Economic growth in Thailand is a form of 'window dressing'
If we are to believe the current Thai government, it is now 'hosanna in the highest' when it comes to the economy. The gross national product will grow by about seven percent this year, something that we have rarely if ever achieved in the Netherlands.
So everyone has to go in Thailand but keep his mouth shut so as not to disturb the goose with the golden eggs while brooding.
The reality is less prosaic and in any case a lot harder. Because the ordinary man or woman in Thailand does not notice the current economic growth. On the contrary. The minimum wage is now 205 THB per day in many provinces and take it from me that you can't kick a door in Thailand either. The employer tries to avoid overtime as much as possible in order to save costs; many Thais are therefore nowadays forced to take a job to keep their heads above the (rising) water.
Another big problem is that prices in Thailand are rising faster than inflation (more than 3 percent this year) and Thai people therefore have less to spend. The fall in prices of imported goods as a result of the weak dollar and the strong baht is hardly noticeable. That money flows into the pockets of the chain stores or oil companies.
So where does this reported growth come from? Thailand is one of the largest automotive manufacturers in Asia. The rising sales therefore yield a considerably higher yield, except for the employees who are saddled with a low income. This also applies to the tens of thousands of women who work in the electronics industry in Korat and the surrounding area. Seagate's hard disks are a good example in this case. And the farmers no longer need it from the export of rice. Their rice is now more expensive, while demand falls and supply rises. Customers are now turning to Vietnam, for example.
I know a man in Hua Hin who exports refurbished moped engines to Germany. He invoices (of course) in euros, but they now yield almost twenty percent less in Thailand than a year ago. So he has to look for a second job. Every day, Thai newspapers report growing problems for companies that depend on exports. If conditions do not change, thousands will lose their jobs. And that in a period when American and European tourists are also failing. A good acquaintance of mine in the tourism industry can no longer keep his head above water and is considering throwing in the towel.
The number of Thai people who are deeply in debt is increasing visibly. Macro-economically, Thailand is doing well. That is an irritating form of 'window dressing', because it is of little use to the man or woman in the street.
Good article from Hans. I also don't understand those cheer stories from Abhisit and his friends. The farmers complain bitterly that tourism is in the doldrums. In Pattaya, the bars are empty. Only the Russians are coming.
The contrasts between yellow and red only get bigger.
We agree that income in Thailand is not redistributed as in the Netherlands. Indeed, low incomes do not benefit very well from growth in Thailand. And we can discuss for hours whether things are well or badly arranged in the Netherlands, whereby someone's point of view will also be determined whether you contribute net to – or take a net deduction from – the treasury.
I recognize some things you say, but is it really the case that the common man (I assume you also include the middle class in this category) notices absolutely nothing of the growth? I am regularly stuck in traffic, and am always amazed at the huge number of cars driving around in a so-called developing country. That's really not all hi-so. Not only in Bangkok, by the way – I have the same impression in the rest of Thailand.
Following a tip on this blog I recently visited Paradise Park at the weekend, well, you can have fun finding a parking space there. Crowds of Thais who happily go shopping by car at the weekend - not the typical image of poverty I have in mind.
Ladies with certainly not a large income in my office who buy a small Nissan for about 300,000 baht (with financing, of course), and who are proudly stuck in traffic for 2-3 hours every day (face!).
With regard to tourism in Thailand, it has recovered reasonably well. I do believe that the 'establishments' that mainly cater to Europeans are struggling – Steve cites Pattaya as an example and it probably is. But most of the high end hotels in Bangkok, Phuket and Samui have a very acceptable occupancy rate, and rightly cater to a more Asian clientele. However, that is not the type of customer that keeps Sjonnie & Lek's beer bar running, of course.
Of course Abhisit has a colored positive story, he is a politician. But Asia as a region has been on the rise for years with always good future prospects, and that also has repercussions on Thailand. Of course there is poverty in Thailand, and the government should indeed do something about it (education is a good start), but I see things a lot less gloomy than Hans, especially for the long term.
You can indeed discuss this for hours. I think purchasing power is the most important indicator of wealth, but I'm not an economist.
The examples you mention refer to the title of this excellent post. 'Window dressing' is what the Thais are very adept at. The Thai buy everything on credit and certainly cars. Drive through Thailand and be amazed by the new Pick-up trucks that are next to a slum. Cell phones and cars, that's what it's all about. I once read on another blog about a Thai lady who had an Iphone and didn't use it, she didn't know how that thing worked (very special with an Iphone). But she had bought it purely for status.
