Thailand’s Business Sector on Edge as New Government Faces Economic Challenges
As Thailand prepares to install its third government in just over a year, businesses are expressing deep concerns about the potential impact on critical policies, including the delayed digital wallet stimulus. The abrupt transition, triggered by the Constitutional Court’s removal of Prime Minister Srettha Thavisin and the quick appointment of Paetongtarn Shinawatra, has left the business community uneasy about the continuity of economic strategies amid stagnant growth and increasing competition from cheap Chinese imports. Experts emphasize the urgent need for the new government to implement measures to protect domestic SMEs, address high household debt, and reassess Thailand’s open investment policies to maintain competitiveness.
Industry leaders, including Aat Pisanwanich and Montri Mahaplerkpong, highlight the pressing economic issues that the incoming Pheu Thai-led coalition must tackle. These include reviving struggling Thai SMEs, reducing household debt, and curbing the influx of low-cost Chinese products that have severely impacted local businesses. Additionally, the new administration faces the challenge of maintaining investor confidence while addressing high energy costs, which have driven up production expenses and diminished Thailand’s appeal as an investment destination compared to neighboring countries.
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Editor’s Note: As Thailand prepares to install its third government in just over a year, businesses are deeply concerned about potential disruptions to crucial policies, such as the delayed digital wallet stimulus. The abrupt political transition, prompted by the Constitutional Court’s removal of Prime Minister Srettha Thavisin and the swift appointment of Paetongtarn Shinawatra, has created uncertainty over economic strategies amid stagnant growth and intensifying competition from low-cost Chinese imports. Industry leaders stress the urgent need for the new Pheu Thai-led coalition to address pressing issues like supporting SMEs, reducing household debt, and reassessing open investment policies to boost competitiveness and restore investor confidence.
Thai Baht Faces Uncertainty Amid Political Turmoil and Central Bank Decision
The recent rally of the Thai baht is under significant pressure as political developments threaten to destabilize the currency’s recovery. Since hitting a near two-year low against the dollar in May, the baht had been one of the strongest-performing currencies in the region, buoyed by a resurgence in tourism. However, the political upheaval following Paetongtarn Shinawatra’s rise to the prime ministerial position and the ousting of her predecessor, Srettha Thavisin, has raised concerns among traders. With the Bank of Thailand (BoT) expected to maintain its interest rate at 2.50% in its upcoming policy meeting, market analysts are skeptical about the baht’s ability to sustain its recent gains. Some forecast a decline towards 37.5 per dollar by year-end, citing technical vulnerabilities and the possibility of a weaker neutral rate due to structural impediments to Thailand’s economic growth.
As traders prepare for the BoT’s decision, the political landscape remains a critical factor influencing the baht’s trajectory. Analysts like Jeffrey Zhang from Credit Agricole CIB HK Branch and Moh Siong Sim from Bank of Singapore have maintained a bearish outlook on the currency, with expectations that the baht may weaken further due to external pressures, including potential US dollar strengthening amid upcoming US elections. Meanwhile, domestic issues such as Thailand’s elevated household debt and the uncertain fate of the digital cash handout program, previously advocated by Paetongtarn, add to the uncertainty. While the immediate political uncertainty has eased with Paetongtarn’s victory, concerns over delayed economic reforms and fiscal policies may continue to weigh on the baht in the near term.
Editor’s Note: The Thai baht, which had recently rallied after a two-year low, faces renewed uncertainty amid political upheaval and the Bank of Thailand’s upcoming interest rate decision. Traders are concerned that the baht’s gains might not be sustainable, with forecasts suggesting a possible decline towards 37.5 per dollar by year-end due to both domestic issues, like high household debt and uncertain fiscal policies, and external pressures, including potential US dollar strengthening.
Thai Government Agency Maintains GDP Forecast Amid Calls for Economic Stimulus
The National Economic and Social Development Council (NESDC) has upheld its GDP forecast for 2024, projecting growth between 2.3% and 2.8%, with an average of 2.5%. Despite this steady outlook, the agency has urged the government to expedite economic support measures, particularly those targeting low-income earners, and to accelerate budget disbursements in the second half of the year. NESDC Secretary-General Danucha Pichayanan emphasized the importance of preparing the 2025 budget to address global economic volatility, which could be exacerbated by increasing international conflicts and trade tensions.
