The sufficiency economy philosophy

Thailand has designed an economic theory of development envisioned by the late King Bhumibol Adulyadej to modernize the country

Thailand is one of the countries that has benefited most from economic development since the 1990s, but the foundations of this development can also be traced back to the Sufficiency Economy Philosophy (SEP) conceived by King Bhumibol Adulyadej. Over the past three decades, the king has always spurred his people towards a gradual and balanced approach to development, that is, towards an economy of sufficiency that could guarantee basic needs for everyone without blindly pursuing economic growth as an end in itself. After the 1997 economic crisis, the king revised the SEP, to be interpreted also as a path through which to guarantee economic recovery and build a more resilient and sustainable development, able to face the challenges deriving from globalization. In 1999, the National Economic and Social Development Board gave the following definition of SEP: National Economic and Social Development Board ha dato la seguente definizione della SEP: 

"Sufficiency Economy" is a philosophy that stresses the middle path as an overriding principle for appropriate conduct by the populace at all levels. This applies to conduct starting from the level of the families, communities, as well as the level of a nation in development and administration to modernize in line with the forces of globalization… Sufficiency means moderation, reasonableness, and the need for a self-immunity mechanism for sufficient protection from impact arising from internal and external changes… In addition, a way of life-based on patience, perseverance, diligence, wisdom and prudence is indispensable to create balance and be able to cope appropriately with critical challenges arising from extensive and rapid socioeconomic, environmental, and cultural changes in the world.

SEP is a guiding principle to be applied at all levels, from the single individual to relations between states and the natural world. In the long run, it aims to build a socially balanced Thailand capable of responding to rapid and extensive changes in society, in the environment and in culture due to globalization. To achieve this result, SEP implies acting with moderation and reasonableness, seeking knowledge and morality in proposing and implementing development projects.

The most practical example of SEP implementation is in the proper management of land and water resources. This new approach to agriculture is commonly known in Thailand as New Theory Agriculture, which is based precisely on sustainable agriculture that guarantees self-sufficiency for rural families and a life in harmony with nature. The New Theory is divided into three phases: 1) sufficiency at the family level, 2) sufficiency at the community level, 3) sufficiency at the national level. In practice, it is a matter of guaranteeing access to food and increasing the income of rural families; increasing cooperation between farmers within the community and the creation of a social safety net within it; finally, reaching national sufficiency thanks to corporate social responsibility towards rural communities and the support of the public sector which facilitates trust between rural actors through institutional agreements.

In 2003, the NESDB launched a movement in favour of SEP to make it better known within and outside the country. Authorities hope that a better understanding of the concept among people will lead to a wider recognition of SEP, its greater application on a larger scale and potentially even its possible expansion outside the country. The movement also plans to create a network to facilitate understanding about SEP in all sectors and at all levels of society. It is composed of four distinct implementation programs: 1) development and coordination of the learning network, 2) creation of new knowledge through study and research, 3) production of new curricula and review of the learning process, 4) dissemination of information and knowledge to the public.

The purpose of establishing this propaganda movement in favour of SEP is to allow Thailand to pursue balanced and sustainable development in the globalized world. The promoters are aware that the theory will help build and develop solid foundations for society and improve the ability to adapt to any internal or external change and shock. Ultimately, the ultimate goal is to achieve the welfare of the Thai people as a whole.

Lack of tourism in Thailand causes baht depreciation

Public intervention does not seem to be enough to rescue the national economy from the pandemic

“A perfect storm is engulfing Thailand’s baht and the one group of people who can save it are stuck in lockdown, thousands of kilometers from the arrivals lounges of Bangkok, Phuket and Chiang Mai.” A un articolo di Bloomberg article opens in these terms, noticing how the absence of tourists in Thailand translated into a depreciation of the national currency. Indeed according to the author, baht is currently the worst performing currency in Asian emerging markets. Several factors contributed to this decline: deficit in the balance of payments, the contextual increase of the dollar and the seasonal repatriation of dividends by Japanese investors. But the dire outlook on tourism is the real weak link in the national recovery.

