var textForPages =["ECONOMIC\u000d\u000aREVIEW \u000d\u000aMID-YEAR\u000d\u000a2023\u000d\u000aHOW TO MOVE\u000d\u000a THE THAI ECONOMY \u000d\u000aFORWARD","","MACRO-\u000d\u000a ECONOMY\u000d\u000aTELECOM-\u000d\u000a MUNICATIONS\u000d\u000a17\u000d\u000a BANKING\u000d\u000a12\u000d\u000a INDUSTRY\u000d\u000a25\u000d\u000a PROPERTY\u000d\u000a30\u000d\u000a IT\u000d\u000aSTOCKS\u000d\u000a19\u000d\u000a INSURANCE\u000d\u000a26\u000d\u000a RETAIL\u000d\u000a15\u000d\u000a ENERGY \u000d\u000a23\u000d\u000a TOURISM \u000d\u000aBANGKOK POST\u000d\u000aECONOMIC\u000d\u000aREVIEW\u000d\u000aMID-YEAR 2023\u000d\u000aProject Editor: Sirivish Toomgum, Coordinator: Srisamorn Phoosuphanusorn, Copy Editing: Eric John Baker, Frank Stephen Thomson, Andrew John Faxwell, \u000d\u000aWriters: Business reporters, Photographs & Graphics: Bangkok Post archive\u000d\u000aCREATIVE & SPECIAL PUBLICATIONS: \u000d\u000aDeputy Managing Editor: Ratch Lunchaprasit, Editor: Simon Kind, Design & Layout: Rawich Weerakul, Cover Design: Rawich Weerakul\u000d\u000aSPECIAL PUBLICATION ADVERTISING: \u000d\u000aFirst Vice President: Nanthana Singkamala, Tel 0 2616 4440, Fax 0 2240 3649, nanthanas@bangkokpost.co.th\u000d\u000aThe Bangkok Post is edited by Soonruth Bunyamanee for the Bangkok Post Public Company Limited, Printer, Publisher and Owner.\u000d\u000aOffice: Bangkok Post Building, 136 Sunthorn Kosa Road, Klongtoey, Bangkok 10110, Thailand. www.bangkokpost.co.th, Tel +66 (0) 2616 4000, Fax +66 (0) 2240 3666\u000d\u000aGOVERNMENT FACES\u000d\u000a A BALANCING ACT\u000d\u000aSTOCKS ON A SHAKY \u000d\u000a FOUNDATION\u000d\u000aBALANCE OF POWER PROMISING OUTLOOK FOR\u000d\u000a A NIMBLE SECTOR\u000d\u000aRESURGENCE POISED\u000d\u000a TO PERSIST\u000d\u000aRETAIL BOUNCES BACK\u000d\u000aMANUFACTURERS\u000d\u000a HOLD THEIR BREATH\u000d\u000aSECTOR PREPARES FOR \u000d\u000a UNEVEN GAINS\u000d\u000aANALYSTS TENSE\u000d\u000a AS SECTOR DEVELOPS\u000d\u000aPROPERTY UNDER \u000d\u000a PRESSURE\u000d\u000aDIGITAL \u000d\u000aTRANSFORMATION \u000d\u000aCONTINUES APACE\u000d\u000a4 21\u000d\u000a8\u000d\u000aCONTENTS\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 3","I\u000d\u000an the aftermath of the general election, the \u000d\u000abiggest challenge facing the new govern\u0002ment is how to propel the Thai economy \u000d\u000aforward without any disruptions.\u000d\u000aThe Move Forward Party (MFP) and \u000d\u000aPheu Thai Party, which are set to lead a \u000d\u000aproposed coalition government, made \u000d\u000acampaign policy pledges that require sig\u0002nificant budget expenditure, which could \u000d\u000aaffect fiscal stability.\u000d\u000aThe economy recently recovered from \u000d\u000athe impact of the pandemic, which started in \u000d\u000aThailand in January 2020. In response to the \u000d\u000acrisis, the Prayut Chan-o-cha administra\u0002tion launched two emergency loan decrees \u000d\u000aenabling it to borrow 1.5 trillion baht in total \u000d\u000ato mitigate the economic impact of Covid-19 \u000d\u000ain the country.\u000d\u000aThe proposed coalition government \u000d\u000atouted a welfare budget for pensions tally\u0002ing 500 billion baht. When combined with \u000d\u000aother MFP policies proposed to the Election \u000d\u000aCommission, the 52 policies have a total \u000d\u000abudget of 1.28 trillion baht.\u000d\u000aThat amount does not include Pheu \u000d\u000aThai\u2019s pledges to reduce utility fees and give \u000d\u000aevery person aged 16 and older a 10,000-\u000d\u000abaht handout via a digital wallet. It is esti\u0002mated the latter policy alone would require \u000d\u000aa budget of 500 billion baht.\u000d\u000aREFORMS REQUIRED\u000d\u000aIn terms of the fiscal burden, the MFP\u2019s \u000d\u000aproposed reforms to tax and revenue collec\u0002tion are expected to increase government \u000d\u000arevenue by 650 billion baht per year.\u000d\u000aSirikanya Tansakul, the MFP\u2019s deputy \u000d\u000aleader, said one measure is the collection \u000d\u000aof wealth-based taxes from asset holders \u000d\u000awhose net assets are valued at more than \u000d\u000a300 million baht. Any amount in excess of \u000d\u000a300 million baht would be taxed at a rate of \u000d\u000a0.5%. It is estimated around 100,000 people \u000d\u000aare in this category.\u000d\u000aAnother option is to raise the corporate \u000d\u000aincome tax from 20% to 23%. The MFP also \u000d\u000apushed for the collection of capital gains tax \u000d\u000aon the sale of shares, which is deemed to \u000d\u000abe fairer to retail investors than a financial \u000d\u000atransaction tax.\u000d\u000aFollowing a substantial fiscal response \u000d\u000ato Covid-19, Thailand\u2019s new government \u000d\u000afaces a medium-term challenge of reduc\u0002ing the elevated deficit and debt levels, and \u000d\u000athe structural challenge of meeting rising \u000d\u000aspending demands, including those asso\u0002ciated with an ageing population, while \u000d\u000amaintaining fiscal sustainability, accord\u0002ing to the World Bank\u2019s \u201cThailand Public \u000d\u000aRevenue and Spending Assessment\u201d report \u000d\u000areleased in June.\u000d\u000aThailand has traditionally had a conserva\u0002tive approach to fiscal policy, with budget \u000d\u000adeficits and public debt remaining con\u0002tained prior to the pandemic. Tax revenues \u000d\u000a(averaging 16% of GDP) have remained rela\u0002tively low over the past two decades when \u000d\u000acompared with upper middle-income coun\u0002tries. Low levels of revenue mobilisation \u000d\u000ahave constrained overall public spending.\u000d\u000aAs Thailand becomes an ageing society, \u000d\u000agovernment expenditures will be higher. \u000d\u000aUnder a baseline projection, the combined \u000d\u000afiscal cost of the old age allowance and civil \u000d\u000aservice pension is projected to rise from \u000d\u000a1.8% of GDP in 2019 to 3.5% in 2050.\u000d\u000aThe World Bank report noted meeting \u000d\u000athe spending needs identified while main\u0002taining debt sustainability will require a \u000d\u000asubstantial increase in revenue. In the \u000d\u000aabsence of revenue reforms, the additional \u000d\u000aexpenditure on social assistance, education \u000d\u000aand adaptation to climate change, even after \u000d\u000aaccounting for potential improvements in \u000d\u000aspending efficiency, would cause the fiscal \u000d\u000adeficit to exceed 8% of GDP (up from 4%), \u000d\u000awhile the public debt stock would increase \u000d\u000ato unsustainable levels in the long term.\u000d\u000aBOOSTING REVENUE\u000d\u000aThe World Bank proposed progressive tax \u000d\u000areforms to provide the revenue needed to \u000d\u000afund elevated spending requirements. These \u000d\u000ainclude raising the rate of value-added tax \u000d\u000a(VAT), broadening the personal income \u000d\u000atax base and removing exemptions, and \u000d\u000aexpanding the collection of property tax.\u000d\u000aThe bank estimated raising the VAT rate \u000d\u000afrom 7% to 10% would increase revenue by \u000d\u000aup to 1.6% of GDP, with a greater impact on \u000d\u000ahigh-income groups. The low VAT base is a \u000d\u000adriver of low tax potential, largely attribut\u0002able to the prevalence of exemptions and \u000d\u000ahigh rates of informality, said the report.\u000d\u000aThe World Bank also proposed removing \u000d\u000amost personal income tax deductions and \u000d\u000aallowances. An analysis shows the benefits \u000d\u000aof some tax allowances, such as tax incen\u0002tives for long-term savings, accrue mainly \u000d\u000ato high-income taxpayers.\u000d\u000aThe bank estimated measures to broaden \u000d\u000athe personal income tax base from the \u000d\u000acurrent level of 28.5% of the labour force \u000d\u000ato an average of 32.5%, the figure reported \u000d\u000ain upper middle-income countries, would \u000d\u000aincrease personal income tax revenue col\u0002lection by 0.3 percentage points of GDP to \u000d\u000a2.1%.\u000d\u000aThe World Bank also suggested property\u000d\u000atax reform as Thailand\u2019s property tax\u000d\u000acollection is relatively low at 0.2% of GDP, \u000d\u000abelow the average of upper middle-income \u000d\u000acountries at 0.5%.