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Here is your Mekong Memo Thailand for this week.
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Headlines:
PM Gets the Boot Over Border Call
Streets Fill with Angry Crowds
Economic Forecasts Paint Grim Picture
Racing Against the Tariff Deadline
Central Bank Leadership Race Down to Final Two
Cannabis Dreams Up in Smoke
Casino Plans on Pause
Tourism Numbers Take a Dive
AI Gets a Rulebook, Government Moves Online
Virtual Banks Get 2026 Go-ahead
Manufacturing Shows Signs of Life
Auto Industry Hits Rough Patch
Foreign Investment Defies the Storm
Golden Anniversary with China
War on Phone Scammers
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PM Gets the Boot Over Border Call
Prime Minister Paetongtarn Shinawatra is out, suspended by the Constitutional Court after a leaked conversation with Cambodian Senate President Hun Sen went public. The court voted 7-2 to bench her, deciding the border dispute conversation was not exactly in the national interest. Deputy PM Suriya Juangroongruangkit is now running the show; former defense minister Phumtham Wechayachai might be stepping up next, we’ll see soon enough. The Bhumjaithai party jumped ship from the coalition, leaving Paetongtarn's administration looking lonesome. She’s got 15 days to convince the court she didn’t do anything wrong.
Read more: Asia Times (Court Decision), Goskagit (Suspension Details), Reuters (Political Dynasty), Arab News(Cabinet Reshuffle)
Streets Fill with Angry Crowds
Around 20,000 protesters gathered at Victory Monument demanding Paetongtarn's head on a platter. The newly minted "United Front to Defend Sovereignty" managed to bring together previously warring factions including Red Shirts, Yellow Shirt conservatives, and other assorted reform groups in a rare display of political unity. The spark that lit the match was the same leaked phone call mentioned above. Protest leader Sondhi Limthongkul said that while military intervention could solve the problem, civilian governance should come first. Opposition parties are sharpening their knives for a no-confidence motion.
Read more: Goskagit (Protest Details), Iraq News (Protest Size), Bangkok Post (Coalition Formation), Bangkok Post (Protest Leadership)
Economic Forecasts Paint Grim Picture
The economic outlook has taken a beating, and growth projections are getting flogged like they’re going out of style. Bangkok Bank chopped its 2025 GDP forecast from 3% to 2%, with whispers of a reduction as low as 1.5% if things really go south. The World Bank joined the woe-fest, cutting their view to 1.8% for 2025 and 1.7% for next year. Even the Bank of Thailand's more optimistic 2.3% number came alongside warnings about slowing growth. The possible US tariffs, declining tourism, political chaos, and high household debt are making everyone nervous.
Read more: Bangkok Post (Bangkok Bank Forecast), AI Invest (World Bank Forecast), Bangkok Post (Household Debt), AI Invest (Economic Challenges)
Racing Against the Tariff Deadline
The clock is ticking on reaching a tax deal with the United States before the July 9 deadline. Without an agreement, tariffs on US-bound goods could go up to as much as 36%, an outcome that would likely crush export revenues from $60 billion to $40 billion. Chamber of Commerce representative Poj Aramwattananont and Finance Minister Pichai Chunhavajira are burning the midnight oil in negotiations with US Trade Representative Jamieson Greer. The tariffs could land between 15-20%, with negotiators trying to get better terms than Vietnam's recent deal.
Read more: Bangkok Post (Negotiation Details), Seattle Times (Pet Food Industry Impact), Reuters (Economic Impacts)
Central Bank Leadership Race Down to Final Two
The race to lead the central bank has been winnowed down to two contenders before current governor Sethaput Suthiwartnarueput's September 30 scheduled exit. Government Savings Bank president Vitai Ratanakorn is facing off against deputy central bank governor Roong Mallikamas for the top job. The Bank of Thailand held its key rate at 1.75%, calling this decision a "monetary lifeline" for a battered economy.
Read more: Investing.com (Leadership Candidates), Bangkok Post (Rate Decision), Bangkok Post (Policy Flexibility), Bangkok Post (Currency Management)
Cannabis Dreams Up in Smoke
The 2022 cannabis decriminalization experiment seems to have come to an abrupt end with new rules that effectively stifle recreational use. The health ministry banned recreational sales and now requires a medical prescription for purchases. Cannabis flower buds now fall under "controlled herb" classification, and within 45 days, cannabis will return to its previous status as a controlled narcotic. This reversal threatens thousands of dispensaries with closure and puts small farmers and businesses in a tough spot. The industry, otherwise expected to hit $1.2 billion by 2025, is in disarray, and the fact that the government can’t seem to make up its mind is lost on nobody.
Read more: Al Jazeera (Industry Impact), Independent (Policy Change), FTN News (New Regulations)
Casino Plans on Pause
The Entertainment Complex Bill that would lay the groundwork for five casino resorts in Bangkok, Chon Buri, Chiang Mai, and Phuket has been shelved for the moment. Political turmoil and public opposition facing Paetongtarn's Pheu Thai Party have forced the delay. The People's Party opposition wants a complete withdrawal of the legislation. Despite the setback, the government claims it still has a long-term commitment to getting the casino project off the ground, saying it would result in a 20% tourism boost (see next article) and higher visitor spending.
