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Here is your Mekong Memo Thailand for this week.
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Headlines:
Parliament Dissolved, Snap Elections in Feb
Cambodia Conflict Simmers
Border Closures Blow Up Trade and Tourism
Central Bank Cuts to Three-Year Low
Caretaker Government Freezes Stimulus
Political Realignments Before Election
Tech Leaders Get Into the Political Arena
International Coalition Tackles Scams
Panel Recommends Cambodia MOU Termination
Insurance Gets Investment Support
Renewable Energy and Plastic Recycling
Tourism and Hospitality: Hotels, Arena, Healing
Labor and Wages: Bonuses Inbound
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Parliament Dissolved, Snap Elections in Feb
Prime Minister Anutin Charnvirakul dissolved parliament on December 12 with royal approval, forcing elections which are now scheduled for February 8. The dissolution got the government out in front of a no-confidence vote that was brewing from the opposition People’s Party. Anutin, who has served as PM for just three months before the dissolution, will now lead a caretaker government with limited power until the new administration comes together. The dissolution comes after a string of broken promises on constitutional reform and an election is expected to capitalize on nationalist sentiment from the current conflict with Cambodia. No single party is expected to be able to muster a majority: at last report, the People’s Party was polling at 23%, Bhumjaithai at 20%, and 27% of voters were still undecided.
Read more: Foreign Policy (Dissolution Context), Reuters (Election Process), UPI (GDP Impact), Asia Sentinel (Political Vacuum)
Cambodia Conflict Simmers
Fighting between Thailand and Cambodia has so far killed at least 21 Thai soldiers and 18 Cambodian civilians. More than 800,000 people are reportedly displaced. Thailand ran airstrikes yesterday targeting casino areas in Poipet that officials claim Cambodia has been using for drone attacks and weapons storage, though Cambodia denies this. Both sides blame the other for starting the violence and breaking a July ceasefire. The UN condemned the escalation, asking both countries to honor their obligations under international law. U.S. President Trump claimed a ceasefire agreement after phone calls with both leaders, but Anutin denied agreeing to any ceasefire, insisting Cambodia needs to act first.
Read more: Macao News (Casino Bombings), WRAL (Airstrikes), JURIST (UN Response), France24 (Trump Ceasefire Claims)
Border Closures Blow Up Trade and Tourism
Land checkpoints between Thailand and Cambodia are still closed for the foreseeable future, bringing a stop to cross-border trucking operations and forcing companies to reroute shipments through Laos and Vietnam at higher costs and longer transit times. Only humanitarian cargo is currently being allowed through. Maritime routes are stable, with ports at Laem Chabang and Sihanoukville operating normally. Thailand’s eastern Trat province is getting hammered on both trade and tourism - hotel occupancy on Koh Chang and Koh Kood has plummeted to 20% from near capacity.
Read more: Kuehne+Nagel (Logistics Impact), Khaosod English (Economic Losses)
Central Bank Cuts to Three-Year Low
The Bank of Thailand cut its policy rate by a quarter of a percent to 1.25%, the lowest level in more than three years and the sixth drop since October 2024, totaling 125 basis points. The unanimous decision is in support of a repeatedly stalled recovery and to keep deflation at bay. Inflation forecasts were lowered to -0.1%, 0.3%, and 1.0% for 2025-2027 on low energy prices and government subsidies. Further cuts are likely in February if things get worse.
Read more: Reuters (Rate Cut Details), Trading View (Economic Projections)
Caretaker Government Freezes Stimulus
The caretaker administration is unable to approve new obligations, putting economic measures on hold until after the February election. The fate of the second phase of the “Khon La Khrueng Plus” co-payment deal is now uncertain. The Thailand Individual Savings Account tax deduction increase from 500,000 to 800,000 baht will also be delayed. Solar and renewable energy projects worth 180+ billion baht could stall without government support. The approved 2026 fiscal budget remains in place, but anything that would need parliamentary approval is frozen under the rules of the constitution.
Read more: Bangkok Post (Stimulus Delays), Bangkok Post (Constitutional Limits), Nation Thailand (Business Concerns)
Political Realignments Before Election
The Bhumjaithai Party propped itself up by way of a couple high profile defections as Varawut Silpa-archa, former Chartthaipattana Party leader, came on board with a group of 12 former MPs. Deputy Prime Minister Suchart Chomklin also switched parties. Varawut said that the realignment was needed because changing political realities mean that smaller parties find it hard to deliver results on their own these days. Bhumjaithai is getting three prime ministerial candidates ready: Anutin Charnvirakul, Foreign Minister Sihasak Phuangketkeow, and economist (formerly of Dusit International) Suphajee Suthumpun. Pheu Thai has turned to Yodchanan Wongsawat, Thaksin Shinawatra’s nephew and political novice, as their candidate after Thaksin was put in jail over conflict of interest. Pheu Thai’s polling has dropped to a hair over 11%.
