The Thailand Board of Investment (BOI) has approved investment incentives for five projects with a total investment of value of over USD 1.3 billion.
The projects include:
1. A W (Thailand) Co., Ltd., was granted investment promotion incentives for its automatic transmission production project worth around USD 230 million. Located in Chonburi Province, this project will produce and supply automatic transmissions to both local and overseas carmakers.
2. General Rubber (Thailand) Co., Ltd. was granted investment promotion incentives for its vehicle tires production project worth USD 305 million. Located in Rayong Province, this project will boost local rubber consumption in support of the government’s policy as it will use approximately 35,398 tons per year of natural rubber.
3. Mr. Xunning Ju was granted investment promotion incentives for a vehicle tire production project worth over USD 315 million. Located in Chonburi Province, this project will increase local rubber consumption in support of the government’s policy as it will use approximately 23,838 tons per year of natural rubber.
4. Flying Officer Ronnachai Wongcha-um was granted investment promotion incentives for an aircraft heavy maintenance and repair center, a joint venture between Thai Airways International Plc and a global aircraft manufacturer. The USD 200 million project will be located at the Eastern Airport City (EEC-A) in Rayong Province. The project will enhance the country’s competitive advantages, especially in terms of new aircraft maintenance. It will also provide local aviation technicians with an opportunity to enhance their skills to comply with international standards.
5. Thai Lion Mentari Co., Ltd. was granted investment promotion incentives for its air transportation project with a total investment value of around USD 220 million. The low-cost airline will operate domestic and international services, which will support Thailand’s aviation and tourism industries.
(Source: Thailand Board of Investment)
In its role as the ASEAN chair for 2019, Thailand is pushing for a cohesive regional industrial 4.0 development plan under the main theme of “advancing partnership for sustainability”.
Speaking at a Special Session on the Fourth Industrial Revolution (4IR) held in Bangkok on 14 January 2019, the Minister of Commerce of the Kingdom of Thailand Sontirat Sotijirawong delivered a keynote speech in which he stressed that the economy and society of the future would have to rely on creativity, innovation, and connectivity between technology and the production system to create competitiveness and increase productivity in driving sustainable economic growth.
Five deliverables were discussed at the session, including an ASEAN declaration on industrial transformation to industry 4.0, development of an ASEAN Digital Integration Framework Action Plan (DIFAP), development of an ASEAN innovation road map so-called “Partnering for Innovative Community”, guidelines on development of skilled labour to address the challenges of 4IR, and policy guidelines to develop and promote ASEAN-based microenterprises and to push for their digitisation.
(Sources: The Nation; ASEAN Secretariat)
Under the Thai government’s economic agenda, Rayong, and two other neighbouring provinces, Chonburi and Chachoengsao will form the Eastern Economic Corridor (EEC). Stretching a total area of 13,000 square kilometres, it is expected that the EEC will be an arterial node for trade, investment, and regional transportation, besides also serving as a strategic gateway to this region. The EEC is slated to attract approcimately USD 46 billion in investments which is projected to push Thailand’s gross domestic product (GDP) growth by five percent annually by 2020.
To ensure the success of the EEC, Bangkok is relying heavily on foreign direct investments, in particular those from China, and public-private partnerships, and it is relaxing certain laws and regulations to facilitate and encourage foreign investors looking to invest in the EEC’s initiatives. In November, the Deputy Prime Minister led government officials and 65 Thai private companies to Shanghai to promote the EEC.
In January 2019 it was revealed that the total amount of investment promotion application in 2018 exceeded the original target by 25%. Investment applications in the EEC accounted for more than THB 680 billion (USD 21 billion). Largest-scale investment projects have been in the areas of petrochemical and electrical vehicle (EV) production. In 2018, the BOI received 1,626 investment applications projects with a total value of THB 902 billion (USD 28 billion). Both the application number and the investment value were higher than those in 2017, by 3% and 43%, respectively.
