Thailand 20241220: Unequivocal, Cleansing, Wise
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:
Global Tax Reform Reshapes Business Landscape
Rate Cuts Take Center Stage in 2025
Export Growth Powers Economic Recovery
Digital Economy Outpaces GDP Growth
Debt Relief Targets Economic Recovery
Chinese Competition Spurs Protection Measures
Rail Infrastructure Expansion Accelerates
Tourism Recovery Drives Hotel Growth
Aviation Network Expands With New Routes
Korean Investment Lifts EV Sector
Toyota Expands Hybrid Production
Industrial Sentiment Reaches Eight-Month High
Anti-Coup Bill Tests Coalition Unity
E-Visa System Goes Global
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Global Tax Reform Reshapes Business Landscape
Thailand will introduce a 15% global minimum corporate tax for multinational companies from January 2025, while keeping a 20% tariff for other businesses. The government has been talking up tax reforms including potential VAT increases from 7% to 15% and reduced personal income tax rates. The Thai Chamber of Commerce says it supports these changes to improve competitiveness against regional rivals, particularly Singapore. Officials say the reforms will attract international companies looking for lower operating costs while maintaining OECD compliance.
Read more: Nation Thailand (Tax Reform), Bangkok Post (Reform Details)
Rate Cuts Take Center Stage in 2025
The Bank of Thailand maintained its policy rate at 2.25% through 2024 as monetary policy has emerged as one of the main economic growth drivers for 2025. Finance Minister Pichai Chunhavajira is pushing for further rate cuts to match surprisingly low inflation, which averaged just 0.32% from January to November. The National Economic and Social Development Council forecasts that fiscal stimulus will decrease by mid-2025, shifting focus to monetary tools for sustaining economic momentum.
Read more: Bangkok Post (Policy Shift), Bangkok Post (Rate Cut Push)
Export Growth Powers Economic Recovery
Thailand is foreseeing 3% export growth for 2024 and 2025, a six-year high. Commerce Minister Pichai Naripthaphan wants to do even better than that, however, downplaying concerns about U.S. trade policies. October 2024 saw 14.6% export growth, the highest in three months. The Ministry says the highest-potential markets now include India (6.5% growth), CLMV (5.3%), ASEAN-5 (4.5%), and the Middle East (3.8%).
Read more: Bangkok Post (Growth Forecast), AJOT (Minister's View)
Digital Economy Outpaces GDP Growth
Domestic digital economy growth was 5.7% in 2024, reaching almost 4.5 trillion baht and outperforming overall GDP. Digital exports have grown 17.2%, and two major conglomerates say they plan 100 billion baht investments in AI and data centers for early 2025. Private digital consumption has grown 5.6%, surpassing national consumption growth of 4.8%.
Read more: Nation Thailand
Debt Relief Targets Economic Recovery
The cabinet has approved debt relief measures for nearly 2 million borrowers with combined debts of $26.3 billion. The program suspends loan interest for three years and waives accumulated interest for compliant borrowers. Measures cover mortgages up to 5 million baht, car loans up to 800,000 baht, and small business loans up to 5 million baht. Banks' contributions to the Financial Institutions Development Fund has been halved for three years to encourage participation.
Read more: Bangkok Post (Banking Impact), PropNewsTime (Relief Details)
Chinese Competition Spurs Protection Measures
Thailand is putting measures into place to combat cheap Chinese imports that are putting the heat on local manufacturers. More than 2,000 Thai factories closed in 2023, with some businesses reporting 50% sales drops thanks to Chinese competition. New protective measures include tighter import inspections and 7% VAT on all goods, including those priced below 1,500 baht. Regional responses mirror Thailand's concerns, with India considering 25% steel import tax and Indonesia proposing 200% tariffs on certain goods.
Read more: VOA News
Rail Infrastructure Expansion Accelerates
Thailand has committed $19 billion to rail expansion in 2024, including $8.7 billion for six double-track projects totaling 1,312 km and $10 billion for the Bangkok-Nong Khai high-speed line. The government is prioritizing expressway network expansion to 3,000 km by 2025. Project challenges include land acquisition and construction materials access, particularly sand shortages.
Read more: Global Construction Review
Tourism Recovery Drives Hotel Growth
SCB EIC forecasts hotel sector growth with nationwide occupancy rates reaching 72% in 2024 and 74% in 2025. Room rates exceed 2019 levels by 8% in 2024, with an additional 5% growth projected for 2025. The industry expects 36.2 million foreign tourists and 270.2 million domestic travelers in 2024, driving competitive expansion in both main destinations and secondary cities.
Read more: Nation Thailand
Aviation Network Expands With New Routes
Eight international airlines launched new routes to Thailand in 2024, with three more planned for 2025. Bangkok gained European connections through British Airways, ITA Airways, and Thai Airways. Phuket added flights from Air India, Air India Express, Air Astana, and Saudia Airlines. Chiang Mai secured Hong Kong Airlines service and upcoming Etihad Airways routes. U-Tapao Airport near Pattaya is looking forward to S7 Airlines flights direct from Irkutsk.
Read more: Meetings-Conventions-Asia
Korean Investment Lifts EV Sector
A South Korean automaker is planning $30 million in investment for an EV and battery manufacturing facility. The announcement comes alongside discussions to complete the Thailand-South Korea economic cooperation framework by 2025 and revive a joint commerce committee dormant for two decades. Thailand wants Korean investment in semiconductors, PCBs, medical technology, AI, data centers, and robotics.
Read more: Nation Thailand
Toyota Expands Hybrid Production
Toyota Motor Corp is promising 55 billion baht to expand hybrid car production in Thailand. The investment includes production line updates for internal combustion engines and battery-powered electric motors. Industry Minister Akanat Promphan says the expansion will continue to create jobs and will facilitate technology transfers and workforce development.
Read more: Bangkok Post
Industrial Sentiment Reaches Eight-Month High
The industrial sentiment index climbed to 91.4 in November 2024 from 89.1 in October, an eight-month peak. Strong exports and tourism drove the increase, though the three-month outlook declined from 98.4 to 96.7. Business leaders remain concerned about global geopolitics, U.S. trade policies, and proposed minimum wage increases.
Read more: Travel and Tour World
Anti-Coup Bill Tests Coalition Unity
A proposed defense ministry reform bill is creating tensions within Thailand's ruling coalition since it would give the cabinet authority over military general appointments and dismissals. The legislation, introduced by Pheu Thai Party lawmaker Prayuth Siripanich, is seeing resistance from pro-military coalition members, raising concerns about near-term political stability (again).
Read more: Nikkei Asia
E-Visa System Goes Global
Thailand will launch an e-visa system in January 2025, allowing electronic visa applications for all nationalities. The system reportedly modernizes the visa application process and improves security measures. Immigration officials expect improved efficiency in processing visitors while being able to maintain screening protocols.
Read more: Khao Sod English
That’s it for this week, thanks for reading!
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