Dr Prasarn Trairatvorakul, the governor of the Bank of Thailand, is one man who is well aware of the on-going dangers of the European debt crisis to the economies of Asia.

As he wrote recently in an article published by Euromoney Institutional Investor, in June 2012 ‘Thailand and other Asian counterparts joined a group of 37 member countries in pledging additional contributions to ensure the IMF has adequate resources to carry out its mandate to safeguard global financial stability.’

In a recent interview on Australian television, the Secretary-General of ASEAN, Dr Surin Pitsuwan (a former Thai foreign minister), said ASEAN had built up a fund of US$240 billion as part of what is called the Chiang Mai Initiative Multilaterisation (CMIM).

This fund is designed to operate as an emergency relief measure for ASEAN member states and is intended as a first line of economic defence extraneous of the IMF. This fund provides a dedicated regional financial safety net.

As well, Thailand has ‘bilateral cross-border collateral arrangements with Japan, Malaysia, and Singapore to facilitate reciprocal operational arrangements. This collaboration is aimed at enhancing liquidity facilities to financial institutions in Thailand and those countries, thus supporting central banks and monetary authorities in preserving regional financial stability,’ wrote Dr Prasarn.

The governor went on to state, ‘Among Thailand’s key strengths are healthy corporate balance sheets as well as companies’ ability to adapt to changing economic conditions, enabling them to manage exogenous shocks well and rebuild quickly.’

He stressed Thailand had strong foreign reserves and minimal direct exposure to the troubled European economies. Its ‘highly diversified export sector – both in term of markets and products – lessens the adverse impacts from the G3 slowdown.’

The 2008 Bank of Thailand Act he claims has ‘improved the transparency and effectiveness of monetary policy conduct by safeguarding the operational independence of the central bank while providing clear mechanisms for policy coordination with the Ministry of Finance.’

Nonetheless, Dr Prasarn acknowledged Thailand faced ‘the critical long-term challenge of creating a new economic paradigm for sustainable growth to replace the legacy economic platform of export-based growth to G3 markets.’

That new paradigm should move from a ‘labour cost based economy to one that is based on creativity and innovation. The challenge is to avoid falling into a middle income trap and to propel the economy up the global value chain.’

The governor highlighted three key industries where Thailand could lead the region: agri-business, high-tech manufacturing, and the old stalwart, tourism. To help with this and other advancements, the government intends to raise expenditures on R&D to 2 percent within 10 years and ‘forge a closer collaboration between research universities and industries both in terms of promoting joint research efforts and human resource development.’