(Sources: Board of Investment of Thailand; China Dialogue; The ASEAN Post)
In early November 2018 Thailand decided to waive the THB 2,000 (USD 83.50) visa-on-arrival fee for tourists from more than 20 countries, notably from China, in order to boost the tourism sector. The number of tourists enterinh Thailand through Suvarnabhumi Airport declined from 3.1 million in 2016 and to 2.2 million in 2017 and from January to September this year the number stood at 1.7 million. It is hoped the visa-fee exemption from December 1 till the end of January will attract 30% more tourists.
The decision arrives at the same time that Thailand Deputy Prime Minister made a deal in Shanghai with Chinese e-commerce giant Alibaba to help promote Thailand as a tourist destination to Chinese people. Earlier this year, in April, a memorandum of understanding was signed between Tourism Authority of Thailand and Zhejiang Fliggy Network Technology Company Limited, a travel brand of Alibaba Group, aims to systematically promote Thailand tourism in secondary provinces of China by utilising Alibaba’s online platforms to run marketing activities such as reservations for rooms, tickets and vacation packages around the world, helping to draw more international visitors to the country.
On November 11, when China celebrated "Singles Day", Alibaba launched a 20-second video on its website to encourage Chinese tourists to travel to Thailand. The targeted audience of the video were as many as 800 million Chinese people.
(Source: The Straits Times)
An economic and business promotion committee has been set up on September by Thai and American businesses in order to promote Thailand's digital economy and Thailand-US digital trade and investment.
Two memorandums of understanding (MoU) have been signed between the Thai Chamber of Commerce and the American Chamber of Commerce, aiming to promote trust on digital platforms and ecosystems, as well as upgrading working skills required in the digital economy.
Kalin Sarasin, chairman of the Thai Chamber of Commerce highlighted this a good opportunity for Thailand to attract foreign investment, in view of the ongoing trade dispute between the US and China. 70% of US chamber members in Thailand surveyed expect progress on the Eastern Economic Corridor (EEC), focused on driving investment and innovation in 3 eastern provinces, namely Chachoengsao, Chonburi and Rayong. According to Mr. Sarasin, US investors are optimistic about Thai economic growth and are committed to promoting Thai small businesses applying more digital technology.
Mr. Goyer, executive director for the Southeast Asia US Chamber, also highlighted that US businesses are keen to invest more in digital businesses such as blockchain sharing economy, and air freight services.
(Source: Bangkok Post)
The Thai economy has grown more robustly than expected in the second quarter of the year, buoyed by solid export and investment gains. The country’s recovering is underpinned by solid export demand and tourism.
The economy expanded 4.6%. Total investment increased 3.6% year on year and public investment expanded 4.9 per cent year on year in the second quarter. Exports, a key driver of the economy, climbed 12.3% year on year for the quarter. The National Economic and Social Development Board (NESDB) is maintaining its 2018 forecast for GDP growth, but it has raised its estimate for expansion in exports, citing an improvement in the economies of the country’s trading partners.
According to news reports, the first interest rate hike since 2011 can be expected from the Bank of Thailand if GDP growth is maintained. The Thai Baht has been performing well in a difficult environment for many emerging market's currencies. The Baht has moved up by nearly 2% in the last quarter against the US Dollar, making it the best performer among 12 major Asian currencies tracked by Bloomberg. A rise in interest rates would help to draw investors.
(Sources: The Nation; The Business Times)
Thailand's Deputy Prime Minister Dr. Somkid Jatusripitak has revealed that the country’s investment drive will focus on three major agendas, namely national competitiveness, the reduction in income disparity, and sustainability.
Addressing the heads of Thailand's Board of Investment (BOI) 14 overseas offices, the Deputy Prime Minister said that investments are a significant tool to address the national agenda.
Dr. Somkid said: "From now, we have to make sure that investment promotion activities can also effectively address the three major national agendas." He cited the development of the bioeconomy as an example.
Dr. Somkid also advised the BOI to promote an investment ecosystem. He said that to attract entrepreneurial ventures, the country should not only provide investment incentives but also assist other activities that support the development of startups. Education, people training, infrastructure and a supply chain in the related industries should all be developed to help investors ensure success.
