Thailand 20260109
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Here is your Mekong Memo Thailand for this week.
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Headlines:
Tensions Threaten a Fragile Pause
Border Conflict Disrupts Supply Chains
Feb 8 Election Complicated by Vote-Buying Fears
Coalition Arithmetic For Post-Election Outlook
Economy Sees Worst Growth in Three Decades
Policy Priorities Target Demographic Crisis
Semiconductor Hopes for Regional Primacy
China Ties Test U.S. Alliance
New Rules on Money, More Taxes
Crime and Corruption, Big Joke
Economic Headwinds Blow (Unequally)
New Rules, Same Challenges
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Tensions Threaten a Fragile Pause
Thailand and Cambodia agreed to a ceasefire on December 27, 2025, after weeks of fighting. The truce is fragile, with Thailand accusing Cambodia of violating the agreement by way of mortar fire (KH says it was an accident) that injured a Thai soldier on January 6. Both sides agreed to stop troop movements and keep lines of communication open between themselves. China has stepped in as mediator instead of the U.S. - Chinese foreign minister Wang Yi is being firm in telling both sides to cool their jets. Around a quarter million people remained in camps as of January 4.
Read more: Kiripost (Containers Blocking Access), CSIS (Ceasefire Details), Nation Thailand (Violation Claims), Bangkok Post (Weapons Seizure), Bangkok Post (Foreign Ministry Response), Nation Thailand (Army Warning), CGTN(China Mediation)
Border Conflict Disrupts Supply Chains
The border conflict is still causing knock-on effects in manufacturing and logistics throughout the Indochina Peninsula. The Poipet-Aranyaprathet border closing, which normally handles more than 70% of land cargo between the two countries, has disrupted production of starch, ethanol, and steel. The Ministry of Finance says that losses in Thailand are so far more than 10 billion baht. The conflict is particularly problematic for hard disk drive manufacturers (Thailand accounts for 40% of global HDD production capacity), with big operations from both Western Digital and Seagate.
Read more: Logistics Viewpoints
Feb 8 Election Complicated by Vote-Buying Fears
A Thai Rath poll shows the pro-democracy People’s Party and Pheu Thai Party with 61.17% support between them, with the ruling Bhumjaithai Party coming in at 13.15%. The electoral system favors local constituency power, which historically benefits Bhumjaithai. High-profile warnings about vote-buying are already circulating. In Ubon Ratchathani, Pheu Thai candidate Watcharapol Chueakhong thinks at least a billion baht ($30M) is flowing for vote-buying. Voter loyalty appears to prioritize party branding over individual politicians, with 56.47% saying they would not support MPs who switch parties.
Read more: Thai Examiner (Poll Numbers), Thai Examiner (Nakhon Nayok), Bangkok Post (Buri Ram Polls), Bangkok Post (Misinformation), Thai Examiner (Ubon Ratchathani)
Coalition Arithmetic For Post-Election Outlook
Neither the People’s Party nor Bhumjaithai Party is expected to be able to pull off a parliamentary majority in the upcoming election, meaning that a coalition will likely need to be formed to pull together the next government. Pheu Thai, currently expected to finish third, is likely to play an important role in post-election horse trading. Because of this, the election results might hinge more on electoral arithmetic than democratic choice. The People’s Party could lead but will need to ally with Bhumjaithai to form a government. Political dynamics suggest the future coalition may include Bhumjaithai, Pheu Thai, and Klatham. The Democrat Party has ruled out joining any parties connected to “grey money,” particularly Klatham, using grey financing as a political dividing line. Klatham denies accusations of connections to transnational crime and has criticized the Democrats for stirring up political tensions.
Read more: Bangkok Post (Coalition Prospects), Bangkok Post (Grey Money), Bangkok Post (Legal Action)
Economy Sees Worst Growth in Three Decades
GDP growth is expected to be a flaccid 1.5-2% for 2026, which would be the lowest rate in 30 years. Export growth is expected to drop to 0.5%, and inflation is expected between 0.2% and 0.7%. The Bank of Thailand says the economy is going to have a sustained decline in competitiveness across the board, particularly because of U.S. tariffs, an appreciating currency, and (ever-unresolved) political uncertainty. The baht has risen more than 8% in the past year, creating a competitiveness gap with Vietnam. Household debt remains a critical constraint on banking sector expansion, as it hampers access to credit for otherwise potential borrowers.
Read more: Vietnam Plus (GDP Forecast), Trading View (BOT Warning), Bangkok Post (Household Debt), Trading View(Business Sentiment), Nation Thailand (Ekniti Plan), Nation Thailand (JFC Warning), The Diplomat (Central Bank)
Policy Priorities Target Demographic Crisis
Five political parties are starting to make noise about the dropping Thai birth rate all at the same time. Thailand’s total fertility rate has dropped from 6.4 in 1964 to 1.46 in 2023, (below replacement) which means that the nation’s population is headed for a drop towards 30 million by 2074. Thai Sang Thai thinks 2,000 baht a month to women until the child is six will do the trick. Palang Pracharath prefers 1,500 baht monthly support from pregnancy until delivery, followed by 1,000 baht up to age six. The Democrat Party suggests 5,000 baht a month for mothers and children for a year, including a savings account with bonuses. The People’s Party’s spin is for a monthly child allowance of 1,200 baht for four years. Bhumjaithai focuses on healthcare access through community nursing programs.
