent to 20 percent of US levels for more than 10 years.

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