Thailand 20231103
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Thailand 20231103
Mekong Memo Thailand Weekly: Business, politics, finance, trade & legal news.
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Here is your Mekong Memo Thailand for November 3, 2023:
Headlines:
Navigating the New World Order
Shinawatra Scion Ascends
Thailand Urged to Accelerate Net Zero Target
Baht Soars Amid Global Economic Tensions
Bangkok Rental Market Strong
Aviation Booming with New Connections
EV Market Sees Subsidy Shifts and Investment
Thailand's Bet on Legal Casinos
Expats in Thailand Can Breathe Easy on Foreign Income Taxation
Tourism Roundup: Year Finishing Strong
Looming Demographic Shift is Race Against Time
Economic Outlook: A Mixed Bag
Navigating the New World Order
Thailand's foreign policy is characterized by a delicate balancing act, maintaining its traditional autonomy while engaging with both the United States and China. Despite recent U.S. efforts to revitalize the alliance, Thailand remains non-committal to deepening ties at the expense of its relationship with China. Bangkok's stance on the Ukraine conflict reflects this, opting for neutrality and abstaining from key UN votes. The country's approach is rooted in a long-standing tradition of strategic autonomy, prioritizing economic and security interests without aligning too closely with either global power.
Read more: Carnegie Endowment for International Peace
Shinawatra Scion Ascends
Paetongtarn Shinawatra's unopposed election as the leader of Thailand's Pheu Thai Party marks a significant moment in Thai politics, signaling a potential shift in the party's direction and strategy. Her ascent is seen as a preparation for her to potentially become prime minister, reflecting the enduring influence of the Shinawatra family in Thai politics. Despite concerns over her family's legacy and the perception of a proxy agenda, Paetongtarn's leadership is being presented as bringing a fresh perspective, especially with the younger generation taking a more prominent role within the party.
Read more: Asia Sentinel (Shinawatra's Hold), Nikkei Asia (Daughter's Leadership), Thai PBS World (Path to Leadership), Thai PBS World (Future Direction)
Thailand Urged to Accelerate Net Zero Target
The Thailand Development Research Institute warns that Thailand risks falling behind its neighbors if it adheres to its 2065 net-zero emissions goal. With regional counterparts like Singapore, Malaysia, Vietnam, and Laos aiming for 2050—and China for 2060—Thailand's later target may diminish its international standing and investment attractiveness. The TDRI urges earlier action to enable SMEs and the education sector to adapt, and recommends initiating carbon taxes on certain sectors to expedite the transition.
Read more: Asia News Network
Baht Soars Amid Global Economic Tensions
The Thai baht has surged to a six-week high against the US dollar, spurred by investor anticipation of the Federal Reserve's meeting outcomes and a rise in domestic gold prices due to Middle East conflicts. Despite this peak, the baht has seen volatility and faces potential impacts from the Fed's rate decisions amidst high US inflation and oil prices. Analysts suggest that the baht's strength is temporary, influenced by gold trade profits and US market risks, with caution advised as the Bank of Thailand may adjust policies following the Fed's lead.
Read more: Investing.com
Bangkok Rental Market Strong
Bangkok's property market is showing signs of recovery and adaptation. The land price index in Greater Bangkok rose by 3% year-on-year in Q3 2023, marking the lowest growth rate in seven quarters, with the Real Estate Information Center (REIC) noting a cautious approach from developers due to rising interest rates and economic pressures. JLL reports a flourishing rental market, particularly in the Central Business Area, as investment-grade apartments saw a 2.5% quarter-on-quarter increase in rents in Q3 2023. This shift is attributed to buyers' wait-and-see approach and the return of expatriates. Developers are now exploring the multifamily sector, offering rental properties with yield guarantees, showing a potential shift in the market appetite for freehold ownership.
Read more: Bangkok Post (Market Recovery), Bangkok Post (Land Price Index), JLL Research (Rental Market Growth)
Aviation Booming with New Connections
Thailand's aviation sector is witnessing a revitalization with the introduction of new international flights. SAS has launched a direct route from Copenhagen to Bangkok, improving travel options between Europe and Asia. Thai Airways is not only resuming its services to Vietnam but also inaugurating direct flights to Istanbul from December 1, promising to strengthen economic and transport ties. Thai Airways is set to reconnect Kathmandu with Bangkok, catering to the demand for this popular route. In a major capacity boost, Lufthansa is reintroducing its flagship Airbus A380 on the Munich-Bangkok route.
