Thailand 20240607: Trailblazing, Multidimensional, Enterprising
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Here is your Mekong Memo Thailand for this week.
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Headlines:
Global Tax Rules to Impact Foreign Residents
Move Forward Party Confronts Legal Challenges
Economic Measures and Export Challenges
Push for Higher Inflation to Stimulate Economy
Visa Programs Expanded
Plans to Legalize Casinos Continue
"Zero Dropout" Plan to Address Education Gap
Tourism Revenue Falls Short Despite Arrivals Rise
Small Modular Nuclear Reactors Investigated
Real Estate to Allow for Foreign Ownership
Illegal Foreign Business Operations Dismantled in Phuket
ASEAN Data Center Leadership by 2027
Air Connectivity and Infrastructure Expansion
BRICS Membership and Attracting Foreign HQs
Political Documentary Hits the Cinema
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Global Tax Rules to Impact Foreign Residents
The Revenue Department plans to tax foreign residents on worldwide income starting in 2025, aligning with OECD goals to eliminate tax shelters. Foreign residents will be taxed on all income, not just remittances, affecting those with global investments and retirement funds. The law changes are intended to widen the tax base, requiring full income declarations from tax residents. This change comes along with the government's need to address revenue shortfalls and comply with international tax standards.
Read more: Bangkok Post (Overseas Income Rules), Thai Examiner (Tax Plan)
Move Forward Party Confronts Legal Challenges
The Move Forward Party is facing some big legal challenges, including a Constitutional Court case that could dissolve the party. The court, responding to an Election Commission petition, accuses the party of undermining the monarchy by advocating changes to the lese-majeste law. Despite a gag order, the party plans to hold a press conference to explain its defense strategy. Former PM candidate Pita Limjaroenrat has said he is ready to assume leadership if the current PM is unseated by the court.
Read more: Bangkok Post (Court Case), The Star (Pita's Readiness), Thai PBS World (Foreign Policy), Thai PBS World(Gag Order Defiance), Bangkok Post (Defiance)
Economic Measures and Export Challenges
Prime Minister Srettha Thavisin is optimistic about economic improvement in Q4 2024, looking especially to boost state revenue and address budget spending. A private sector panel from the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) is predicting that export growth may fall short due to global challenges and domestic structural issues. Public debt has risen to 11.474 trillion baht, impacting fiscal stability. Despite these hurdles, the group maintains a GDP growth forecast at 2.2% to 2.7%, supported by potential government stimulus measures.
Read more: Bangkok Post (Government Measures), Bangkok Post (Export Challenges), Nation Thailand (Public Debt), Bangkok Post (GDP Forecast)
Push for Higher Inflation to Stimulate Economy
The government is suggesting that faster inflation to boost economic growth after a slow recovery from COVID-19 might be a good idea. The Finance Ministry is considering raising the central bank's inflation target above the current 1-3% range to encourage interest rate cuts. Despite low consumer prices, the Bank of Thailand remains cautious, fearing overheating from fiscal measures like the proposed digital wallet for adults. Adjusting the inflation goal is controversial, with worries about currency devaluation and reduced household spending power.
Read more: Bangkok Post
Visa Programs Expanded
New visa measures have been introduced to attract foreign nationals, including a high-skill visa drawing over 56,000 workers, a digital nomad visa for remote work, and extended visa-free entry for 93 countries. Khon Kaen province expects economic growth from these changes, benefiting tourism and local businesses. The new policies also include longer stays for students and retirees, and streamlined processes for international travelers. All of this should go a long way towards improving the country's appeal as a global destination for work and leisure.
Read more: Khaosod English (High-Skill Visa), Euronews (Digital Nomad Visa), NZ Herald (New Rules), Bangkok Post(Khon Kaen Tourism)
Plans to Legalize Casinos Continue
The country is accelerating its study and legislation process to establish integrated entertainment complexes that include casinos. Prime Minister Srettha Thavisin has directed the Ministry of Finance to draft necessary laws, anticipating at least 12 billion baht in tax revenue in the first year. While the government sees this move as a way to increase tourism and state revenue, experts are divided on its chances of success. Concerns range from political instability to the feasibility of attracting major international gaming operators.
Read more: Bangkok Post (Study Acceleration), Japan Times (Legalization Plans), Asia Gaming Brief (Expert Opinions)
"Zero Dropout" Plan to Address Education Gap
The "Zero Dropout" project, led by the Equitable Education Fund (EEF), hopes to re-enroll a full one million out-of-school children within five years. The initiative targets children of migrant laborers, undocumented kids, and unregistered disabled children. The COVID-19 pandemic exacerbated dropout rates, slowing economic development. By achieving this goal, the government expects a 1.7% GDP increase. A collaborative meeting with 11 government agencies is scheduled to drive the project forward.
