The inauguration of Mr. Joe Biden to become the 46th President of the United States went by successfully after the riot incident that disrupted the general assembly of congress to approve the resolution to make Joe Biden the new President. As a result, the world is focused on and prepared for future situations, especially economic policies and international relations policies where the previous president, Donald Trump had opted to adopt the “America First” principle. Donald Trump believed that the USA had been taken advantage of by allied nations, and therefore implemented policies to counteract them, such as in the Middle East where allied nations will have to help pay for the maintenance of the support military, and the policy that created the most buzz was the tariffs imposed on goods from countries which traded with the US and led the US to a deficit like China, Korea, India, and other countries around the world. Even American companies that invested in foreign countries were also having higher taxes collected to pressure them to move the production base back to their country. Thailand is also no exception, as the country has also been affected by these policies.
A glance at Joe Biden’s policies prior to becoming to the leader of the United States
There will be an additional taxation for the high-income earners to be invested in the public system.
- This tax will be collected from individuals earning more than $ 400,000 per year.
- Increased minimum wage from $ 7.25 / hour to $ 15 / hour.
- Returning the US to the Paris Treaty to cooperate with climate change and its reinstatement of the World Health Organization.
- Entering the United States into the membership or treaties with several organizations that Donald Trump had canceled and withdrawn from.
All three topics are considered to have a tremendous impact on the world economy, whether it is in the production sector, import–export, or the capital that will flow into Thailand and the ASEAN region.
The impact of US policies on Thailand
From the mentioned policies, it is considered that there are both advantages and disadvantages where Thailand and the private sector who are trading partners of the United States will have to improve to avoid any problems that may occur such as the disqualification of GSP or the pressure of raising taxes on human rights law, which is divided into each business as follows:
- Businesses that receive positive impacts
Businesses that are expected to benefit from Joe Biden’s policy are the manufacturing and investment sector. The minimum wage hike policy of up to 100% will increase the cost of US production. As the previous wage rate at $ 7.25 an hour has been doubled to $ 15 an hour, many businesses are expected to step back and investigate a new investment location where the labor cost is lower, but well equipped with manufacturing technology and raw materials used in the production. Among the developing countries that are targeted by foreign investors like the US are the developing countries in the ASEAN region. Thailand is also working on improvements and reforms in rail and transportation, as well as the development of industrial estates such as the EEC, among others, as well as providing many other tax privileges for foreign investors to invest in the area.
Once the United States becomes a member of the Paris Treaty, what will follow will be the production of electric cars or EV cars, with many automakers coming to terms with stopping gas-fueled car production and turning to producing more EV cars. Thailand is also one of the bases for exporting cars with the same potential as other nations in this region. In addition, a high-speed rail system is being developed to connect to three major airports: Don Mueang – Suvarnabhumi – Utapao to increase the transport potential and reduce travel time.
- Businesses that receive negative impact
One of the main policies of the new president of the United States is to push for cuts in the use of natural resources and to become more dependent on renewable energy. Importantly, the reinstatement of the Paris Treaty is to express the need to reduce impacts on global climate and the environment. With the aim of leading the United States into a zero-emission era by 2050 and banning drilling areas for oil and natural gas, this could affect the producers of oil, coal, and related businesses as it will cause the world crude oil price to drop. However, the lower fuel costs will be beneficial for the transportation business, including the clean energy business, businesses in the process of equipment production and installation.
Another business sector that should be observed is labor-intensive businesses, and the close observation should be on the issue of human trafficking. If Thailand continues to use illegal labor and treats laborers unfairly, this may affect the downgrade or deprivation of GSP rights. The example occurrence was with fisheries 3–4 years ago, where marine goods from Thailand were banned both in the US and Europe, resulting in the disruption and massive damage to the fishing business. Afterward, Thailand received a status update that reenabled trading; however, privileges on tax and others remained banned.
Create uniqueness and amplify strengths in response to investment opportunities
One of Thailand’s strengths among other countries within the ASEAN region is the location, as the country is located in the center of the region. Especially in the CLMV region, if there is a transportation system that can help reduce travel times, as well as warehouses built with a purpose to distribute products to CLMV countries, this will help to reduce costs for manufacturers. Establishing manufacturing plants in the country will help to ease the shipping process to CLMV countries. Additionally, if Thailand wishes to be the center of transportation of goods to the mentioned countries, it is also necessary to improve cold storages as well as storage methods to keep products fresh and in good condition for as long as possible so that customers at the receiving end will receive quality products and able to sell at a good price.
In terms of nursing and medical treatment, Thailand is recognized by many countries around the world as having the best medical and nursing system and is possibly the center of Asia’s medical practice. Aside from having skillful and capable nurses, the medical fees are also more reasonable than in foreign countries, thus being accepted by many foreigners who travel to the country for medical treatment purposes.
Conclusion of US policy on investing in Thailand
After recognizing the policy of the new president of the United States, it can be concluded that the private sector should implement some preparations as follows:
- The acceptance of investment funds should be prepared by following the news of the investment movement of the Chamber of Commerce in the areas where the business is located.
- Prepare to develop new technology to support future production such as robots for industrial use in substitution for human labor as robots will not only help with production but also in transportation and logistics, such as moving materials.
- Modification and improvement of cold storage to be able to extend the shelf life of products. Previously, goods were not able to be exported which affected the related business sectors and caused great damage. This was due to the products exported being of poor quality as they were stale and not able to be sold at a good price.
- Develop the potential of human resources to respond to the production and services that will occur in the future. The main development areas required should be to improve English communication skills as this is considered a weakness of Thai labors.
In producing other products under US regulations, the production capabilities must also be taken into consideration whether or not the demand can be met. Generally, Thailand’s business growth shall occur and develop in a good direction with the involvement of the Thai people as a whole. If the nation’s economy is striving, everyone in the country will benefit with better income and living standards.