In general, emerging economies of Southeast Asia are deeply embedded in the webs of globalization, which is why the consequences of the Covid-19 crisis were quickly transmitted from one country to another. The entire region based its economic growth on exports, attraction of foreign direct investments and global value chains - hardly hit by the pandemic. The contraction in global trade has strongly affected the economic stability of these countries, even though ASEAN maintained positive growth rates in 2020. In short, the picture is not the brightest: a series of systemic contributing causes afflict the region.

As argued by Victoria Kwakwa, Vice President of the World Bank for East Asia and the Pacific, political and health performances of ASEAN countries are commendable, but this is not enough for countries that heavily rely on the one sector that cannot be digitized: tourism.

ASEAN has pledged to do everything in its power to remedy the situation. It promoted the Development Framework, the 2020-2030 Work Plan and the White Paper for the implementation of intra-regional and international tourism. But in 2019 in Thailand tourism-driven services contributed to the 62% balance of payments surplus, and the situation has dramatically worsened since then. The current account deficit recorded in the first quarter of 2021 overwhelmed the Thai baht, which fell by 3% in March. According to economist Prakash Sakpal, an Asia’s expert, the current deficit of $ 1.7 billion in the first two months of 2021 compared with the surplus of $ 8.8 billion in the same months of 2020 clearly describes the situation. The Bank of Thailand hoped that a depreciation could have revived the economy, making Thai exports more competitive and favoring tourism. However, while most ASEAN countries have experienced a vigorous recovery in exports since mid-2020, Thailand has maintained a negative trend, declining 1.2% year-on-year in February last year.

According to Forbes, the country hopes that easing restrictions on intra-regional tourism will encourage people to travel more. The Center for Economic Situation Administration is considering welcoming vaccinated visitors without quarantining them for some destinations, starting in July 2021. However, different variants of Covid-19 could further slow the recovery of tourism, and perhaps the recovery for the whole country will be slower than expected. A rapid distribution of vaccines is crucial in this sense, especially with regard to international tourism - which is why the slowness of Europe, the third country of origin of tourists visiting Thailand after East Asia and Southeast Asia, does not bode well.

Off on the Phad Thai foot

Southeast Asia is increasingly establishing itself in Italy and Europe thanks to its rich culinary offer.

“Don't eat anything your great-great grandmother wouldn't recognize as food” said the American writer Michael Pollan. Who better than Italians, always ready to criticize any foreign dish, to agree? And yet, in the latest years Southeast Asian cuisine is overcoming geographical boundaries and winning over even the most sceptical hearts. Not only are countless Thai and Vietnamese restaurants opening all around Italy, but even new TV series are being made to portray the scents, taste, and colours of Asian dishes. But which are the most popular in Europe and Italy today, that even your great-great grandmother would be fond of?

One could fill lots of book trying to illustrate the richness and variety of ingredients in Vietnamese cuisine, and it still wouldn’t be enough. When France colonised Vietnam and its neighbours in 1887, it formed the Indochinese Union and heavily influenced this region’s cuisine. But before that, the culinary heritage of Vietnam was influenced by China, which provided a fundamental contribution to the birth of Vietnamese popular dishes. Wontons, wheat noodles, chili peppers and corn can be found in both countries’ culinary heritage. When the French arrived, the ingredients list expanded to include potatoes, asparagus, onions, coffee, and many others. And today, two of the most beloved typical Vietnamese dishes both by locals and Europeans are the outcome of French influence!

The first one is Bánh mì, a delicious baguette-shaped bread made with rice flour instead of wheat flour. Fillings can be very fancy, but the most cherished one is a combination of grilled meat, coriander, pickled vegetables and sauces. The second dish is the world-renowned Pho: a soup of Vietnamese rice noodles and meat broths. It is common belief that the word Pho (pronounced fuh) derives from the French pot au feu (stew). The presence of beef meat, rarely seen in other typical Asian dishes, is further evidence of the influence left by the French colonisation.