Economic experts, including those from Kasikorn Research Center and KGI Securities, echoed the call for timely government intervention, noting that the second-quarter GDP growth of 2.3% aligns with market expectations but highlighted the need for further stimulus to achieve the projected 2.6% growth for the full year. Analysts pointed out that the economic outlook for the remainder of the year heavily depends on government spending and the implementation of consumption-boosting measures. With concerns over high household debt and the need to attract foreign investment, the new Pheu Thai-led government faces pressure to deliver on its economic policies while navigating the challenges posed by global uncertainties.
https://www.bangkokpost.com/business/general/2850166/agency-maintains-gdp-forecast-for-the-year
Editor’s Note: The National Economic and Social Development Council (NESDC) has maintained its 2024 GDP growth forecast of 2.3% to 2.8%, emphasizing the need for expedited economic support measures and faster budget disbursements, particularly for low-income earners. NESDC Secretary-General Danucha Pichayanan highlighted the importance of preparing the 2025 budget to mitigate global economic volatility exacerbated by international conflicts and trade tensions. Economic experts from Kasikorn Research Center and KGI Securities support these calls, stressing that achieving the forecasted 2.6% growth depends on effective government spending and stimulus measures to address high household debt and attract foreign investment amidst global uncertainties.
Push for Expanded Tax Reduction Scheme to Boost Rooftop Solar Panel Adoption
The IEEE Power and Energy Society (Thailand) is advocating for an expansion of the government’s tax reduction scheme aimed at promoting the installation of rooftop solar panels. Scheduled for final approval in the latter half of the year, the scheme currently targets 90,000 households from 2024 to 2027, offering tax benefits for those purchasing solar panels with a capacity under 10 kilowatts and costing less than 200,000 baht. Nipon Ketjoy, a member of the IEEE Power and Energy Society, has urged authorities to include small and medium-sized enterprises (SMEs) in the scheme to alleviate their electricity costs and support their operations during economic slowdowns. He argues that extending the scheme could drive significant adoption of clean energy and boost business growth, ultimately enhancing tax revenues.
The Department of Alternative Energy Development and Efficiency is expected to review the proposal, which requires a 20.2 billion baht budget and aims to cut annual electricity consumption by 585 million kilowatt-hours. As Thailand sets ambitious renewable energy targets under the 2024 national power development plan—aiming for 51% of total power supply from renewable sources by 2037—the inclusion of SMEs could further support the country’s transition to sustainable energy. New Energy Plus Solutions Co, a solar panel distributor, has supported the scheme, highlighting its potential to reduce carbon dioxide emissions and promote environmental benefits.
https://www.bangkokpost.com/business/general/2850121/state-urged-to-widen-tax-scheme
Editor’s Note: The IEEE Power and Energy Society (Thailand) is pushing for an expanded tax reduction scheme to include small and medium-sized enterprises (SMEs) in order to boost rooftop solar panel adoption and alleviate their electricity costs. With the proposal set for review and a 20.2 billion baht budget aimed at significantly reducing electricity consumption, this expansion could support Thailand’s renewable energy targets and enhance business growth while promoting environmental benefits.
Majority of Thais Lack Cybersecurity Knowledge, New Study Reveals
A recent survey by Advanced Info Service (AIS) highlights a significant gap in cybersecurity awareness among Thai citizens, with over half of respondents lacking essential knowledge in areas crucial for personal and organizational safety. The Thailand Cyber Wellness Index 2024 revealed that many Thais are unfamiliar with the risks of ransomware, the dangers of using public Wi-Fi for financial transactions, and the importance of secure passwords. In response, AIS has launched the Digital Health Check, a personalized cyber-immunity assessment tool designed to enhance digital literacy and provide tailored learning recommendations. The initiative also includes the AIS Secure Net service, offering free, comprehensive cybersecurity protection for a year.