\u000d\u000aCLEAR TARGETS\u000d\u000aThe Finance Ministry set four targets for \u000d\u000atax reform, aiming to increase revenue to \u000d\u000acover expenses and deal with future eco\u0002nomic uncertainties, said Fiscal Policy Office \u000d\u000a(FPO) director-general Pornchai Thiraveja.\u000d\u000aFirst, tax reform should ramp up the \u000d\u000acountry\u2019s competitiveness and ensure sus\u0002tainable economic growth. The ministry will \u000d\u000aexamine the overall tax structure to increase \u000d\u000atax revenue and review tax benefit measures \u000d\u000athat cost the state coffers, he said.\u000d\u000aMembers of the Move Forward Party, including leader Pita Limjaroenrat, centre right,\u000d\u000awave from an open-top vehicle on Ratchadamnoen Avenue near Democracy Monument as\u000d\u000athey celebrate winning the May 14 general election and becoming the majority party in parliament.\u000d\u000aPhoto: Wichan Charoenkiatpakul\u000d\u000aTrucks transport \u000d\u000ashipment containers \u000d\u000aat the Port Authority \u000d\u000aof Thailand in Bangkok \u000d\u000aon April 5, 2023.\u000d\u000aPhoto: Somchai \u000d\u000aPoomlard\u000d\u000aThe proposed coalition government will need to be astute if it plans to deliver\u000d\u000agenerous policies pledged to the electorate,\u000d\u000awrite Wichit Chantanusornsiri and Phusadee Arunmas\u000d\u000aTHAILAND MANAGED \u000d\u000aTHE COVID CRISIS BY \u000d\u000aDEPLOYING FISCAL AND \u000d\u000aMONETARY MEASURES \u000d\u000aFOR A COUPLE OF \u000d\u000aYEARS, BUT GOING \u000d\u000aFORWARD THESE \u000d\u000aPOLICIES NEED TO \u000d\u000aRETURN TO NORMAL.\u000d\u000aDANUCHA PICHAYANAN,\u000d\u000aSECRETARY-GENERAL, NATIONAL ECONOMIC AND \u000d\u000aSOCIAL DEVELOPMENT COUNCIL\u000d\u000aGOVERNMENT FACES A BALANCING ACT\u000d\u000aSecond, tax reform should align with the \u000d\u000adigital economy.\u000d\u000aThe ministry will continue to use \u000d\u000aadvanced technologies to improve the tax \u000d\u000acollection process and provide greater con\u0002venience to taxpayers, said Mr Pornchai.\u000d\u000aHe said the ministry already uses block\u0002chain technology to support tax filings and \u000d\u000aVAT refunds for foreign tourists.\u000d\u000aThird, tax reform should promote a green \u000d\u000aeconomy by encouraging people to con\u0002sume fewer products that are not environ\u0002mentally friendly, said Mr Pornchai. The \u000d\u000aministry plans to use both tax and non-tax \u000d\u000ameasures to promote a green economy, \u000d\u000asuch as a reduction in the excise tax on \u000d\u000aelectric vehicles, tax-deductible donations \u000d\u000ato environmental activities, and the launch \u000d\u000aof sustainable bonds, he said.\u000d\u000aThe fourth goal is to create fair treatment \u000d\u000ain the tax system and to support children, \u000d\u000athe elderly and the disabled.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 4\u000d\u000aMACROECONOMY\u000d\u000aContinued on page 6","","STRICT DISCIPLINE\u000d\u000aDanucha Pichayanan, secretary-general \u000d\u000aof the National Economic and Social\u000d\u000aDevelopment Council (NESDC), warned \u000d\u000athe new government to maintain financial \u000d\u000aand fiscal discipline as it will affect foreign \u000d\u000ainvestors\u2019 confidence in the Thai economy.\u000d\u000aMr Danucha said Thailand managed\u000d\u000athe Covid crisis by deploying fiscal and \u000d\u000amonetary measures for a couple of years, \u000d\u000abut going forward these policies need to \u000d\u000areturn to normal.\u000d\u000aPolitical leaders must assess the impact \u000d\u000aof policies on economic stability and foreign \u000d\u000aconfidence in the Thai economy, he said.\u000d\u000aThailand needs to prepare for shocks if \u000d\u000athe global economy slumps, particularly in \u000d\u000athe US and EU, because this could affect the \u000d\u000aThai economy, said Mr Danucha.\u000d\u000aHe said the country must build fiscal \u000d\u000acapability and resiliency to cushion against \u000d\u000aany global economic crisis or geopoliti\u0002cal conflict.\u000d\u000a\u201cWe need to maintain strict financial \u000d\u000adiscipline, according to the medium-term \u000d\u000afiscal plan, which requires a budget deficit \u000d\u000aof no more than 3% of GDP. Continuous \u000d\u000abudget deficits are not good in terms of \u000d\u000ainternational assessments and economic \u000d\u000aratings, which demonstrate that we still have \u000d\u000anot reached a state of fiscal balance,\u201d said \u000d\u000aMr Danucha.\u000d\u000a\u201cWe must report actual facts to the new \u000d\u000agovernment about projected revenues and \u000d\u000aexpenses, as well as our budgeting capacity.\u201d\u000d\u000aThe NESDC in February downgraded \u000d\u000aits economic growth forecast to 2.7-3.7% \u000d\u000afor this year from an estimate of 3-4% in \u000d\u000aNovember last year, largely attributed to \u000d\u000athe global slowdown and declining exports.\u000d\u000aThe government\u2019s planning unit forecast \u000d\u000athe export value of goods in US dollar terms \u000d\u000ato decrease by 1.6% this year, downgrade \u000d\u000afrom 1% growth in the November estimate \u000d\u000aand compared with 5.5% growth in 2022. \u000d\u000aThe FPO projected growth of 3.6% this \u000d\u000ayear in April, supported by improving \u000d\u000adomestic consumption and the rebound\u0002ing tourism sector, particularly increasing \u000d\u000aarrivals from Asia and Europe.\u000d\u000aThe office forecast 29.5 million foreign \u000d\u000aarrivals this year, up 164% year-on-year, \u000d\u000agenerating income of 1.3 trillion baht, an \u000d\u000aincrease of 255%.\u000d\u000aAs a result, income from the tourism \u000d\u000asector and related service businesses would \u000d\u000acontinue to increase, in line with improving \u000d\u000adomestic demand, said the FPO.\u000d\u000aPrivate consumption is expected to \u000d\u000aexpand by 4.1%, in line with increasing \u000d\u000apublic income attributed to the economic \u000d\u000arecovery coupled with declining inflation.\u000d\u000aSUNNY SECOND HALF\u000d\u000aChaichan Chareonsuk, chairman of the \u000d\u000aThai National Shippers\u2019 Council (TNSC), \u000d\u000asaid Thai exports are likely to post growth in \u000d\u000athe second half this year because inventory \u000d\u000alevels held by trading partners are expected \u000d\u000ato shrink. Traders maintained relatively \u000d\u000ahigh stocks last year related to concerns \u000d\u000asurrounding stock security.\u000d\u000aAccording to Mr Chaichan, the country\u2019s \u000d\u000ashipments in the first four months this year \u000d\u000aperformed better than expected, especially \u000d\u000ain March when they reached the highest \u000d\u000alevel in 12 months at $27.6 billion, a decline \u000d\u000aof only 4.2%.\u000d\u000aHe said exports registered by other \u000d\u000acountries in the region, such as Vietnam \u000d\u000aand Indonesia, fell by more than 10%, high\u0002lighting Thailand\u2019s resilient performance \u000d\u000aamid numerous risk factors such as high \u000d\u000ainflation, rising interest rates, the banking \u000d\u000asector crisis in the US, volatile energy prices, \u000d\u000aand a slow Chinese recovery.\u000d\u000aChina\u2019s revival is expected to continue, \u000d\u000ahelping the supply chain and increasing the \u000d\u000aflexibility of product manufacturing, said \u000d\u000aMr Chaichan.\u000d\u000aThe value of Thailand\u2019s customs-cleared \u000d\u000aexports in April tallied $21.7 billion, down \u000d\u000a7.6% year-on-year. Export figures in the \u000d\u000asecond quarter could contract by 2.7% year\u0002on-year, he said, if shipments total at least \u000d\u000a$26 billion in both May and June.\u000d\u000aThis is a challenging target, especially \u000d\u000awhen considering the monthly perfor\u0002mances in the second quarter of 2022, Mr \u000d\u000aChaichan said.\u000d\u000aThailand\u2019s exports decreased by 4.5% \u000d\u000ayear-on-year in the first quarter to $70.3 \u000d\u000abillion, while imports fell by 0.5% to $73.3 \u000d\u000abillion, resulting in a trade deficit of $3.04 \u000d\u000abillion, according to Commerce Ministry\u000d\u000adata.