Thailand 20250620
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Here is your Mekong Memo Thailand for this week.
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Headlines:
Political Crisis as Coalition Partner Exits
Border Dispute Raises Tensions
Record Export Growth
Economic Stimulus Package Approved
Thai Airways Finishes Restructuring
Thailand Lags ASEAN in Biz Innovation
EV Market Regulations Revised
Clean Air Act
BKK Condo Market Remains Tepid
Gov’t to Buy Back Rail Lines, Cap Fares
Crypto Tax Break Until 2029
Thailand-Vietnam Partnership
Education System in Demographic Crisis
Whistleblower Protections Improved
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Political Crisis as Coalition Partner Exits
The government is on the brink of collapse after the Bhumjaithai Party pulled its support, with all eight of its ministers resigning effective yesterday, June 19. The exit was set off by a controversial leaked phone conversation between Prime Minister Paetongtarn Shinawatra and former Cambodian leader Hun Sen, which critics say compromised national sovereignty. In the conversation, the PM referring to a Thai army commander as "an opponent." The Pheu Thai-led coalition is still in control with 292 seats against the opposition's 208 in the 500-seat House. The Army has spoken out for national unity and rejected any coup speculation. The political crisis has sent the SET index to a five-year low, dropping 2.2% in early trading, bringing the year-to-date decline to -23%.
Read more: The Diplomat (Coalition Withdrawal), The Guardian (Phone Leak), Bangkok Post (Military Response), France24 (Resignation Calls)
Border Dispute Raises Tensions
Apart from the political ramifications suggested by the previous article, Thailand-Cambodia relationship have continued to deteriorate since the May 28 border incident that resulted in a Cambodian soldier's death. Thailand has limited border crossing hours and Cambodia has slapped a ban on the import of Thai produce. The dispute surrounds disputed areas in the Emerald Triangle region, and is disrupting cross-border trade worth 250 billion baht and impacting around half a million Cambodian workers in Thailand. Cambodia says that it intends to pursue the dispute at the International Court of Justice, but Thailand refuses to recognize the court’s jurisdiction. The Thai Foreign Ministry has criticized Cambodia's approach, saying they’ve shown a lack of genuine commitment to a peaceful resolution. Both countries have agreed to continue discussions through the Joint Boundary Commission, with the next meeting scheduled for September.
Read more: Bangkok Post (PM's Response), Independent (Import Ban), Bangkok Post (Diplomatic Tensions), Thaiger(Migrant Workers)
Record Export Growth
Exports reached a record $31 billion in May, an 18.4% increase and the fastest growth seen since March 2022. Computer and parts exports in particular showed growth (+104%), along with agricultural related stuff (+6.8%). The increase comes while negotiators work feverishly with their US counterparts to prevent tariff increases of up to 36% when a 90-day pause expires on July 9. The United States is Thailand's largest export market, making up nearly 20% of shipments. The Ministry of Commerce has put forward a trade proposal that prioritizes five areas it wants to focus on: tariff measures and quotas, non-tariff barriers, digital trade management, rules of origin, and economic/national security considerations.
Read more: Reuters (Export Growth), Bangkok Post (Record Exports), Bangkok Post (US Proposal), MarketScreener (Negotiations)
Economic Stimulus Package Approved
Thailand's Economic Stimulus Board has approved a 110-billion-baht package to raise GDP by 0.5%. The package sets aside 70% for infrastructure, focusing on agricultural water systems, potable water infrastructure, flood prevention, and road construction. 10% is earmarked for tourism development, with the balance of the money designated for financial measures. The stimulus is expected to generate up to 7 million jobs, with larger amounts of money allocated to provinces with lower per-capita income. Finance Minister Pichai Chunhavajira will present the projects to the cabinet next week. The broader stimulus plan includes the Interior Ministry's 79.9 billion baht allocation for 21,000 projects and the Transport Ministry's 80 billion baht for infrastructure development.
Read more: Bangkok Post (Package Approval), Reuters (Finance Minister Statement), Bangkok Post (Project Details)
Thai Airways Finishes Restructuring
After four years, Thai Airways International has finally wrapped up its court-supervised debt restructuring process. The national carrier, which entered bankruptcy protection in 2020 during the COVID-19 pandemic, has found profitability through restructuring that including workforce reduction, operational cost cuts, and route optimizations. The airline has secured new capital through investments, equity offerings, and asset sales while also renegotiating aircraft lease agreements. Having met all court-mandated rehabilitation requirements, Thai Airways is now getting ready to start trading again on the stock exchange and to expand its international network. The carrier has also officially dissolved its budget airline subsidiary Thai Smile after running up billions in losses over its 12-years of operation.
Read more: Travel and Tour World (Restructuring Completion), Travel and Leisure Asia (Thai Smile Dissolution)
Thailand Lags ASEAN in Biz Innovation
The World Bank's Thailand Economic Monitor reports that Thailand is trailing far behind its ASEAN neighbors in measures of business innovation. Only 11.9% of Thai companies made innovation part of their production processes, and a measly 8.2% have introduced new products or services. The adoption of foreign technology stands at 5.6%, and R&D investment is a mere 1.1%. In contrast, the Philippines leads ASEAN with 40.9% process innovation, followed by Vietnam at 37.9% and Malaysia at 37.3%. The innovation deficit has been a contributing factor to business challenges, with 24,000 SMEs deregistering in 2024, 1,234 factories closing, and 35,000 workers laid off. With SMEs being responsible for the employment of 12.9 million people nationwide, the World Bank says there needs to be an expansion of SME financing, a prioritization of innovation, improved competitiveness, and more R&D investment.
