Deputy Prime Minister MR Pridiyathorn Devakula knew the first day he assumed the role of overseeing economic affairs under the Prayut Chan-o-cha government that reviving the economy would be a difficult task. Political protests and uncertainty, followed by the military coup on May 22, 2014, had taken their toll.
He admits that efforts to disburse government funds to boost the economy towards the end of last year were slow. But he says the obstacles have been overcome and better results can be expected in the second quarter of this year.
What is equally, if not more important, is to accept that what has been achieved will help lay the groundwork for future, long-term growth.
In the past, Thailand's growth has centred on exports and manufacturing. But annual growth has slowed and has been slowing for a long time. From 2008-2013, average annual export growth has not reached 3%. In the last four years, GDP growth has not exceeded 5%.
Many products have started to face competition from countries in Asean. And many Thai companies are investing in these countries because costs are lower.
This means that products which used to generate revenue for the country to grow as an export-led economy are no longer driving growth. Here M R Pridiyathorn describes what the government has done in the past six months.
New promotional privileges
The government's first strategy is to develop a new category of products, which will make the country competitive. These are products that competitors in Asean, namely Cambodia, Laos, Myanmar and Vietnam (CLMV countries), cannot produce.
The crucial process of manufacturing is to create a supply chain. Countries like Thailand have advanced supply chains that can support products that need higher technology.
The Board of Investment has developed a long list of of these products. For example, Thailand has advanced food supply chain capabilities. Now promotional privileges will be given to the production of medical food with active nutrients. Likewise for the production of eco-friendly polymers and hygienic pulp and paper.
Thailand also needs to move up from the production of eco-cars to the production of hybrid and electric cars. Production of normal spare parts will be transformed to production of high technology, security, and energy conservation spare parts, which are necessary in the production of hybrid and electric cars.
There are over 4,000 Thai companies involved in the production of plastic products and Thailand is considered one of the plastics centres in Asia.
These companies can still produce these products but the government now will promote bio-plastic products. These are more difficult to produce but since Thailand already has a strong production base, the transition is possible.
Malaysia is one of the top manufacturing countries in Asean and 60% of its manufacturing is more advanced than Thailand's. Thailand remains number one in hard disc production but is unlikely to catch up on production of other electronic products.
In that case, Thailand needs new product lines to attract foreign investors. The country needs to change and cannot remain idle. In the past, companies upgraded the quality of their products. The government hopes its new list of items eligible for promotional privileges will help attract foreign investors and one day turn this country into the centre of Asean for industry.
Foreign investors are interested in research and development in industry as well as specific training centres. There is interest, for example, in Thailand becoming a centre for training of airline staff. The country needs to open itself to this type of centre.
The government has conducted roadshows in Japan explaining the promotional initiatives and many Japanese companies have started discussions. This is a period of action, of building a base for the future. By the time the promotional privileges expire, they will be able to support the new products.
Trading nation
In recent years Thai companies have expanded overseas, for example the Siam Cement Group with construction materials, ceramics, tiles, cement.
Srithai is the leading producer and exporter of melamine products. Mitr Phol has set up sugar operations in China and Australia and is considered number four in the world. Other companies expanding internationally are Pranda Jewelry and Thai Union (processed canned tuna).
Low labour costs are the reason they are expanding overseas. And despite their expansion they have not closed down their Thai factories and operations. They control the market and they know they can compete.
They are expanding their production base, the categories and grades of their products. In countries where the cost of labour is cheaper they would produce lower grade products so as to compete in a lower market, but in Thailand they are number one.
Many companies have set up trading headquarters in Singapore. This is why Thailand needs to transform itself into a trading nation. Japan once expanded its development bases overseas including Thailand during a similar phase in its development.
Japan upgraded itself into a trading nation a long time ago. It has a huge base in Brazil to enter the Latin American market. Many foreign countries ask why Thailand does not explore this possibility. Companies which set up production units in the region could one day upgrade their bases in Thailand to full headquarters.
As a trading headquarters this means that income from (overseas) subsidiaries sent back home is not taxed. There's also no capital gains tax. The government's objective is to bring profits back into the country.
Companies with their headquarters in Thailand will be able to buy products from their subsidiaries and sell them overseas. Bookings remain in Thailand but are not taxed.
On top of this, if a Japanese firm sets up a regional headquarters in Thailand to look after its other companies in the region, it would be granted the same status and privileges as an international headquarters.