Read more: Bangkok Post (Defections), Bangkok Post (PM Candidates), U.S. News (Pheu Thai Strategy)
Tech Leaders Get Into the Political Arena
Tech entrepreneurs, including Pawoot Pongvitayapanu and Isriya Paireeparit, have joined the People’s Party, saying they want to influence digital economy strategy ahead. Pawoot is pushing for full government digitalization and regulations to support digital commerce and SMEs. Teerachart Kortrakul wants to reduce the regulatory overhead that hamstrings business growth and wants better use of technology to improve government transparency. Democrat Party’s Karndee Leopairote is beating the drum on building artificial intelligence capacity and more local data sovereignty. Pheu Thai’s Yodchanan Wongsawat wants better use of technology to improve productivity.
Read more: Bangkok Post
International Coalition Tackles Scams
Thailand hosted the International Coalition Against Online Scams with more than 300 participants from 58 countries. Cambodia did not join. The meeting was the introduction of the “Global Partnership Against Online Scams,” with Thailand, Bangladesh, Nepal, Peru, and the United Arab Emirates saying they were committed to cooperation, victim protection, and cross-border collaboration. Thailand has rescued more than 10,000 scam victims and seized nearly $300 million in assets. Between December 8-12, 2025, authorities say they worked with Meta (Facebook) and other international partners to close more than 59,000 scam-linked accounts and block up to 5,000 fraudulent ads daily.
Read more: Nation Thailand (Coalition Meeting), Mint (Global Partnership), Bangkok Post (Account Takedowns)
Panel Recommends Cambodia MOU Termination
A Senate study panel has unanimously said that Thailand should scrap the 2001 Thailand-Cambodia maritime boundaries MOU. The panel said that Cambodia’s 1972 continental shelf line infringes on Thai sovereignty and that Cambodia’s proposal for a 50:50 split of petroleum benefits isn’t acceptable.
Read more: Nation Thailand
Insurance Gets Investment Support
The Office of the Insurance Commission (OIC) reduced equity risk charges for insurance companies from 25% to 18% in a move that could unlock an additional 200 billion baht in investment next year. The change could double insurers’ equity holdings from 200 billion baht to 400 billion baht. The OIC is getting ready to set up a national catastrophe fund to support the insurance sector in case of natural disasters. Total industry assets are approximately 4.8 trillion baht, with expected premium growth of just over 3% next year.
Read more: Bangkok Post (Investment Rules)
Renewable Energy and Plastic Recycling
Thailand wants to see 100% plastic waste reuse by 2027, as is gets petrochemical producers ready for the EU’s Carbon Border Adjustment Mechanism, which could soon apply to plastics. Thititham Pongpanangam of the FTI’s Plastics Industry Club (Plastics Industry Club? Lol) said high costs and waste management shortcomings would be barriers to success. SCG Chemicals says it expects to make up to a million tonnes of green polymers by 2030. The government also wants renewable energy to make up more than half of the power mix by 2037 under its latest power development plan, which includes proposals for small modular nuclear reactors.
Read more: Reccessary (Plastic Goals), Bangkok Post (Energy Plan), Bangkok Post (Industry Transition)
Tourism and Hospitality: Hotels, Arena, Healing
Origin Hotel plans to invest approximately 7.5 billion baht each year for the next four years to develop 17 hotels with 4,731 rooms and two retail projects. Five hotels with 1,625 rooms will open in 2028, ten hotels with 2,498 rooms in 2029, and two hotels with 608 rooms in 2030. Live Nation agreed to run Bangkok’s Impact Arena, a 12,000-seat venue, with plans for updated production infrastructure, improved hospitality, and premium seating. Thailand is working to improve its wellness tourism position with a new national strategy, promoting the theme “Healing is the New Luxury.”
Read more: Bangkok Post (Hotel Investment), Music Business Worldwide (Live Nation), Barchart (Wellness Tourism)
Labor and Wages: Bonuses Inbound
Salary increases in Thailand have so far paced 4.5% in 2025, a little below the historical norm of 5%, according to a recent Deloitte survey. AI integration is coming on fast for labor, changing pay structures from job-based to skill-based rewards. Bonuses are staying stable at about two months’ annual salary. Some industries, including the chemicals and energy sectors, are likely to end up with three month bonuses. The voluntary resignation rate was 12.9%, highest in retail at 32.9%. A Mahidol University survey found 90% of employers want candidates with AI skills, and 93% value proficiency in English and a second language. More than 75% of employers also noted the importance of psychological and emotional skills alongside technical competence.
Read more: Bangkok Post (Wage Trends), Bangkok Post (Skills Demand)
That’s it for this week, thanks for reading!
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