The Thai Economy
By David Henderson
Earlier this month, I returned from a 10-day trip to Thailand. Here are some impressions of the Thai economy: “street-level” impressions, not impressions based on looking at aggregate data. Also, I didn’t make it to Bangkok, spending the whole time in Chiang Mai and its environs. So take the following with any dose of salt that you care to add.
1. The “work ethic” is strong there. Of course, there’s selection bias. The people I observed working were–working. But here’s what I mean. People, whether waiters, masseuses, drivers of Song Tows or Tuk-Tuks were always hustling. They were trying to please the customers and did so with a smile. Also, when we went to a cooking class and, at the end, told the lady who taught us that we had a particular Muay Thai boxing match we wanted to go to later that night, she told us she could get the tickets for us. She made it clear that we wouldn’t get a discount from her but we would pay the same as at the door. My daughter’s boyfriend explained to me that “everyone’s a Ticketmaster.”
2. For reason #1, I could imagine a lot of those people thriving in the U.S. economy and making our lives better here.
3. The transportation system is highly efficient. The Song Tows get you from point A to B for, typically, 20 baht, which is about 67 cents. You hail a Song Tow by holding out your hand, he stops and you tell him where you want to go, he quickly assesses whether that works in light of the commitments he’s made to his current passengers, and, if he says yes (he typically did), you get in the back on one of two parallel benches facing each other. With the Tuk-Tuk, essentially a motorized tricycle, you are the only passengers. You tell the driver your destination and the price is typically 150 baht or $5. You can fit 3 passengers, or, in a pinch, 4 passengers in one Tuk-Tuk.
If our local governments allowed such transportation, some people, especially young people, would probably do without cars.
The other major form of transportation there is scooters. You will often see whole families–two parents and two small children–on a scooter. Again, very efficient. (Early in my time there, I looked out my daughter’s apartment window onto a busy street and saw a huge number of scooters at a stop light that had made their way to the front of the cars. That’s typical. For a second, I hallucinated that an Asian motorcycle gang had come to town with particularly underpowered motorcycles.) We wouldn’t see that here, not just because of laws, but mainly because of our huge wealth. People here can afford cars for roughly the same percent of income that they pay for scooters.
4. The Thai immigration laws are screwy. You can stay in the country on a certain visa for 90 days and then you must leave the country to renew. Of course, a market response to this regulation has happened: you can pay a relatively small amount to get a bus to Burma. You get on the bus and take about a four-hour ride, it drops you off at the border, you pay the Burmese official a small amount of money to get into Burma (you walk across), you turn your documents over to the Thai official, you wait around at an outdoor market, and then, typically within an hour, you have your papers and are on the bus back to Chiang Mai. Of course, my economist’s brain came up with a more-efficient alternative: let people pay a fee somewhat higher than the price of the bus fare plus fee to the Burma government plus half of people’s time value and people, to save time, would pay it to renew. All that wasted transportation and wasted time is saved, plus governments get additional revenue. But governments are governments. Who in the government has the incentive to implement that reform?
Even retirees don’t have secure rights to stay. I talked to an older Australian who had moved to Thailand a year earlier. He kept the minimum amount he needed in a Thai bank (under $30,000) to get a visa for a year. But the law made it clear that when he went to renew the next year, he would have no assurance of being renewed even if he had kept that minimum amount in the bank.
5. The Thai investment laws are holding the economy back. I can’t legally buy a house in Thailand or buy or start a business in Thailand. If I want to, I must find a Thai partner who will own a majority share. Think of the unseen: the businesses that would have started and grown and made the Thai economy more prosperous that will not start because of that regulation.