Thailand 20250110: Assiduous, Elusive, Reliable
Mekong Memo Thailand Weekly: Business, politics, finance, trade & legal news.
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Here is your Mekong Memo Thailand for this week.
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Headlines:
Outlook Mixed as Exports Face Headwinds
Tourism Recovery Powers Growth
Banking Sector Flaccid
EV Market Shifts Gears
Global Minimum Tax Takes Effect
Amazon Cloud Hub Launches TH Region
Financial Hub Ambitions Take Shape
Government Tackles PM2.5 Crisis
Cabinet Approves 2026 Budget
Real Estate Market Sees a Pullback
Infrastructure Push Continues
Digital Government Progress
Industry Adapts to Changes
Outlook Mixed as Exports Face Headwinds
Thailand projects a paltry 1-3% export growth for 2025, following 5% growth in 2024. The economy is likely going to be challenged by U.S. trade policy shifts under a second Trump term, currency volatility, and rising input costs. The government wants to stave off tariff increases via direct U.S. negotiations. Average inflation stayed at 0.40% in 2024, ranking among ASEAN's lowest. Border trade grew 6% to 1.66 trillion baht in 2024's first 11 months.
Read more: Bangkok Post (Export Growth), Asian News Network (Inflation), Nation Thailand (Border Trade)
Tourism Recovery Powers Growth
Foreign tourist arrivals reached 35.54 million in 2024, up 26% year-on-year, bringing 1.67 trillion baht in revenue to Thai shores. Chinese visitors led with 6.73 million arrivals, followed by Malaysia and India. Thailand wants 40 million visitors in 2025 and is making headway towards that figure with visa relaxations and improved infrastructure. Tourism is 12% of Thai GDP and supports 20% of employment.
Read more: SCMP (Tourism Numbers), Business Standard (2025 Targets)
Banking Sector Flaccid
Banks expect weak loan growth of 1.4% in 2025 alongside rising non-performing loans. The sector's NPL ratio reached 2.97% in Q3 2023, with stage 2 loans increasing across segments. Earnings growth may slow to 5-6% in 2025-2026, down from 7% last year. The central bank could cut rates in H1 2025 given weak economic growth and low inflation.
Read more: Bangkok Post
EV Market Shifts Gears
EV sales growth eased to 10.5% in 2024 from a stunning 320% in 2023 thanks to reduced incentives and stricter lending policies. PTT is reducing its stake in Horizon Plus from 60% to 40%, due to a claimed market oversupply. Horizon plus was established originally as a joint venture to manufacture electric vehicles domestically. The government has a "30@30" policy targets for EVs, expecting electric vehicles to comprise 30% of auto production by 2030.
Read more: Bangkok Post (Sales Data), Bangkok Post (PTT Divestment)
Global Minimum Tax Takes Effect
Thailand has put the OECD's global minimum tax framework into action through an Emergency Decree, effective January 2025. The legislation puts a 15% global minimum effective tax rate in place for large multinational enterprises with consolidated revenue of at least EUR 750 million. The Board of Investment has adjusted incentives to try and maintain investment attractiveness.
Read more: Tilleke & Gibbins
Amazon Cloud Hub Launches TH Region
Amazon Web Services launched its Asia-Pacific (Thailand) Region data center as part of a $5 billion investment. The facility allows for local data storage and reduced latency. AWS claims that this project will add $10 billion in GDP contribution and support for 11,000 jobs annually.
Read more: Bangkok Post
Financial Hub Ambitions Take Shape
The Fiscal Policy Office has drafted a Financial Business Hub Act to try and stake out some territory for Thailand as a regional financial center. The legislation outlines incentives for international financial businesses, including exemptions from foreign ownership restrictions and immigration controls. Targeted sectors include banking, payment services, securities, and digital assets.
Read more: Tilleke & Gibbins
Government Tackles PM2.5 Crisis
Prime Minister Paetongtarn has made much noise about making efforts to reduce PM2.5 air pollution as Bangkok's levels once again exceeded standards. It seems like the same story as always, with claimed measures including a demand that buyers avoid burnt sugarcane purchases, better control of vehicle emissions, and regulating construction sites. The plan involves multiple ministries coordinating on information gathering and emergency response, but plus ça change...
Read more: Vietnam+, Nation Thailand
Cabinet Approves 2026 Budget
The Cabinet has given the green light to a 3.78 trillion baht budget for fiscal year 2026, a figure that is up 0.7% from 2025. Revenue is expected to come in at 2.92 trillion baht which implies an 860 billion baht deficit. The budget allocates 2.65 trillion baht for regular expenses and 860 billion baht for investment.
Read more: Khao Sod English
Real Estate Market Sees a Pullback
The residential market index fell to 76.8 in Q3 2024, its lowest level in 12 quarters. Seven major real-estate associations have made proposals for stimulus measures including transfer fee reductions and tax cuts. Corporate office space trends are showing a shift toward green and worker-friendly designs.
Read more: Bangkok Post (Market Index), Nation Thailand (Stimulus Proposals)
Infrastructure Push Continues
The Transport Ministry plans to launch some major projects including SRT rail line expansions and the continuation of double-track upgrades. Total investment required is 319 billion baht. A 95-billion-baht irrigation project for the Chao Phraya River system has also received approval.
Read more: Bangkok Post (Transport Projects), Bangkok Post (Irrigation Project)
Digital Government Progress
Thailand climbed to 52nd globally in the UN E-Government Development Index, ranking second in ASEAN. The government wants to elbow its way into the top 40 by 2027 through its Digital Government Development Plan 2025-2027 and the integration of 153 government services into one central platform.
Read more: Nation Thailand
Industry Adapts to Changes
Some of Thailand’s biggest industries are managing pressure to adapt to U.S. trade policy adjustments and the impacts of disruptive technology on the status quo. The Excise Department says that it will restructure automobile tax rates to support a transition to EVs and hydrogen vehicles. Good news includes that investment applications rose 42% to 723 billion baht in 2024's first nine months.
Read more: Bangkok Post (Industry Adaptation), Bangkok Post (Tax Restructuring)
That’s it for this week, thanks for reading!
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