Read more: Casino.org (Project Delay), Casino.org (Opposition Push), Yogonet (Political Context), Bangkok Post (Senate Committee)
Tourism Numbers Take a Dive
Tourism is seeing a decline across virtually every major market including China, Europe, US, Japan, Australia, Middle East, India, Russia, and South Korea. Bangkok Bank reports a 2-3% drop in international arrivals during this year’s first five months, and has this year’s forecast of visitors at 35.5 million. This would be a reversal of fortunes and put the country behind both Malaysia (38 million) and Japan (36.9 million). Chinese arrivals especially dropped off - from 11 million in 2019 to less than 2 million so far this year. The Tourism Authority still (ambitiously) says it has expectations of 68.5 million visitors by 2028.
Read more: Travel and Tour World (Market Decline), Bangkok Post (Arrival Statistics)
AI Gets a Rulebook, Government Moves Online
An AI governance framework is coming, based on a risk-based regulatory approach that sorts AI systems into prohibited, high-risk, and general use categories. The tiered strategy is intended to protect users while still allowing for innovation and development with clear rules and oversight. The Electronic Transactions Development Agency is going to oversee the situation with its AI Governance Center. In separate news, the Office of the Council of State has begun work on digital transformation using Microsoft's AI and cloud technology. The centerpiece for their partnership is “TH2OECD,” an AI-powered system that they say can analyze more than 70,000 legal documents and compare them against OECD instruments.
Read more: Bangkok Post (AI Framework), News Microsoft (Digital Government)
Virtual Banks Get 2026 Go-ahead
The Bank of Thailand approved three groups to launch virtual banks by mid-2026. The winners are ACM Holding Co (TrueMoney) backed by Charoen Pokphand Group, a Krungthai Bank-Advanced Info Service-PTT Oil and Retail Business consortium, and a group made up of SCB X, KakaoBank, and WeBank.
Read more: Bangkok Post
Manufacturing Shows Signs of Life
The Manufacturing Production Index is up 1.8% year-on-year for May, its second consecutive month of growth. Automotive reported a 12.8% production increase, its first positive move in 22 months (although see next article - it might just be a May bump). Palm oil manufacturing has grown by a quarter on the back of demand from India, China, and Myanmar, and sugar production grew 21%. Industrial capacity utilization improved from 56.6% in April to 61% in May. In less positive news, the steel sector is suffering overcapacity: manufacturers are pumping out less than 30% of what they could be producing. The Federation of Industries has recommended a five-year moratorium on new steel factory construction.
Read more: Bangkok Post (MPI Growth), Business Times (Factory Output), Bangkok Post (Steel Overcapacity)
Auto Industry Hits Rough Patch
Auto sale numbers are expected to drop to 565,000 units and vehicle production to fall by 7.83% once the final numbers are tabulated for the first five months of 2025. The industry expects to lose 50 dealerships, a drop to 2,146 outlets. While Japanese and Western brands are seeing the biggest dealership declines, Chinese EV manufacturers are expanding their footprint. Dealers say they’re struggling with unsold inventory and high interest rates, leading some to convert to pure sales offices or to switch brands. The government is considering scrappage incentives and has launched a 5 billion baht loan-guarantee program.
Read more: Khao Sod English (Market Pressure), Just Auto (Scrappage Incentives)
Foreign Investment Defies the Storm
Foreign investment totaled nearly 89 billion baht for the first five months of the year, a solid 24% increase over 2024. Japan is the leading investor with 41 billion baht in 85 entities, followed by Singapore (11.4 billion baht, 52) and China (7.54 billion baht, 53). The Eastern Economic Corridor was the destination for 54% of total foreign investment at 47.7 billion baht. Despite investment growth, the long-suffering stock market remains down 22% year-to-date.
Read more: Bangkok Post (Investment Growth), Bangkok Post (Stock Market Outlook), ASEAN Briefing (Investor Implications)
Golden Anniversary with China
China and the Kingdom are celebrating 50 years of diplomatic relations. China has kept its position as Thailand’s biggest trading partner for more than a decade, with bilateral trade totaling $134 billion last year. China was the largest source of foreign investment in 2023 and was the king of inbound tourism, although that’s not as reliable as it once was. The introduction of mutual visa exemptions in early 2024 was a huge change in relations and really helped spark the two-way tourism numbers; it’ll be interesting to see if they bounce back any time soon. Reportedly about 40% of Thailand’s population has some sort of Chinese ancestry.
Read more: CGTN (Diplomatic Milestone), Bangkok Post (Relationship Complexities)
War on Phone Scammers
The National Broadcasting and Telecommunications Commission approved eight measures to fight technology-related crimes, especially targeting scams from Cambodia. The strategy requires service providers to screen suspicious users, have quick-suspension protocols, and better verify mobile phone users. New rules limit foreigners to three mobile numbers per provider and restrict tourist SIM cards to 60-day use. A recent post on X from Cambodia’s Sam Rainsy may also be of interest to readers.
Read more: Asian News Network (NBTC Measures), Asia Times (Cybercrime Operations), x.com (Rainsy Tweet)
That’s it for this week, thanks for reading!
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