Your Thailand vacation will keep on getting more expensive
Definitely for so many of us from the eastern part of the country, and certainly for so many of us countrymen, Thailand may well be our 30th state. And with the Thai government making entry into the country even easier (read no visa required) we would not be very wrong in thinking so. The nearest substantial holiday, and chic shopping destination from Kolkata is Bangkok â€“ its just a bit under 2 hours and that makes it much closer than Mumbai, Chennai or Delhi. The closest sea beach and golf resort options, major aqua sport and recreation centres are all there. Add to that hotel prices that are too good to miss, food to die for and a â€œforeign stampâ€ on the passport makes it a compelling destination for not only Indians but also for so many all over the world.
Even though the tiny country is an economic minnow (or is it?) compared to its neighbor to the east (India), how is it that their currency, the Thai Bhat (THB) has gained upon the Indian Rupee (INR)??
In 1998, on my first visit to Thailand, I remember having paid less than a rupee to get a THB but today I pay nearly 2.5 times. This amounts to a simple depreciation rate of 7.5% per annum over the two decades in question. This is a huge markdown for the rupee against a currency of a country whose GDP is nearly a sixth of us at just about 500 billion odd USD.
But thatâ€™s about the only thing that India beats Thailand at.
India over the years have remained an economically inward looking country, focusing on our consumption. If we are to disregard tech and pharma from the equation we hardly have any exports to talk of. But each of the Asian tigers have relied upon cheap labour, fantastic infrastructure and can-do spirit to make themselves export houses. Thailand, a 500 billion economy gets to earn 300 billion of it from exports. Compare that to Indiaâ€™s 2.7 Trillion USD economy that sells just a fifth of its
produce and services abroad. Not only that. India imports a lot more compared to its exports versus Thailand, which sees its exports consistently higher than its imports.
This leads to a major positive for the Thai economy. For a country that small in size and population manages to get a positive Current account balance. Simply put, it generates money to lend to the world whereas India continues to be a negative Current Account Balance economy, leading to it being a net borrower from the world. As we borrow more, in USD, THE VALUE OF OUR CURRENCY GETS DIMINISHED.
Actually, Thailandâ€™s strength is in keeping their exports and imports in balance and making their country a magnet for tourists. Just imagine a country of 70 million has nearly the size of their population pass through their main airport at Suvarnabhumi every year with minimum fuss and a great lot of comfort.
This phenomenon of Thailand becoming the manufacturing hub and a tourist magnet sees its population very gainfully employed. Compared to unemployment stats of a little less than 6 %( up from 4.5%) over 5 years in India, the Thai unemployment stats has remained largely in the 0.5% range over the last half decade. Thailand is a huge hub for auto, fabrics and clothing and low level engineering. Plus the tourism magnet. The huge tourism sectors â€“ hospitality, retail, restaurants, airports, money exchanges and multiple allied services â€“ provides employment to a huge chunk of their population. And to provide, the icing on the cake, Thailand is a hugely popular medical tourism destination for people from all over the world. On the basis of important quality of life evaluation metrics. Thailand has left India far behind and continues to develop rapidly.
The gaps for India is quite easy to lay out. Low exports coupled with high imports. Deplorable infrastructure. Low utilization of obvious strength areas, and ease of doing business (read, lack of it) are obvious hindrances that are impeding us from cutting the gap.
To summarize, if you are planning to retire in the sylvan surroundings of Hua Hin, enjoy the sun sand and great food for the next few years, make sure you keep on buying and storing the THB. But, as far as investment options are concerned, Indian stock markets have lorded it over the Thai indices.