This week, Thailand will get its moment under the sun when it hosts one of the major diplomatic events of the year — the APEC leaders’ summit — from Monday to Friday.
Being held under the theme “Open. Connect. Balance.”, the event takes place at a vulnerable period in global affairs, marked by geo-political conflict and economic challenges.
Created in 1989, the Asia Pacific Economic Cooperation is a regional forum aimed at advancing economic integration on a voluntary basis. This principle is different from other free trade agreements, which require reciprocal cuts in tariff rates.
APEC now has 21 economies as members encompassing developed and emerging markets, namely: Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, United States of America, and Vietnam.
The grouping covers about 2.9 billion, or 38 percent of world population, with a combined gross domestic product (GDP) of US$52 trillion in 2020, accounting for 62 percent of world GDP and combined trade accounting for 48 percent of global trade in 2020, according to apec.org.
Piti Srisangnam, director of Academic Affairs, ASEAN Studies Center at Chulalongkorn University, hailed the success of the APEC economies during the past three decades.
In 1990, 41.7 percent of the population lived below the poverty line and that has now dropped to 1.8 percent, he said. The decline in the number of extremely poor people is largely a result of the impressive economic development of China, he said, adding that as of 2021, China does not have extremely poor people.
Trade and investment among APEC economies rose from 45.2 percent to 67.9 percent of their total trade currently, he said. Trade facilitation agreements have led to APEC’s rise in the World Bank’s Ease of Doing Business index by an average of 12 percent since 1990, he said.
Impact on Thailand’s economy
As the world emerges from the devastating impact of the COVID-19 pandemic, leaders will have a chance to meet in person, which could lead to closer cooperation.
The tourism industry in Thailand is reaping immediate benefits. An estimated 10,000 delegates, business persons and journalists have visited Thailand this year to attend many APEC-related meetings during the year, according to Tanee Sangrat, spokesman of Thailand’s Foreign Ministry.
Thailand’s tourist arrivals for the year are expected to hit 10 million, a speedy turnaround from about 427,869 last year.
Deputy government spokesperson Trisulee Trisaranakul was optimistic of achieving the target, and said 7.56 million foreign tourists had visited in the first 10 months from January to the end of October. The Tourism Authority of Thailand has predicted 1.5 million tourists a month in November and December, helping achieve the 10 million target.
Thailand has been heavily dependent on spending by foreign tourists, which made up 12 percent of GDP before the pandemic when foreign arrivals hit 40 million in 2019.
How far can Thailand’s ambitious BCG push go in the APEC community?
Changing global supply chain
Thailand has a chance to promote foreign investment in the Eastern Economic Corridor at a crucial time as geopolitical tensions rise and the world wrestles with the fallout of the pandemic.
The tensions between the US and China have led to trade restrictions since 2018 when former US president Donald Trump imposed high tariff rates on Chinese products. US trade restrictions on Chinese products have continued under the current US administration. In addition, President Joe Biden has imposed trade restrictions on advanced chips.
The US pressure on China is impacting the global supply chain, forcing multinational companies or Chinese manufacturers to move their production facilities to other Asian countries, including India, Vietnam, Indonesia and Thailand.
Thailand and other ASEAN countries have made clear that they do not want to choose sides between the US and China, but want to maintain good relationships with the world’s largest and second-largest economies.
Financial cooperation
In upgrading to a digital economy, the Bank of Thailand (BOT) and Finance Ministry have developed systems for digital payments within the country and cross-border payment.
During the APEC finance ministers’ meeting in October, the BOT had presented its experience of a cross-border payment system via digital means, such as QR payment. Currently, Thailand has joined hands with Cambodia, Indonesia, Japan, Malaysia, Singapore and Vietnam on cross-border QR payments. Users can receive financial transactions via mobile phones under the connectivity of Thailand’s PromptPay-Singapore’s PayNow scheme, according to the BOT.
Thailand is seeking to expand cross-border payment cooperation with other APEC members too.
Tough balancing act
In October, Thailand abstained from a UN resolution condemning Russia’s illegal annexation of parts of Ukraine. Diplomatic circles interpreted the vote as the Thai government’s outreach to Russian President Vladimir Putin to attend the APEC Summit.
The Ukraine war has rattled the global economy due to rising energy, food and fertilizer prices, pushing many developing countries on the edge of a food crisis.
As the host of APEC, Thailand could play a role in reducing the impact of geopolitical conflicts on the economy. Piti said that so far the world’s superpowers have weaponized their economies against each other, such as by imposing trade sanctions and financial decoupling.
“The APEC forum will let the private and public sectors propose closer economic cooperation to improve economic welfare and to end the use of economies as weapons,” he added.
By Thai PBS World’s Business Desk
