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Viewing cable 07BANGKOK5502, DEMOCRAT LEADER LAYS OUT PRO-BUSINESS AGENDA

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Reference ID Created Released Classification Origin
07BANGKOK5502 2007-10-21 23:45 2011-08-25 00:00 UNCLASSIFIED Embassy Bangkok
VZCZCXRO5304
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #5502/01 2942345
ZNR UUUUU ZZH
R 212345Z OCT 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 0281
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC
UNCLAS SECTION 01 OF 02 BANGKOK 005502 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS USTR 
USDOC FOR 4430/EAP/MAC/OKSA 
 
E.O. 12958:N/A 
TAGS: ECON EINV ETRD TH
 
SUBJECT:  DEMOCRAT LEADER LAYS OUT PRO-BUSINESS AGENDA 
 
REF:  BANGKOK 4943 
 
1.  Summary:  In an October 18 address to Thai business and 
investment leaders, Democrat Party leader Abhisit Vejjajiva outlined 
the challenges to Thailand in a globalized world, and the Party's 
outward-looking plan of action to meet those challenges.  Abhisit 
presented a pro-business platform which he said sought to change the 
government's role from one of economic controller to business 
facilitator, cutting costs and improving business competitiveness. 
Abhisit pledged action on a number of issues important to foreign 
investors, including abolishment of capital controls, shelving 
amendments to the Foreign Business Act, and a more business-friendly 
attitude toward compulsory licensing of pharmaceutical products. 
However, audience members expressed concern that as part of a likely 
weak coalition government, a Democrat-led administration might not 
be able to implement its bold proposals.  End Summary. 
 
2.  In a forum entitled "Thailand - Back in Business," Democrat 
Party leader and possible Prime Minister candidate Abhisit Vejjajiva 
built on an earlier economic speech (reftel) and set forth a 
pro-business platform that focused on meeting the challenges 
presented by globalization.  Abhisit laid out the competition for 
markets by rising economic powers China and India in both low-wage 
and high-tech sectors, and contrasted their successes with 
Thailand's failure to keep pace.  He pointed out Thailand's stagnant 
rankings in business competitiveness indexes in comparison with 
improvements by several of its neighbors in the region.  Abhisit 
opined that Thailand is in a regressive cycle, with low investor and 
consumer confidence feeding off Thailand's economic doldrums.  He 
blamed this lack of confidence for recent investment decisions by 
Seagate, Bridgestone and Intel to place major investments elsewhere 
in the region. 
 
3.  Presumably in deference to the business-oriented audience, 
Abhisit kept discussion of the Democrat Party's other populist 
proposals to a minimum, and focused on the party's pro-business 
proposals.  Abhisit said the government needs to change its role as 
a controller of the economy and become a facilitator for private 
business, pledging to stay out of the way of business and cease 
government being a burden rather than a help.  He promised to change 
rules and regulations that hinder business, including capital 
controls and proposed amendments to the Foreign Business Act. 
 
4.  Abhisit said he did not want to see a Thai economy based on low 
labor costs, and advocated policies to move the economy toward 
higher-end manufacturing and services.  He pushed for higher 
value-added in Thai products and building Thai brands in the global 
market.  He also advocated greater educational focus on information 
technology, math and sciences, and foreign languages to better 
compete in a knowledge-based economy. 
 
5.    Abhisit noted that Thai competitiveness had suffered from a 
lack of investment in infrastructure, and pledged to expend 300 
billion baht in irrigation projects, 200 million baht in dual-track 
railways to better link with neighboring countries, and 250 billion 
baht over 10 years on improving mass transit.  In so doing Abhisit 
hoped to reduce transport and logistics costs by 25-30 percent, 
increase farmers income by 40 to 50 percent within four years, 
double tourism receipts over four years, and bring annual GDP growth 
to the seven to eight percent range. 
 
Abhisit on the issues du jour 
----------------------------- 
 
6.  During his speech and in a following question and answer 
session, Abhisit touched on a number of key issues important to 
foreign investors.  He pledged to end the 30 percent capital reserve 
requirement imposed last December to stem the appreciation of the 
baht, earning the biggest applause of the speech.  Abhisit said the 
policy had destroyed the bond and debt markets and he would act to 
revive them.  He continued that a Democrat Party administration 
would not enforce a strong or weak baht policy, noting the 
advantages to different parties of each policy.  However, he 
explained that scrapping capital controls would spur investment and 
weaken the baht to help exporters. 
 
7.  Abhisit said he would not pursue controversial proposed 
amendments to the Foreign Business Act that would further restrict 
foreign ownership in certain business sectors.  He stressed the need 
to protect national interests, but said it would be done with 
clearer rules and a mechanism that would be accepted 
internationally. 
 
8.  In response to a question on compulsory licenses of 
pharmaceutical products that the current government has pursued, 
Abhisit said that the policy should only be used "as a last resort." 
 He said that if necessary he would invite pharmaceutical companies 
to discuss any potential action, and noted that just the threat of 
 
BANGKOK 00005502  002 OF 002 
 
 
doing a compulsory license often worked as well as its actual 
implementation.  As an alternative, Abhisit noted the Clinton 
Foundation's success in driving down global medicine prices by 
purchasing in bulk and suggested the RTG could pursue a similar 
policy to help reduce medicine costs. 
 
9.  Comment:  Abhisit hit all the right notes for his audience, 
putting forward policies to modernize and advance the economy and 
promoting ways to make doing business easier and cheaper.  However, 
if the Democrat Party takes power after the upcoming December 
elections, it will almost certainly be as part of a coalition.  Many 
audience members questioned whether the Democrats would be able to 
control key ministries and implement their proposals, and whether 
they would be in office long enough to do so.  Political analysts 
have predicted that the next government will be a weak coalition, 
and will find it difficult to push through bold proposals.  End 
Comment. 
BOYCE