Don Nakornthab, Ph. D. Senior Director, Economic and Policy Department, Bank of Thailand
The global pandemic of coronavirus has literally brought the world to a standstill. Since early this year, the world has been fighting with the deadly virus. While some have found themselves back to square one, many more are faring much worse, some on the brink of bankruptcy.
At the time of writing this article, almost ten million people have contracted the virus, with the death toll reaching nearly 500,000 and still rising.
Last month, the International Monetary Fund (IMF) warned that the economic downturn of coronavirus is the worst since the Great Depression in 1923, with global economic growth shrinking by three percent – a bleak outlook compared to the one-percent drop during the 2008 subprime mortgage crisis.
Thailand is particularly hit hard. Despite its swift response and effective implementation in curbing the spread of the Covid-19, the country has suffered a major setback. The latest forecast by the Bank of Thailand says the country’s economy is likely to shrink by 8.1 percent.
The figure is based on the Tourism Authority of Thailand’s newly projected number of foreign tourists at eight million, an 80-percent decline or 32 million from last year. The industry is one of Thailand’s main income sources, accounting for about ten percent of gross domestic product. The plunge is the lowest since 2006 as a result of the disappearance of Chinese tourists who account for almost one-thirds of foreign visitors.
But in the midst of every crisis, lies great opportunity, said Albert Einstein.
According to Dr Don Nakornthab, Senior Director of the Economic and Policy Department, Bank of Thailand, it is a perfect time for the government to “reset” the country in three major areas: tourism, education, and workforce.
“The Covid-19 crisis has turned a spotlight on the serious need for a reset in the tourism industry. We focus too much on the quantity instead of quality. We’re also too dependent on foreign incomes,” says the expert.
Moreover, the export revenues are expected to decrease by more than four percent of GDP due to ongoing export slump. “Unless the government injects at least one trillion baht, the country will likely suffer negative growth,” he notes.
This means the inequality problem will exacerbate as the gap between the rich and the poor grows bigger. The impact will be felt the most by those at the grassroots level and in small-to-medium-sized businesses. In fact, the crisis has already taken its toll on their livelihood.
From an economic viewpoint, the situation is simply a reflection of the dire need of education reform, another crucial factor in the country’s long-term growth.
Outdated curriculum and teaching techniques aside, the ‘new normal’ era will further put students under pressure. Online and distance learning are becoming a norm, but how it can be applied is still a question when the majority of the students are from low-income households. Notebooks and tablets suitable for fast Internet connections are certainly out of reach.
The reform will also answer the long-overdue need for reskilling and upskilling the labor force. As the world is undergoing digital disruption, the landscape of jobs will go through transformation inevitably. New jobs will be created and existing jobs will either be lost or transformed, thanks to the digitization and automation through artificial intelligence (AI).
Sooner or later, this will happen. However, the pandemic is just a catalyst for change to happen earlier, Dr Don says, adding that the post-Covid-19 era will see several drastic changes in Thailand’s labor force market.
“First of all, unemployment will be on the rise. In the past, we could return to the agriculture sector when a crisis hit. Now, there isn’t much room left because crop prices aren’t that good. Joblessness will be worse if workers don’t adopt reskilling or upskilling. So the new generation of workers must have digital skills and is ready to embrace new technological advances, automation, and the working environment that involves a lot of communication with robots and AI.”
These should be what Thailand aims for as the ‘new normal’ practice if Thailand is to stay competitive in the global market.
He dismissed the possibility of Thailand’s rise toward industrialization, saying that it is “out of the question”. Only heavy industries such as electronics and petrochemical sectors have a clear future in terms of technological advance and know-how, he says.
The future, he points out, lies in the agriculture sector. Despite its shrinking size, it should be on the high priority list in order to achieve sustainable development and growth. “The sector still has a future but we must build that future ourselves.”
Of course, agricultural technology will come into play. The whole production process will likely be computer-operated or even managed digitally from afar. AI will be a major part to ensure optimal use of resources. Hence, the need for reskilling and upskilling.
In a way, coronavirus crisis has overturned the old definition of ‘security’. “Earlier, when we said Thailand must be stable, prosperous, and sustainable to have security, we thought about the military. Now that security means food security and health security, both of which are Thailand’s strengths.”
The country’s management of the pandemic so far is also a proof of the country’s effective public health system as well as its high potential to become a regional, or even global hub in medical services in the long run.
“If we could transform the country into an ultimate destination not just for mainstream or eco-tourism, but also medical tourism, I’d say we’re in the right direction. The world has entered the aging society so it even makes more sense.”