The
Federation of Thai Industries (FTI) has expressed concern over a possible
reduction of purchase orders from the manufacturing sector because of the
prolonged political protests, expecting impacts to be seen in the second
quarter of 2014.
Meanwhile
PTT Production and Exploration (PTTEP) has suggested that the private sector
fortify itself against political fluctuations and uncertainty, partly by
expanding outside the country and capitalising on growth elsewhere.
Speaking
at a seminar on "2014: Thailand's Direction in the World", FTI
chairman Payungsak Chartsutipol said he was concerned about the political
situation, for which there was still no certain resolution in sight, as
Thailand was highly connected with the global economy.
Exports
contribute about 60-70 per cent of the country's gross domestic product. If
foreign customers view Thailand as being in constant turmoil, their confidence
will lessen, fearing that manufacturers here will not be able to produce
products as ordered.
The
political situation is expected to affect the Thai economy adversely from now
through the second quarter of 2014 despite brighter prospects for the global
economy, Payungsak said. The World Bank has raised its estimate for global GDP
growth next year on the back of signs of a US recovery and China's estimate for
its growth at 7.3 per cent.
If
Thailand manages to stabilise its political situation, its GDP is expected to
expand by 5 per cent next year, around the same as neighbouring countries.
Tevin
Vongvanich, PTTEP's president and chief executive officer, said that despite
signs of a global economic recovery in 2014, there remained several
uncertainties. The Thai private sector needed to be ready for a possible delay
in public investments due to political risks, which would likely slow the
economy.
Still,
given the likelihood of a healthier global economy, Thai companies could expand
their investment in foreign countries where business is likely to see high
growth, he said.
Private
corporations may take this opportunity to strengthen their competitiveness by
developing their human resources and information technology, improving internal
organisational transparency, and paying more attention to stakeholders through
marketing and corporate-social-responsibility activities.
Meanwhile,
the European Asean Business Centre (EABC) lamented the dissolution of
Parliament, saying this would disrupt negotiations on a free-trade agreement
between Thailand and the European Union.
"The
timing of the dissolution of Parliament is not ideal for Thailand, as the
Thai-EU Free Trade Agreement is currently being negotiated," the EABC said
in a statement. "Considering the economic situation in Thailand, with low
growth, it would be extremely beneficial for the Thai economy if this FTA could
be concluded quickly, since this will benefit Thailand greatly and jump-start
the economy.
"Thailand
is losing precious time and may even fall behind [its] Asean peers, some of
which are also in FTA negotiations with the EU," the statement said.
Noting
that European corporations have considerable investments in this country, the
EABC wished to see Thailand grow stronger and take opportunities to become an
economic hub within Asean.
"This
may be at stake with the ongoing demonstrations and the call for an appointed
government," it said.
It
added that while those companies that had operated in Thailand for a long time
might understand the underlying political factors, outsiders viewing media
coverage of the conflict on a daily basis would certainly be discouraged about
investing in this country, or would at least postpone their investment
projects. Therefore, the political crisis comes at an inopportune time.