As far as Thai cuisine is concerned, the birth of new Thai restaurants everywhere in Italy (not only in Rome and Milan) is a clear sign of its increasing success. Besides the classic Phad Thai (stir-fried rice noodles with vegetables, eggs, roasted peanuts, fish sauce, tamarind juice, garlic, chilli pepper, lime and palm sugar), there are many more creative combinations of flavours that are winning hearts in the West to the extent that Thai Massaman curry, the “king of curry”, was awarded first place in the CNN’s “The world's 50 best foods” list. The reason? “Even the packet sauce you buy from the supermarket can make the most delinquent of cooks look like a Michelin potential”.

While it is still hard to find Indonesian or Singaporean restaurants in Italy, the interest toward Southeast Asian countries’ cuisine seems to be a fast-growing trend. Suffice it to say that many other dishes in the aforementioned list come from ASEAN countries. Even Netflix, the media giant always very careful about its viewers’ needs, own two series that frequently portrait the cuisine in Bali, Yogyakarta, Cebu, and other Southeast Asian locations: Street Food Asia and Chef’s Table.

All encouraging signs that show once again the increasing interest in ASEAN countries’ history, traditions, and rich culinary offer in Europe and worldwide.

By Valentina Beomonte Zobel

The Reasons for Thai Resilience

Diplomatic acumen and economic choices will determine Thailand's ability to continue its development story

Even in an exceptionally diverse context such as Southeast Asia, Thailand still stands out for several reasons. First, "the Land of the Free" - the actual meaning of Thai Land - is the only ASEAN country which never fell under the colonial yoke of the West. Second, the extraordinary complexity of Thai culture is held in high regard by Western tourists and Asian powers alike. Finally, thanks to a favorable geography and a shared history, Thailand can make a great contribution to bridging the gap between China and India and finding a common ground among the often-squabbling ASEAN countries.

The figures of the economy have certainly contributed to creating the myth of Thai exceptionalism: GDP grew on average by 7.5% per year through the period 1960-1996, making Thailand one of the greatest success stories of international development. A smart policy mix of incentives and investments have persuaded numerous car manufacturers to move their production plants to the country, transforming Bangkok into the "Detroit of Asia". The rapid growth of the average income enabled Thailand to join the middle-high income country club in 2011. A few years later, the government drafted the Thailand 4.0 masterplan, betting on smart cities and the Internet of Things to avoid the "middle income trap".

In fact, over the last two decades, Thailand's GDP slowed down, following the ups and downs of global trade, while the country was facing the return of poverty and a threatening growth of inequalities. The Covid-19 pandemic has exposed the structural weaknesses of the Thai economy and its excessive dependence on external demand. The unexpected yet inevitable shutdowns of national borders, for instance, caused the collapse of the tourism industry, worth about 15% of Thai GDP, putting 2.5 million jobs at risk. The Bank of Thailand has projected an 8.1% decrease of the GDP in 2020: the lowest point after the 1997-1998 Asian financial crisis.

The compounded economic and health crisis found the cabinet of Prayuth Chan-o-cha already confronted with the thousands of Thai students who have taken to the streets since February to protest against the government of the former-general-who-became-Prime-Minister. The protests have been characterized by an explicit criticism of the King Maha Vajiralongkorn, a rather unusual occurrence in a country where those who breach the strict lese-majesty law face up to 15 years of prison. In general, however, the protests are a dramatic manifestation of the enduring tension between the progressive quest of the working classes and the youth and the more conservative stances of the military and political elites.