The study underscores the urgent need for improved digital skills, with findings showing that while overall digital literacy has reached a basic level, significant gaps remain. The Technology Crime Investigation Division 1 reports that cybercrime has caused 69.1 billion baht in damages from March 2022 to July 2024, with only a fraction of the losses recoverable. Thailand ranks sixth globally for financial cyber threats, highlighting the critical need for targeted digital literacy programs to address these vulnerabilities and enhance cybersecurity awareness across various demographics.
Editor’s Note: A recent survey by Advanced Info Service (AIS) reveals a troubling lack of cybersecurity knowledge among Thai citizens, with over half of respondents unaware of essential risks such as ransomware and secure password practices. In response, AIS has introduced the Digital Health Check tool and the AIS Secure Net service to boost digital literacy and provide free cybersecurity protection for a year. The study highlights an urgent need for improved digital skills, as Thailand faces significant cybercrime damages and ranks sixth globally for financial cyber threats.
New Solar Panel Partnership Aims to Boost Sales Amid Growing Competition
New Energy Plus Solutions Co, a local distributor of solar panels, has announced a strategic partnership with Chinese solar panel manufacturer LONGi Green Energy Technology to enhance its market presence in Thailand. This collaboration comes as New Energy Plus Solutions, currently selling panels from Shanghai-based Jinko Solar Holding, seeks to stay competitive by integrating LONGi’s advanced technologies. The partnership will introduce two new types of rooftop solar panels featuring LONGi’s innovative “Back Contact” technology, designed to improve efficiency in low sunlight conditions, and building-integrated photovoltaics (BIPV) for enhanced integration with building structures.
The Thai solar panel market has been expanding at an average rate of 22% annually since 2022, with projections estimating its value to reach 67 billion baht by 2025, driven by advancements in solar technology, the rise in work-from-home arrangements, and increasing electricity costs. LONGi’s entry into the market aligns with Thailand’s government initiatives to promote renewable energy through feed-in tariffs, green utility tariffs, and tax incentives. The collaboration is set to leverage New Energy Plus Solutions’ commitment to customer education and one-stop solutions, aiming to capture a larger share of the growing solar market.
Editor’s Note: New Energy Plus Solutions Co has partnered with Chinese manufacturer LONGi Green Energy Technology to enhance its competitive edge in Thailand’s growing solar panel market. This collaboration will introduce innovative products, including LONGi’s advanced “Back Contact” technology and building-integrated photovoltaics (BIPV), aimed at improving efficiency and integration. With the Thai solar market expanding rapidly and expected to reach 67 billion baht by 2025, the partnership aligns with government renewable energy initiatives and seeks to capture a larger market share.
Commerce Ministry to Propose Measures Against Cheap, Poor-Quality Imports
The Commerce Ministry is set to propose new measures to Prime Minister Paetongtarn Shinawatra next week aimed at addressing the influx of cheap, low-quality imported products that are impacting local businesses. Ronnarong Phoolpipat, Director-General of the Department of Foreign Trade (DFT), announced that the proposal will include the formation of a national working team to tackle the issue. This initiative follows consultations with local entrepreneurs who reported that such imports, along with customs fraud and foreign competition, are undermining their market position.
The proposed measures will involve stricter quality inspections for imported goods and potential amendments to trade laws and international agreements to better protect Thai businesses. Entrepreneurs will also be guided on how to utilize anti-dumping and countervailing regulations to safeguard their interests. The DFT will collaborate with various agencies, including the Thai Chamber of Commerce and the Federation of Thai Industries, to address these concerns and enhance the competitiveness of Thai businesses.
Editor’s Note: The Commerce Ministry will propose new measures to Prime Minister Paetongtarn Shinawatra to combat the impact of cheap, low-quality imports on local businesses, including stricter quality inspections and potential trade law amendments. The initiative, led by the Department of Foreign Trade, aims to strengthen protections for Thai businesses and improve competitiveness by addressing issues like customs fraud and unfair foreign competition.