Read more: Asian News Network
EV Market Regulations Revised
The government is announcing new measures for EV promotion to address a market oversupply. New regulations require manufacturers to have local production facilities, with requirements to produce twice the number of imported EVs by 2026 and triple by 2027. EV registrations have grown from 84,500 units in 2022 to 206,000 units in 2024, as well as bringing 644 investment promotion requests worth 280 billion baht for EV and parts manufacturing. Policy adjustments include flexible compensation production timelines and the option to export unsold imported EVs without affecting production quotas. EVs failing to meet local production requirements will not qualify for subsidies. The changes are necessary to deal with market oversaturation concerns, particularly related to the aggressive pricing strategies of Chinese manufacturers.
Read more: Bangkok Post
Clean Air Act
Clean air legislation is making its way through parliament to address pollution concerns. The Draft Clean Air Act brings several new mechanisms including declaring a fundamental right to clean air, creating a national monitoring system, and setting up a Clean Air and Health Fund. The legislation will give “Clean Air Officers” enforcement authority and require pollution tracking at the provincial level. For businesses, the act will require environmental assessments, emissions reporting, and financial penalties for violations. The framework draws from international best practices, particularly those already used in the US, EU, UK, Philippines, and Singapore. The law is expected to reduce PM2.5 levels, bring agricultural and industrial emissions under control, generally improving public health protections.
Read more: National Law Review
BKK Condo Market Remains Tepid
Bangkok's condominium market continues to be soft, with Q1 data showing 6,306 new units launched in 14 projects valued at 19.8 billion baht. The take-up rate dropped to 64.2%, a 2.5% year-on-year decrease. Mass market developments dominated new launches at 60.5%. Multiple factors are behind the slowdown, including a flagging economy, reduced foreign demand, and tighter lending conditions. Foreign condo transfers are expected to drop by 2.6% in 2025, with Chinese purchases down 7%, though Myanmar buyers showed 12% growth. The market outlook suggests about 25,000 new unit launches through the rest of this year, with take-up rates expected to drop 3-5% year-on-year. Recovery will be dependent on reforms in lending and debt management.
Read more: Bangkok Post
Gov’t to Buy Back Rail Lines, Cap Fares
The Finance Ministry and State Enterprise Policy Office are leading plans to repurchase concessions for Bangkok's electric train lines by next year. The buyback, with an estimated value of 200 billion baht, is being floated as a way to make public transport more affordable by capping fares at 20 baht a trip. The government says it intends to become the sole owner of the infrastructure while also considering private operators being allowed to compete in service delivery. Finance Minister Pichai Chunhavajira said financing could be arranged through an infrastructure investment fund. The plan reportedly appeals to the current private operators because the remaining concession periods they are operating under are limited. The planned 20-baht fare implementation is expected by September and a complete buyback is expected sometime next year.
Read more: Bangkok Post
Crypto Tax Break Until 2029
A tax exemption on Bitcoin and cryptocurrency gains is in effect from January 2025 through December 2029. The exemption, approved by the Thai SEC, has been made to promote transparent crypto trading, support technological innovation, stimulate economic growth, bring more foreign investment, and help set Thailand up as a global digital asset hub. Alongside the tax incentive, the SEC says that it’s tightening regulatory measures, including blocking access to unlicensed crypto exchanges including Bybit, OKX, CoinEx, 1000X, and XT.COM. Global cryptocurrency exchange KuCoin has entered Thailand's digital asset market with a fully regulated trading platform under SEC supervision, providing crypto-to-crypto trading and Thai Baht fiat services.
Read more: 99 Bitcoins (Tax Exemption), Crypto.news (KuCoin Launch), Decrypt (Fraud Case)
Thailand-Vietnam Partnership
As Thailand and Vietnam get ready to celebrate 50 years of diplomatic relations, they’re expected to raise the tempo of high-level exchanges and plans on how to work better together to manage regional challenges. Vietnam is making economic integration with Thailand, its largest ASEAN trading partner (2024 bilateral trade over $20 billion) a priority. The partnership is using a "Three Connectivity Strategy" that is centered on supply chain integration, innovation, and cooperation in the green and digital economies. Both countries say they want to work better together in the Mekong region, especially on environmental monitoring and water security. They also say they need strategic autonomy but have to balance relations with China and the United States.
Read more: Bangkok Post (Partnership Framework), The Diplomat (Strategic Basis)
Education System in Demographic Crisis
The education system has a problem because of a huge demographic change: annual births have dropped from 1,221,228 in 1971 to only 461,421 in 2024 - the first time in 70 years that the annual tally of newborns has fallen below half a million. The demographic changes have forced the consolidation of 1,217 small public schools between 2017-2023, a move that particularly hurts rural communities. While traditional schools are struggling, international schools are growing; 249 schools with 77,734 students in 2024. Urban parents are increasingly turning to alternatives like homeschooling and online education. The situation is similar to the one that Japan experienced, causing concerns about workforce capacity and economic stability that will need policy interventions to prevent educational institutions from collapsing because of insufficient enrollment.
Read more: Bangkok Post
Whistleblower Protections Improved
Amendments to the Organic Act on Anti-Corruption have been made, substantially improving protections for whistleblowers. The amendments grant legal immunity to people who provide good-faith information to anti-corruption agencies, protecting them from civil, criminal, and disciplinary liability. The National Anti-Corruption Commission must evaluate possible retaliation cases within 15 days and can provide immediate assistance to good-faith whistleblowers. The amendments set support mechanisms, including legal counsel, court fee coverage, legal defense, bail assistance, and official protective status notices. The National Counter Corruption Fund will finance these services, and the protections are able to be applied retroactively to existing cases.
Read more: Tilleke & Gibbins
That’s it for this week, thanks for reading!
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