According to the BOI's foreign investors' confidence survey for this year,i nvestors' confidence reached the highest level in five years, with 98.5% of the respondents confirming that they would continue to invest in Thailand. Out of the 600 companies that responded to the survey, 33% said they planned to expand investment, while 65.5% said their investment in Thailand would continue.
The availability of raw materials and parts (54.7%), sufficient suppliers (50.8%) and attractive investment incentives (44.5%) were highlighted as the top three drivers boosting investor confidence and expanding investment. BOI's level of service, incentives, services and assistance in visa and work permit solutions, as well as information provided on BOI's website, the services at BOI's OSOS center, easy access to services and service speed, were also mentioned as positives.
(Source: PR Newswire)
Thai small and medium-sized enterprises (SMEs) have enjoyed strong growth in 2018, thanks to brisk demand for sales of products to elsewhere in Asia. The Thai Minister of Commerce said that the number of SMEs has now reached more than 3 million, representing 42.8% of the nation’s GDP. The Ministry also raised its export growth forecast to 9% this year from 8%
Banjongjitt Angsusingh, deputy permanent secretary of the Ministry of Commerce, added that the value of exports by SMEs in the first five months of 2018 reached USD 25.467 billion - 24.5 per cent of total exports. The top export markets for SMEs are in ASEAN, with shipments of USD 7.576 billion, a rise of 6 per cent. This takes Asean’s share of total shipments to 29.7 per cent, followed by China with shipments of USD 3.019 billion and an 11.9 per cent market share.
Krittee Manoleehakul, managing director of Tencent (Thailand) also commented on the expanding Chinese market, saying that “Thai businessmen are increasingly interested in searching for business opportunities and expanding their market to China - especially the online market”
(Source: Bangkok Post)
China and Japan are collaborating on the Eastern Economic Corridor (EEC) of Thailand. The MOU on Japan-China Private Economic Cooperation in Third Countries signed between Japan and China on May 9, 2018 in Tokyo, stated that both countries will establish a committee to promote the development of Japan-China private business activities to third countries such as Thailand under the framework of the Japan-China High-Level Economic Talk.
The EEC is expected to become a new economic growth pole in Thailand and even Southeast Asia. The building of the EEC plays an important role in promoting regional economic growth, elevating the level and quality of industrial development, and it is thought it will contribute to the economic prosperity and the improvement of people’s livelihood in the region.
China maintains its position as Thailand’s largest trading partner and the main source of tourists, while Thailand is China’s third largest trading partner in ASEAN countries. More than 5,000 Japanese companies have established their business bases in Thailand, especially in the EEC area and have contributed to the country’s economic development for more than three decades. The Japanese Government said it will continue to encourage and support the business activities of Japanese companies in Thailand.
(Sources: The Nation; Eastern Economic Corridor Office)
The Thai National Shipper’s Council (TNSC) has raised its forecast the export rate to 8% for this year from the previous estimate rate 6% based on a rise in the value of shipments to a high record in March,. Exports during the month jumped by 7.1% year-on-year to 22.36 billion baht (USD 700 million) .
This growth was driven by improvements in the economies of Thailand’s major trading partners and higher prices of oil-related and agricultural products due to increased crude prices, as OPEC (Organization of the Petroleum Exporting Countries) reduced its production. Additionally, Thailand has gained from greater market diversification for exports. Around 30 per cent of exports were directed towards Thailand's main markets, with a range of markets making up the rest. Recently, the government joined with Chinese e-commerce Alibaba Group to improve access to the Chinese market, with a focus on agricultural products. The agreement in April 2018 between the Eastern Economic Corridor Office (EECO) and Alibaba covers the expansion of Thai exports of agricultural and other products to the global markets through Alibaba’s platform. In the first phase, the focus will be on Durians and rice.
TNSC also higlighted risks to growth, including the possible trade war between the US and China, and escalation in the violence in Syria, which might impact the middle-east and crude oil. The Council also expressed concerns over appreciation of the baht and advised that SMEs should consider using financial instruments to hedge exchange risk and also look into diversification by distribution to new markets. The Council also suggested that the government should monitor trade barriers and continue discussions with entrepreneurs to set up measures to deal with potential issues, such as the imposition of high US tariffs. It also said that the Government should accelerate free trade negotiations and work on bilateral and multilateral economic cooperation frameworks, such as the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership; has been signed but not ratified) and RCEP (Regional Comprehensive Economic Partnership; ongoing negotiations). Freight prices have also witnessed increases on almost all routes, and are expected to keep rising during the second quarter of 2018. The Council highlighted the importance of e-commerce for promoting B2B cross-border business.