Taiwanese Startup Promotes Thai Relocation Amid Geopolitical Shifts
Profet AI, a Taiwanese startup specializing in AI applications for manufacturing, is advocating for the relocation of businesses to Thailand to mitigate geopolitical risks. Jerry Huang, co-founder and CEO of Profet AI, revealed that about 40% of their Taiwanese clients are considering moving their factories to Thailand, driven by the need to reduce geopolitical exposure and capitalize on Thailand’s strategic market advantages. The move includes sectors like electric vehicle batteries, auto parts, and semiconductor manufacturing, as well as small robotics and startups from Taiwan.
The shift aligns with Thailand’s national AI strategy and action plans, which aim to enhance digital transformation and AI adoption. Profet AI, in partnership with HexaTech Solutions, plans to establish an R&D center in Thailand within the next year, focusing on developing large language models and other AI technologies. This investment comes amid a surge in Thailand’s electronics and automotive sectors, with substantial investments reported in advanced electronics, semiconductors, and printed circuit boards, reflecting the country’s growing role as a key player in the global manufacturing landscape.
https://www.bangkokpost.com/business/motoring/2851432/taiwanese-startup-touts-thai-relocation
Editor’s Note: Profet AI, a Taiwanese startup, is encouraging businesses to relocate to Thailand to avoid geopolitical risks, with about 40% of their clients in sectors like electric vehicle batteries and semiconductors considering the move. This initiative supports Thailand’s AI and digital transformation goals, as Profet AI plans to set up an R&D center with HexaTech Solutions, capitalizing on Thailand’s expanding role in electronics and automotive industries.
Vietnam’s ESG Framework: A Roadmap for Business Compliance and Growth
As Environmental, Social, and Governance (ESG) factors gain global importance, businesses in Vietnam are being urged to navigate a complex legal landscape to align with international and domestic standards. Vietnam’s ESG framework is influenced by its participation in key international agreements such as the Paris Agreement and the EU-Vietnam Free Trade Agreement, alongside domestic regulations like the Law on Environmental Protection and corporate governance laws. These regulations cover a range of issues from environmental sustainability to labor rights, with public and listed companies facing stricter compliance requirements, including detailed ESG reporting to the State Securities Commission.
Compliance with ESG standards offers significant benefits for Vietnamese enterprises, including enhanced operational efficiency, improved brand reputation, and better access to financing and international markets. The Vietnamese government is actively promoting “green financing” and encouraging industries to adopt sustainable practices. By integrating ESG best practices, companies can attract long-term investors, access new financing opportunities, and remain competitive in high-standard markets such as the EU. With a growing emphasis on ESG compliance, businesses are advised to undertake ESG assessments, adopt international certifications, and collaborate with authorities to ensure alignment with evolving regulations and standards.
https://www.lexology.com/library/detail.aspx?g=7e3a5e09-e9d4-4696-8835-e396ea81d5f6
Editor’s Note: Vietnamese businesses are navigating a complex ESG framework influenced by international agreements like the Paris Agreement and the EU-Vietnam Free Trade Agreement, alongside domestic regulations such as the Law on Environmental Protection. Compliance with these standards offers benefits like enhanced operational efficiency, improved brand reputation, and better access to financing and global markets. The Vietnamese government is promoting green financing and sustainable practices, urging companies to adopt ESG best practices and collaborate with authorities to align with evolving regulations. A good read.
Taiwan and Vietnam Forge Stronger Startup Ties at Tech Solution Day
Startup Island Taiwan showcased 18 innovative startups at the Taiwan Tech Solution Day, held at Hanoi’s National Innovation Centre on August 13. The event underscored the growing collaboration between Taiwanese and Vietnamese tech ecosystems, featuring leading representatives from both regions. Taiwanese startups demonstrated advancements in digital services, cybersecurity, smart manufacturing, and sustainable industries, with notable participants like Gogolook, IsCoolLab, and ZiG highlighting their successes and future plans in the Vietnamese market.
