Poor investment or loan decisions will not be forgiven by inflation. This environment will alter attitudes to property, especially among users who will increasingly regard it purely as a factor of production subject to the full disciplines of cost controls. But lower nominal rents need not mean lower real income. 19 The second fundamental difference lies in the role, and potential, of the Private Finance Initiative. In many ways, the PFI simply reflects processes already underway in the private sector whereby occupiers are seeking more flexible arrangements and are prepared to pay a price for changing the traditional relationship between landlord and tenant. It opens up the possibilities for more imaginative use of property, and the principles are applicable both to public and private sector users of property. The providers of services, whether public sector or private, no longer want automatically to own the productive assets needed to provide them. They prefer to rent them instead with a higher level of service as part of the deal. Landlords with property expertise are well placed to provide this wider type of service and have a competitive advantage in doing so compared with less experienced operators. And maybe the word “property” will itself imply something too narrow. Owners will provide a working environment. They may move from “core and shell” to “finish and facilitate”. Indeed in some PFI cases the owners will go even further and operate as well, “provide and process” you might say. This would give outsourcing a new meaning.
Thailand is somewhat in an awkward position currently, being left behind by the NICs, and being caught up by countries like China and Vietnam, to name a few. It is therefore important to extend efforts beyond market diversification to promoting higher value along the production chain, a task that both the private sector and the Government have a role to play. Especially with the rising FTAs as well as other regional integration and cooperation, notably among ASEAN, we must work to make sure that Thai producers and exporters can fully utilize the benefits from these arrangements. Fourth, prudent policy has obviously shielded us from the contagion of external developments so far. In addition to the importance of fiscal discipline and debt sustainability which I have already highlighted, I would like to stress that monetary policy has not and should not be used as an instrument to boost short-term growth. However, it can help cushion the economy against growth contraction in the short run, while ensuring stability in the long run. In this past crisis, the adverse effect led us to a series of aggressive rate cuts during December 2008 to April 2009 in order to help shore up the economy. The rate cuts were timely and turned out to be effective, in view of the momentum of economic recovery achieved. Regarding the framework of monetary policy, I should stress that the Bank of Thailand’s policy framework has always emphasized, not only monetary stability, but also financial stability.