Thailand 20250328
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:
Prime Minister Survives No-Confidence Vote
Government Pushes on With Land Bridge
Minimum Wage Hike Set for May Start
Bloated Bureaucracy Risks Competitiveness
Economy Flashing Warning Signs
Auto Industry in Transition Toward EVs
FDI Shows Strong Early 2025 Growth
Digital Economy Fuel for GDP Growth
SEC Powers Expanded to Combat Financial Fraud
Climate Change Act for Carbon Trading Rules
Employee Welfare Fund Launch Set for October
Casino-Entertainment Complex Bill Advances
Tax Incentive Program Targets Skilled Expats
Central Bank Chief Selection Process Begins
TAT Launches Health and Beauty Campaign
Southern Insurgency Faces Development Challenges
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Prime Minister Survives No-Confidence Vote
Prime Minister Paetongtarn Shinawatra defeated a parliamentary no-confidence motion this week by a vote of 319 to 162. The opposition challenged her leadership, questioning her economic skills and alleging influence from her father, former Prime Minister Thaksin Shinawatra. During the debate, Defence Minister Phumtham Wechayachai defended the government's progress on military reform, confirming ongoing talks with military leaders about modernizing the armed forces. This includes plans for weapons, equipment, technology updates, and personnel policy changes. The minister reaffirmed plans to end military conscription while retaining strong national defense capabilities.
Read more: NHK World (No-confidence vote), Nation Thailand (Military reform)
Government Pushes on With Land Bridge
The government is sticking with pressing forward with its massive 1 trillion-baht Land Bridge project connecting the Gulf of Thailand and Andaman Sea. They plan to implement it through a 50-year public-private partnership, with Dubai Port World and investors from China and the Middle East showing interest. The project includes deep-sea ports in Chumphon and Ranong provinces with highway and rail connections, creating a 100-kilometer transport route that bypasses the Malacca Strait. A special economic zone bill is being prepared for cabinet in May. Bidding starts next year with a target completion date of 2030.
Read more: Bangkok Post (Project commitment), GCaptain (Implementation details)
Minimum Wage Hike Set for May Start
Labour Minister Phiphat Ratchakitprakarn plans to roll out a nationwide minimum wage increase to 400 baht by May 1. Right now, only five provinces have this wage rate: Phuket, Chon Buri, Rayong, Chachoengsao, and Koh Samui. The change will affect nearly six million workers and 500,000 SME employers. The national wage committee will meet before Songkran (mid-April) to work out the details. Current minimum wages across provinces range from 337 to 380 baht, with employers worried about a one-size-fits-all approach given the economic differences between regions.
Read more: Bangkok Post
Bloated Bureaucracy Risks Competitiveness
The public sector remains bloated and resistant to change, even as global peers are working towards leaner, tech-driven governance models. Experts are saying that the outdated and centralized Thai bureaucracy stifles investment, encourages corruption, and fails to meet public needs. Despite a mandate for reform, progress has been held up by the centralization of government authority and a lack of political will. Public wages eat up more than 40% of the national budget, and spending has correlation to service quality, particularly in education. Reforms are being proposed, but they generally see resistance from officials benefiting from the status quo.
Read more: Thai PBS World
Economy Flashing Warning Signs
Kasikorn Research Center is sounding alarm bells about the economy, calling the country the "Sick Man of Asia" with GDP growth expected at just 2.4% for 2025. Manufacturing looks especially weak, with production likely to shrink a little this year, more factories closing, and a heavy reliance on exports. Possible US tariffs could hit hard - a 10% tariff might cut GDP by 0.3%, while a 25% tariff could cause a 0.6% drop. The car industry is also seeing extra pressure from proposed US tariffs, threatening Thailand's position as Southeast Asia's second-largest manufacturing center.
Read more: Nation Thailand (Economic outlook), Bangkok Post (Tariff impact), Investing.com (Industry challenges)
Auto Industry in Transition Toward EVs
The auto manufacturing industry is changing fast as it shifts toward electric vehicles. Exports now make up 70% of production, and EV adoption has jumped from 5,000 units in 2020 to 200,000 in 2023. Chinese manufacturers dominate the EV market with 93% of imports. The government's "EV 3.5" policy cuts consumer subsidies from THB 150,000 to THB 100,000 while requiring an increased level of local production. The industry is having to navigate several challenges all at once: cheap Chinese imports, parts suppliers needing to adapt to EV technology, overcapacity in traditional production, and trade diversion through free trade agreements.
Read more: ISEAS (Industry transition), Just-Auto (Production challenges)
FDI Shows Strong Early 2025 Growth
The green light has been given to 181 foreign investment projects in January-February 2025 - a 68% increase over last year. Total investment hit 35.2 billion baht (up a third), creating 1,344 local jobs. Japan led with 38 projects worth 13.6 billion baht, and China / Singapore tied for second place with 23 projects each. The Eastern Economic Corridor has drawn 57 projects, making up 31% of total foreign investments and 50% of investment value. Major Taiwanese manufacturers Delta Electronics and Foxconn are expanding their Thailand operations as part of a plan to spread manufacturing beyond mainland China.
Read more: Bangkok Post (Investment), Asia Nikkei (Taiwanese expansion)
Digital Economy Fuel for GDP Growth
The Thailand digital economy is expected to grow 7.3% in 2025, reaching 4.85 trillion baht ($144.4 billion) - much faster than overall GDP growth of 2.8%. The increased pace is thanks to government policies pulling in foreign investment for data centers, manufacturing technologies, electronic components, and digital products. Public digital spending should grow 4.3%, and digital exports are expected to rise 5.5%. A new “Go Digital ASEAN” program has trained more than 44,000 Thai small businesses in digital skills with impressive results - more than two thirds of participants saw revenue growth and nearly four out of five started using digital tools for their business.