(Source: The Nation, Thai National Shipper’s Council)
According to the World Bank's Thailand Economic Monitor, the country's economy is expected to grow by 4.1% in 2018, the fastest pace since 2012. Rapid export growth continues fueling the economy, while an increase in capacity utilization and acceleration in capital goods imports suggest domestic demand recovery as well. Regulatory reforms and overall policy stability are contributing to continuing improvements in business sentiment.
The Thai economy is moving toward a new era, with the government implementing three key strategies in its economic drive:
According to the World Bank, Thailand has the potential to raise productivity and grow even faster over the medium term, highlighting the importance of innovation for productivity and long-term growth. In turn, the Thai government is keen to reform the economy, and is emphasizing on innovation technology in order to enhance the country’s competitiveness. The reform comprises three major plans:
(Sources: World Bank; Voice of Vietnam)
Thailand’s export growth is likely to be 4% in 2018, in light of the robust growth of exports in January and February 2018 and the recovery of the global economy. Products that are expected to enjoy higher export growth include computers and components, electricity circuits, vehicles, plastic pellets and jewelry. Exports of goods and services currently account for about 70% of Thai GDP.
While inflationary pressures in the country are muted and do not pose a threat, the Bank of Thailand is however grappling with the challenge of currency appreciation. The baht has appreciated about 10% against the dollar in the past year, the second-best performer in a basket of Asian currencies tracked by Bloomberg. This may have a negative impact on exports. Exporters are also worried about trade barriers, which are increasing. In particular, Thailand could face greater US scrutiny after its trade surplus with the world’s biggest economy exceeded USD 20 billion last year.
(Sources: Bloomberg; Bangkok Post; The Nation)
Thailand has approved legislation geared towards attracting more investment in an ambitious USD 45 billion project in the country’s industrial east, which the ruling junta hopes will help lift South East Asia’s second-largest economy. Chachoengsao, Chonburi and Rayong Provinces have been designated for the development of the Eastern Economic Corridor (EEC). The EEC drew USD 9.3 billion of promised investment in 2017, according Thailand's investment agency. The EEC project will connect with target industries under the Thailand 4.0 policy which takes into account the shifting of Thailand’s economy to value-based, innovation-driven economy. The target industries under the EEC will be:
1. Functional Food
Auto, Auto parts, Electronics and Robotics
1. Smart Automobiles
2. Electronic parts
3. Robotics for industrial and lifestyle use
Aviation, Maintenance and Related Businesses
1. Aircraft parts and spare parts
2. Maintenance, Repair and overhaul (MRO)
3. Air Cargo
1. Wellness Center
2. Medical Center
3. Medicines and Devices
(Sources: Reuters; Royal Thai Embassy in Washington D.C.)
Thailand’s Board of Investment (BoI) announced that it is expecting to receive investment proposals of THB 720 billion (USD 22.6 billion) in 2018 which represents a 12% increase from 2017. Japan retains its status as Thailand’s largest foreign investor followed by Singapore, China, and the U.S.
Economic growth in Thailand has lagged regional peers since the army took power in 2014. However, rising exports and tourism are giving the economy a boost and BoI forecast growth of as much as 4.6% for 2018.
(Sources: Bangkok Post; Business Times)
Thailand’s economic indicators have shown steady improvement, with the private sector spending and investing more because of its greater confidence in the economy. In his national address on 24 November 2017, Thailand's Prime Minister pointed out that the country’s economic growth in the third quarter of 2017 registered at 4.3%, the highest growth rate in 18 quarters. The Thai economy has, in the past three quarters of 2017, expanded by 3.8% and growth is expected to reach 3.9% by the end of the fourth quarter. As for next year, it is believed that the Thai economy will grow by 4.1%.
