UN seal of approval

Foreign direct investment may improve with higher minimum wages, a natural part of moving from industries with unskilled labour to skilled labour.

The United Nations report discussed below ("Asia-Pacific Trade and Investment Report 2011") is available for free download here (press release).

Click button to listen to UN ESCAP Report to download

ECONOMY: Escap: Pheu Thai plans sound by Nareerat Wiriyapong

Improved political stability, a proposed cut of business taxes and a hike in the daily minimum wage will give Thailand better odds in competing with regional economies to attract foreign direct investment, says the UN Economic and Social Commission for Asia and the Pacific (Escap).

Escap executives have played down arguments over the Pheu Thai Party's proposed rise of the daily minimum wage to 300 baht, saying instead that the policy should be part of the country's industrial transformation: sending a signal to international communities that Thailand is moving away from unskilled labour industries to more value-added activities.

"Raising the minimum wage will help in terms of income security for workers coming to Thailand," said UN under-secretary-general and Escap executive secretary Noeleen Heyzer.

It is a good way looking forward for Thailand.

Ravi Ratnayake, Escap's trade and investment director, urged the new government to come up with measures to deal with the short-term negative impacts of the wage hike including ones to help small and medium-sized enterprises.

"You need to balance positive and negative impacts of higher minimum wages," said Mr Ratnayake, adding that the prices of some products may go up. "But in the long term, there are net positive impacts."

Meanwhile, foreign direct investment (FDI) is drawn to political stability, which has not abounded in Thailand in recent years but could improve after this month's election and when the new government is installed.

Certain proposals of the new government to reduce business taxes will create more FDI in Thailand, said Mr Ratnayake.

Although the agency's "Asia-Pacific Trade and Investment Report 2011" released yesterday found that FDI flows to the region have fully recovered from the 2009 global crisis, 75% of these go to just five "giants" - China, Hong Kong, India, the Russian Federation and Singapore.

Financing the fiscal stimulus The government ultimately faces borrowing another 800 billion baht over the next three years (2009-2012) to fund the second stage of the fiscal stimulus programme. For now the Finance Ministry will issue bonds for another 400 billion baht in loans mainly from the local financial market. Half of this will pay for this year's.

In Southeast Asia, while FDI flows to Malaysia and Indonesia rose sharply last year, Singapore was clearly the leader in the sub-region, ranking as the No.1 FDI destination in the world. The island economy attracted 35% of FDI inflows during 2008-10, with Vietnam, Indonesia and Thailand taking 17%, 16% and 13%, the report said.

Escap also projects spectacular export growth in Asia-Pacific after returning to pre-crisis levels with an estimated 17.3% last year. Growth will stabilise at 9% in 2011.

India is expected to record the highest export growth with 11.3% this year, followed by Korea (11%), China (10.8%), Thailand (10%), Indonesia (9.9%) and Malaysia (7.9%).

Opportunities for export expansion will depend largely on the growth of intra-regional demand and ability of developing countries of the region to restructure and diversify their exports," Dr Heyzer said, noting that Asia-Pacific exports face a clear and present risk of protectionism.

"The region is facing uncertainties in the post crisis era, such as climate change, inflation pressures driven by food and energy price increases, foreign exchange volatility, the effect of natural disasters and sluggish demand in developed economies," she said.

Although Thailand has been able to keep the effects of rising oil prices at bay due to state price controls, as the global price of oil continues to climb, Thailand, like the rest of the Asia-Pacific, will continue to face rising oil costs that can curtail economic growth, said the report.

(Source: Bangkok Post, ECONOMY, Escap: Pheu Thai plans sound, 26/07/2011, Nareerat Wiriyapong, link) 

Economics Vocabulary 

Escap - "the Economic and Social Commission for Asia and the Pacific (UNESCAP or ESCAP), located in Bangkok, Thailand, is the regional arm of the United Nations Secretariat for the Asian and Pacific region" (See Wikipedia)

sound plans - good effective plans, plans that should work (achieve project goals)

seal of approval - some picture (design, logo, symbol) that has a meaning of approval or distinction and prestige

stability - when a situation does change suddenly and unexpectedly, so people can operate normally and successfully ความมีเสถียรภาพ ความมั่นคง
political stability - a situation in which the government and government policy does not change suddenly and unexpectedly (so businesses can operate successfully)

proposed - suggested (but not yet chosen or decided upon)

wage - an amount of money that you earn for working, usually according to how many hours or days you work each week or month ค่าจ้าง
daily minimum wage - the smallest amount of money that can legally be paid to a worker

better odds - make some good event more likely to happen, a better chance of happening

attract - to cause someone to be interested in something ดึงดูดความสนใจ
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)

