Thailand 20240927: Chameleonic, Perennial, Mottled
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:
Flooding Dampens Tourism as Nation Braces for More
Strong Baht Challenging for Tourism and Export
EV Push Amid Declining Auto Production and Sales
PM Faces Mounting Political Challenges
Export Momentum and UK Trade Boost
Mortgage Growth in to Hit 23-Year Low
Economic Growth Faces Downward Revisions
Private Sector Call for Clarity on Tourism Policies
Ethics Code Reforms Spark Controversy
Debt and Fraudulent Practices Threaten Stability
First Silicon Chip Plant in Two Years
Five Applications for Virtual Bank Licenses
Education Crisis as Dropout Rates Passes 1 Million
Super Yacht Regulations Eased
Greenwashing Fear With Rushed Climate Targets
Food Businesses Gear Up for IPOs for Expansion
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Flooding Dampens Tourism as Nation Braces for More
Severe flooding in northern Thailand, particularly in Chiang Mai, has heavily impacted the region's tourism sector, with tourists avoiding normally popular destinations. The month-long floods have submerged business and tourist areas, causing a big drop in occupancy rates. Tourism cancellations, along with damage to infrastructure, have dampened local economic activity, with an estimated loss of 242 billion baht across northern provinces. While recovery is expected with the high season, concerns remain as weather forecasts foresee more rainfall.
Read more: Straits Times (Tourist Concerns), Nation Thailand (Economic Toll), Bangkok Post (Losses).
Strong Baht Challenging for Tourism and Export
The Thai baht has surged to its highest level in over a decade, driven by global gold prices and speculative trading. While the stronger currency reflects economic stability, it is raising concerns in sectors like tourism and exports. Tourists are finding Thailand more expensive, potentially dampening the country's booming tourism industry. Exporters struggle to stay competitive as the baht continues to appreciate. Policymakers are expected to address these challenges with monetary adjustments in the coming months.
Read more: Bangkok Post (Currency High), Travel and Tour World (Tourism Threat))
EV Push Amid Declining Auto Production and Sales
Thailand has approved a 7.12 billion baht subsidy program to boost electric vehicle (EV) adoption, offering buyers up to 100,000 baht per vehicle. This comes as the nation’s auto industry struggles, with a 20.56% drop in car production in August due to weak domestic demand and tightened loan criteria. The government wants to increase EV production to 30% of total output by 2030. The EV subsidy is expected to drive investments and offset declining sales in traditional vehicles.
Read more: VnExpress (Subsidies), Nation Thailand (Government EV Program), Bangkok Post (Cabinet Allotment), Bangkok Post (Car Production Drop)
PM Faces Mounting Political Challenges
Thailand’s new and youngest-ever prime minister, Paetongtarn Shinawatra, faces a series of political hurdles as she navigates opposition both from within the coalition and from the public. Criticism surrounding her father, Thaksin Shinawatra's potential influence, has led to petitions questioning her ethical standing. The political landscape is complicated by internal party tensions and constitutional scrutiny, which could threaten her leadership. With significant challenges ahead, Paetongtarn’s political future, and Thailand’s stability, remain under a cloud of uncertainty.
Read more: Nation Thailand (Constitutional Amendments), ISEAS (Leadership Challenges)
Export Momentum and UK Trade Boost
Exports grew 7% in August 2024, the second consecutive month of growth. The UK-Thailand trade deal, recently signed, is expected to benefit both nations, with Scotch whisky set for especially healthy gains. With streamlined processes for UK imports into Thailand and growing demand in the Thai market, the trade deal creates new opportunities for British businesses. Thailand's rice exports surged 39.5% year-on-year, strengthening its overall trade position despite currency fluctuations.
Read more: Bangkok Post (Exports), The Drinks Business (UK Trade Deal)
Mortgage Growth to Hit 23-Year Low
Mortgage growth is forecast to expand by just 1.2% in 2024, the slowest rate in more than twenty years, driven by declining purchasing power, rising household debt, and stagnant income growth. Commercial banks are tightening lending criteria, primarily focusing on upper-income borrowers to maintain asset quality. Housing refinance loans have grown, accounting for 21.3% of total new mortgages in the second quarter. Non-performing loans are expected to rise, putting further pressure on the banking sector.
Read more: Bangkok Post
Economic Growth Faces Downward Revisions
The Asian Development Bank (ADB) has lowered Thailand's GDP growth forecast to 2.3% for 2024, driven by weak exports and sluggish government spending. Thailand's role in international diplomacy was highlighted by Prime Minister Srettha Thavisin's engagements at the UN General Assembly, including discussions on climate action, global cooperation, and equitable recovery. While facing economic challenges, Thailand continues to position itself as a player on the global stage.