Read more: TVBRICS (Growth), Asian News Network (Go Digital)
SEC Powers Expanded to Combat Financial Fraud
Regulators are rushing through an emergency decree to beef up the Securities and Exchange Commission's powers following recent market scandals. The new rules will let the SEC freeze major transactions when they spot financial wrongdoing, run independent investigations into market-shaking cases, and punish foreign entities involved in illegal short selling. The regulatory push comes as the local bourse has dropped more than 15% this year, with international investors dropping more than $1 billion in Thai stocks.
Read more: Bangkok Post (Regulatory expansion), FinTech News (Enforcement actions)
Climate Change Act for Carbon Trading Rules
Thailand is getting ready to roll out a Climate Change Act with big implications for carbon-intensive industries. The new law creates an Emissions Trading Scheme with mandatory emissions controls and allowance trading, a Carbon Border Adjustment Mechanism requiring importers to register embedded emissions, and a Carbon Tax Framework capped at THB 120 per unit. Companies would be required to report greenhouse gas emissions, and a Climate Fund supported by ETS auctions, carbon taxes, and CBAM fees is expected to help drive business innovation. The law should take effect in 2026. Separately, the Securities and Exchange Commission is re-assessing regulations to make carbon trading through blockchain technology easier. They've updated their utility token framework so digital asset managers can participate in carbon markets, supporting Thailand's goal of carbon neutrality by 2050. The plan uses blockchain for transparent carbon credit tracking and reduced greenwashing risks.
Read more: Tilleke & Gibbins (Climate Change Act), Reccessary (Regulations)
Employee Welfare Fund Launch Set for October
Thailand will start a national Employee Welfare Fund on October 1, 2025, run by the Department of Labor Protection and Welfare. Companies with 10 or more employees must join through mandatory contributions from both employers and employees. The contribution rate starts at 0.25% of wages from 2025-2030, then increases to 0.50% after October 2030. Exemptions will apply for employers with fewer than 10 employees, those already offering provident funds or similar benefits, and some limited sectors like private schools, non-profits, and agriculture. Breaking the rules is expected to lead to fines and possible jail time.
Read more: Lockton
Casino-Entertainment Complex Bill Advances
The cabinet just approved a draft bill allowing casino-entertainment complexes - a big step toward legalizing gaming. The law would limit the casino space to 10% of these entertainment areas and require Thai citizens to show bank deposits of THB50 million ($1.5 million) to get in the door. The proposal got strong backing with 80% support from 71,000 people during public consultations. Next up is parliamentary review (which could take 180 days), followed by Senate and royal approval. Supporters talk up tourism growth and possible annual revenue of THB187 billion ($5.14 billion), while critics worry about gambling addiction, money laundering, and powerful people taking advantage of the system.
Read more: AGBrief (Cabinet approval), Gambling Insider (Public backing), Skift (Tourism impact)
Tax Incentive Program Targets Skilled Expats
A new tax incentive program is aimed at bringing skilled Thai expatriates home, offering a flat 17% income tax rate for those with bachelor's degrees and at least two years of international work experience. Running through December 31, 2029, the program also gives employers 50% tax exemptions on salaries paid to returning workers. It targets professionals in technology, advanced manufacturing, and research. To qualify, you must be a Thai national who hasn't worked in Thailand during the relevant tax year. The policy is an attempt to fight brain drain while supporting the nation’s capacity for innovation.
Read more: Asian News Network (Details), Nation Thailand (Implementation)
Central Bank Chief Selection Process Begins
Finance Minister Pichai Chunhavajira announced plans to form a selection committee to find the next central bank governor, with Sathit Limpongpan, former Finance Ministry permanent secretary, expected to lead the panel. Current Governor Sethaput Suthiwartnarueput's term ends in September, and age limits prevent him from serving again. The government wants a successor with "modern ideas" who can work closely with the state. Top candidates include BoT deputy governor Roong Mallikamas, former IMF economist Sutapa Amornvivat, and independent rate panel member Santitarn Sathirathai.
Read more: Bangkok Post
TAT Launches Health and Beauty Campaign
The Tourism Authority of Thailand (TAT) has kicked off the Amazing Thailand Health and Beauty campaign to make Thailand ASEAN's top wellness tourism destination. The campaign is aimed at health-conscious travelers from ASEAN, South Asia, and South Pacific regions, expecting to pull in 600 direct B2B buyers and engage 600,000 consumers. It launched with a three-day consumer fair in Phnom Penh, Cambodia, celebrating 75 years of Thai-Cambodian diplomatic relations. The strategy includes partnerships with VISA, hospitals, and spa brands, offering special health and wellness packages.
Read more: Travel and Tour World
Southern Insurgency Faces Development Challenges
Thailand's Deep South conflict, which started with the 1902 Pattani annexation, continues to create problems more than a century later in 2025. Between 2004 and 2024, there were 22,928 violent incidents, resulting in 7,626 deaths and 14,385 injuries. The government has spent 513 billion baht managing the conflict and working towards peace talks with groups like Barisan Revolusi Nasional. Recent months have seen new violence, despite attempts to manage the conflict through a hybrid peace model involving international partners.
Read more: ISEAS
That’s it for this week, thanks for reading!
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