Ministers,

Mr. Fred Lam, Executive Director, Hong Kong Development Council,

Excellencies,

Distinguished Guests,

Ladies and Gentlemen,

     It is my great pleasure to be in Hong Kong today and to address this distinguished gathering of leading business entrepreneurs, investors and what we consider “friends” of Thailand.  

     Though I have been here many times before, this is my first visit as Prime Minister of Thailand. Of course, I am very delighted to be back, because as an ordinary citizen, or prime minister of my country, I will always feel very much impressed by this wonderful city. To me its unique cultural heritage and impressive economic vibrancy demonstrate a perfect blend of the old traditions and the modern life-style in the era of globalization. 

     The purpose of me being here this time is very simple.  I am here to reaffirm our partnership and commitments in trade, investment and tourism, and all kinds of cooperation, and a strong relation that we have always enjoyed.  And despite the common challenges we face from the economic downturn and also challenges which may be unique in Thailand following the political turmoil not just in recent days but may be over the last two or three years,  my every intention is to make sure that Thailand is back in business, and I am here to reaffirm that. 

     I am sure you have seen from reports, particularly newspapers and may be on your television.  The last four months have not been easy for Thailand.  But I can tell you that from the very first day when I assumed office, I was very clear that this was going to be the case.  I knew that there were incredible challenges ahead of me when I assumed the office, but I knew also that the Thai people, the Thai society, will be strong enough, resilient enough, to see us through difficult times.  And from day one, one of my key priorities was to pursue reconciliation, having inherited the political landscape which is extremely divided, may be to the degree that has been unprecedented in the modern Thai political history.  But from day one also, my approach has been consistent.  The government has tried to avoid all forms of confrontation.  The government would not engage itself in sparking of new conflicts, and hope that eventually things would cool down.  If there were any errors that we have made in the first five months it was that we underestimated that some of our opponents were willing to use violence, unilateral violence, and to create chaos as witnessed by many of you, may be, on the television during last month, and actually first-hand by some of you here.  

     Since then, what I have done is to quickly move to restore order.  We had to declare the state of emergency during what is Easter for you and also Songkran for us.  And within the space of two days, we were able to restore order in the capital and protestors called off their protest; and we were able to resume normalcy, indeed even before the Songkran festival ended.  We had Bangkok people back on streets, this time splashing water with each other.  And once that was achieved, what I made clear was that this was not about scoring a political victory of any kind, but what I wanted to do was just to bring the end to the chaotic scene, and that was only my job to restore order and stability for the country.  So as the gesture to back that up, I immediately called for a special session of parliamentary debate on the events that took place prior to and during Songkran.  For two days we had the opposition and the senators to speak up their mind.  And at the end of that very session, I asked the President of the Parliament to set up two special committees – one that oversees all the events that had taken place, so that anybody who has doubts about the way we dealt with things, whether there was extensive force used, whether we had done anything illegal or unconstitutional, they can bring their cases up and they will be met with transparent response on the part of the government.  And that committee is now working on that very task.  The other committee that has been set up, which is equally if not more significant, has been tasked to look at the way ahead to find the political solution to what has essentially been a political problem.  That means the issue of constitutional amendments, political reforms or any other proposals for reconciliation are now being discussed, using the parliamentary mechanism, which involves not just Government MPs, Opposition MPs and also senators, but also bring in some outsiders from all sides.  And again this special committee is also at work to make sure that we do push through a process of reconciliation at a national level.  

     So, in that sense, it has been a long way from Songkran to the beginning of May.  Over the last couple of fortnights, if you turned to the streets of Bangkok it was completely normal.  And just last week, Thailand has proved once again our readiness to be a venue for international events.  We had a meeting of the ASEAN+3 health ministers held in Bangkok on 7 and 8 May, and I am delighted to say that the meeting went very well despite being organised at a short notice.  Again it is a proof of not just Thailand being normal and stable now, but also ready to carry on our commitments as Chair of ASEAN.  And the meeting itself again proves that ASEAN as a grouping was ready to be united to meet whatever challenges that come, in this case of course the problem of the new type of influenza.  And so, I am proud to say that the meeting went smoothly, without outside interference or disturbances, and surely has restored confidence and trust in the country of Thailand and the city of Bangkok.  

