Thailand 20250627
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Here is your Mekong Memo Thailand for this week.
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Headlines:
TH/KH Relations Worst in a Decade
Paetongtarn Government on the Edge
Central Bank Holds Steady Despite Troubles
Cannabis Industry Gets Snuffed Out
Casino Bill Remains a Political Fight
Big Bets on AI Future
Chinese Tourist Drop Hits Economy Hard
Retail Giants Push Ahead Despite Economy
Government Targets Cross-Border Crime
Stimulus Package For Growth
Finance Ministry Works to Duck U.S. Tariffs
Race for Central Bank Chief Heats Up
E-Waste Ban On Toxic Imports
Energy Watchdog Gets Ready for Price Shocks
Hotels Fear Job Cuts After Wage Hike
Supply Chain Hub Position Improves
Defense Partnerships Build Military Muscle
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TH/KH Relations Worst in a Decade
Relations between Thailand and Cambodia have crashed to a decade low after a May border skirmish left one Cambodian soldier dead. Thailand closed border crossings in seven provinces and Cambodia hit back by banning Thai fuel imports, farm products, media, and internet services. The fight is rooted in old territorial claims dating to a 1907 map and exploded after a leaked phone call between PM Paetongtarn and Hun Sen. The economic toll is climbing and threatens $10 billion in trade as well as the livelihood of almost half a million Cambodian workers in Thailand. Both leaders visited border areas recently, with military forces building up on both sides as tensions continue to rise.
Read more: The Guardian (Border Closures), UCA News (Economic Impact), Nation Thailand (Hun Manet Response), Euronews (Tourism Impact)
Paetongtarn Government on the Edge
Prime Minister Paetongtarn Shinawatra's leadership hangs by a thread after the aforementioned leaked conversation with Cambodia's Hun Sen. The Constitutional Court set a July 1 hearing on a petition from 36 senators claiming constitutional violations. The National Anti-Corruption Commission has launched its own probe into the incident. The Bhumjaithai Party departed the ruling coalition, leaving the government without a clear majority. Protests have erupted nationwide demanding the PM's resignation, and Bhumjaithai is no preparing a no-confidence motion. Political analysts see several possible outcomes: resignation, a cabinet reshuffle, snap elections, or even (god forbid) another coup. The crisis is the most serious challenge to Paetongtarn's leadership since she took office.
Read more: Bangkok Post (Court Case), Bangkok Post (Protests), The Conversation (Political Analysis), Bangkok Post(Cabinet Reshuffle)
Central Bank Holds Steady Despite Troubles
The Bank of Thailand kept its key rate at 1.75% in a 6-1 vote, raising its 2025 growth forecast to 2.3% but cutting the 2026 outlook to 1.7%. The bank said it's ready to cut rates if things get worse, watching risks from the US as well as the local political drama. First-half manufacturing and exports performed well, but the bank expects growth to slow as consumer spending weakens and inflation stays restrained at 0.5%. Negative credit growth and high household debt are still problems, and tourism numbers continue to disappoint.
Read more: Investing.com (Rate Decision), Khao Sod English (Economic Forecast), Nation Thailand (International Analysis), Nation Thailand (Banking Sector)
Cannabis Industry Gets Snuffed Out
The government is pulling a U-turn on cannabis policy, moving to recriminalize a $1.2 billion industry that boomed after 2022 decriminalization. The Health Ministry signed an order banning over-the-counter sales and making cannabis buds a controlled herb that requires a doctor's prescription. Officials say they’re concerned about kids getting access, addiction, and tourists smuggling weed home. The Pheu Thai Party wants to go even further by making cannabis a narcotic again. Business owners are shocked by the reversal, seeing it as political payback for Bhumjaithai’s departure from the coalition. Cannabis advocates plan to protest the new rules, which will take effect when published in the Royal Gazette.
Read more: NBC News (Industry Impact), Straits Times (Political Context), Euronews (New Regulations), Tourism Authority (Tourist Advisory)
Casino Bill Remains a Political Fight
The Entertainment Complex Business Act that proposes the legalization of casino resorts will get a make-or-break vote on July 9 that could decide the government's fate. The bill has become a litmus test for PM Paetongtarn after the Bhumjaithai Party jumped ship. Public opinion isn't on her side - nearly 57% of Thais say they oppose both entertainment complexes and casinos. Each resort would need at least 100 billion baht in investment but could generate 278 billion baht yearly in revenue. International casino operators are watching closely, but religious groups and social conservatives are fighting back. People's Party MP Parit Wacharasindhu says that several coalition members will vote against the bill, putting the government's slim majority at risk.