\u000d\u000aThe council predicts Thai export growth \u000d\u000aof 0.6% in the third quarter and 12% in the \u000d\u000afourth quarter this year.\u000d\u000a\u201cThe TNSC estimates export growth of \u000d\u000a0-1% this year for a value of $287-290 bil\u0002lion,\u201d he said.\u000d\u000a\u201cThe first half will likely post a slight \u000d\u000acontraction year-on-year, followed by an\u000d\u000aaccelerated recovery in the second half \u000d\u000adriven by strategies and trade stimulus \u000d\u000aactivities carried out by the government \u000d\u000aand private sectors.\u201d\u000d\u000aSTRATEGIES FOR SUCCESS\u000d\u000aTo promote exports in the second half of \u000d\u000athe year, Mr Chaichan said a greater focus \u000d\u000ashould be placed on using soft power, ramp\u0002ing up online and offline markets, push\u0002ing the participation of entrepreneurs in \u000d\u000aregional activities, maintaining existing \u000d\u000amarkets and expanding into new ones.\u000d\u000aHe said greater efforts are needed to \u000d\u000aexpedite free-trade agreement (FTA) nego\u0002tiations to improve links between exporters \u000d\u000aand importers, particularly regarding FTAs \u000d\u000awith the United Arab Emirates and the EU. \u000d\u000aOther work involves raising standards \u000d\u000aand promoting innovation in the production \u000d\u000aof bio-circular and green (BCG) items and \u000d\u000aenvironment, social and governance-related \u000d\u000aproducts to meet the demands of a green \u000d\u000aeconomy, said Mr Chaichan.\u000d\u000aHe said Thai exporters still face numerous\u000d\u000arisks such as a potential hike in the \u000d\u000aminimum wage, high electricity costs, vola\u0002tile exchange rates, economic uncertainty \u000d\u000aamong trading partners such as the US, \u000d\u000aEurope and Japan, and the vulnerability of \u000d\u000aThai small businesses, which are vital to the \u000d\u000acountry\u2019s economy.\u000d\u000aDomestic political unease adds another \u000d\u000alayer to the risk confronting shippers, said \u000d\u000aMr Chaichan.\u000d\u000aGiven these risks, the TNSC called on the \u000d\u000anew government to accelerate upgrading \u000d\u000aThailand\u2019s trade competitiveness through \u000d\u000acost reduction measures such as adjust\u0002ing labour costs appropriately, as well as \u000d\u000aimproving the cost structure of electricity \u000d\u000aand diesel prices. The council also wants \u000d\u000asupport for supply chain financing to \u000d\u000aenhance financial liquidity within the pro\u0002duction chain.\u000d\u000aEfforts should also be made to enhance \u000d\u000aefficiency, such as promoting sustainable \u000d\u000ainvestment and aligning with the net-zero \u000d\u000apolicies promoted worldwide. Environ\u0002mental management needs to be integrated \u000d\u000amore closely within the global trade arena, \u000d\u000aespecially in terms of the EU\u2019s Carbon \u000d\u000aBorder Adjustment Mechanism and carbon \u000d\u000acredits, he said.\u000d\u000aA shipping vessel moored at Bangkok Port in Khlong Toei. The Thai National Shippers\u2019 Council forecasts export growth of 0-1% this year, \u000d\u000agenerating $287-290 billion in value.\u000d\u000aComprehensive water management is \u000d\u000aneeded to address the severe drought con\u0002ditions expected to occur from 2023-26, \u000d\u000ahelping to ensure a sufficient quantity of \u000d\u000aagricultural and food products for export, \u000d\u000asaid Mr Chaichan.\u000d\u000aThe council also urged: promoting pro\u0002ductivity within organisations through auto\u0002mation and IT development; upgrading the \u000d\u000alogistics network by utilising the rail system \u000d\u000aas the backbone to support multimodal \u000d\u000atransport; establishing Laem Chabang Port \u000d\u000aas a central transshipment centre; amend\u0002ing competition laws and transport agree\u0002ments to ensure fairness; and upgrading the \u000d\u000atrade facilitation platform and enhancing \u000d\u000aworkforce skills.\u000d\u000aThe government should support budget \u000d\u000aallocation for promoting trade activities \u000d\u000aand increasing the benefits of cross-border\u000d\u000ae-commerce, he said. Investment in \u000d\u000ainfrastructure needs to be accelerated and \u000d\u000acrucial export markets must be retained, \u000d\u000awhile new markets in the Middle East, Latin \u000d\u000aAmerica and Asia should be explored, said \u000d\u000aMr Chaichan.\u000d\u000aAat Pisanwanich, director of the Center \u000d\u000afor International Trade Studies at the Uni\u0002versity of the Thai Chamber of Commerce, \u000d\u000asaid exports are forecast in a range of -1% \u000d\u000ato 1% this year based on a sluggish global \u000d\u000aeconomy, inflation curbing purchasing \u000d\u000apower, a slow Chinese economic recovery, \u000d\u000aand higher interest rates. All these factors \u000d\u000acould hinder both consumption and invest\u0002ment, he said. \u000d\u000aTAPPING NEW MARKETS\u000d\u000aPermanent commerce secretary Keerati \u000d\u000aRushchano said a recent joint meeting with \u000d\u000acommercial counsellors overseas and re\u0002presentatives from the private sector such \u000d\u000aas the Thai Chamber of Commerce, the\u000d\u000aFederation of Thai Industries, and the TNSC \u000d\u000aagreed to identify target export markets in \u000d\u000athe second half of the year.\u000d\u000aTarget markets include the Middle East, \u000d\u000aSouth Asia, Cambodia, Laos, Myanmar, Viet\u0002nam and China, which offer growth poten\u0002tial amid the global economic slowdown.\u000d\u000aA task force would be established to \u000d\u000aexpedite exports to these markets, with \u000d\u000amore than 350 activities planned for the \u000d\u000asecond half, he said.\u000d\u000a\u201cThe 350 activities are expected to help \u000d\u000agenerate income of more than $550 million \u000d\u000a[19.4 billion baht] in the second half,\u201d Mr \u000d\u000aKeerati said.\u000d\u000aHe said the Commerce Ministry is pro\u0002ceeding with plans to open new markets, \u000d\u000amaintain existing markets, and revive old \u000d\u000amarkets by accelerating the formation of \u000d\u000atrade representative groups to expand \u000d\u000amarket potential, promoting cross-border \u000d\u000ae-commerce, negotiating business partner\u0002ships both offline and online, increasing \u000d\u000aexports of BCG and innovative products, \u000d\u000aand promoting business matching for high\u0002value services, particularly digital content, \u000d\u000ahotels, catering, and restaurants featuring \u000d\u000athe Thai Select logo.\u000d\u000aThe ministry is planning more vigorous \u000d\u000aefforts in secondary city markets, espe\u0002cially in Asean, the US and Europe, said \u000d\u000aMr Keerati.\u000d\u000aHe said if the $550 million target for the \u000d\u000asecond half is achieved, total export value \u000d\u000afor this year is estimated at $290-293 billion, \u000d\u000aa slight improvement on the original target \u000d\u000aof $289-292 billion.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 6\u000d\u000aMACROECONOMY\u000d\u000aContinued from page 4","","T\u000d\u000ahe Thai stock market was in a free \u000d\u000afall for the first five months of 2023, \u000d\u000awith market capitalisation plung\u0002ing by almost 2 trillion baht over \u000d\u000athe period.\u000d\u000aPlagued by global economic uncertainty, \u000d\u000arising interest rates and recent post-elec\u0002tion political questions, foreign investors \u000d\u000adumped 101 billion baht worth of Thai \u000d\u000ashares from January to May, including 33 \u000d\u000abillion baht sold in May alone.\u000d\u000aBucking the trend of stock market gains \u000d\u000aafter a national poll, the Stock Exchange \u000d\u000aof Thailand (SET) index dropped to a \u000d\u000a12-month low of 1,514.89 points five work\u0002ing days after the election.\u000d\u000aLOCAL BOURSE\u000d\u000aThe Thai bourse contracted 8% for the \u000d\u000afirst five months, with analysts predict\u0002ing sentiment would remain poor until a \u000d\u000anew coalition government is formed and \u000d\u000athe market knows the identity of the next \u000d\u000aprime minister.