Nov 27, 2012

Thailand - AEC 'won't bring foreign takeover'

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Thais have a false perception that the Asean Economic Community will immediately open up the service sector to foreign dominance and negatively affect jobs, says a think-tank.

Thailand Development Research Institute president Somkiat Tangkitvanich said Asean was behind schedule in agreeing how countries can invest in other members' service sectors.

Asean countries have agreed to allow workers of eight professions to freely move to other member countries, but they still have to register and observe domestic requirements in those countries.

The eligible occupations are doctors, dentists, nurses, engineers, architects, surveyors, tour guides and accountants.

Nurses, dentists and doctors require tests done in the Thai language, while others need a certain amount of knowledge of Thai to work in the country. Tour guides, however, have no requirements, Mr Somkiat said.

Only 399 engineers have registered to work freely in Asean countries.

"Thais often have a misconception that people will lose jobs due to the free flow of labour once the AEC opens, especially in the area of nurses," Mr Somkiat said.

The foreign share of Thailand's service sector is legally capped at 50%. The country has opened its trade more than any Asean country by eliminating 90% of import taxes, he said.

Mr Somkiat said the postponement of the AEC by one year to 2016 will not create a significant difference, as the important issue is not how fast the AEC takes places but the level of commitment to integration of each country.

Chetha Intarawitak, a senior researcher, said Asean countries face low use of tax privileges under the AEC owing to a lengthy and complicated approval process.

Members have also exhibited rampant non-tax protectionism in the form of price controls, foreign exchange controls, quotas, monopolies, registration and labels, he said.

Mr Chetha said Thailand's import costs have remained high because customs officials' dependency on other agencies makes the work inefficient and there is a shortage of IT personnel.

Asean countries also need to harmonise cross-border transport, he said.

Duenden Nikomboriraks, a senior researcher, said the delay in opening up Asean's service sector had resulted from the bloc's flexibility in the terms of readiness for members.

Thailand's liberalisation in the service sector would remain muted in 2015 as key sectors that provide fundamental services such as finance, energy, transport and logistics would remain relatively closed to foreign participation.

"More than 40% of the workforce is in the service sector, but its productivity is lower than that of the industrial sector. It's the service sector that has the potential to grow and lift people's income," Ms Duenden said.

Policymakers should tackle the monopoly of large corporations in energy, electricity and telecommunications to grow the service sector and reduce business operating costs, she said.

Former Bank of Thailand governor MR Pridiyathorn Devakula said the role of professional councils in setting criteria for professionals would be important in regulating Asean labour flexibility.

Nanchanok Wongsamuth & Parista Yuthamanop

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