In 2014, Thailand’s GDP growth stood at only 0.9%. At that time, the global economy was experiencing a slowdown and Thailand faced severe political conflicts. Later, in 2015, the Thai economy started to pick up, with a growth rate of 2.9%, and the rate moved up to 3.2% in 2016. The government cites greater stability in the country and increased confidence by both local and international investors as the key reasons for the improvement in the Thai economy, allowing it to enjoy the economic boom together with its neighbors in South East Asia.
(Sources: Thailand Foreign Office)
According to the World Bank’s 2018 “Ease of Doing Business” report, Thailand now ranks 26th out of 190 economies in terms of the ease of doing business for small and medium enterprises around the world. In addition, Thailand is one of the top 10 economies that have progressed most in the ranking, going from 46th place in 2017 to 26th in 2018 - a great achievement.
In the past year, the country has adopted various reforms to make it easier to do business in Thailand. For example, a requirement to obtain a company seal has been abolished and the need for approval of company work regulations from the Labor Department has been eliminated. This results in a shorter time taken to start a business – from 27.5 days to 4.5 days.
In addition to improving the regulatory framework, the government also supported the development of a comprehensive Doing Business portal to be launched in 2019 to provide easier and faster services for business owners.
Other initiatives include an automatic risk-based system to select companies for a tax audit; reduction in the property transfer tax rate; adoption of legislation to broaden the scope of assets that can be used as collateral; and the use of geographic information systems for access to electricity. To further improve the business environment, Thailand is continuing systematic reforms to concentrate on areas including enforcing contracts, registering property and paying taxes.
(Sources: The Nation; British Chamber of Commerce Thailand)
Thailand has jumped 2 places to 32nd rank globally from last year’s 34th most competitive economy on the World Economic Forum’s global competitiveness index. Thailand scored 4.7, an improvement compared to last year’s score of 4.6 and 34th ranking. Various factors have helped the country rise in its ranking: in infrastructure, its scrore increased from 4.4 to 4.7, and its rank went up from 49th to 43rd due to improvement of Infrastructure for roads, rails, ports and air transport, while the rise in the number of Mobile Phone Subscriptions helped it rise in rank from 55th to 5th this year.
Several indices put Thailand’s competitiveness in the top 30 when compared with the other 137 nations included in the index. One is the country’s Secondary Education Enrollment Rate, which is ranked 8th in the world, another major improvement as the Kingdom was ranked 84th last year. For Government Budget Balance and Gross National Saving, Thailand is ranked 10th and 16th, respectively. Furthermore, Foreign and Domestic Market Size are ranked 12th and 24th. Finally, the Gross Domestic Product (GDP) is now ranked 20th, which is considered high.
Thailand has advanced in the financial market on the following pillars: Financing through Local Equity Market, Availability of Financial Services, Soundness of Banks, and Venture Capital Availability, being ranked 20th, 23rd, 27th and 27th, respectively. These improvements suggest the readiness of the nation’s financial and marketing situations in the long-run. For marketing, Thailand is ranked 21st and 25th on the Extent of Marketing and Degree of Customer Orientation, which indicated a progressed level of marketing concepts. Furthermore, when compared with ASEAN+3 countries, Thailand is ranked 6th, after only Singapore, Japan, Malaysia, South Korea and China, all of which remained in the same ranking positions as last year. This clearly reflects Thailand’s stability in competitiveness among ASEAN+3 countries.
(Source: Chulalongkorn University)
The Thai Bankers' Association keeps its economic growth forecast for Thailand at 3.5% to 4% due to a number of local and global risks. The business group has expressed that recent occurrences, such as Hurricane Harvey's effect on the US economy, the US' political landscape, geopolitical tensions over North Korea and the Thai baht's performance are some of the risks worth noting to consider as potential hindrances for Thailand's economic growth.
However, in the first seven months of 2017, exports expanded by 8.2%, which was higher than the Association expected. For this year's second quarter though, the Thai economy has seen a faster growth rate due to the strength of the country's export and tourism.