Thailand enjoys a relatively young population (about 1/3 is under 25 years old), fairly good infrastructure (constantly expanding), and a rather beneficial geographical position, right in the centre of the Beijing-Delhi-Jakarta triangle. Such "Optimal general features,” together with the traditional resilience of the main economic indicators and a few significant socio-economic trends, as the presence of a robust urban middle class, help explain the renewed interest of investors in the Thai market. The recent economic choices of the government, which seems to reflect a changing attitude towards internal consumption and expansionary fiscal policies, may open a new window of opportunity for Italian companies exporting industrial machinery and consumer goods to Thailand.

As a matter of fact, the full recovery of the Thai economy will depend on the ability of the government to leverage the distinctive strengths of the country which Kishore Mahbubani, former Singaporean top diplomat and keen observer of regional affairs, singles out in 'The ASEAN Miracle.' Its unique national sentiment, a mindful use of soft power and well-demonstrated mediation skills will prove essential for Thailand to overcome the difficult economic and social contingency and enable the country to carry on its history of growth and development.

By Francesco Brusaporco

Thailand's response to the Covid-19 crisis

Thailand's response to the Covid-19 crisis Thailand has effectively addressed the economic and health consequences of the coronavirus pandemic standing out as a model for all.

On July 9th, the Italy-ASEAN Association organized a webinar on Thailand and its response to the crisis caused by Covid-19 with the President of the Italy-ASEAN Association, Enrico Letta, the Ambassador of Thailand in Italy, Chirdchu Raktabutr, the Ambassador of Italy to Thailand, Lorenzo Galanti, the President of the Foreign Affairs Commission of the Thai Senate, Pikulkaew Krairiksh, the Thai Minister for Social Development and Human Security, Chuti Krairiksh and Ducati's CEO, Claudio Domenicali. The meeting was moderated by the Vice-President of the Italy-ASEAN Association and former Ambassador of Italy to Thailand Michelangelo Pipan.

Although Thailand was the first country after China to confirm a Covid-19 case on its territory in early January, the management of the coronavirus pandemic by Thai authorities has since then emerged as one of the greatest success stories in South-East Asia and beyond. At the moment, in fact, Thailand is only the 99th most hard-hit country in the world, with an extremely low total number of cases, at about 3200 units as opposed to a population of over 70 million inhabitants, and a proportion of deaths in relation to the overall population among the lowest in the world. These enviable epidemiological outcomes are the result of effective governmental action, which imposed restrictive measures in a timely fashion, but are also a by-product of the incredible social discipline of Thai citizens.

On the economic front, Thailand has greatly suffered from the collapse of international trade and international tourism, both of which are key sectors for the economy of the Kingdom. The most recent estimates from the Thai Central Bank and from the World Bank project a GDP contraction between 5 and 8 percentage points in 2020 and a partial recovery between 4% and 5% in 2021. The Thai government has thus responded to the grave economic crisis by launching a 64 billion US dollars stimulus package, amounting to 16% of the country's GDP, designed to assist families, businesses and local development projects in the area. In spite of the inevitable economic devastation caused by the coronavirus pandemic, thanks to the financial solidity of the Kingdom, which can count on a 44% debt-to-GDP ratio, the Thai government is confident it can control the damage and get the economy back on its feet in a relatively short time. 

The evolution of the Covid-19 crisis in Thailand has shown a certain resilience of the country to external shocks. On both the economic and health front, Thailand has shown great resistance and flexibility in its response to the pandemic. However, the current goal of the Thai government in the medium-term is to carry out a cautious reopening to international trade and tourism, while at the same time seeking to reduce its excessive dependence on external factors. The government has shown intention to pursue a political strategy based on the notion of "immunity", combining health security, economic resilience and preparation for external crises. The Thai government thus intends to strengthen its economic self-reliance, in an attempt to limit excessive exposure to international upheavals, while maintaining a high degree of openness of the national market to foreign trade and tourism.

Thailand has proven itself to be a resilient country in its approach to the coronavirus pandemic, doing everything possible to limit the economic and health consequences of the Covid-19 crisis. The challenge for the Kingdom in the coming years will be to further increase its resilience to external shocks in the event of new crises of analogous seriousness.  

