Page 77 - FoodFocusThailand No.185 August 2021

SPECIAL REPORT

Food Industry Asia (FIA) commissioned The Economic Impact of scale of the industry’s contribution to Thailand’s economy and job
the Agri-Food Sector in South East Asia to better understand the market.”
challenges faced by the region’s industry last year, with the report The report notes that Thailand’s sales tax rates are low when
highlighting the pivotal role the sector will play in Thailand’s economic compared with global standards, which increases the risk of a sales
recovery, creating employment and putting affordable food on the table. tax hike as a way to finance public spending needed to support a
Thailand’s agri-food sector faces the third most challenging recovery recovery. The potential for this puts the country most at risk in Asia
of the region’s 10 countries, after the Philippines and Indonesia, scoring from post-COVID-19 fiscal adjustments, according to the report’s
just 4.9 out of 10 in the report’s Economy Recovery Matrix. Thailand’s Fiscal Risk Assessment Framework.
food industry is especially vulnerable because of its dependence on Mr.James Lambert, Director of Economic Consulting Asia for
tourism. Its inbound tourism market, the largest in Southeast Asia, has Oxford Economics, said, “Thailand’s agri-food sector faces significant
been devastated by the pandemic. Tourism accounted for 9.5% of risks from any fiscal adjustments, especially given its vulnerable state
Thailand’s total food consumption in 2019 and international arrivals are due to the effects of the pandemic. It is important for any fiscal policy
not expected to return to pre-pandemic levels before 2024. implemented to be carefully planned, designed, and communicated,
Commenting on the findings, Mr.Visit Limlurcha, Chairman of Food which we have seen through the government’s existing COVID-19
Processing Industries Club, The Federation of Thai Industries said that policies to support businesses, including those in the agri-food sector,
this paints a worrying picture for the recovery of an industry that in 2019 and stimulate domestic spending.”
accounted for one-quarter of the economy (THB 4 trillion), employed “Sound fiscal policies that support the agri-food industry will enable
almost half of the workforce (17.9 million people), and contributed more it to continue contributing strongly to Thailand’s economy as it has
than THB 708 billion in taxes. This reinforces how important it is for the done so for decades. This will support people in Thailand, small
government and the industry to work together to overcome the significant businesses and a wider economy recovery given that households
challenges the agri-food sector faces. spend more than a third of their income on food and non-alcoholic
“The report shows just how vital the agri-food sector is to Thailand’s beverages,” said Mr.Lambert.
economy. While the sector’s contribution shrank because of the The report recommends governments focus on three areas to
pandemic, it contracted by less than the economy as a whole. The help the agri-food sector overcome challenges caused by the
industry is fully committed to working with the government to ensure pandemic and external pressures such as the closure of borders.
we play a critical role in the post-pandemic recovery and that the agri- using education to influence sustainable or health behaviours,
food sector remains a key driver of the economy,” Mr.Visit said. favouring regulatory standards over taxes and maintaining a constant
According to Mr.Matt Kovac, Executive Director of FIA, the dialogue with the industry.
government must recognise current and future risks that agri-food With rising incomes and growing populations driving consumer
companies face, before developing policies and implementing measures demand for higher quality food, the research also highlights key
to drive the post-pandemic recovery. Unintended policy consequences recommendations to meet this, including to improve land and labour
could easily scuttle the agri-food industry’s and Thailand’s economic productivity, which requires technological innovation and skills
recovery plans, potentially leading to rising business and consumer development, and a sound and supportive policy environment. This
costs, and leading to closure of businesses and job losses. includes investing in new technologies to improve the resilience,
Mr.Kovac added, “Thailand’s agri-food sector will face strong efficiency, and environmental sustainability of the region’s labour-
headwinds next year, including a slump in food and beverage demand intensive food value chain.
as well as longer-term challenges that will linger beyond the pandemic.
Policymakers must consider such issues before introducing policies
that could potentially hamper the agri-food sector’s recovery, given the
More Information Service Info C015

Thai Agri-food Sector Shrank 6% Last Year

but Remains a Significant Pillar

to Support Country’s Economic Recovery

Thailand’s agri-food sector contracted by 6%, or THB 228 billion,
last year with a corresponding decline of 8%, or 730,000 people,
in its workforce, largely due to the effects of the COVID-19
pandemic, revealed new research by Oxford Economics.

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