\u000d\u000a\u201cThe longer it takes to form a govern\u0002ment, the greater the concern, as it will affect \u000d\u000athe approval of the budget bill for fiscal \u000d\u000a2024,\u201d said Kobsak Pootrakool, chairman \u000d\u000aof the Federation of Thai Capital Market \u000d\u000aOrganizations (Fetco).\u000d\u000aMr Kobsak, also a senior executive \u000d\u000avice-president at Bangkok Bank, said inves\u0002tors want clarity on economic policies from \u000d\u000athe planned coalition government, led by \u000d\u000athe Move Forward Party (MFP), includ\u0002ing a stimulus package for consumption, \u000d\u000aa minimum wage hike and reductions to \u000d\u000aelectricity bills.\u000d\u000aUncertainty on whether the MFP, which \u000d\u000awon 152 seats, will lead the government \u000d\u000aformation by early August pressured inves\u0002tor confidence. Opponents also filed legal \u000d\u000aAn investor monitors share prices of SET-listed companies at a securities firm. Photo: Pornprom Satrabhaya\u000d\u000aThai equities have taken a battering this year, and political and economic uncertainties\u000d\u000amean their future performance is uncertain,\u000d\u000awrite Nuntawun Polkuamdee and Nareerat Wiriyapong \u000d\u000aTHE LONGER IT TAKES TO FORM A GOVERNMENT, \u000d\u000aTHE GREATER THE CONCERN, AS IT WILL AFFECT THE \u000d\u000aAPPROVAL OF THE BUDGET BILL FOR FISCAL 2024.\u000d\u000aKOBSAK POOTRAKOOL,\u000d\u000aCHAIRMAN, FEDERATION OF THAI CAPITAL MARKET ORGANIZATIONS\u000d\u000aSTOCKS ON A SHAKY FOUNDATION\u000d\u000achallenges to the qualifications of MPF \u000d\u000aleader Pita Limjaroenrat, claiming his share\u0002holding in media company itv is prohibited \u000d\u000afor politicians.\u000d\u000aMr Kobsak said the market also reflected \u000d\u000aanxiety about MFP policies concerning \u000d\u000aending monopolies and capital gain tax \u000d\u000acollection, which could hurt the profitability\u000d\u000aof large-cap companies in power gen\u0002eration, telecom and retail. The campaign \u000d\u000apledge of a minimum wage increase would \u000d\u000aadversely affect companies in construc\u0002tion, hotel and manufacturing industries,\u000d\u000ahe said. \u000d\u000aThe Stock Exchange \u000d\u000aof Thailand booth at a \u000d\u000aMoney Expo. The Thai \u000d\u000abourse posted a negative \u000d\u000areturn of 8% during \u000d\u000aJanuary-May 2023.\u000d\u000aPhoto: Nutthawat \u000d\u000aWicheanbut\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 8\u000d\u000aSTOCKS\u000d\u000aContinued on page 10","Dato\u2019 Hasan Azhari Hj Idris, Chief Executive Officer, Invest Selangor Berhad\u000d\u000awww.investselangor.my \u000d\u000aS\u000d\u000aelangor is gearing up to host the \u000d\u000a7th Selangor ASEAN Business \u000d\u000aConference (SABC) 2023 on Octo\u0002ber 19-20, offering a remarkable \u000d\u000aplatform for businesses to seize \u000d\u000aopportunities in the region. This confer\u0002ence aims to facilitate exploration of the \u000d\u000aMalaysian market and the broader regional \u000d\u000amarket, home to over 600 million consum\u0002ers. As Malaysia\u2019s most progressive and \u000d\u000adeveloped state, Selangor serves as a gate\u0002way to numerous entry ports worldwide, \u000d\u000aparticularly within ASEAN countries. Its stra\u0002tegic location, coupled with advanced manu\u0002facturing technology, makes it an attractive \u000d\u000adestination for global business investors.\u000d\u000aHighlighting the significance of\u000d\u000aSelangor\u2019s economic contribution, Dato\u2019 \u000d\u000aHasan Azhari Hj Idris, Chief Executive Officer\u000d\u000aof Invest Selangor Berhad, emphasised \u000d\u000athat the state accounts for a substantial \u000d\u000aone-fourth of the country\u2019s GDP, the high\u0002est percentage among all states in Malaysia. \u000d\u000aThanks to its exceptional infrastructure and \u000d\u000ainvestment-friendly environment, Selangor \u000d\u000ahas successfully attracted over 6,231 manu\u0002facturing projects, creating 461,221 jobs and \u000d\u000aattracting manufacturing investments worth \u000d\u000amore than RM206.1 billion since 1999.\u000d\u000aThe 7th Selangor ASEAN Business Conference\u000d\u000a(SABC) 2023 promises a fresh perspective on \u000d\u000aSelangor as the thriving epicentre of ASEAN. \u000d\u000aThis conference will provide valuable oppor\u0002tunities for businesses from both ASEAN \u000d\u000aand non-ASEAN countries to explore and \u000d\u000atap into the Malaysian market, fostering sus\u0002tainable growth and fruitful partnerships.\u000d\u000aUnder the theme \u201cSelangor, Epicentre \u000d\u000aof ASEAN: Leveraging Diversity, Catalysing \u000d\u000aOpportunity, Creating Prosperity,\u201d SABC \u000d\u000a2023 showcases Selangor\u2019s pivotal role in \u000d\u000ashaping the economic landscape of the \u000d\u000aregion. As a key component of the Selangor \u000d\u000aInternational Business Summit (SIBS), SABC \u000d\u000aprovides a platform for influential economic \u000d\u000aplayers, stakeholders, and thought leaders to \u000d\u000aconvene and engage in crucial discussions. \u000d\u000aThis year\u2019s conference will explore topics \u000d\u000asuch as market access, regional economic \u000d\u000aintegration, and the limitless potential \u000d\u000aof entrepreneurship.\u000d\u000aHighlights of the 7th SABC\u000d\u000aHighlights of the 7th SABC include gather\u0002ing prominent regional economic leaders \u000d\u000afrom governments and the private sector \u000d\u000ato discuss the challenges, opportunities, \u000d\u000aand trends within the ASEAN region. The \u000d\u000afocus this year will be on smart cities and \u000d\u000ainvestment, featuring speakers from South \u000d\u000aSELANGOR SET TO HOST\u000d\u000aASEAN BUSINESS CONFERENCE\u000d\u000aUNVEILING BUSINESS \u000d\u000aOPPORTUNITIES, EXPLORING \u000d\u000aINVESTMENTS, AND \u000d\u000aFOSTERING SUSTAINABLE \u000d\u000aDEVELOPMENT \u000d\u000aPARTNERSHIPS\u000d\u000aKorea, Thailand, and Taiwan who will share \u000d\u000asuccess stories, knowledge, experiences, and \u000d\u000aapproaches in addressing liveability chal\u0002lenges through smart technology.\u000d\u000aRegarding investment, representatives \u000d\u000afrom Investment Promotion Agencies (IPAs) \u000d\u000afrom various local and regional entities, \u000d\u000aincluding the Thailand Board of Investment \u000d\u000a(BOI), will present valuable insights and \u000d\u000avalue propositions for potential investors. \u000d\u000aThey will showcase investment opportunities\u000d\u000aand destinations in the participating countries.\u000d\u000aAn exciting aspect of this year\u2019s event is \u000d\u000athe networking session at the SPARK hall, \u000d\u000awhere IPAs and Industrial Park Operators \u000d\u000acan immediately connect and engage in \u000d\u000afruitful business discussions.\u000d\u000aThe conference will also cover the topic \u000d\u000aof \u201cThe ASEAN Connection: Exploring the \u000d\u000aHidden Gems of Regional Supply Chains,\u201d \u000d\u000awhere IPAs will unveil the potential of \u000d\u000aregional supply chains and identify key \u000d\u000asectors and strategies to enhance connec\u0002tivity and collaboration.\u000d\u000aFurthermore, there will be discussions on \u000d\u000abuilding resilient and agile supply chains in \u000d\u000aASEAN, exploring strategies to mitigate risks, \u000d\u000aenhance efficiency, and navigate disruptions \u000d\u000afor sustained economic growth. Emphasis\u0002ing the importance of promoting regional \u000d\u000aintegration within ASEAN\u2019s supply chains, \u000d\u000athe conference will explore initiatives and \u000d\u000apolicies that foster seamless cross-border \u000d\u000atrade, investment, and cooperation for the \u000d\u000amutual benefits of member countries.\u000d\u000aVenue to strengthen business \u000d\u000apartnerships for sustainable prosperity\u000d\u000aDato\u2019 Hasan further elaborated that the \u000d\u000aconference not only aims to promote \u000d\u000aSelangor as the economic powerhouse of \u000d\u000aMalaysia but also seeks to create business \u000d\u000aopportunities for other countries.