Tourism Aside, Thailand Should Look to India for Broader Economic Cooperation

Thailand has yet to fully recover from the COVID-19 pandemic. The tourism-dependent economy shaken by severe border restrictions saw arrivals slowing to a near standstill. When borders began to open in 2021, the Kingdom saw just over 106,000 foreign tourists, a drop from 6.7 million in 2020. At its apex, Thailand drew as many as 40 million.  Fast forward to 2023, the new Pheu Thai-led Srettha Thavisin has been hard at work attempting to lure the most lucrative tourist market back to Thailand – middle-class Chinese, who have stayed away in the aftermath of tourist scams that have tarnished the Kingdom’s reputation and the death of a Chinese mother of two in the Siam Paragon shopping mall shooting.

Shoring up Tourism

To ease border restrictions, Srettha has moved to remove visas for Taiwanese visitors and is encouraging Russian investments in trendy places like Pattaya. Similarly, by granting visa waivers to Indians last month, Thailand is also illustrating its intent to forge a more robust cooperation with India in tourism. India is a growing trade partner, with $5.9 billion in goods exported to Thailand in 2021, and $8.5 billion exported to New Delhi that same year. India-Thailand economic activity has surged since the late 1980s, and with Thailand looking toward the Indian Ocean, economic activity has increased, particularly with India’s “Look East” strategy and Thailand’s Eastern Economic Corridor (EEC) aiming to capture investment from Indian private enterprise.

However, as the Indo-Pacific region becomes more integrated and as geopolitics and a moderate decline in the Chinese economy signal both challenges and opportunities, sectoral competition is becoming more of an issue, evidenced recently in the semiconductor industry, where India and Thailand are now competitors in an effort to gain an increasing share of the Asian market. Because of security vulnerabilities in the region, chipmaking has begun to move away from traditional centers like China and Taiwan. India has also sought to internalize supply chains, as the same geopolitical vulnerabilities and the COVID-19 pandemic made many countries rethink the security of their respective industries.

Yet, as much as there is now competition, there are also increased opportunities when comparisons and contrasts are made in the contexts of demographics, education, food security, and income. First, India’s explosive economic growth has created tremendous wealth over the past two decades, but it has increased income inequality – according to Oxfam International, the top 10 per cent of the population holds 77 per cent of India’s national wealth. Simultaneously, the large increase in population has not addressed the country’s growing food insecurity challenges. Within these twin crises lie opportunities, as Thailand can provide lessons learned on addressing insecurities, as it has been one of the few countries who have been able to produce more food than its population requires, making it a leader in both food exports and processed foods. The growth in Thailand’s food sector was robust, even during the pandemic with increased investments in 2020 and food processing and agriculture accounting for $1.4 billion in foreign direct investment. The opportunities for both south-south cooperation and private sector cooperation in addressing India’s food insecurity challenges remain extensive.

Second, India’s rapid income inequality, while alarmingly high, is representative of a new wealthier class of Indian society.  While middle class tourists have been hit by rising travel costs, wealthier tourists are not encumbered by the same challenges. In the absence of Chinese visitors, rich Indians are helping fill the void, evidenced by the increase in catering to their needs, such as luxury wedding packages and premium accommodations. While Thailand expects more than 1.4 million visitors from India this year, the most opportunity lies with the wealthiest among them. The good news is that Thai tourism is moving away from catering to entry-level travelers by encouraging the local industry to diversify its tourism packaging beyond Chinese visitors to include the emerging wealthier markets from India and Indonesia.

Cooperating on Climate Change

But bilateral cooperation too must expand beyond tourism, and in the case of the new Srettha government, move beyond seeking easy, short-term wins. While removing visa restrictions is meaningful to encourage more Indians to visit Thailand, both should also look to limit external economic shocks by adapting to critical environmental challenges, such as the ravages of climate change, which plagued both countries over the past year.

This past April, on almost the same day, Thailand recorded its hottest day ever at 45.4 degrees Celsius in the northern province of Tak, while temperatures rose above 44 degrees in many northern and eastern Indian cities. For India, climate change poses a major challenge as it must raise the standard of living for billions while facing the added burden of reducing global greenhouse gas emissions. Temperature increases are also accompanied by more natural disasters, such as increased rainfall, flooding, soil erosion, and cyclones.

For major urban areas like Chennai, Kolkata, and Bangkok, these are also economic vulnerabilities. Chennai, for example is notorious for bad disaster planning, particularly when aid to residents affected by floods in 2015 never arrived. Coordinated responses and lessons learned exchanges are critical, and both India and Thailand need to increase climate-related diplomacy and resource contributions to shore up not only their own geographical spaces, but the broader Bay of Bengal, which includes areas very vulnerable to mass climate-related migration and major impacts to small-to-medium sized enterprises (SMEs).

Srettha’s short term strategy of encouraging Russian, Chinese, and Indian tourists to make their return and increase their footprint misses the larger picture in fostering a longer-term partnership with each. In contrast to selling old ideas to Chinese investors that will only increase sharper criticism directed at his fragile coalition government, longer-term engagements across a range of sectors is more appealing. Economic recovery is as much about building resilience as it is about growth. India and Thailand have a lot to learn from each other about both.