     But more significant than everything that I have just described to you is the fact that the last four months, while they have not been easy politically, have not distracted the government from what needs to be done on the economic front.  My other priority when I assumed the office was clearly to steer the country through these very difficult economic times.  And I am glad to say that despites all these difficulties all the plans that we have set out as far as the recovery and stimulus packages are concerned are on track and on time.  

     The way we approached these issues may be a little bit different from a number of countries, but not very much out of lines.  In a sense, for Thailand, like all Asian economies, the problems that we are facing are something that results directly from the financial crisis in the United States and European countries.  It is not a crisis of our making, and what we have learnt and what we have done since the previous financial crisis of 1997 has ensured that for Thailand our financial system was and remains in good health.  There was vey little direct impact as far as the financial side is concerned - ample liquidity, and the banks and financial institutions have more than enough capital to lend, even in the case of Thailand.  Actually, we work out that there should almost double than the lending without affecting their stability.  

     Of course, the problem comes from the fact that our economy is one of the most open.  That means, of course, when purchasing power drops in our key trading partners and countries, our exports are badly hit.  And we are looking at the figure for the first quarter of this year where export has been contracting around 20 percent.  Now I know there are similar numbers that you have seen here and may be a number of countries around the region.  

      We also see a drop of tourism of around 10-15 percent, again not much out of line with other countries, and in fact surprisingly, I think, less than the average comparing to the drop in global travel altogether. 

       So the approach that we have adopted in dealing with the crisis is by drawing an analogy.  I think of the way we have been affected by the economic crisis as having a building on fire, and so we take three steps.  The first is to make sure that the lives of the people that are affected by the fire.  Secondly, of course, we need to put out the fire as quickly as possible.   And thirdly, we look to redesign the building to make sure that we have stronger foundations and will protect us in the future.

        So, the first economic stimulus package that we put in was very much designed to protect the least fortunate and the poorest in the country, which has been focusing on farmers’ income and also those people who earn low income in industrial sector.  At the same time, making sure that those who are less fortunate, who have been laid-off during these times would get adequate training and can move either back to the country side or seek new jobs when the economy recovers.  At the same time, we take this opportunity to build a better social safety and protection for the most vulnerable group of people including the elderly and our children.  We now have a scheme of free basis education of 15 years, beginning actually yesterday when schools are open.  And also, the elderly have now been provided monthly income support, again beginning at the end of April.  

       Last week, a very important step has been taken and is in line with the second step that we need to do, which is to prop up domestic demand.  These programmes have one very desirable feature, which is that the money could be quickly dispersed.  So, in the space of three months, not only will we be able to implement by pushing through a supplementary budget through the parliament.  Now we have about 70 to 80 percent of that extra budget being dispersed directly to the people.  That is the way that we try to compensate for the loss of activities that stemmed from these global economy, which is of course export and tourism.  It is only the first of the two packages that we put in to make sure that there is sufficient fiscal and monetary stimulus to the economy. 

        And as we move to the second stage we also move to the third step of solving the problem, which is about redesigning or restructuring our economy.  Given the financial constraint or fiscal constraint as to how big a fiscal deficit we could run, we are now seeking loans, internal and external, to finance a very comprehensive programme of public investment over the next three years.  The first package which was designed to assist our people amounted to 3 billion USD, but the next package that we are now implementing will be 45 billion USD over the next three years.  And we focus on what we see as our fundamental strength of the economy.  First of all, we will enhance our potential as a gate and agricultural country, or at least as a country that exports food, and aims to be one of very significant producers of alternative fuel.  So there will be major investment in core distribution and also transport and communications.  Double track rails and a number of rural roads will be the key components of this package.  Secondly, we want to reduce our logistics costs.  And apart from the projects I have already mentioned the mass transit programme which will continue to be extended, as well as other infrastructure investment will be taking place over the next two or three years will reduce cost of our industrial sector.  At the same time, we are recognizing the potential that we have in the service sector.  I am sure many of you here are familiar, if not impressed, by the service-mindedness of Thai people and the quality of services we provide.  So investment in tourist industry will be diversified - not just sand, sun, beaches, but medical services, environmental tourism, eco-friendly tourism, and so on.  These are the programmes that we will invest to fully support, to take advantage when the global economy recovers.  These are the key components lead by the key programmes and, as I have said, they remain on track and on time despite all the political difficulties that we faced over the last four months. 

