prasarn trairatvorakul : thailand in the new regional and global financial landscape speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the international chamber of commerce ( icc ) thailand general council and networking dinner, bangkok, 30 september 2014. * * * good evening distinguished guests, ladies and gentlemen. i am delighted to be here today, to address honorable members of thailand international chamber of commerce. thailand international chamber of commerce has made an important contribution to our nation in two main ways. at home, the organization helps develop awareness among members on future trends of business. in the international arena, the international chamber of commerce ensures member ’ s participation in the formulation of trade and investment policies. on this occasion, i would like to express my appreciation for the hard work that you have done throughout the past fifteen years and the strategic function that your organization will continue to serve in a more dynamic environment going forward. today, i would like to share with you my perspective on how thailand could prosper in the new regional and global financial landscape. let me offer an analogy. imagine yourself embarking on an important challenge, perhaps a new job with demanding responsibilities. naturally you may feel a little nervous, since there is no guarantee that the new venture will be a successful one. a transition to a successful career consists of three stages. the first is to familiarize yourself with this new environment – to get to know new colleagues, to learn about the culture of the workplace, and basically to settle in. some may find this phase more challenging than others, especially if they were easily shaken by cultural shocks. once you have settled in the new place, you may discover certain shortcomings of yours are constraining your career advances. these shortcomings may already be existing, but are only exposed by the new job. fixing these shortfalls is the second step in the transition. finally, to make a significant progress in the career, you will have to set the bar for yourself, and strive to reach it through learning and development. this will require insights to identify one ’ s strengths, and skills to take advantage of them given the dynamics of the working environment. the stages of economic development may be thought of in a similar vein, consisting of three pillars. the first pillar is to ensure that the economy ‘ settles in ’ the new global environment smoothly, and remains resilient against new types of shocks. the second pillar is to identify and fix

tools, including large foreign reserves, the current policy capability is adequate in meeting challenges of the day. second pillar : fixing the shortfalls ladies and gentlemen, at the same time, a number of pressure points in the thai economy have started to emerge in the aftermath of the global financial crisis. the decline of economic growth in recent years relative to pre - crisis period hints at structural bottlenecks holding back the economy. exports which were the leading driver of pre - crisis growth are expected to be flat this year, lagging those of our competitors. anecdotal evidence suggests that some manufacturing sectors are struggling to be integrated into the global modern supply chain. slow gain in labor productivity, and inadequate investment may be hindering the overall technological advances, a critical pre - requisite for sustaining long - term development. these problems are potentially our existing shortfalls that need to be overcome in the second pillar of development. however, it may be too premature to put the entire blame on structural flaws. there are a number of cyclical headwinds suggesting that the recent subdued growth could be just a temporary phenomenon. the more diversified export product range in thailand implies that our global growth ‘ beta ’ may be lower than that of our specialized hi - tech exporter peers. this is not necessary a shortcoming, since some high - end manufacturing sector such as semiconductor is prone to strong cyclical swings, with a short and sharp upturn followed by a protracted downturn. but by implications, export diversification that helped lessen the impact of global recession then, is limiting our sensitivity to the global recovery now. it may therefore take some time for exports to show a firmer recovery. another factor weighing on private sentiments and domestic demand until recently is the political development. economic uncertainties brought about by street protests and threats of violence late last year have had a discernible impact on private spending and tourism. but a political resolution in the second quarter has lifted the fog, and the incoming data since suggest that there has been a steady improvement in private sector confidence. the resumption of public spending is also adding to growth impetus, including through accelerated disbursement of fiscal budget, and infrastructural public investment. the government ’ s efforts to balance the short - term stimulus needs with the long - term improvement of fiscal spending efficiency should also be welcomed. as the fiscal support starts to kick in, the domestic demand should continue to lead this recovery. bis central bankers ’ speeches this cyclic