The Japanese are happy with this because it is convenient for them to oversee their subsidiaries in the region. The law change will be announced within weeks.
Digital economy
Thailand took the first step this month towards becoming a digital economy. This step is to establish a national broadband network. At the moment broadband networks are owned by private companies and agencies.
A working group has been set up including representatives from state agencies that operate their own networks.
All use fibre optics and have excess capacity. The government is asking that this excess capacity be combined into a national broadband. The objective is to give access to all villages nationwide by the end of 2016 and all homes by 2017.
State agencies own about 200,000 kilometres of network while the private sector has about 100,000 kilometres. The plan is to use the excess capacity of state and private entities. A holding company might be set up to operate the national broadband.
The private sector, which has already expressed an interest, needs to place a value on their excess capacity and take shares in the company. They would be able to rent capacity on the national broadband.
The difficult part is how to lay the network since the government and private sector networks are all over the place.
Once a holding company is set up, the government will know how much additional investment is required. It can then call bids for construction and laying the network.
Data centre
The second part of moving towards a digital economy is setting up a national data centre. There are 112 government agencies that have their own data centres and the cost of combined maintenance is high.
The government has asked these agencies to stop expanding their data centres. If there is a need to expand, they should rent.
The plan is to build a new centre. Over the next two years efforts will be made to pool the data requirements of state agencies so as to calculate overall capacity needs.
The centre will be built with double the necessary capacity and could operate 24 hours a day.
Construction, maintenance and security will be of international standard. Sensitive information relating to national, military and financial security will not be stored at the centre.
Preliminary work on the centre started last month and the whole process is expected to be completed within 10 months.
Efforts are also under way to streamline requests for information and the issuing of licences and permits from government agencies.
An initial assessment showed there are over 60 types of licences and permits sought from various government agencies.
The objective is to streamline services in which an applicant only needs an identification card. Part of the plan includes a website which informs applicants of the various stages, steps and documentation required to apply for licences and the estimated time it would take for approval at each stage.
The difficulty is not in programming but in getting the government agencies to change their rules and regulations. It also requires government officials to change their mindset - to change the way they work and move away from paperwork. The Interior Ministry backs this initiative.
Current economic situation
The government realised in September last year, shortly after Prime Minister Gen Prayut took office, that it would have a tough time ahead. For the previous six months before the coup there was negative growth, with little state money injected into the economy.
In the third quarter of last year, the NCPO had failed to disburse much in the way of government funds. It had released about 100 billion baht, but another 300 billion baht was in the pipeline, which had yet to be released.
The NCPO was concerned about corruption and ordered reviews of some projects underway. The consequent delays resulted in low growth of 0.6%.
It was impossible to jump from such low growth to 4%. The government knew it had to speed up disbursement of funds, especially remaining funds from the 2014 budget. It also had to disburse funding from the current budget.
Waiting for the government process was not enough. What was needed was an immediate cash injection into the system.
There were two methods of cash injection - the first were funds available for the repair of schools and health centres with each project valued at one to two million baht.
The total amount was about 23 billion baht. Releasing these funds would create jobs and boost consumption.
The second was to help farmers. There were about 1.8 million farming families who had not benefited from the rice-pledging scheme.
There are about 3.6 million families who were to benefit from the scheme. An injection of funds was aimed at assisting the lowest income group in society, before the government disbursement of funds took effect.
On Sept 30, a proposal was made to give a cash injection to 2.9 million farming families. Although another estimated 500,000 families had yet to be surveyed or registered, it was estimated that by October the cash injection would be disbursed, and benefits felt by December 2014.
But during one cabinet meeting questions were raised about the official registry of farmers with some members arguing that landowners - not real farmers - would benefit from the cash injection.
The Interior Ministry was assigned to come up with a new list and this caused a delay. By the time the cash injection was disbursed it was December 2014 and early January this year.
Early in its administration the government took action against many illegal activities and implemented social order campaigns. This had an impact on the informal economy, which is hard to measure.
With regards to the 23 billion baht budget for small projects, problems occurred because contractors refused to bid, as the government's median prices were too low.
These prices have been reviewed and contracts signed between February and March this year.
The government is confident that growth will improve in the second quarter. It is disappointed in delays in improving the economy but there is no choice but to move forward.
Pichai Chuensuksawadi is Editor, Bangkok Post.