Read more: Inside Bitcoins (Regulatory Framework), Guru Focus (Investment Impact), Bangkok Post (Public Opinion), Bangkok Post (Political Implications)
Big Bets on AI Future
The government is betting big on artificial intelligence with a 6 billion baht investment to create 10 million AI users, 90,000 AI professionals, and 50,000 AI developers by 2025. A UNESCO study showed there are still some big gaps though: no AI laws, few risk frameworks, 80,000 too few AI experts, and unequal digital access across society. The Bank of Thailand drafted new AI risk management rules for banks and finance firms, and government agencies are now (Now? Horse, barn, etc.!) being told the must use multi-factor authentication after several alarming cyber breaches. Officials want to build a National Data Bank, win 500 billion baht in data center investments, and form an AI Governance Center in October all as steps to making the country a regional AI leader.
Read more: Bangkok Post (National Strategy), TDRI (Readiness Assessment), Bangkok Post (Cybersecurity Measures), Tilleke (Financial Regulations)
Chinese Tourist Drop Hits Economy Hard
Chinese tourist numbers have crashed 30% in early 2025, causing ripples across the economy. Duty-free giant King Power says it wants out of its airport contracts (interesting article from The Nation), and Airports of Thailand stock plunged 50%. The Tourism Authority is changing strategy, now trying to win European visitors instead of mass Chinese tourism. The new plan is on talking up wellness retreats, foodie tours, cultural immersion, and luxury experiences. Tourist visa stays were cut from 60 to 30 days to try and stem the tide of foreigners working illegally. Malaysia has overtaken China as the top source of visitors. The changes are forcing a rethink of a sector that was banking on Chinese visitors returning in force post-pandemic.
Read more: Travel and Tour World (Chinese Arrivals), Nation Thailand (King Power Crisis), Travel and Tour World(Strategic Shift), Travel and Tour World (Visa Changes)
Retail Giants Push Ahead Despite Economy
Central Retail is planning to spend 45-47 billion baht in a three-year expansion in both Thailand and Vietnam, looking for 5% yearly growth despite bleak economic forecasts. They say they’ll add 1-2 department stores, 25-30 Tops stores, and grow in Vietnam with 4-6 GO! malls. Saha Group wants an economic reset, saying the nation needs more AI and STEM education, tax breaks for green energy, and the abandonment of quick-fix cash handouts. The Bank of Thailand says restaurants are growing six times faster than tourism, with a 106% annual increase while tourist arrivals grew just 12%. Many companies are selling off units and assets to raise cash, especially in energy and utilities, as they battle weak growth and high levels of debt in a tough market.
Read more: Bangkok Post (Central Retail), Bangkok Post (Saha Group), Bangkok Post (Restaurant Sector), Nation Thailand (Corporate Divestments)
Government Targets Cross-Border Crime
A damning Amnesty International report on Cambodian scam centers is putting on the heat. PM Paetongtarn will block exports supporting scam operations and take legal action against Poipet facilities. The scam factories are said to rake in as much as $19 billion yearly - 60% of Cambodia's GDP. Police busted an underground casino in Nonthaburi, arresting 54 people as part of an attack on illegal gambling that's reportedly worth more than a trillion baht yearly. Officials want to create a National Cybercrime Intelligence Centre and push for an ASEAN-wide task force to fight these cross-border criminal networks.
Read more: Khao Sod English (Scam Centers), Inside Bitcoins (Casino Raid), Nation Thailand (Regional Analysis), Bangkok Post (Rescue Operations)
Stimulus Package For Growth
The cabinet has approved a 115 billion baht stimulus package. The plan puts 85 billion baht into infrastructure, including 8 water projects and 26 transport developments expected to create 358,807 jobs and increase water supply by 192.2 million cubic meters. Tourism gets 10 billion baht for 420 projects, the goal is to bring 2.76 million more tourists and 55 billion extra baht. Another 11.1 billion baht goes to exports, agriculture, and digital infrastructure development. The total package should create 7.4 million jobs and lift GDP by 0.4 percentage points. Finance Minister Pichai Chunhavajira called an emergency meeting on the economic fallout from the Cambodia border crisis, asking for data on border trade, raw material supplies, and affected sectors.
Read more: Bangkok Post (Stimulus Package), Nation Thailand (Economic Measures), Bangkok Post (Border Impact)
Finance Ministry Works to Duck U.S. Tariffs
Finance Minister Pichai Chunhavajira said that the 18% US import tax figure floating around is just an estimate, and isn’t set in stone. Negotiators proposed a five-year plan to cut the US trade surplus in half through food industry partnerships, the purchase of more US energy and weapons, tariff cuts on 11,000 items, a block on transhipping, and supporting Thai companies to invest in US energy and agriculture. The stakes are high - potential US tariffs could be as high as 36% on Thai exports if talks fail, threatening much needed 2025 growth. Pichai insisted the border crisis with Cambodia won't derail these trade talks, which are ongoing under a confidentiality agreement. The outcome will shape economic prospects for years to come.
