Thailand 20240830: Caliginous, Audacious, Inspired
Thailand 20240830: Caliginous, Audacious, Inspired
Mekong Memo Thailand Weekly: Business, politics, finance, trade & legal news.
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Here is your Mekong Memo Thailand for this week.
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Headlines:
Pheu Thai and Democrats Forge Alliance
Baht Surges as USD Weakens
Central Bank Closely Watching Forex
Scrutiny of Businesses Using Nominee Structures
Push for Small Nuclear Plants
BRICS Membership Gains Momentum
Thailand Post Explores Entry into Virtual Banking
Travelers to See Thai ETA, Schengen-Style Visas
Auto Industry Slowdown, Production Cuts
Koh Samui Cruise Terminal Slated for 2032
Push for Incentives to Attract Foreign HQ’s
More Land Sales Expected for WHA
Call to Shift Economy to High-Tech Agriculture
New Gripen Jets for Air Defense
Community Work For Coastal Protection
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Pheu Thai and Democrats Forge Alliance
Pheu Thai Party has formally invited the Democrat Party to join its ruling coalition, the end of a longstanding political and sometimes bitter rivalry. The invitation follows Pheu Thai’s decision to sever ties with the Palang Pracharath Party (PPRP). While some Democrat members, including former leaders, are opposed to the alliance, current leaders are saying they need to move past old conflicts. Both parties say they intend to collaborate on improving the country’s economic and social conditions.
Read more: Nation Thailand (Coalition Invitation), Prachatai English (Political Alliance)
Baht Surges as USD Weakens
The Thai baht has reached its highest level in 13 months, largely due to a weakening US dollar and rising gold prices. The baht’s appreciation is supported by Thailand’s new digital wallet initiative and speculation about US Federal Reserve rate cuts. Market analysts are monitoring the impact of Thailand's fiscal policies and the potential effects on inflation. The baht's movement aligns with trends in other Asian currencies, though it continues to fluctuate within a predicted range, reflecting broader global economic dynamics.
Read more: Nikkei Asia (Economic Hopes), Nation Thailand (Gold Prices), Bangkok Post (Fluctuating Range)
Central Bank Closely Watching Forex
The Bank of Thailand is closely monitoring the baht's movement as it strengthens against the US dollar, driven by internal and external factors including gold imports and market expectations of a US Federal Reserve rate cut. Governor Sethaput Suthiwartnarueput said that the central bank is prepared to adjust monetary policy to maintain financial stability, particularly in light of high household debt and tightening credit conditions. Economic growth is expected to continue, albeit at a slower pace.
Read more: The Investor (Currency Movements), SCMP (Policy Adjustments), Bangkok Post (Baht Strengthening)
Scrutiny of Businesses Using Nominee Structures
The Commerce Ministry is ramping up inspections of businesses suspected of using Thai nominees to hide foreign ownership, particularly in tourism, real estate, and logistics. Investigations have found potential violations in 165 out of 26,019 cases looked at across the biggest tourist provinces. Authorities say the legal repercussions of such practices under the Foreign Business Act are severe and are encouraging whistleblowing from affected businesses. Other sectors, including wholesale and retail, are also reportedly coming under increased scrutiny.
Read more: Bangkok Post
Push for Small Nuclear Plants
The government is being called on to accelerate the development of small nuclear power plants as part of a clean energy strategy. Former energy secretary Kurujit Nakornthap says he supports the construction of small modular reactors (SMRs), which offer a reduced environmental impact compared to traditional reactors. SMRs are seen as being an important way to reducing carbon emissions while ensuring that energy security needs are met. The lengthy approval process, expected to take up to eight years, means that there is a need for immediate action.
Read more: Bangkok Post
BRICS Membership Gains Momentum
At a recent forum in Bangkok, discussions were held on the potential benefits and challenges of Thailand joining the BRICS economic bloc. Ambassadors and business leaders from BRICS nations said that Thailand’s location and economic strength make it a strong candidate. They pointed to opportunities in trade, investment, and increased global influence as benefits, but challenges like regulatory barriers and the need for multilateral cooperation were also discussed. The decision to join ultimately rests with Thailand.
Read more: Nation Thailand
Thailand Post Explores Entry into Virtual Banking
Thailand Post wants to enter the virtual banking sector, with plans to either join a consortium applying for a virtual bank license or to act as a neutral banking agent. Using its extensive branch network and door-to-door delivery service, the state agency says it wants to support underserved communities, including migrant workers. Talks are underway with several groups as Thailand Post positions itself for expansion.
