OBG talks to Prime Minister Yingluck Shinawatra

Interview: Prime Minister Yingluck Shinawatra

How did the floods of late 2011 affect the administration’s priorities? What reforms are most pressing following such a natural disaster?

YINGLUCK SHINAWATRA: The government has given high priority to alleviating the impact of the floods and putting in place measures that will help to prevent such crises from occurring again in the future.

We are turning the flood into an opportunity to make Thailand’s infrastructure and economy safer from such disasters. A multi-billion-dollar flood recovery and restructuring package has been set aside to compensate and assist affected sectors in the recovery effort and to ensure that small and medium-sized enterprises, entrepreneurs and industrial estate development can resume production as soon as possible.

More than $11bn has been set aside to create an improved water and crisis management system. Flood walls, barriers and dams are being built to protect industrial estates and communities.

Floodways and diversions are being created to allow water to flow in and out. Drainage systems are being built to prevent water build-up. Information databases and contingency plans are being developed.

Most importantly, a single command authority on water management is being put in place to oversee and execute plans, in particular during times of crisis.

At the regional level, ASEAN has given full support to my initiative to work together to address and prevent flooding. This government will continue its policies such as strengthening domestic demand, pursuing people-centred development, creating a business-friendly environment and expanding investment in transportation and logistics.

In addition, we will be following through on the high priority agenda announced when we took office. This will take a variety of forms, including the empowering of women so that they can contribute further to the country’s economic development and strengthening education for our children, which is a very important form of investment for the future of our country.

What is the government’s strategy for restoring confidence in long-term investment in Thailand?

YINGLUCK: Business confidence in Thailand remains strong, not only because of our policies but also because of our solid economic fundamentals. That is why our economy is forecast to expand by around 5.5-6.5% in 2012 in the form of a v-shaped recovery, despite the floods in 2011. That is why foreign companies affected by the floods continue to invest in our future. The fiscal and financial position is sound. Public debt stands at 40% of GDP. The level of foreign exchange reserves is high at $180bn. We also have a large pool of skilled labour that is valued by multinational companies.

In terms of policies, this government is committed to promoting domestic demand through investment and government spending. Projects that have been planned include large transport and infrastructure schemes to promote national and regional connectivity.

With regard to policies for the private sector, corporate income tax is being lowered from 30% to 23% in 2012, and to 20% in 2013. We have removed some restrictions to make it easier for companies to set up regional operating headquarters here. In addition, labour skills are being upgraded. Thailand is preparing itself for the ASEAN Community in 2015, which will make the South-east Asian region of over 600m consumers a single market and production base.

The message I received from foreign investors, both in Thailand and abroad, including at the annual meeting of the World Economic Forum in Davos in January 2012, is that they are confident in Thailand’s economic future and would like to continue to be our trading and investment partners. Thailand’s hosting of the World Economic Forum for East Asia in 2012 is expected to underscore that message. In view of the current mix between our water management and recovery package on the one hand, and people-centred development and business-friendly economic policies on the other, Thailand is striking the appropriate balance between emergency relief and long-term planning.

What are the challenges to fostering unity and reconciling the political differences of recent years?

YINGLUCK: The political situation in Thailand has been back to normal for some time now. The elections in July 2011 were a fresh start which resulted in a peaceful transition of power. They also showed that all sides are committed to resolving issues through democratic processes. The elections saw voter turnout of 75%, one of the highest in recent years. In my visits to foreign countries and at international meetings, the message from our foreign friends is the same – they strongly support Thailand’s democracy and this government, which came from a democratic process.

We should not overlook the fact that the political events in Thailand in the past few years reflect increased activism on the part of the Thai people, who have become more aware of the importance of politics to their lives and want to make their voices heard. The diversity of views being expressed by different groups shows that Thailand is a vibrant democracy and an open society. However, one cannot deny that political activism in the past few years has also been marred by violent incidents and a lack of compromise. While this is truly regrettable, it is perhaps part of the process of learning how to become a more mature democracy which Thailand has to go through. I am sure that democracy in Thailand will emerge stronger after this experience.

Recognising that more work remains to be done on this issue, this government attaches great importance to promoting national reconciliation. The government supports the work of the Truth and Reconciliation Commission of Thailand (TRCT), established by the previous government, and the TRCT’s recommendations. A compensation package has been approved to provide remedies to all sides that suffered losses in the political violence of the past several years.

Political stability has been the fruit of this government’s efforts so far. We will continue to consolidate these gains by supporting good governance, the rule of law, human rights, transparency and accountability.

Which are the most urgent priorities on your foreign policy agenda? What bilateral relationships in Asia would you like to develop?

YINGLUCK: One of the most important foreign policy priorities of this government is to expedite the promotion and development of close and cordial relations with neighbouring countries by enhancing cooperation between the public sector, private sector, people and the mass media to cultivate mutual understanding and promote mutual interests. This will lead to expanded cooperation in all relevant areas, including trade, investment, tourism promotion, transportation and people-to-people ties. Indeed, this is part of Thailand’s overall foreign policy of maintaining good relations with all members of the international community.

In this regard, I am pleased that in my visits to neighbouring countries in South-east Asia, there has always been a warm reception, as well as a great receptivity and willingness to reciprocate these policies.

As a founding member of ASEAN, Thailand attaches great importance to the realisation of a people-centred and effective ASEAN Community in 2015. We are committed to playing a more proactive role in community building and in developing an ASEAN-centred regional architecture that promotes peace, prosperity and progress. To this end, Thailand supports the development of enhanced connectivity within our region, whether in the Greater Mekong subregion, ASEAN or beyond, and will use its geographical location and other assets to promote further progress in this area.

In addition, as a member of good standing within the international community and with Bangkok serving as regional headquarters for the UN as well as for other international organisations, Thailand will be playing an active role in the international community and with relevant organisations to address global issues of common concern, particularly those that impact Thailand and the region. One such issue is disaster management, which Thailand is hoping will benefit from enhanced regional and international cooperation.