But as you say yourself everything is financed. You can wait for the consequences. The US is a good example. Yesterday I saw something on TV about Ireland. Mortgages of 150% were taken out there. Now the country is bankrupt. House prices have fallen by 50%. They expect a national debt of more than 30%!
What I want to say is that prosperity in Thailand is relative. Again, I'm no expert, but common sense tells me that few people benefit from economic growth. Jan with the cap certainly not.
@Robert: it just depends on how you look at it. But Paradise Park as a benchmark is a wrong starting point. The second most luxurious shopping center simply attracts the better off. And you say yourself that Thai drive a financed car because of their 'face'. That only makes them poorer… If they had enough money, that car would be paid for in cash.
You will find the poverty in other neighborhoods and villages, where you may not come that often. The rich in Thailand are getting richer, according to statistics, and the poor are getting poorer.
Come on Editors and Hans, that car on credit is absolute nonsense, how many people do you know who pay for a car in cash in the Netherlands or in other Western countries. The fact that Thais finance the purchase is of course not proof of poverty - if we go on that route, most car owners are poor!
And I also understand that Paradise Park is only 1 observation point…but still…if I take into account all the weekend traffic jams around Central World, Paragon, MBK, Platinum mall (not really hi-so right?), Panthip, the various Centrals that are NOT just better situated putting on, etc. etc. all add up, then that is a lot of can. You can see a similar effect in other medium-sized cities.
Of course I also see the poverty, and yes, I also know the rest of Thailand and the interior very well. But still, I stick to my comments regarding Hans' story. I think you see things way too black.
Hans
a year ago exactly on this day I got 47,65 baht for one euro. Now the euro is almost 42 baht. That's not even a 20% drop. Gradually, that percentage may well be adjusted or the time period that is being discussed may be increased.
Abhisit likes to make everyone believe that things are going well. Especially for his own ass. Come on people those figures they spread is purely the good news show. The TAT also now calls out that tourism is booming. Where?
Thai people like to tell you what you want to hear, remember!!
Sleep peacefully…
@Thailandganger: if you count exactly on the day, you're right. Then it is now 14 percent, because the euro is at 41 baht. Very recently the euro was still at 39 and then we are already talking about 18 percent. I also wrote: 'Almost twenty percent'.
Yes, I would like a few more. 14% is almost 20% Ha ha ha I'll remember.
@bkkdaar: I fail to see what SP or VVD have to do with the situation in Thailand. And you will not find many people on welfare in Thailand. In Thailand, if you were born on a dime, it is very difficult to become eleven cents… Those are the consequences of super-capitalism.
Everyone keeps on bumping, what else can you do? Strong economy or not. It's a mess everywhere right now and no one knows where he stands. Incomes go down and prices go up.
As for Thailand, I hope they will adjust the value of that bath. The Thai can no longer sell their goods and there is less investment. The Thai government has come up with a measure to tax profits on foreign investments by 15%, thus repelling foreign capital and causing the value of the bath to fall. My goodness is this for real????
Nope… the government is busy with the upcoming elections, that bath will come.
To accuse Abhisit of putting on a good-weather show is very short-sighted. His illustrious predecessors also made grateful use of this to a much more intense degree. The difference lies in the fact that Mr T, in particular, was very populistic and mainifested in order to carry out his self-enrichment at state expense. Despite everything, Abhisit is not doing badly at all, at least better than the previous government.
That the rich are getting richer and the poor are getting poorer is not only true in Thailand, but actually all over the world. Let's wait and see what the new government will manage to achieve. What is certain is that this will only benefit the rich. Just like in Thailand, by the way.
I think it happened in Japan or Taiwan. A politician who apologizes to the people for his failure and then kills himself.
This has also happened a few times in the car industry. Also a lot of sjolly and again sjolly and then killed himself.
Should also happen with us in Neerlandistan. The CDA will probably have completely disappeared from the face of the earth by then.
Yes of course most cars are bought through the bank as well as everywhere else. USA above all.
I have experienced the following myself.
We had bought a new Mazda ZoomZoom. We also knew the owner of the garage privately.
One day Som came home with the announcement that we had a Mazda Tribute from a customer (wife) of his.
Car was imported from Germany with everything you need.
And of course with a discount.
And why.
The owner had bought the car through the bank and could no longer afford the repayment after 1 month.
We took it up with a loan from the bank.
About 5 years ago.
Gerrit