Read more: Bangkok Post
Travelers to See Thai ETA, Schengen-Style Visas
Southeast Asian nations, led by Thailand, are moving plans for a Schengen-style visa forward in order to allow seamless travel across six countries: Thailand, Cambodia, Laos, Malaysia, Myanmar, and Vietnam. The plans, combined with Thailand's accelerated rollout of an Electronic Travel Authorization (ETA) system, are expected to insure tourism inflows are uninterrupted. The ETA, rumored to be fully deployed by mid-2025, will be mandatory for visa-exempt travelers, with claimed benefits of streamlined entry and improved security.
Read more: VisasNews (Thailand's ETA), Travel and Tour World (Schengen-Style Visa)
Auto Industry Slowdown, Production Cuts
Thailand’s automotive industry saw car production down 16.6% year-on-year in July due to declining domestic sales, made worse by tightened credit and high household debt. The vehicle market saw a 21% drop in sales in July, a continued decline despite broader economic growth. Vietnamese EV maker VinFast has delayed launching dealerships in Thailand, citing a global EV market slowdown and the need to align local operations with company standards. There is no word on when they may begin sales.
Read more: WION (Production Decline), Yahoo Finance (Sales Drop), TNGlobal (VinFast Delay)
Koh Samui Cruise Terminal Slated for 2032
The Marine Department has finalized a study on a 12.1-billion-baht cruise terminal in Koh Samui, set to open by 2032. Located in Taling Ngam, the terminal will help grow Surat Thani tourism by handling up to 120 cruise landings and 180,000 visitors annually. The project, backed by Public-Private Partnership financing, is expected to generate over 46 billion baht in economic benefits within 37 years. Construction is anticipated to begin in 2029, following government approval.
Read more: Bangkok Post
Push for Incentives to Attract Foreign HQ’s
Wallapa Traisorat, chief executive and president of Asset World Corp (AWC) is calling on the government to introduce incentives to lure more foreign companies to establish regional headquarters in Thailand. AWC suggests tax incentives, human resources benefits, and reduced income taxes for foreign employees would be useful measures. AWC is focused on expanding its real estate developments and attracting business travelers, with new projects like the EA Rooftop in Bangkok at Empire Tower. Interestingly, they also went out of their way to say they weren’t interested in any casino projects.
Read more: Bangkok Post
More Land Sales Expected for WHA
WHA Corporation, Thailand's largest industrial estate developer, is expecting a 40% increase in land sales for the second half of 2024, thanks to strong demand from foreign manufacturers, especially the Chinese. The company expects land sales to reach 224 hectares, lifted by rising interest from the automotive, electronics, and data center sectors. The growth is expected to contribute to record sales and net income for WHA in 2024.
Read more: Bangkok Post
Call to Shift Economy to High-Tech Agriculture
Dr. Supavud Saicheua, Chairman of the NESDC, is advocating for a shift in Thailand’s economic focus from manufacturing to high-tech agriculture and high-end services. He argues that competing with China in manufacturing is unsustainable and that Thailand would be much better served by capitalizing on its strengths in agriculture and food production. Dr. Supavud says there is a need for agrarian reform to increase farmer productivity, which he believes could be a new engine for economic growth, making Thailand more livable and attracting global wealth.
Read more: Khaosod English
New Gripen Jets for Air Defense
Thailand plans to acquire between 12 and 14 Saab Gripen E/F fighter jets for its air defense and to address border security challenges, particularly the spillover from Myanmar’s civil war. The new Gripens will replace aging F-16s and are part of Thailand’s military modernization strategy, which also appears to be trying to balance influence between the US and China. The acquisition is pending final government approval.
Read more: Asia Times
And now for something completely different.
While the focus of The Memo is on news for business, we often wrap up with a less business-focused article. A few topics of conversation this week in the office were the ongoing drama in the wake of a collapsed train tunnel in Pak Chong district, the perils of moonshine, and the story of the son of a famous Spanish actor convicted of a grisly murder. On a happier note, we leave you with this:
Community Work For Coastal Protection
Thailand is focusing on community-led, nature-based solutions to protect its 3,219-kilometer coastline, vital for tourism and the fishing industry. With rising global temperatures and the worries about the climate threatening coastal ecosystems, local communities, particularly in Phuket, are leading work to restore mangroves and protect against erosion.
Read more: Nation Thailand
That’s it for this week, thanks for reading!
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