\u000d\u000a\u201cWe believe in the power of collaboration. \u000d\u000aRather than competing against each other, \u000d\u000aour focus is on ensuring that ASEAN grows \u000d\u000atogether, fostering sustainable prosperity. I \u000d\u000ahope that businesses in ASEAN can develop \u000d\u000ain unison, creating a brighter future for the \u000d\u000aregion and contributing to the global \u000d\u000aeconomy,\u201d he stated.\u000d\u000aAccording to his explanation, participants \u000d\u000awill seize this opportunity to network with \u000d\u000afellow business leaders and industry experts \u000d\u000afrom across the region. This networking can \u000d\u000ahelp them establish valuable connections, \u000d\u000adiscover potential business partners, and \u000d\u000astay updated on the latest trends and oppor\u0002tunities in their respective industries.\u000d\u000aHe further emphasised that the conference\u000d\u000aprovides a platform for participants to share \u000d\u000atheir experiences and best practices with \u000d\u000atheir peers and learn from experts in their \u000d\u000afields, gaining valuable insights into the \u000d\u000aASEAN business landscape.\u000d\u000aFurthermore, he highlighted that \u000d\u000aparticipants will gain a better understanding \u000d\u000aof government policies and regulations that \u000d\u000aimpact their businesses, potentially influ\u0002encing these policies. The conference will \u000d\u000aalso explore cutting-edge technologies and \u000d\u000asolutions relevant to businesses operating in \u000d\u000athe region. Dato\u2019 Hasan added that the event \u000d\u000aserves as an avenue for participants to con\u0002nect with potential partners, investors, and \u000d\u000acustomers from across the region, as well \u000d\u000aas explore new markets for their products \u000d\u000aand services.\u000d\u000aSelangor: Gateway to ASEAN\u000d\u000aStrategically located on the border of \u000d\u000aKuala Lumpur, the business capital of Malay\u0002sia, and Putrajaya, the administrative capital, \u000d\u000aSelangor boasts excellent connectivity. It is \u000d\u000ain close proximity to Kuala Lumpur Interna\u0002tional Airport (KLIA) and has its own airport, \u000d\u000aSultan Abdul Aziz Shah Airport in Subang. \u000d\u000aAdditionally, the renowned international \u000d\u000aseaport, Port Klang, the second busiest \u000d\u000acontainer port in the region, is also situated \u000d\u000awithin the state. These entry points posi\u0002tion Selangor as an attractive trading hub, \u000d\u000aespecially within the ASEAN region.\u000d\u000aAs Malaysia\u2019s most developed state, \u000d\u000aSelangor\u2019s robust economic growth is propelled \u000d\u000aby its abundant natural resources, world\u0002class land, sea, and air connectivity, and \u000d\u000aunparalleled urban commercialisation. With \u000d\u000aa population exceeding six million, it offers \u000d\u000aa vast and highly sought-after talent pool of \u000d\u000askilled workers. The modern business infra\u0002structure boasts Malaysia\u2019s best-connected \u000d\u000aand secure business complexes, including \u000d\u000athriving IR4.0 industrial developments. \u000d\u000aMoreover, Selangor is home to 3.6 million \u000d\u000amultilingual and highly skilled workforce, \u000d\u000amaking it the largest source in the country.\u000d\u000aTo accelerate its economic growth and \u000d\u000asustainability, Selangor has identified five \u000d\u000acore clusters: life sciences, food and \u000d\u000abeverages, manufacturing, electrical and \u000d\u000aelectronics, and transportation equipment \u000d\u000aand machinery.\u000d\u000aDato\u2019 Hasan Azhari Hj Idris concluded: \u000d\u000a\u201cI would also like to take this opportunity \u000d\u000ato invite the business communities from \u000d\u000aThailand to register and participate in the \u000d\u000aconference through the event website, \u000d\u000awww.selangorsummit.com. We hope that \u000d\u000athis year\u2019s summit opens up more oppor\u0002tunities to multinational corporations, \u000d\u000asmall and medium enterprises to show\u0002case their products and services, and use \u000d\u000aSABC as a strategic avenue for collaborations \u000d\u000aand partnerships.\u201d","Fetco\u2019s investor confidence index \u000d\u000aretreated to bearish territory for the first time \u000d\u000ain eight months in May, partly attributed to \u000d\u000alocal political uncertainties. Mr Kobsak said \u000d\u000ainflation in key economies should be moni\u0002tored because if rates accelerate in the latter \u000d\u000ahalf of this year, it would pressure central \u000d\u000abanks to raise their policy rates further.\u000d\u000aThe SET predicts political uncertainties \u000d\u000awill be short-lived and foreign fund outflows \u000d\u000awill reverse if the new government\u2019s policies \u000d\u000ado not affect the country\u2019s competitiveness \u000d\u000aand push operating costs higher.\u000d\u000aSET executives and analysts expect the \u000d\u000aindex to recover in the second half of the \u000d\u000ayear as the political situation is resolved. \u000d\u000aGlobal inflation has begun to stabilise as \u000d\u000aoil prices fall and interest rate policies are \u000d\u000arelaxed, but geopolitical factors must still \u000d\u000abe monitored.\u000d\u000a\u201cAnalysts expect various negative factors \u000d\u000ato be resolved in the second half of the year. \u000d\u000aWhile Thai tourism is recovering well and \u000d\u000ainflation has begun to ease, foreign investors \u000d\u000aare expected to return to buy Thai stocks \u000d\u000ain the second half,\u201d said SET president \u000d\u000aPakorn Peetathawatchai.\u000d\u000aAt the end of May, the SET index had \u000d\u000arisen 0.3% from the previous month and \u000d\u000adecreased 8.1% from the end of 2022, regis\u0002tering 1,533.54 points.\u000d\u000aThe SET\u2019s forward price-to-earnings \u000d\u000a(P/E) ratio was 16.1 times, above Asian \u000d\u000abourses\u2019 average of 12.5 times. The historical \u000d\u000aSET P/E ratio is 20.8 times, exceeding Asian \u000d\u000abourses\u2019 average of 14.1 times.\u000d\u000aCRYPTOCURRENCIES\u000d\u000aThe cryptocurrency market has rebounded\u000d\u000athis year, generating the highest returns \u000d\u000aamong all assets. In the first five months, Bit\u0002coin yielded the highest return of 66%, fol\u0002lowed by Ethereum at 56%, equities on the \u000d\u000aNasdaq100 at 31%, Binance\u2019s BNB coins at \u000d\u000a22%, and equities on MSCI World at 8.73%.\u000d\u000aThe recovery was driven mainly by the \u000d\u000adollar depreciation as the US economy \u000d\u000aweakened, leading investors to speculate \u000d\u000amore on high-risk assets. However, in the \u000d\u000afirst week of June, the US Securities and \u000d\u000aExchange Commission (SEC) accused \u000d\u000aBinance and Coinbase, two leading crypto\u0002currency exchanges, of committing ille\u0002gal activities, which may cause damage \u000d\u000ato investors.\u000d\u000aInvestors lost confidence, again making \u000d\u000athe crypto market volatile.\u000d\u000aThe number of crypto investors in Thai\u0002land has dropped dramatically, partly attri\u0002buted to damages of more than 2 billion baht \u000d\u000afrom deposits in the Zipup+ platform of \u000d\u000aSingapore-based crypto exchange Zipmex.\u000d\u000aAs investors await a Singapore court\u2019s \u000d\u000adecision regarding the company\u2019s restruc\u0002turing, Zipmex is in the process of finding \u000d\u000anew investors.\u000d\u000aIn May, Thailand\u2019s SEC approved the \u000d\u000aestablishment of Gulf Binance, a new crypto \u000d\u000aexchange, which is preparing for trading in \u000d\u000athe Thai market.\u000d\u000aBOND MARKET\u000d\u000aInvestments in the bond market have \u000d\u000agained attention from investors. The popu\u0002larity of mutual funds increased since the \u000d\u000asecond quarter of 2023 amid an expecta\u0002tion that major central banks\u2019 interest rate \u000d\u000aadjustments are nearing a cyclical peak.\u000d\u000aKasikorn Asset Management (K-Asset) \u000d\u000aexpects fixed income assets to recover this \u000d\u000ayear and provide an attractive rate of return, \u000d\u000aas global interest rates near a peak.