Richard R. C. Shih from the Taiwan Economic and Cultural Office in Vietnam emphasized the strong bilateral relationship, citing significant Taiwanese investment and workforce presence in Vietnam. Do Tien Thinh of the NIC noted Vietnam’s vibrant startup ecosystem and digital transformation opportunities, positioning it as an attractive environment for Taiwanese ventures. The Taiwan Tech Solution Day fostered valuable connections and showcased Taiwan’s ambition to enhance global startup collaborations.
Editor’s Note: At the Taiwan Tech Solution Day held at Hanoi’s National Innovation Centre, Startup Island Taiwan highlighted 18 innovative startups, showcasing advancements in digital services, cybersecurity, and sustainable industries. The event demonstrated the strengthening ties between Taiwanese and Vietnamese tech ecosystems, with prominent participants like Gogolook and IsCoolLab presenting their achievements and future plans. Richard R. C. Shih from the Taiwan Economic and Cultural Office and Do Tien Thinh from the NIC both underscored the robust bilateral relationship and Vietnam’s growing appeal for Taiwanese startups seeking new opportunities.
Indonesia Warns of Economic Disruption Without Clean Energy Transition
Indonesia faces significant economic disruption if it fails to transition to clean energy, according to Rachmat Kaimuddin, Deputy for Infrastructure and Transportation at the Coordinating Ministry for Maritime Affairs and Investment. Speaking at the IDX Channel ESG 2024 Conference, Kaimuddin highlighted the potential loss of competitiveness for Indonesian goods due to climate policies like the Carbon Border Adjustment Mechanism (CBAM) in developed regions such as the European Union. He emphasized that integrating Environmental, Social, and Governance (ESG) principles is not only a sustainable investment but also crucial for economic resilience.
Kaimuddin stressed the importance of reducing reliance on imported energy, noting that Indonesia currently imports 60% of its fuel oil, which poses a risk to national energy security. While Indonesia remains a major exporter of fossil fuels, including coal, he urged the country to advance its renewable energy sector and reduce dependence on foreign clean energy technologies. This transition is essential to maintaining economic stability and aligning with global environmental standards.
Editor’s Note: Indonesia risks significant economic disruption if it fails to transition to clean energy, warned Rachmat Kaimuddin at the IDX Channel ESG 2024 Conference. He highlighted that without adopting Environmental, Social, and Governance (ESG) principles, Indonesian goods could lose competitiveness due to climate policies like the Carbon Border Adjustment Mechanism in the EU. Kaimuddin stressed the need to reduce reliance on imported energy and advance renewable energy sectors to ensure economic stability and align with global environmental standards.
Nusantara Capital City Project Faces Scrutiny Amid Ambitious Goals
Indonesia’s ambitious plan to relocate its capital to Nusantara in East Kalimantan is both a groundbreaking initiative and a source of public skepticism. The Ibu Kota Negara (IKN) project aims to address Jakarta’s severe challenges, including overpopulation and environmental degradation, by creating a modern, sustainable city. While the government envisions Nusantara as a model of smart and green urban development, integrating technological innovation and environmental sustainability, concerns have arisen. Critics argue that the project’s substantial $33 billion cost could strain national finances and exacerbate existing social and economic issues. Environmentalists also worry about the potential impact on East Kalimantan’s rich biodiversity and the carbon footprint of the construction phase.
Public opinion remains divided, with some Indonesians supporting the move as a means to spur regional development, while others question the project’s timing and financial feasibility. The relocation process has faced political opposition and administrative delays, raising concerns about its effectiveness and potential disruptions during the transition. As the project progresses, the government’s ability to address these issues transparently and mitigate negative impacts will be crucial to ensuring that Nusantara meets its ambitious goals and benefits all Indonesians.
Editor’s Note: Indonesia’s ambitious plan to relocate its capital to Nusantara in East Kalimantan is facing scrutiny amid concerns over its $33 billion cost and potential environmental impact. While the project aims to address Jakarta’s overpopulation and environmental issues by creating a sustainable, smart city, critics worry it may strain national finances and harm local biodiversity. Public opinion is divided, with support for regional development tempered by skepticism about the project’s timing, financial feasibility, and administrative challenges.