Thailand should develop closer economic links with booming Asian economies like China and India to emerge as a competitive regional player, the central bank chief said Wednesday.
The Bank of Thailand's governor Pridiyathorn Devakula credited solid economic fundamentals for helping the country weather challenges brought by high oil prices and shaken investor confidence after months of political turmoil.
But Thailand faces a greater threat from rapid economic growth in China and India, he said.
"China and India have cheap human resources and huge domestic markets which make them key rivals of Thailand in terms of attracting trade and investment," Pridiyathorn told reporters.
Unless Thailand finds new ways to compete, the country could "lose and be left behind" in the global economy, he said.
"That would be regrettable for Thailand, which in my personal view has the capability to develop and stay in the same league as Singapore and South Korea, if we find ways to substantially benefit from economic changes in the Asian region," he said.
Half of foreign direct investment in Asia in 2004 went to China and India, while the balance was split among the rest of the region, according to the bank's research.
Pridiyathorn said Thailand's economy has been hurt by declining private investments amid months of political uncertainty.
"Once Thai politics is stable again, private investment will resume to help drive the economy," he said.
In the first half of the year, applications from both foreign and domestic businesses for new investments dropped by 53 percent, according to government figures.
Nevertheless, Pridiyathorn said Thailand could have "satisfactory economic growths" of around 4.0-5.0 percent this year and 4.0-5.3 percent in 2007, as strong exports help relieve the impact of oil imports.
"We have international reserves of almost six billion dollars, which is three times higher than the country's short-term debts. Non-performing loans have decreased on target while household debt is not worrisome," he said.All rights reserved. © 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.