\u000d\u000aThe rates are likely to stabilise for the \u000d\u000aremainder of 2023, before falling next year, \u000d\u000asaid the brokerage. In Thailand, the central \u000d\u000abank is likely to stop raising interest rates \u000d\u000asoon, said K-Asset. \u000d\u000aThe Thai Bond Market Association (Thai\u0002BMA) predicts private companies will issue \u000d\u000acorporate bonds worth more than 1 trillion \u000d\u000abaht this year.\u000d\u000aHowever, if the economy does not recover, \u000d\u000athe potential risk of default, especially \u000d\u000afor bonds issued by small and medium\u0002sized enterprises, could increase, said \u000d\u000athe brokerage.\u000d\u000aThis year some companies have already \u000d\u000adefaulted on debt payments, including All \u000d\u000aInspire Development for 1.72 billion baht; \u000d\u000aCho Thavee, which extended the repay\u0002ment period for 33.8 million baht worth \u000d\u000aof bonds; and Stark Corporation, which is \u000d\u000ahighly likely to default on payments of five \u000d\u000aseries of bonds worth nearly 9.2 billion baht.\u000d\u000aProblems also loom for corporate bonds, \u000d\u000aas companies entered the debt restructuring \u000d\u000aprocess with a total value of 13.5 billion baht.\u000d\u000aThaiBMA said investment-grade bonds \u000d\u000astill remain attractive for investment. \u000d\u000aPORTFOLIO REALLOCATION\u000d\u000aEconomic conditions are likely to exert \u000d\u000apressure on the investment market, includ\u0002ing high uncertainty stemming from ele\u0002vated interest rates, persistent core inflation, \u000d\u000athe resolution of the US debt ceiling issue, \u000d\u000aand domestic political instability surround\u0002ing the formation of a new government.\u000d\u000aSCB Chief Investment Office (SCB CIO) \u000d\u000asaid investors are advised to consider a \u000d\u000aportfolio reallocation plan, recommend\u0002ing 60% in long-term US government bonds \u000d\u000aand high-quality bonds, 30% in emerging \u000d\u000amarkets stocks, such as China and Thailand, \u000d\u000aand 10% in commodities like gold.\u000d\u000aSornchai Suneta, executive vice-presi\u0002dent at SCB CIO and head of product func\u0002tion at Siam Commercial Bank, said because \u000d\u000aof the level of uncertainty, especially regard\u0002ing the direction of interest rates, which \u000d\u000acan significantly impact various types of \u000d\u000aassets, investors should maintain a cautious \u000d\u000aapproach for the second half of this year.\u000d\u000aSCB CIO forecasts the Fed to maintain \u000d\u000aits policy rate at 5.00-5.25% until the end \u000d\u000aof 2023.\u000d\u000a\u201cHowever, some market analysts expect \u000d\u000aa potential rate hike at the June meeting \u000d\u000aas the Fed has emphasised the considera\u0002tion of multiple data points in its policy \u000d\u000aactions. The US faces a risk from core infla\u0002tion, which has been gradually declining, \u000d\u000awhile wages show no signs of a decrease,\u201d \u000d\u000asaid Mr Sornchai.\u000d\u000a\u201cFurther interest rate hikes remain \u000d\u000aa possibility.\u201d\u000d\u000aDespite benefiting from China reopen\u0002ing its borders, the Thai stock market has \u000d\u000afared poorly compared with other regional \u000d\u000abourses over the first five months of 2023.\u000d\u000a\u201cPolitical uncertainty surrounding the \u000d\u000aformation of a new government has con\u0002tributed to this performance. However, the \u000d\u000amarket already factored in a potential delay \u000d\u000ain government formation into share prices,\u201d \u000d\u000ahe said.\u000d\u000a\u201cThe substantial shocks to the share \u000d\u000aprices of large companies were influenced \u000d\u000aby the campaign pledges of the MFP and \u000d\u000aPheu Thai Party.\u201d\u000d\u000aMr Sornchai advised investors to priori\u0002tise asset allocation and regularly review \u000d\u000athe proportion of their invested assets. This \u000d\u000apractice ensures alignment with the current \u000d\u000amarket conditions, acceptable risk levels \u000d\u000aand investment goals.\u000d\u000aAnalysts predict the sentiment \u000d\u000awould remain poor until a new \u000d\u000acoalition government is formed \u000d\u000aand the market knows who would \u000d\u000abe the next prime minister.\u000d\u000aThe Securities and Exchange Commission\u000d\u000alogo is visible at the headquarters on\u000d\u000aVibhavadi Rangsit Road.\u000d\u000aPhoto: Patipat Janthong\u000d\u000aA man walks past \u000d\u000athe Stock Exchange \u000d\u000aof Thailand on \u000d\u000aRatchadaphisek \u000d\u000aRoad.\u000d\u000aPhoto: Patipat \u000d\u000aJanthong\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 10\u000d\u000aSTOCKS\u000d\u000aContinued from page 8","","An electric car on display at Thailand International Motor Expo \u000d\u000ain Bangkok. EV makers want the new government to continue \u000d\u000awith promotions for EV and battery manufacturing in Thailand.\u000d\u000aPhoto: Pattarapong Chatpattarasill\u000d\u000aConstruction workers ride in the back of a pickup in Min Buri. A wage hike is a major concern for industries once a new government takes office.\u000d\u000aPhoto: Nattapol Lovakij\u000d\u000aMinimum wages, \u000d\u000aelectric vehicles and\u000d\u000abio-circular and \u000d\u000agreen economic \u000d\u000adevelopment \u000d\u000adominate concerns \u000d\u000afor industry, \u000d\u000awrites Lamonphet \u000d\u000aApisitniran\u000d\u000aMANUFACTURERS \u000d\u000aHOLD THEIR BREATH\u000d\u000aA\u000d\u000after campaign pledges vowing \u000d\u000achange, the industrial sector is curi\u0002ous about how the Move Forward \u000d\u000aParty (MFP) will alter the business \u000d\u000aenvironment once it assumes office.\u000d\u000aThe Prayut Chan-o-cha government \u000d\u000aincreased the daily minimum wage last year, \u000d\u000aapproved incentive packages to speed up \u000d\u000agrowth of the electric vehicle (EV) indus\u0002try and declared bio-, circular and green \u000d\u000a(BCG) economic development as a national \u000d\u000aagenda item.\u000d\u000aThe Federation of Thai Industries (FTI) \u000d\u000ais monitoring how the proposed coalition\u000d\u000agovernment will adjust these policies or \u000d\u000acreate new ones if they can successfully \u000d\u000aform a new government this year.\u000d\u000aWages, EVs and BCG development are \u000d\u000akey economic issues as they involve busi\u0002ness operating costs and the cost of living for \u000d\u000ahouseholds, as well as climate sustainability \u000d\u000aand environmental goals, said the FTI.\u000d\u000aThe federation expects clarity on these \u000d\u000aissues if the coalition government can take \u000d\u000aoffice without a prolonged delay. \u000d\u000aWAGE UPTICK\u000d\u000aThe MFP\u2019s campaign pledge to increase \u000d\u000athe minimum wage to 450 baht a day will \u000d\u000aprove a challenge to labour-intensive busi\u0002nesses, according to the FTI.\u000d\u000aThailand raised wages on Oct 1 last year \u000d\u000adespite a disagreement from the FTI, which \u000d\u000afelt the move came ahead of the original \u000d\u000aschedule, set for January 2023.\u000d\u000aThe current daily minimum wage in \u000d\u000aBangkok is 353 baht, while workers in Chon \u000d\u000aBuri, which is in the Eastern Economic Cor\u0002ridor, receive 354 baht a day. Workers in \u000d\u000aother provinces receive a lower daily wage.\u000d\u000aMFP leader Pita Limjaroenrat did not \u000d\u000aindicate whether a wage hike will occur, \u000d\u000aassuming the coalition government takes \u000d\u000aoffice in August.\u000d\u000aDuring a talk with the FTI on May 23, one \u000d\u000aday after he announced a 23-point memo\u0002randum of understanding (MoU) signed \u000d\u000aby the eight political parties seeking to set \u000d\u000athe new government\u2019s policy direction, Mr \u000d\u000aPita said only he would ensure a reasonable \u000d\u000aincrease without causing a negative impact \u000d\u000ato industry.\u000d\u000aOne plank included in the MoU is \u000d\u000aimproving workers\u2019 rights and ensuring \u000d\u000afair wages.\u000d\u000aThe proposed wage rise would be done in \u000d\u000aa fair manner through negotiations among \u000d\u000aa tripartite wage committee made up of \u000d\u000aemployers, employees and government \u000d\u000arepresentatives, said Mr Pita.