Read more: Nation Thailand (Diplomatic Engagements), Nation Thailand (Economic Outlook)
Private Sector Call for Clarity on Tourism Policies
The private sector is calling on the government to establish clear policies and incentives to foster the growth of man-made tourist attractions. This comes after Prime Minister Paetongtarn Shinawatra outlined plans to boost tourism promotion, particularly through artificial attractions. Industry leaders spoke about the need for unambiguous government support to drive investment, especially for large-scale projects like entertainment complexes. Investors need firm government commitments before conducting feasibility studies, and say there is a desperate need for updated legislation and incentives to stimulate both domestic and foreign investments.
Read more: Nation Thailand
Ethics Code Reforms Spark Controversy
Proposed revisions to Thailand's ethics code for public officials are drawing sharp criticism from opposition parties and civil society groups. The reforms, intended to provide more flexibility in conflict-of-interest rules, are seen by many as weakening accountability standards for politicians and high-ranking officials. Critics argue that such changes would erode transparency and undermine public trust, calling for stronger safeguards to protect ethical governance.
Read more: Bangkok Post
Debt and Fraudulent Practices Threaten Stability
Thailand faces a growing crisis with 2.4 million at-risk borrowers, many burdened by debt exceeding 1 million baht. A FICO survey revealed concerning attitudes, with 39% of Thais deeming it acceptable to exaggerate income on loan applications. This aligns with rising mortgage defaults and household debt, currently over 16 trillion baht. Financial experts warn of increased risks to the banking sector, calling for stricter fraud detection and regulatory measures to mitigate long-term financial instability.
Read more: Bangkok Post (At-risk Borrowers), StockTitan (Fraud Concerns)
First Silicon Chip Plant in Two Years
Thailand’s first silicon carbide (SiC) chip factory, a joint venture between Hana Microelectronics and PTT, is set to begin operations in 2027 with an investment of 11.5 billion baht. The factory will produce 6-inch and 8-inch SiC wafers, necessary for electric vehicles, data centers, and energy storage systems. Supported by the Thailand Board of Investment (BOI), the project is part of the country's push into advanced technology sectors, benefiting from technology transfer from a leading South Korean chipmaker.
Read more: Nation Thailand
Five Applications for Virtual Bank Licenses
The Bank of Thailand (BOT) has received five applications for virtual bank licenses, including bids from prominent entities such as Sea Limited, in partnership with Bangkok Bank, SCB X, and Krungthai Bank. The BOT will evaluate applicants based on qualifications and potential, with results expected by mid-2025. Successful applicants must start virtual banking operations within a year.
Read more: Asian Banking & Finance
Education Crisis as Dropout Rates Passes 1 Million
Thailand is facing a severe rise in student dropout rates, now exceeding one million students, driven by poverty, social issues, and an economic slowdown. Experts are alarmed, as this threatens the country’s future workforce and overall economic growth. Initiatives like mobile schools are being introduced to provide flexible learning opportunities and re-integrate students into the education system, with the goal of reducing the dropout rate and breaking cycles of poverty.
Read more: CGTN
Super Yacht Regulations Eased
Thailand has upgraded its regulations for super yacht visits, lowering the vessel size threshold from 30 meters to 24 meters, in line with international standards. The changes are expected to help position Thailand as a leading Asian marina hub, focusing on attracting wealthy foreign tourists. Super yacht owners will now benefit from streamlined procedures, including a new electronic application system and quicker approval times. Popular destinations such as Phuket and Koh Samui are expected to see increased traffic.
Read more: Bangkok Post
Greenwashing Fear With Rushed Climate Targets
As Thailand accelerates efforts to meet ambitious climate goals, concerns are rising over "greenwashing," where companies announce net-zero targets without substantive action. Despite many firms reporting carbon footprints, only 10% are fully compliant with necessary auditing and reporting standards. With new mandatory climate legislation set to take effect in 2025, there is pressure on businesses to genuinely reduce emissions or risk penalties, carbon taxes, or reliance on carbon credits. The upcoming Climate Change Act is designed to ensure transparency and accountability.
Read more: Khaosod English
Food Businesses Gear Up for IPOs for Expansion
Two Thai companies, Ohkajhu Organic Restaurants and Dusit International’s food subsidiary, are preparing for major IPOs to fuel their expansion. Ohkajhu plans to raise 1.06 billion baht, expanding its organic food offerings and branch network. Dusit International intends to list its food business by late 2025 or early 2026, seeking capital to support its sustainable growth strategy. Both firms are positioning themselves to capitalize on the growing demand for health-conscious and innovative food products.
Read more: Bangkok Post (Ohkajhu IPO), Nikkei Asia (Dusit International)
That’s it for this week, thanks for reading!
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