Read more: Nation Thailand (Tariff Negotiations), Nation Thailand (Political Impact), Reuters (Economic Risks)
Race for Central Bank Chief Heats Up
Government Savings Bank president Vitai Ratanakorn is now the frontrunner for the Bank of Thailand's top job, competing with current deputy governor Roong Mallikamas. Vitai's pitch: increase GDP growth to 4% within 2-3 years, cut loan rates, and restructure non-collateral debt. Banking analysts remain bullish on local banks, saying valuations are reasonable and 7% dividend yields attractive. Banks are getting more oversight in leasing and vehicle financing, pushing some toward more cautious lending. The Securities and Exchange Commission wants to update digital asset exchange rules, allowing platforms to list their own tokens while adding investor protections through mandatory disclosures and better oversight.
Read more: Nation Thailand (BOT Governor Selection), Bangkok Post (Selection Process), Bangkok Post (Banking Outlook), Fintech News (Digital Assets)
E-Waste Ban On Toxic Imports
An e-waste import ban took effect June 24, increasing the number of prohibited items from 428 to 463 categories, including bad circuit boards, used lithium batteries, dead phones, and appliances with hazardous materials. The ban tackles a mounting crisis - only 500 tonnes (0.125%) of the country's 400,000 tonnes of yearly e-waste gets proper disposal. E-waste imports exploded from 900 tonnes in 2014 to more than 50,000 tonnes by 2017, mostly from America and Europe. After China's 2018 ban, many unlicensed recycling operations, often Chinese-owned, set up shop locally despite a 2020 import ban. The facilities release mercury and lead through metal smelting, damaging farms and contaminating soil and water wherever they are found.
Read more: Vietnam Plus (Import Ban), BBC (Environmental Impact)
Energy Watchdog Gets Ready for Price Shocks
The Energy Regulatory Commission is working to protect against LNG price spikes due to tensions between Israel and Iran. Natural gas fuels 60% of Thailand’s electricity production. LNG is currently priced at $12-13 per million BTUs and power at 3.98 baht per kilowatt-hour. Contingency plans include getting more gas from the Gulf, the Malaysia-Thailand Joint Development Area, and Myanmar to keep prices stable, especially if Iran closes the Strait of Hormuz. At the same time, PTT Oil and Retail Business is managing fallout from Cambodia's ban on Thai energy imports, which derailed plans for a $100 million oil depot investment there. The company still runs 186 gas stations and hundreds of retail outlets in Cambodia through local staff.
Read more: Bangkok Post (Price Volatility), Bangkok Post (Cambodia Ban)
Hotels Fear Job Cuts After Wage Hike
The Thai Hotels Association is saying layoffs are coming after the minimum wage jumps to 400 baht daily on July 1. The increase will push operational costs up 14% from last year, with payroll eating up to 50% of expenses during low season. Small Chiang Mai hotels are reportedly facing the biggest hit. The Association asked the Prime Minister to reconsider as hotels are already under pressure with fewer tourists, especially from China and the Middle East. Hotels in the southern provinces are expecting wage hikes of up to 18.7%. The timing couldn't be worse - the industry is already being battered by low occupancy, high power costs, and tough competition from neighboring countries with lower operating costs.
Read more: Bangkok Post
Supply Chain Hub Position Improves
Automotive production hit 1.47 million vehicles in 2024, with a plan for 725,000 EVs by 2030 attracting players like BYD, Mazda, and Toyota. Electronics exports reached $75 billion, ranking 6th globally in semiconductor device exports. Food exports generated $52.19 billion, keeping leadership in rice, tuna, and chicken. Medical tourism brought in $433.8 million, with plans to serve 4 million international patients by 2027.
Read more: ASEAN Briefing
Defense Partnerships Build Military Muscle
An aircraft maintenance deal with Textron Aviation Defense was announced at the Paris Air Show, in a partnership with Thai Aviation Industries to support Royal Thai Air Force planes. The program will maintain Beechcraft T-6TH trainers and AT-6TH light attack aircraft, improving combat readiness and training effectiveness. Services will include scheduled maintenance, repairs, parts management, and avionics upgrades. The deal moves goals for defense modernization and self-reliance in aviation maintenance forward. Separately, Japan's Ground Self-Defense Force held meetings with Thai Armed Forces in Bangkok about regional tensions, discussing military cooperation and joint humanitarian assistance. Thailand was a participant in Japan's Nankai Rescue exercise, while Japan expressed concern about Thai-Cambodian border problems, with Thailand promising to work through existing channels to resolve them.
Read more: Travel and Tour World (Aircraft Program), Nation Thailand (Japan-Thailand)
That’s it for this week, thanks for reading!
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