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 12\u000d\u000aINDUSTRY\u000d\u000aContinued on page 14","","Kriengkrai Thiennukul, chairman of the \u000d\u000aFTI, said his concerns were allayed after the \u000d\u000atalk with Mr Pita.\u000d\u000aMr Kriengkrai said if a wage increase is \u000d\u000anot carefully managed, it would add greater \u000d\u000afinancial burdens to businesses, especially \u000d\u000asmall and medium-sized enterprises. This \u000d\u000agroup is sensitive to increased operating \u000d\u000acosts as they have limited access to lending \u000d\u000asources, he said.\u000d\u000aIn addition, if the daily minimum wage in \u000d\u000aThailand is too high, it could prompt manu\u0002facturers to relocate their production facili\u0002ties to another country, said Mr Kriengkrai.\u000d\u000aThe tripartite wage committee agreed \u000d\u000alast year to increased wages by 5.02%, which \u000d\u000awas viewed as acceptable by the Employers\u2019 \u000d\u000aConfederation of Thai Trade and Industry \u000d\u000a(EconThai).\u000d\u000aTanit Sorat, vice-chairman of EconThai, \u000d\u000asaid the rise corresponded with inflation \u000d\u000aof 5.5% last year, as projected by the Com\u0002merce Ministry.\u000d\u000aThis year, Thai inflation should hover in \u000d\u000aa range of 2.7-3.2%, according to the Joint \u000d\u000aStanding Committee on Commerce, Indus\u0002try and Banking, which made the forecast \u000d\u000ain April. \u000d\u000a\u201cIt\u2019s not an easy time for the Thai manu\u0002facturing sector, but the FTI remains upbeat \u000d\u000aabout improved investment and economic \u000d\u000aprospects in the second half of this year, \u000d\u000acompared with the first six months,\u201d said \u000d\u000aMr Kriengkrai.\u000d\u000aEV MOMENTUM\u000d\u000aGlobal automakers in Thailand want to \u000d\u000aknow whether the new government will \u000d\u000acontinue to promote EV-related industries, \u000d\u000asimilar to the Prayut administration.\u000d\u000aThe FTI expects EVs to be a key industry \u000d\u000adriving the Thai economy in the future, with \u000d\u000athe ongoing EV promotion policy drawing \u000d\u000aforeign investment in eco-friendly cars.\u000d\u000aThe domestic economy has been pro\u0002pelled by exports and tourism, but trade is \u000d\u000aprojected to slow this year based on a slug\u0002gish global economy.\u000d\u000aThe rapid growth of the Thai EV industry \u000d\u000ais attributed to a cabinet resolution last year \u000d\u000aapproving an incentive package including \u000d\u000atax cuts and subsidies to promote EV con\u0002sumption and production between 2022 \u000d\u000aand 2023.\u000d\u000aAccording to media reports, Thai-Chi\u0002nese joint venture SAIC Motor-CP, the manu\u0002facturer of MG cars, announced it would \u000d\u000aproduce 100,000 EV cars per year in Thai\u0002land. China\u2019s BYD plans to produce 150,000 \u000d\u000aEVs per year in Thailand, while Great Wall \u000d\u000aMotor aims to manufacture 80,000 EVs \u000d\u000aper year.\u000d\u000aNeta, another Chinese auto manufacturer, \u000d\u000ais planning to manufacture 20,000 EVs per \u000d\u000ayear in Thailand.\u000d\u000aChangan Automobile and GAC Aion are \u000d\u000aalso in the process of developing their EV \u000d\u000abusinesses in Thailand, while Chery Auto\u0002mobile plans to make an EV investment here \u000d\u000anext year.\u000d\u000aSurapong Paisitpatanapong, vice-chair\u0002man of the FTI and spokesman for the FTI\u2019s \u000d\u000aAutomotive Industry Club, said car com\u0002panies are keen to know whether the new \u000d\u000agovernment will continue to grant incentive \u000d\u000apackages for EV battery production.\u000d\u000aEarlier this year, the National EV Policy \u000d\u000aCommittee agreed in principle on a pro\u0002posal to lower the excise tax on EV batteries\u000d\u000afrom 8% to 1%, while offering a 24-bil\u0002lion-baht subsidy for EV battery production.\u000d\u000aEV producers want the new government \u000d\u000ato continue with the EV and battery promo\u0002tion policies, said Mr Surapong.\u000d\u000aBCG FUTURE\u000d\u000aBCG-based manufacturing is projected \u000d\u000ato provide a domestic economic boost, \u000d\u000awhich is why it should be supported by the \u000d\u000anew government, said Mr Kriengkrai.\u000d\u000aUnder the BCG concept, businesses are \u000d\u000aencouraged to adopt new manufacturing \u000d\u000atechnologies that can add value to their \u000d\u000aproducts while minimising the negative \u000d\u000aimpact on the environment.\u000d\u000a\u201cWe urge the new government to push \u000d\u000aahead with BGG projects. We hope the pro\u0002posed coalition government will leave the \u000d\u000acurrent BCG policy unchanged,\u201d he said.\u000d\u000aThe Prayut administration declared BCG \u000d\u000aas a national agenda item in 2021 and high\u0002lighted its importance to the economy and \u000d\u000aglobal environment during the Asia-Pacific \u000d\u000aEconomic Cooperation summit in late 2022.\u000d\u000aBCG investment projects are expected to \u000d\u000agenerate up to 130 billion baht in economic \u000d\u000avalue for Thailand in the future, according \u000d\u000ato an Industry Ministry estimate last year.\u000d\u000a\u201cBCG aims to develop the economy \u000d\u000athrough decarbonisation and other envi\u0002ronmentally-friendly measures,\u201d said \u000d\u000aMr Kriengkrai.\u000d\u000aMr Kriengkrai believes the Thai economy will remain on a recovery track, improving in the second half.\u000d\u000aMr Pita says any wage \u000d\u000aincrease must be \u000d\u000acarefully considered \u000d\u000abefore it takes effect.\u000d\u000aPhoto: Pattarapong \u000d\u000aChatpattarasill\u000d\u000aCAR COMPANIES \u000d\u000aARE KEEN TO KNOW \u000d\u000aWHETHER THE \u000d\u000aNEW GOVERNMENT \u000d\u000aWILL CONTINUE TO \u000d\u000aGRANT INCENTIVE \u000d\u000aPACKAGES FOR \u000d\u000aEV BATTERY \u000d\u000aPRODUCTION.\u000d\u000aSURAPONG PAISITPATANAPONG, \u000d\u000aVICE-CHAIRMAN, FEDERATION OF \u000d\u000aTHAI INDUSTRIES\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 14\u000d\u000aINDUSTRY\u000d\u000aContinued from page 12","A\u000d\u000anew Thai government must con\u0002front at least two major energy \u000d\u000aissues that could burden public \u000d\u000afinances this year.\u000d\u000aThe Office of the National Eco\u0002nomic and Social Development Council \u000d\u000aprojected economic growth of 2.7-3.7% this \u000d\u000ayear, up from 2.6% last year, yet businesses \u000d\u000aand households are closely watching elec\u0002tricity bills and oil prices.\u000d\u000aThe easing of Covid-19 infections ena\u0002bled Thailand\u2019s tourism sector to revive, one \u000d\u000aof the sole supports for the economy, yet \u000d\u000athe impact of geopolitical conflicts and high \u000d\u000ainterest rates in many large economies to \u000d\u000atame inflation means the new government \u000d\u000aneeds to develop energy policies to appease \u000d\u000abusinesses and households.\u000d\u000aPOWER STRUGGLE\u000d\u000aThough the Move Forward Party and \u000d\u000aseven other political parties seeking to \u000d\u000aform a coalition government have indi\u0002cated expensive power bills are an urgent \u000d\u000aissue and set up a working panel on May \u000d\u000a30 to deal with this problem, it is uncertain \u000d\u000awhether the group can make a significant \u000d\u000acut in electricity prices during the second \u000d\u000ahalf of the year.\u000d\u000aIf the process to form a new government \u000d\u000agoes smoothly, the coalition government \u000d\u000ashould start work in early August, guided \u000d\u000aby a memorandum of understanding (MoU) \u000d\u000asigned by the eight parties on May 22.\u000d\u000aAmong the 23 planks in the MoU is an \u000d\u000aintention to restructure the power tariff and \u000d\u000athe electricity production structure to lower \u000d\u000athe cost of living.\u000d\u000aWhile energy analysts applaud the \u000d\u000aintention, translating it into action may \u000d\u000aprove difficult.