The Thai baht is appreciating in recent months due to a number of factors including a strong current account surplus, capital inflows and the US dollar’s retreat.
(Source: Bangkok Post)
The Bank of Thailand’s Monetary Policy Committee has maintained its benchmark interest rate at 1.5% in July, a quarter-point above the record low. It is expected that the rate will stay at 1.5% for the rest of 2017, and possibly in 2018 as well. The central bank is of the opinion that the level is low enough to aid an economic recovery hampered by high household debt levels. The Thai economy is relying on government spending on mega infrastructure projects to stimulate economic growth and boost domestic activity. The Bank of Thailand has forecasted growth for 2017 to be between 3.5% and 3.7% in 2018.
(Sources: Bangkok Post; The Star Online)
Siam Commercial Bank Economic Intelligence Centre (SCB-EIC) has revised its projected GDP growth for Thailand from 3.3% to 3.4% in 2017, thanks to an increase in exports. It is expected that the economies of trading partners including the US, Europe, China and the CLMV (Cambodia, Laos, Myanmar, Vietnam) nations will grow, which will consequently benefit Thai exports, particularly in electronic parts and food and beverages. These sectors account for 30% of Thailand’s total exports and its forecast has been raised from 1.5% to 3.5%.
(Sources: The Nation, Kasikorn Bank)
Thailand’s annual headline consumer prices fell for the first time in 14 months, mainly due to high comparative figure in 2015. It dropped 0.04% in May 2016 to stand at 100.64 points. According to the minister, drought in 2015 caused the food prices to go up. In April, the index jumped 0.38% from a year ago. The central bank targets headline inflation of 1%-4%. The core CPI index, excluding raw good and energy prices, increased 0.46% in May from a year ago and it went up to 0.50% in April.
Thailand has always contained inflation by state price controls, subsidies and slow domestic demand. The Bank of Thailand has maintained its benchmark interest rate at 1.50%, near record low, since a cut in April 2015. It’s believed that there will be no policy change in the new monetary policy review on 5th July 2017.
(Sources: Bangkok Post, The Times of India)
More than two thirds of the tycoons on the Forbes Thailand Rich List 2017 saw their wealth increase, with the top five notching up the biggest dollar gains. The collective net worth of Thailand’s 50 richest is USD 123.5 billion, up 16% since 2016. Thailand’s economy saw an uptick as it expanded 3.3% in the first quarter of 2017, its highest rate in four years, largely due to improved farm production, increased consumer spending and a recovery in exports. The stock market also rose by 12% in the past 12 months. The Chearavanont brothers of the Charoen Pokphand Group are the biggest gainers in dollar terms, adding USD 3 billion to their wealth to retain their No. 1 spot with a fortune of USD 21.5 billion.
A poll of Thai laborers has been conducted by The Center for Economic and Business Forecasting (CEBF) of the University of the Thai Chamber of Commerce to uncover that household debt has risen to an eight-year high. The survey shows that 97% of 15,000 Thai employees reported an average of THB 131,000 (USD 3,893) in debt per household which is an increase of 10.4% from the previous year and the most in eight years. The majority of household debt is owed to financial institutions as opposed to informal lenders. However, despite the increase in household debt, more expenditure went towards durable goods such as cars, motorcycles and homes. In addition, respondents reported higher savings at a rate of 62.6% from 39.4% in 2016 which is believed to indicate an increase in consumer confidence in Thailand.
(Source: National News Bureau of Thailand)
The central bank of Thailand holds its policy rate at 1.50% to improve economic growth this year and next. The country’s economic growth has been rather slow in comparison to the neighboring countries in South East Asia, which led to a recommendation by International Monetary Fund for Thai officials to ease monetary policy and inject a fiscal stimulus.
(Sources: Bloomberg Markets, Central Bank News)
The Thai government has outlined a series of new incentives and support mechanisms in late 2016 and early 2017 with the aim to encourage foreign investment in key industries. This legislative package is known as BOI Plus.
To boost investment inflows, the government introduced the National Competitiveness Enhancement Act (NCEA) for Targeted Industries in mid-February. A total of 10 industries have been identified by the act, namely smart electronics; automotive and auto parts, including electric cars; medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistic and aviation; biofuels and biochemical; digital; and medical services.
