Why I pulled all my investments out of the Thai stock market

Why I pulled all my investments out of the Thai stock market


The technological factor

All of that is still true, but I would argue that there is an additional and critical driver of economic growth: technology. This was already the case in the 2000s, but the trend has accelerated since then, as technological advances became more powerful. It is also clear that the dominant owner of the technology is the United States (and China, but China has been less of an investor for various reasons). Meanwhile, traditional emerging markets are mostly stuck in “old economy” industries. It is therefore arguable that the new emerging market is not a Brazil, a South Africa or even an Indonesia (although India is proving to be an exception), but Nasdaq itself. After all, all of the world’s best tech companies harbor ambitions to list on Nasdaq, not their local stock markets.

Not being strong in technology is not the only reason Thailand has grown more slowly. We are suffering from the disappearance of what used to be our competitive advantages. We are a labor-deficient country, and we have been for some years. This situation will continue to worsen given our increasingly low birth rates. In 2023, only 6.6 Thais were born per 1,000 inhabitants (compared to 22 in the Philippines!), while the mortality rate was 9/1,000. The dependency ratio is falling surprisingly fast, to 2:1, from around 10:1 just a few decades ago.

The implications of this are enormous, in terms of economic growth, tax revenues, social spending, land prices and overall quality of life.

Population challenge

Addressing this challenge will require multiple approaches, which will necessarily include huge improvements in education and measures to increase personal savings. Furthermore, given our dwindling domestic purchasing power, it would make sense to open up more to outside purchasing power. We need to rethink the numerous restrictions on the rights of foreigners to invest in businesses, buy property or simply move here. We need to make a serious effort to address the fact that we still have one of the highest proportions of “grey economies” relative to official GDP compared to all countries in the world.

Unfortunately, demographics are not the only deteriorating factor affecting our economic prospects. I would like to raise one more: the question of what is commonly called “state capture.” The definition of this is a State whose policies are “captured by private individuals representing the interests of private corporations.” This is arguably happening all over the world, but in Thailand our weak political culture has become increasingly transactional. Political parties and therefore governments have become increasingly dependent on financial support from corporations.

The politics of policies

In the most recent elections, politicians will tell you privately that more voters demanded more money for their votes. One important reason is the voting system, modified by Parliament before the election, which effectively allowed voters to “sell” their constituency’s votes while retaining the option of voting for the party of their choice.

Partly as a result of this, politics has become increasingly transactional between the party and its MPs. A totally depressing culture has developed where MPs demand payment for voting to support their own parties on important issues, including motions of no confidence.

This has meant that many political parties are increasingly dependent on their financial backers. This is bad news.

Evidence of “state capture” can be seen in competition-reducing mergers, concession modifications, and goodwill agreements. The loser is invariably the consumer, and lack of fair play leads to lack of investment in our economy.

The effect of this is that large corporations become even larger and more difficult to compete with. Tellingly, our top companies are the same ones that topped the list 20 years ago, and many are state-granted monopolies, whether private or state-owned.

This is in stark contrast to the US, where over the past 20 years almost 100% of companies have been listed as the most valuable companies. In fact, some of today’s biggest companies didn’t even exist 20 years ago. This is testament to an economic system that allows innovation and entrepreneurship to rise to the top. This is much less true today in Thailand than it was 30 years ago.

“State capture” is also a reason why we do not see serious policies that can make a difference in our future. Our Prime Minister is working hard but it’s like he’s running on a treadmill, sweating buckets just to stay still. We need to turn off the treadmill, only then we can move forward.

This can certainly happen and I already see some evidence of potential changes across the younger generation, both in politics and business.


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