Article edited by Andrea Dugo.

La Deutsche Bank in Thailandia

Nel 1978 la prima filiale e da allora un continuo espandersi in tutto il Paese

Il 16 aprile 2020, la Deutsche Bank, nell’ambito di un programma di modernizzazione dei pagamenti guidato dal governo della Thailandia e volto a sostenere l’inclusione finanziaria e l’introduzione dei pagamenti elettronici, ha lanciato il servizio di pagamenti istantanei “PromptPay”. Tale piattaforma, utilizzando un numero di conto o un proxy-id (numero identificativo dell’imposta sulle società), consente di ricevere pagamenti e rimborsi delle imposte sul reddito direttamente dal Dipartimento delle Entrate, senza alcun costo aggiuntivo.

Questa innovativa modalità di pagamento, già introdotta in ASEAN con le piattaforme “Fast” a Singapore e “DuitNow” in Malesia – come osservato da Burkhard Ziegenhorn, responsabile ASEAN del settore Corporate Bank di Deutsche Bank – accrescerà l’efficienza e la velocità dei pagamenti per le aziende nazionali, agevolandole nella sostituzione graduale delle tradizionali transazioni commerciali. Infatti, da un recente report di DB sull’argomento risulta che l’Asia è più propensa all’abbandono di carte di credito e contanti in favore dei pagamenti online ritenuti più sicuri ed affidabili; propensione che l’Istituto tedesco intende assecondare e valorizzare nel continente. Del resto, sin dal 1870, anno della sua fondazione, la Deutsche Bank ha sempre avuto l’ambizione di divenire una banca dal respiro internazionale. Tanto è vero che già nel 1872 vennero aperte le prime due filiali a Shangai e Yokohama e nel 1906, con il nome di Deutsche-Asiatische Bank, la prima filiale di Singapore. Alla fine degli anni’70 la Banca di Francoforte sul Meno approda anche in Thailandia; più precisamente, l’8 settembre 1978, l’Istituto tedesco inaugura la sua prima sede nella capitale Bangkok, operando sotto il nome di Banca Asiatica Europea. Solo pochi anni prima, infatti, la Deutsche-Asiatische Bank e le sue filiali erano state accorpate nella neonata Banca Asiatica Europea (Eurasbank), che diverrà nel 1986 Deutsche Bank (Asia).I primi tentativi e colloqui esplorativi per aprire filiali in Thailandia risalgono al 1960, tuttavia solo nel 1977 il ministro delle finanze thailandese concederà la licenza per l’apertura di una filiale a Bangkok, chiedendo però che fosse consentito alla Thai Farmers Bank di aprire una sede ad Amburgo. Il 3 luglio 1978 l’allora Eurasbank ottenne la licenza e poche settimane dopo iniziò ad operare in un ufficio nel centro della Capitale. Dall’epoca la Deutsche Bank non ha smesso di crescere, aumentando costantemente il numero di filiali e di dipendenti nel Paese e in generale in tutta la regione ASEAN, consapevole delle potenzialità e delle possibilità di espansione in una delle aree economicamente più vivaci del pianeta. Non a caso il 21 ottobre 2019 Pimolpa Suntichok, da poco Chief Country Officer della Deutsche Bank per la Thailandia, dichiarava al Bangkok Post la forte volontà del gruppo bancario di aumentare la quota di clienti locali, considerando la Thailandia tra le economie più importanti dell’area ASEAN.

La strategia dell’Istituto bancario nel Paese, infatti, si sviluppa secondo due direttrici principali: supportare i clienti europei interessati a sfruttare le catene locali di produzione, soprattutto nel settore automobilistico, e agevolare il commercio verso l’estero delle società thailandesi. Nel 2019 la politica di sviluppo delineata dalla Deutsche Bank ha generato in Thailandia una crescita a due cifre del suo volume d’affari e i suoi profitti sono cresciuti del 50% rispetto al 2018.


Articolo a Cura di Alessio Piazza.