Read more: VnExpress International
Tourism Revenue Falls Short Despite Arrivals Rise
Tourism revenue is projected to miss the government's target by 500 billion baht, with expected earnings of 3 trillion baht due to economic challenges in inbound markets. Despite this, foreign tourist arrivals have increased by 38% in the first five months of 2024, generating over 700 billion baht. A recent seminar organized by Les Roches, Ekthana Hospitality Education Services, and Krungthep Turakij emphasized the importance of sustainable tourism, specifically looking for innovative practices and responsible consumption to ensure long-term industry growth.
Read more: Bangkok Post (Revenue Shortfall), Bangkok Post (Arrivals), Nation Thailand (Sustainability)
Small Modular Nuclear Reactors Investigated
Prime Minister Srettha Thavisin announced plans to roll small modular nuclear reactors (SMRs) into Thailand’s energy mix as part of the green transition to 50% renewable energy production by 2040. SMRs, which can generate up to 300 megawatts per unit, offer a smaller, cost-effective alternative to traditional nuclear plants. Currently, natural gas accounts for two-thirds of the country's electricity production.
Read more: Nation Thailand
Real Estate to Allow for Foreign Ownership
The Land Department has updated criteria for foreigners owning land, allowing purchases with investments of at least 40 million baht under certain conditions. Residential developers are hesitating to launch new projects due to weak demand, reflected in the lowest residential construction area in 12 quarters. Homebuyer confidence in Greater Bangkok has also dropped, dampened by high interest rates and an economic slowdown, leading to fewer housing transfers and a shift towards second-hand homes.
Read more: Nation Thailand (Foreign Land Ownership), Bangkok Post (Developer Hesitation), Bangkok Post (Homebuyer Confidence)
Illegal Foreign Business Operations Dismantled in Phuket
Authorities have dismantled a network that helped foreigners, mainly Russians, stay in the country long-term using shell companies. More than 100 people, including 68 Russians, face charges related to operating businesses without permits. The DSI raided three suspected foreign nominee companies, seizing financial records pointing to transactions involving Russians, Pakistanis, and Indians in real estate, hotels, and restaurants. The crackdown is said to be in order to prevent exploitation of legal loopholes and ensure lawful foreign investment in Phuket.
Read more: AP News (Network Dismantling), Benar News (Russian Investors), Khaosod English (DSI Raid)
ASEAN Data Center Leadership by 2027
The country is set to become a major center for data centers in Southeast Asia with the launch of a new AWS region by early 2025 and a $5 billion investment by 2037. Expecting to house 13 data centers with a market value of $2.8 billion, this is part of the "Ignite Thailand" program to drive digital transformation. Developments include advancements in cloud computing and AI infrastructure, pulling in both domestic and foreign investment to support the digital economy.
Read more: ETCIO SEA (AWS Expansion), Asia News Network (Data Center Hub)
Air Connectivity and Infrastructure Expansion
Thai Airways is to resume its daily Brussels-Bangkok route. Austrian Airlines plans to increase flights to Bangkok, aiming for 13 weekly flights in the 2024/25 winter schedule. AirAsia introduced new direct flights from Bangkok to Tiruchirappalli, improving connections to India's largest Hindu temple. EZY Airlines, a new Thai carrier, is focused on short domestic flights in the South of Thailand. Phuket Airport plans a 6 billion baht expansion to handle 18 million passengers annually. The Thai Pilots Association opposes easing restrictions on foreign pilots to protect local jobs.
Read more: Thaiger (Thai Airways), Travel News Asia (Austrian Airlines), Khaosod English (AirAsia), Bangkok Post(EZY Airlines), Bangkok Post (Phuket Airport), Bangkok Post (Foreign Pilots)
BRICS Membership and Attracting Foreign HQs
The country is looking out for ways to improve its economic standing by seeking membership in the BRICS group. Membership in BRICS is expected to simplify trade with emerging economies like China and India. PM Srettha is focused on attracting foreign headquarters, with plans to lure over 100 global companies and create high-skilled jobs. Measures include tax incentives, investment benefits, and improved infrastructure to boost competitiveness and appeal to international businesses.
Read more: Nation Thailand (BRICS), Nation Thailand (Foreign HQs)
And now for something completely different.
While the focus of The Memo is on news for business, we often wrap with a less business-focused article.
A big story out of the south this week is the start of filming for a new Jurassic World movie in and around Krabi. Part of the government’s plan to get people to plan for retirement better is to sell them lottery tickets (yes, really). during the 1997 financial crisis. Classic car importation might get a little easier. We close with another story from the arts that touches on the political:
Political Documentary Hits Cinemas
"Breaking the Cycle," a documentary by Aekaphong Saransate and Thankrit Duangmaneeporn, has received a rare wide release in cinemas. The film chronicles the rise and fall of pro-democracy movements, focusing on Thanathorn Juangroongruangkit and his Future Forward Party. It shows the generational divide between a more progressive youth and the conservative establishment, showing their struggles against military influence and legal battles. The documentary premiered at Hot Docs in Canada and will continue its international festival run. Check it out.
Read more: Variety
That’s it for this week, thanks for reading!
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