Though many of the measures in the new legislation have already been reflected in the existing BOI incentives, the exemption from corporate income tax and withholding tax on dividends has been extended to 15 years. Moreover, the BOI Plus has established a government-supported competitiveness enhancement fund with an initial budget of THB 10 billion (USD 285 million) to subsidize eligible projects.
Initial targets from the program are investors from Japan, China, Taiwan, the UK, Germany, France, the Netherlands, India and South Korea.
(Sources: Oxford Business Group, Thailand Board of Investment)
In 2016, the average of headline inflation hit a low of 0.2% but the last two months witnessed an uptrend in line with rising global crude oil prices. Based on this, it is expected that inflation will rise in 2017 with the rise in global oil prices.
The result of this would be the diminishing in consumers’ purchasing power, which is already limited. This will also direct how the Monetary Policy Committee (MPC) will formulate its policies later on. Amid relatively high household debt and still-low family incomes, consumption in the household sector will be subdued this year. Furthermore, what will determine monetary policy is inflation, which is expected to move within the target range (2.5 percent, ± 1.5 percent p.a.). Considering many factors including US Fed’s key policy rate, it is projected that MPC will hold the key rate at 1.5%.
(Sources: K-ECON analysis, The Nation)
It is projected that Thailand’s economy will grow at 3.1% in 2016 and 3.2% in 2017, according to the 2016 Thailand Economic Monitor. The key drivers of growth remain private consumption and public investments such as the dual rail track and rail upgrading projects. Tourism growth has also been strong in 2016, with the number of tourist arrivals, mainly from China, rising by 13.1% is Q3. In Q4, it is expected that a temporary slowdown and the postponement of economic activities during the period of mourning after passing of His Majesty King Bhumibol Aduljadej in October will be partly offset by holiday tax breaks on shopping and domestic tourism at the end of the year.
(Sources: The World Bank, KHMER Times)
The growth of Thailand’s economy has been rather slow in Q3. High household debt, weakening exports, slumping foreign investments and low consumer confidence are the symptoms of the Thailand’s economy for many years. Since the military junta seized the power in 2014, the economy has picked up slightly, thanks to an increase in government spending and tourist arrivals. Nonetheless, it remains comparatively low compared with its neighbors. According to The National Economic and Social Development Board (NESDB), the economy grew 3.2% on-year in July-September down from the last quarter from 3.5%. Furthermore, due to the death of Thailand's revered king on 13th October, it is highly probable that the growth of final quarter will be disappointing, particularly in the country’s entertainment sector, as the country goes into mourning for a period of 1 year.
(Sources: Business Mirror, Borneo Bulletin)
Thailand’s household debt to GDP is in a downward trend for 2 successive quarters to 81.3% in 2Q16 as compared to 81.5% in 1Q16, showing that loan products are not doing as well as before. Auto financing is not as lucrative due to repayments on vehicles purchased via the previous First Car Buyer program. In terms of consumption loans such as credit cards and personal loans, they are also in decline as households are limiting their disbursement.
Furthermore, commercial banks have applied stricter rules in loan approvals to ensure acceptable asset quality, pressuring the growth of overall household debt. Nonetheless, mortgage loans remain strong due to the government’s property stimulus offering privileges to those who opt in by the end of this quarter.
(Sources: K-ECON Analysis, SCB Economic Intelligence Center)
Thailand’s cabitnet approved measures namely cash handouts of THB 6.54 billion, equivalent to USD 256.5 million, and debt restructuring in order to aid the struggling farmers. The distribution of cash will provide assistance to 2.85 million farmers who earn up to THB 100,000 (USD 2,972) a year. As stated by an adviser to the commerce minister, that the overall economy is in recovery but commodity prices are still low and there are also drought issues. In addition, the government will structure debts of approximately THB 335 billion (USD 9.9 million) owned by 2.9 million farmers, aiming to save over THB 20 billion (USD 594.4 million) in interest costs for farmers over the next 5 years.
(Sources: Bangkok Post, Reuters)