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Tea Leaves

The selling of 'Thailand 4.0'

Bangkok's generals hope next coup will be economic

French President Emmanuel Macron welcomes Thailand's Prime Minister Prayuth Chan-ocha at the Elysee Palace in Paris on June 25.   © Reuters

The sun was setting over the Gulf of Thailand one balmy evening when three buses filled with 70 foreigners pulled up outside a hotel in the glitzy beachside resort of Pattaya, 100 km southeast of Bangkok.

In a country that for decades has brilliantly marketed itself as one of the world's great tourism destinations and last year brought in 35 million visitors, the convoy and its multinational contingent hardly looked out of place. The visitors, though, were not tourists but members of the media from Asia and beyond, flown in at government expense to report on the Land of Smiles' ambitious efforts to rebrand itself as "Thailand 4.0" -- the self-proclaimed hub of Southeast Asia's fourth industrial revolution.

Just like countless other tourists, the visitors dined in one of the resort's better waterfront restaurants and the more daring ones later explored the racy nightlife. But the Pattaya stopover was merely a staging post for a highly choreographed six-day program to show off some of the country's most innovative companies -- from aerospace and robotics ventures to cancer-drug makers and floating solar farms.

To veteran observers of Thailand the whole exercise looked like a public relations extravaganza on steroids, especially given that the ruling junta, which seized power in a 2014 coup, doesn't exactly have a track record of delivering on its promises. Elections originally pledged for 2015, and now for February 2019, seem destined for further delay.

Even so, it has struck me lately that the generals may, just may, pull off an economic coup to follow their sadly repetitive military ones. Their ultimate goal is to turn a country with a per capita gross domestic product of $6,500 into a developed nation by 2037.

To explain my initial doubts: When the generals staged their coup, they succeeded in quelling political turmoil. But when it came to their enthusiastic vows to make Thailand more economically competitive, they appeared to be firing blanks.

There was much talk of exploiting Thailand's location at the crossroads of a region of 3.5 billion people that accounts for 32% of global GDP. Nebulous plans were floated for investing billions of dollars in high-speed railways connecting to China and Singapore.

While Thailand is Southeast Asia's second-largest economy after Indonesia, its competitive position has been declining. Economic growth has been overtaken by fast-rising neighbors. The Asian Development Bank has predicted that Vietnam, Cambodia, Myanmar, the Philippines and Laos will all expand by 6.8% to 7.1% in 2018, with Thailand lagging at just 4%.

Thailand is also facing intense competition for foreign direct investment. Its share of FDI in Southeast Asia has fallen from 14% in 2013 to below 6% last year, according to United Nations data. And some Western investors have cold-shouldered Thailand since the coup.

As I toured a showpiece project, the $51 billion Eastern Economic Corridor -- touted as the cradle of the junta's "new industrial revolution" ambitions -- my first reaction was that little had changed from a visit I made a year earlier. But my doubts began to lessen as I saw signs of progress. Thai Airways International for example in June finalized a joint venture with Airbus to develop the Vietnam War-era U Tapao military base into a regional aviation maintenance hub to compete with super-efficient Singapore.

In May, Thailand reported its economy unexpectedly grew an annual 4.8% in the first quarter in 2018 -- its best performance in five years. In June, Prime Minister Prayuth Chan-ocha, once shunned by Western leaders, received a warm welcome in Europe when he turned up in the role of supersalesman for his country.

Then came a reminder of the key role Thailand already plays in global supply chains when Toyota Motor's 10 millionth Thai-produced vehicle rolled off the production line. Shortly after came news that five major carmakers were investing more than 30 billion baht ($900 million) in Thai electric vehicle production. Today, Thailand is the world's 12th-largest automaker. It is also a leading international food supplier, thanks partly to home-grown global agribusiness Charoen Pokphand Group, which promotes itself as the "kitchen of the world" and operates a robotics-driven factory in the corridor.

Prayuth's government has now finally launched a bidding process for the public-private partnerships it hopes will finance the eye-watering cost of the corridor. First up will be a $7 billion, 220 km high-speed rail link connecting Bangkok's two major airports with U Tapao. The winning bid will be announced in December, with construction to start in January.

None of which is to say that Thailand's goal to become a developed nation by 2037 will remain on the rails, high-speed or otherwise. Its growth will probably still lag lower-cost neighbors and its population is rapidly aging. Still, Thailand markets itself better than most other countries. Its challenge now is to live up to the hype.

William Mellor is a Hong Kong-based writer.

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