Read more: Thai Examiner (Birth Rate Policies), Bangkok Post (Thai Sang Thai), Nation Thailand (TDRI Priorities)
Semiconductor Hopes for Regional Primacy
The government wants to see the semiconductor sector set its sights set on nearly $80 billion of FDI over the next 25 years. The National Semiconductor Board finalized a roadmap this week that sets out milestones for 2030, 2040, and 2050, charting a course from basic assembly to the big leagues of chip design and wafer fabrication. The roadmap throws in financial incentives, pledges to train 230,000 engineers, R&D center upgrades, infrastructure, and regulatory improvements, but there’s a big gap between a roadmap and actually getting people to pony up cash. Binance TH’s CEO Nirun Fuwattananukul chimed in with a dose of reality, saying the government should focus on long-term FDI competitiveness instead of just flashy announcements.
Read more: Tech in Asia (Semiconductor Plan), Bangkok Post (FDI Strategy)
China Ties Test U.S. Alliance
Since the 2014 (Thai) military coup, the United States has reduced military cooperation with Thailand, allowing China to replace it as its primary arms supplier with $400 million in arms sales between 2016 and 2022. Zach Cooper from the American Enterprise Institute says there’s a risk of “decoupling” between the U.S. and Thailand when it comes to military cooperation, particularly impacting U.S. access to Thai military bases like U-Tapao. The U.S. is re-evaluating its military presence in Southeast Asia even as Thailand appears to be increasingly aligned with Chinese interests.
Read more: Defense News
New Rules on Money, More Taxes
New rules from The Bank of Thailand require documentation for foreign inflows of more than 200,000 USD, including gold transactions. The BOT says’ that it’s trying to stabilize the baht, which has appreciated about 8% in the past year, hurting exporters and tourism. Local gold traders oppose a tax plan on gold trading to curb the baht appreciation. The government introduced a new tax policy on low-value imports and will now apply a duty on all imported goods from the first baht. Around 97% of imported goods already have taxes included in listed prices on platforms like Lazada and Shopee. A new tourist entry fee of 300 baht for foreign travelers will be put in place from February, with 70 baht of that funding medical and accident insurance and the remainder apparently earmarked for “tourism infrastructure.” A permanent natural catastrophe fund is going to be set up that will require 50 billion baht of initial capital of is expected to be fully operational by 2027.
Correction: Due to an error in the source article, a previous version of this story incorrectly stated the Bank of Thailand would require documentation for foreign inflows of more than 200,000 THB, when in actual fact, the threshold is 200,000 USD. The source article at Thai Examiner has, at the time of this correction, still not been updated with the correct information.
Read more: Thai Examiner (Capital Controls), Bangkok Post (Gold Tax), Travel and Tour World (Import Tax), Scand Asia (Tourist Fee), Asia Insurance Review (Catastrophe Fund)
Crime and Corruption, Big Joke
More than 10 politicians and former MPs have found themselves in the hot seat over alleged ties to scams, gambling, and drug trafficking. DSI officials crashed five Bangkok locations yesterday, targeting an iris-scanning cryptocurrency scheme that harvested personal data from 1.2 million citizens (associated with Worldcoin). The probe is looking into allegations of privacy violations and money laundering, with a side eye on KuCoin, a crypto exchange that has its own transnational money laundering baggage. In the “Big Joke” bribery saga, the Royal Thai Police have shared some evidence showing former deputy national police chief Surachate Hakparn (Alias: “Big Joke,” yes, really…) allegedly delivered 16 million baht in gold bars to an anti-corruption official.
Read more: Bangkok Post (Politicians Probe), Bangkok Post (DSI Raids), Khaosodenglish (Scam Compound), Bangkok Post (Big Joke), Bangkok Post (Trafficking)
Economic Headwinds Blow (Unequally)
The bigwigs at Toyota expect 630,000 domestic vehicle sales for 2026, up a bit from last year’s 600,000, banking on government stimulus to resurrect buyer enthusiasm. The company is leaning on the Thailand Plus One policy, but the Cambodian tensions are playing havoc with component shipments. The restaurant scene faces grimmer prospects. Fine dining has been getting the short end of the stick, but street food and budget buffets might picked up some of their losses. Property developers are also bracing for a difficult year as household debt and anemic purchasing power weighing on buyer’s confidence. Sena Development is doubling down on affordable housing, which makes up about 70% of Greater Bangkok’s demand.
Read more: Bangkok Post (Automotive), Bangkok Post (Restaurants), Bangkok Post (Property), Bangkok Post (Inflation)
New Rules, Same Challenges
The Criminal Code amendment that criminalizes sexual harassment is now in effect, addressing what was previously a gap in legal definitions. Penalties for Creepy Casanovas will now start out at a year in prison or a 20,000 baht fine, covering acts with sexual connotation that cause distress. The International Commission of Jurists welcomed the change but said enforcement needs to be in alignment with international rights standards. Prime Minister Anutin showed up at a Finance Ministry subcommittee meeting on January 7 to support the set up of a data bureau to tackle money laundering and illicit financial flows (Ed: shocking that this doesn’t that already exist). Finance Minister Ekniti said the bureau will use an Open API system to better share financial data between agencies like the Bank of Thailand, the SEC, and the Anti-Money Laundering Office. As a side note, we found the stock footage used for the Bangkok Post article tickled our funny bone; delightfully ridiculous.
Read more: ICJ (Sexual Harassment Law), Bangkok Post (Data Bureau)
That’s it for this week, thanks for reading!
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Excellent roundup on Thailand's economic pressures. The 8% baht appreciation creating a competitveness gap with Vietnam is a real bind for exporters, kinda reminds me of when the Swiss franc surged and manufacturers had to scramble. What's interesting is how the BOT's trying capital controls on inflows above 200k baht while also battling household debt that limits credit access, seems like they're fighting on two fronts at once.