Thailand’s local businesses get a global boost: It’s time to trade up

Strengthening Thailand’s local businesses to compete on the global stage could be a game-changing strategy for revitalising the national economy, according to Bank of Thailand Governor Sethaput Suthiwartnarueput.

Sethaput is advocating for the implementation of “globally competitive localism,” a concept that leverages the strengths of local entrepreneurs, such as cultural assets, to create value-added products and services. This, he believes, will drive sustainable long-term growth.

However, turning this vision into reality may face obstacles, particularly from policymakers resistant to shaking up entrenched management practices. Ennoo Suesuwan, a member of the National Economic and Social Development Council, highlighted that the economic development seen over the past few decades has largely favoured the upper classes, leaving 12.4 million Thais earning 100,000 baht or less annually reliant on state welfare cards.

“It’s going to be tough for Thailand to compete globally when our local foundations are so weak.”

Ennoo added the urgent need for decentralised governance to empower local authorities and promote sustainable development.

Despite having fiscal decentralisation laws for the past 20 to 30 years, which allocate 38% of the budget to local areas, many local authorities haven’t received the full amount they’re due. Some governments have redirected budget transfers meant for local projects to fund central initiatives instead, flouting the spirit of decentralisation.

Urban prosperity

Ennoo, part of the drafting committee for the country’s 20-year National Strategic Plan, lamented the lack of serious implementation of decentralisation, which aims to develop rural areas to match urban prosperity, create jobs for youth, and curb migration to major cities.

“Decentralising power to local authorities is crucial for driving change and turning communities into economic powerhouses.”

Ennoo noted that some laws need revising to give local governments more flexibility.

Access to finance for local entrepreneurs, particularly in the restaurant sector, is vital for boosting competitiveness, says Thaniwan Kulmongkol, President of the Thai Restaurant Association. Many Thai restaurants are family-owned and struggle to accumulate capital for growth.

“In a sluggish economy, the government should step up to support small and medium-sized eateries, helping them access soft loans from specialised financial institutions.”

Thaniwan urged the central bank to push commercial banks to ease lending criteria for restaurateurs. Additionally, she emphasised the need for government support in business skills, legal knowledge, and research and development.

Thai cuisine

Supporting Thai restaurants would not only strengthen the domestic economy but also elevate Thai cuisine on the world stage, drawing in more foreign tourists. Thaniwan also called for industry stakeholders to establish standards for food safety, sanitation, and quality management to enhance the reputation of Thai dining.

Sureeyot Khowsurat, CEO of Ubon Bio Ethanol (UBE), stressed that innovation and environmentally friendly products are key for Thai companies to compete internationally. UBE has diversified into flour production, creating value-added items like gluten-free and organic cassava flour, which have garnered interest from US consumers.

“Consumers are increasingly focused on environmental, social, and governance standards, which could pose non-tariff barriers for Thai exports.”

Despite a slowdown in foreign direct investment (FDI), Thailand’s economy still relies on foreign businesses to support local firms under the globally competitive localism framework. Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries, highlighted the need for foreign firms in Thailand to source locally-made products, boosting the growth of Thai businesses for global competition.

Several Chinese electric vehicle manufacturers in Thailand have pledged to use locally produced components, with some aiming for up to 90% local content, Kriengkrai.

“FDI brings substantial benefits by transferring resources and technology into the host country.”

Boosting tourism

Improving the economy in rural areas and boosting tourism in secondary cities could also help support local businesses. Wutthiphum Jurangkool, CEO of Nok Air, suggested that each city’s unique resources should be harnessed through a long-term development plan.

“Building a new economy in the provinces will require a hefty budget before it turns a profit.”

Wutthiphum also called for government support in infrastructure and investment incentives.

Finally, Sanan Angubolkul, chairman of the Thai Chamber of Commerce, urged state agencies to collaborate to enhance quality of life and promote small businesses in sectors like food, tourism, wellness, and logistics. Developing human resources for new industries and transitioning traditional energy structures to greener options are also critical steps.

The chamber’s partnership with the government aims to develop 10 secondary provinces with strong potential for trade, investment, and tourism, fostering sustainable development and invigorating local economies.