           But not only we do this at the country level, we recognise full well that we also have commitment as Chair of ASEAN. We held a successful 14th Summit of ASEAN countries in February in Cha-am and Hua Hin, and of course when October comes we will be hosting the 15th ASEAN Summit and the Summits with our key dialogue partners and also East Asia Summit.  I have been encouraged by the fact that we have been able to conserve unity during these difficult times, where all ASEAN countries agreed that we will continue to compare notes as to the various measures that we take economically so that our policy responses will be coordinated.  Significantly, we also commit ourselves not to turn to protectionism during these difficult times and remain committed to the idea of a free and fair trading system at the regional and global levels.  And thirdly, we also took some initiatives to show the way, may be for the rest of the world, that various regional groupings can come up with their own initiatives and schemes to respond to the crisis.  What began through the last financial crisis, known as the Chiang Mai Initiative – where there will be a programme or arrangement of reserve pool – has not been multilateralised and there has been an increase.  And I am pleased to say that Hong Kong has participated in this scheme. The details of this scheme have been finalised now and agreed upon, and should be in operation by the end of the year.  So I think as a friend, as a partner, and as a regional grouping, we have made substantial progress to prepare ourselves for the economic crisis and to make sure that we will remain a strong region when the global economy emerges from this very crisis.

       As far as Thailand and Hong Kong are concerned, we have enjoyed long and cordial bilateral relations.  And for many years Thai people have travelled to Hong Kong and vice versa. There have been some exchanges of high-level visits from both sides, notably the visit  of HRH Princess Sirindhorn in 1997 to Hong Kong and the visit of the then Chief Executive of Hong Kong to Thailand in 2003.  And after the handover of Hong Kong to China in 1997, we were one of the first countries that expressed confidence in the administration of Hong Kong Special Administrative Region under “one country two systems”.

       In terms of business relations, trade relations between Thailand and Hong Kong have become increasingly healthy, with average annual growth rate of approximately 18 percent.  And for the past three years, Hong Kong has been Thailand’s sixth largest trading partner.  I know that the number in the first quarter of this year is likely to be a disappointment for all of us, but I am sure that the last three years have shown a clear trend that there is a lot more that we can do.  And indeed, next month the senior officials will begin to discuss as to how we can intensify our economic relationship, especially in the area of trade and investment.

        At the same time, Hong Kong remains a significant investor in Thailand, the value of Hong Kong investment amounted to 5 billion baht in 2008.  And for the year 2008-2009 we have designated these years as “Thailand Investment Years”, where there are also special incentives and promotion schemes for investors in some key areas.   I am sure that many of you around the room who are familiar with Thailand, and have been friends and partners with us, can see for yourselves that there are plenty of opportunities lie ahead, whether in agricultural sector, which is now going to be improved by investment to make sure that there are productivity gains, to make sure that we continue to an exporter of food, while at the same time we gain significant share of alternative fuel; whether it is in a number of industries where you have a strong present - textiles, electronics, even financial services - and also new areas where we feel would be the future direction of Thailand lie in creative economy and also the growth of the service sector.  I can reassure you that all the policies that have been adopted by this government will be market friendly and business friendly.  We continue to believe that our success in the past has been based on this very approach where the private sector and market force are there lead and we are there to facilitate and support, and we will do whatever we can to overcome whatever obstacles that remain as far as investors, domestic and foreigner alike, are concerned.  And given the level of public investment that will be taking place over the next three years, there will be plenty of opportunities for public- private partnership also in these key investment projects.

       So, as I have said although it has been, to me, very long four or five months I think there is a lot of progress that I feel quite substantive during that time.  And of course I have no illusion that the task ahead of me or the Thai government is easy.  We know that there are tough challenges ahead both the global economic situation, which is not quite stabilized yet, and also political challenges where there are likely to continue to be some disagreements and divisions.  But I shall do my best to make sure that those differences will be resolved in the chambres of parliament rather than on the streets.  And I am sure many of you here will continue to engage with us and I very much look forward to welcoming many of you in Bangkok and the rest of Thailand.

    Thank you very much. 

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Government Spokesman Bureau

Foreign Relations Division