Read more: TAT News (Copenhagen), The Star (Vietnam), Online Khabar (Kathmandu), Aviation Source News (Lufthansa A380), Bangkok Post (Istanbul)
EV Market Sees Subsidy Shifts and Investment
Thailand is recalibrating its electric vehicle (EV) subsidy program to sustain market growth while easing fiscal pressures. The revised EV subsidies, set to run until 2027, are intended to maintain Thailand's momentum as a growing EV hub in Southeast Asia. The government's strategy involves a gradual reduction in consumer subsidies, complemented by incentives for manufacturers to establish local production bases. This pivot reflects a broader vision to transform Thailand into a regional leader in EV production, leveraging its automotive industry prowess and attracting foreign investment, particularly from China.
Read more: 360info (SEA EV Landscape), The Diplomat (Subsidies), Nikkei Asia (Investment)
Thailand's Bet on Legal Casinos
Thailand's House of Representatives is actively exploring the legalization of casinos within entertainment complexes to combat illegal gambling and stimulate economic growth. A 60-member committee has been established to study the potential of such venues, which could redirect funds currently lost to underground gambling and neighboring countries' casinos back into the national economy. This move could also create local jobs, reducing the need for citizens to seek employment abroad.
Read more: Thai Examiner (Legalization), Bangkok Post (Committee), The Thaiger (Economic Benefit)
Expats in Thailand Can Breathe Easy on Foreign Income Taxation
Thomas Carden, an expert from AITaxAdvisers, addressed expatriates' concerns about Thailand's proposed foreign income tax at a recent meeting of the Pattaya City Expat Club, suggesting that he believes that typical retirees and expats are not the target. He highlighted the protection offered by double-taxation agreements and noted the likelihood of future requirements for a tax identification number and tax returns for foreign residents. Carden also mentioned the possibility of delayed implementation and advised expats to await clear instructions before taking any action.
Read more: Pattaya Mail
Tourism Roundup: Year Finishing Strong
Thailand is set to end the year on a high note, with a push to boost tourism revenue. The country's vibrant nightlife will extend until 4am in key tourist areas starting this New Year, in an effort to stimulate the economy. This move aligns with Thailand's recent accolade as the "Best Destination Outside Europe," reflecting its growing popularity among international travelers, particularly from Denmark. With over 19 million foreign visitors this year, including a surge in Danish tourists, Thailand's tourism sector is set to finish the year strong, continuing to expand its brand value globally.
Read more: Bangkok Post (Strategy), Bangkok Post (Arrivals), Bangkok Post (Nightlife), The Star (International Recognition)
Looming Demographic Shift is Race Against Time
Thailand faces a stark demographic future, with projections indicating a halving of its population in 60 years due to a severe fertility crisis. Birth rates have plummeted, with the total fertility rate (TFR) dropping to a critical low of 1.16, far below the replacement level. This decline is attributed to a complex interplay of economic, social, educational, and environmental factors. The demographic shift threatens to create labor shortages, increase dependency ratios, and inflate healthcare costs for an aging population. The government is urged to prioritize childbirth and manage the impending demographic transition.
Read more: The Straits Times (Population), The Thaiger (Fertility)
Economic Outlook: A Mixed Bag
Thailand's industrial output has fallen for the twelfth consecutive month, with a 6.1% drop in September, signaling a slowing global economy's impact on the country's manufacturing sector. Despite a robust tourism sector shoring up domestic demand, the manufacturing production index (MPI) has shrunk by 5.09% for the first nine months of the year. The manufacturing purchasing managers' index (PMI) also contracted for the third month in October, reflecting weak demand and a shrinking customer base. The Bank of Thailand remains poised to adjust policy rates if necessary, while the Fiscal Policy Office has trimmed the economic growth projection to 2.7%. The resilience of the tourism sector and potential boosts from car, electronics, and agricultural exports offer some economic optimism.
Read more: Bangkok Post (Industrial Challenges), The Thaiger (Export), Nikkei Asia (Monetary Policy), Thai PBS World (Growth), Thai Enquirer (Slowdown), Xinhua (Manufacturing), Xinhua (PMI)
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