Foreign Direct Investment (FDI) - the investment in a business in a country by a foreign company, building a factgory and managing the business (as opposed to portfolio investment which is just buying the stocks and bonds of a company) (See Wikipedia and Google Definitions)

played down - make something seem less important (example: the factory managers played down the problems the factory was experiencing in their annual report)
executives -  the highest level managers in an organization (making plans and ensuring they executed successfully) ผู้บริหาร
policy - a plan of action to guide decisions and achieve outcomes (See Wikipedia) นโยบาย

transformation - change
industrial transformation - big changes in the types of good manufactured and produced in a country

sending a signal to international communities - do something to let foreign governments, companies and other organizations such as NGOs know something that should know about

unskilled labour industries - industries that do not require skilled labour to operate the machines and produce the good or product and therefore pay lower wages (example: textile industry)
value-added - the increase in value and price of a good that is added at one stage of production (added by some combination of labour and capital or machines)
value-added activities - industries that require more skilled labour (that "adds" more "value" to the product)

international - ระหว่างประเทศ between countries
income - money that people receive from work or some other source, used for household consumption and savings
security - the activity of making safe or protecting from harm ความปลอดภัย
income security - protecting workers from harmful changes in their income

trade - the buying and selling of goods การค้าขาย
urged - advised someone very strongly about what action should be taken วิงวอน

come up with - create something new, form a new idea

measures - actions taken to deal with a problem มาตราการ
negative - bad ที่เป็นด้านลบ
impacts - effects on different people and things
enterprises - companies
small and medium-sized enterprises - SMEs
positive - something good สิ่งที่ดี, ในแง่ดี
wages - the amount of money earned per hour by a worker
net positive impacts - more positive effects than negative effects

abounded - existed in large amounts
improve - to get better ดีขึ้น
election - the process of choosing a person or a group of person for a position, especially by voting elect (v) electoral (adj) synonym: the polls การเลือกตั้ง
new government installed.- when a newly elected government takes over control of the country

released - made available to the public
release a report - make a new report available to the public

FDI flows to the region - investments in Southeast Asian countries such as Thailand by big companies from Japan, Europe and the US, etc

recovered - get better again ฟื้นฟู

global - throughout the world ทั่วโลก
crisis - an urgent, difficult or dangerous situation วิกฤต, วิกฤตการณ์

fiscal stimulus - a temporary increase in government spending in order to get the economy moving again after an economic slowdown

bonds - with corporate or government debt held in small amounts by many people (holding bond certificates, each of which pays an annual "coupon" to the holder) 
issue bonds - when a corporation or government creates a new set of bonds that the public can buy (thus borrowing money)
local financial market - the financial markets inside this country (Thailand) on which stocks, bonds and derivatives are traded

sub-region - here: the Southeast Asia sub-region (part of Asia "region" and therefore a "sub-region")
destination - the place where someone or something is going จุดหมายปลายทาง
spectacular - extremely impressive ที่ตระการตา น่าตื่นเต้น
stabilise - to reach a state where there are no longer any major changes or problems ทำให้มีเสถียรภาพ
expected - believe will happen คาดว่า (จะเกิดขึ้น)
record - officially report (and put or "record" in official records)

expansion - when something increases in size, number or importance การขยายออก
growth of intra-regional demand - an increase in the buying and selling of goods within the region (exporting to neighbors, instead of the big rich economies of Europe, Japan and the US)
demand - the need and desire of customers to buy goods and services ความต้องการ

restructure - to organise something in a new and different way so that it will operate better ปรับโครงสร้างใหม่
diversify - add variety to what you already have ทำให้หลากหลาย (See glossary)

clear - easy to understand
risk - the possibility that something dangerous or unpleasant might happen ความเสี่ยง
face a clear and present risk of Y - some harmful event is likely to happen (and this is easy to see)

protectionism - the economic policy of restricting trade between countries using tariffs on imported goods, quota limits on imports, and other restrictive regulationsto discourage imports and prevent foreign take-over of local markets and companies (See Wikipedia)

climate - the general weather conditions usually found in a particular place สภาพอากาศ
climate change - the process of "global warming" caused by increased "greenhouse gases" released into the atmosphere which results in flooding and drought in many places

inflation - the level of prices rising in the economy as a whole (See Wikipedia and The Economist glossary) ภาวะเงินเฟ้อ

volatility - moving up and down suddenly and unexpectedly in unpredictable ways (bad because it makes it difficult to make decisions) ความไม่แน่นอน (See The Economist and glossary)
foreign exchange volatility - when the exchange rate for a country (dollar value of baht) moves up and down suddenly in unpredictable ways making it difficult to do business
natural disasters - big bad events in which many people die such as a tsunami, earthquake, flooding, etc

sluggish - moving much slower than usual ซบเซา
sluggish demand in developed economies - people who live in rich countries such as Europe and the US are not buying things (because econony is bad and incomes are down)

keep at bay - control (and prevent something dangerous from becoming a real problem)
state - government รัฐ
state price controls - when the price sets the price that companies can legally charge for goods such as cooking or rice
curtail economic growth - reduce economic growth