Thailand remains vulnerable, despite push for FTAs

As Thailand pursues more free trade agreements (FTAs) with other nations, Trinh Nguyen, an economist at Natixis, said that the country remains vulnerable, as regionalisation is not a realistic solution.

Speaking at a recent seminar in Singapore, Nguyen noted that Thailand’s efforts to secure an FTA with the European Union may be beneficial, but FTAs alone will not shield the country from growing economic volatility.

“Eventually, Thailand is going to export final products instead of intermediate goods. Regionalisation helps by reducing frictions, but fundamentally, there are limits,” she explained.

Thailand has, however, benefited from capable technocrats who have helped stabilise the country, despite prolonged political instability, according to Nguyen.

“Some people think Thailand is a basket case, but it’s actually done better than many emerging markets. The Ministry of Finance, the central bank, they still function. The airport still works,” she said.

Trinh Nguyen, Senior Economist at Natixis

Meanwhile, Nguyen warned that Thailand’s heavy reliance on tourism remains a key vulnerability, stressing the need for greater economic diversification.

“Tourism alone is too fragile a foundation for economic growth. You can have a beautiful place and a functioning airport, but if people come and just take pictures without spending, it doesn’t help,” she said.

Despite Thailand aiming to boost intra-ASEAN trade, Nguyen argued that the ten-country bloc lacks genuine regional integration.

“There’s no ASEAN dream. It’s a made-up acronym. We don’t have a deeper vision of integration, unlike the European Union, which was built on a shared ideological and economic foundation. Each ASEAN country prioritises sovereignty and self-interest. The purpose of ASEAN wasn’t deep integration, but it was to protect sovereignty. That hasn’t changed,” Nguyen said.

“The strategy must be pragmatic, not idealistic,” she concluded.

By Franc Han Shih, Thai PBS World