\u000d\u000aEven though prices are decreasing for \u000d\u000aimported liquefied natural gas (LNG), the \u000d\u000aA list of expenses on a monthly power bill. The new government faces a difficult task in reducing electricity prices. Photo: Varuth Hirunyatheb\u000d\u000aThe new government faces big choices on adjusting electricity bills and oil prices,\u000d\u000awrites Yuthana Praiwan\u000d\u000aIT WOULD BE DIFFICULT FOR THE NEW \u000d\u000aGOVERNMENT TO CUT THE FUEL TARIFF, \u000d\u000aAS THE FT IS DETERMINED LARGELY BY \u000d\u000aFACTORS THAT ARE NOT CONTROLLABLE.\u000d\u000aSOMBOON AUEATCHASAI, \u000d\u000aCHIEF EXECUTIVE, GUNKUL ENGINEERING\u000d\u000aBALANCE OF POWER\u000d\u000amain fuel used for power generation in \u000d\u000aThailand, businesses and households are \u000d\u000arequired to repay via their power bills funds \u000d\u000alent by the Electricity Generating Authority \u000d\u000aof Thailand (EGAT). \u000d\u000aThe authority is in the red after subsi\u0002dising expensive electricity prices as part \u000d\u000aof a government policy to help people cope \u000d\u000awith the impact of the pandemic and the \u000d\u000aRussia-Ukraine war.\u000d\u000aAs of April, Egat\u2019s accumulated loss was \u000d\u000a136 billion baht.\u000d\u000aEgat said earlier it is unable to shoulder \u000d\u000amore financial burden until 2025, requiring \u000d\u000afunds from electricity bills to help it deal \u000d\u000awith its debt.\u000d\u000aLITTLE ROOM TO ADJUST\u000d\u000aIn addition, it would be difficult for the \u000d\u000anew government to cut the fuel tariff (Ft), a \u000d\u000amain component of the power tariff, as the \u000d\u000aFt is determined largely by factors that are \u000d\u000anot controllable, said Somboon Aueatchasai,\u000d\u000achief executive of Gunkul Engineering Plc, \u000d\u000aa renewables developer and construc\u0002tion firm.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 15\u000d\u000aENERGY","LNG imports were blamed for a surge in electricity bills last year.\u000d\u000aCars line up at a PTT petrol \u000d\u000astation. The new government \u000d\u000amust decide whether it will \u000d\u000amaintain the diesel excise tax \u000d\u000areduction to ease retail\u000d\u000aprices in the country.\u000d\u000aPhoto: Chanat Katanyu\u000d\u000aThese factors include the price of fuels \u000d\u000aused for electricity generation, foreign \u000d\u000aexchange rates and an availability payment \u000d\u000a(AP).\u000d\u000aThe government is responsible for the AP \u000d\u000aunder power purchase agreements made \u000d\u000awith power firms, though the actual power \u000d\u000ausage may be lower during the time frame \u000d\u000athan an average payment rate would suggest.\u000d\u000aA government cannot change these con\u0002tracts after they are signed, said an energy \u000d\u000aexecutive who requested anonymity.\u000d\u000aAccording to Mr Somboon, the AP \u000d\u000aonly makes up 20-30% of the Ft, which is \u000d\u000alargely influenced by fuel prices and foreign \u000d\u000aexchange rates.\u000d\u000aWhen power bills soared last year, offi\u0002cials pointed the finger at the surge in LNG \u000d\u000aprices, attributed to the Russia-Ukraine war.\u000d\u000aForeign exchange rate fluctuations are \u000d\u000adetermined by a wide variety of factors, \u000d\u000ahe said.\u000d\u000aThe new government may opt to give the \u000d\u000apower sector the first priority to use cheaper \u000d\u000agas from domestic sources, said Khomgrich\u000d\u000aTantravanich, secretary-general of the \u000d\u000aEnergy Regulatory Commission.\u000d\u000aAt present, the petrochemical sector is \u000d\u000agiven this privilege.\u000d\u000aThe new government will decide on \u000d\u000adomestic gas usage priority amid efforts to \u000d\u000areduce dependence on LNG imports, said \u000d\u000aMr Khomgrich.\u000d\u000aNEW OIL PRICES\u000d\u000aThe retail prices of diesel, which is crucial \u000d\u000afor the transport and industrial sectors, is \u000d\u000adetermined by the global oil market and the \u000d\u000apolicies of a new government.\u000d\u000aGlobal oil prices have dipped, allowing \u000d\u000athe Oil Fuel Fund Office (OFFO) to cut diesel \u000d\u000aprices six times, from 34.94 baht a litre in \u000d\u000aearly February to around 32 baht a litre in \u000d\u000amid-May. Yet the outlook for the remainder \u000d\u000aof the year is uncertain.\u000d\u000aOne instrument the Prayut Chan-o-cha \u000d\u000agovernment used to control domestic diesel \u000d\u000aprices was cutting the diesel excise tax by \u000d\u000a5 baht a litre, down from 5.43 baht a litre.\u000d\u000aThe tax reduction is scheduled to expire \u000d\u000aon July 20.\u000d\u000aThe new government must decide on \u000d\u000awhether to continue the tax waiver, said \u000d\u000aWisak Watanasap, director of the OFFO.\u000d\u000aThe outlook for the oil trade has improved \u000d\u000afor 2023, with global demand and supply \u000d\u000abelieved to be almost equal.\u000d\u000aDemand for crude oil is projected at 101 \u000d\u000amillion barrels per day (MBD), an increase \u000d\u000aof 1.6 MBD from 2022, while supply is esti\u0002mated at 101.3 MBD, up 1.5 MBD year\u0002on-year, said Nuttapol Nopparatwong, \u000d\u000avice-president for commercial planning at \u000d\u000aThai Oil Plc, citing an estimate from the US \u000d\u000aEnergy Information Administration.\u000d\u000aA supply cut is expected from Opec+, \u000d\u000awhich is the main oil-producing cartel and \u000d\u000aits allies, said Mr Nuttapol in late May.\u000d\u000aCrude oil demand will be driven by \u000d\u000aoil consumption, particularly from Asia, \u000d\u000ahe said.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 16\u000d\u000aENERGY","Visitors browse mobile phones at the Thailand Mobile Expo \u000d\u000a2023 held at Queen Sirikit National Convention Center. \u000d\u000aThe Bank of Thailand upgraded its private consumption \u000d\u000aprojection from 4% to 4.4% for this year.\u000d\u000aPhoto: Varuth Hirunyatheb\u000d\u000aTourists take pictures at Wat Arun in Bangkok. The central bank of Thailand upgraded its 2023 foreign arrival projection from 28 million to 29 million in May.\u000d\u000aPhoto: Pornprom Satrabhaya\u000d\u000aThe second half should benefit the industry, driven by\u000d\u000atourism and private consumption,\u000d\u000awrites Somruedi Banchongduang\u000d\u000aSECTOR PREPARES FOR \u000d\u000aUNEVEN GAINS\u000d\u000aP\u000d\u000aiti Disyatat, the secretary for the \u000d\u000aBank of Thailand\u2019s Monetary Policy \u000d\u000aCommittee, says the tourism sector \u000d\u000aremains the key impetus for Thai \u000d\u000aeconomic growth.\u000d\u000aIn May, the central bank upgraded its \u000d\u000aprojection for foreign arrivals from 28 mil\u0002lion to 29 million this year, increasing the \u000d\u000aoutlook for 2024 to 35.5 million from 35 mil\u0002lion, as international tourist totals continue \u000d\u000ato grow since the beginning of the year.\u000d\u000aFrom January to April this year, foreign \u000d\u000aarrivals tallied 8.65 million. The central bank \u000d\u000aexpects the figure to increase significantly \u000d\u000ain the second half of this year, in line with \u000d\u000aseasonal factors.\u000d\u000aAccording to central bank data, the \u000d\u000anumber of foreign arrivals was 6.47 million \u000d\u000ain the first quarter this year. In April, the \u000d\u000atally was 2.18 million, compared with 2.21 \u000d\u000amillion in March.\u000d\u000a\u201cIf foreign tourist numbers increase as \u000d\u000aexpected and the country\u2019s exports improve \u000d\u000ain the second half this year, Thai GDP \u000d\u000agrowth could exceed our existing forecast,\u201d \u000d\u000aMr Piti said.\u000d\u000aWE EXPECT THE THAI ECONOMY WILL RESUME AT \u000d\u000aPRE-COVID LEVELS IN TERMS OF ACTIVITY IN THE \u000d\u000aMIDDLE OF THIS YEAR.\u000d\u000aSOMPRAWIN MANPRASERT, CHIEF ECONOMIST, \u000d\u000aSCB ECONOMIC INTELLIGENCE CENTER\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 17\u000d\u000aBANKING","IMPROVING OUTLOOK\u000d\u000aThe central bank also upgraded its pri\u0002vate consumption projection from 4% to \u000d\u000a4.4%, with exports improving from a con\u0002traction of 0.7% to a dip of 0.1%. Headline \u000d\u000ainflation for the year is expected to decline \u000d\u000ato 2.5% from 2.9%. \u000d\u000aThe regulator maintained its Thai GDP \u000d\u000agrowth projection for next year at 3.8% as \u000d\u000awell as its outlook for core inflation at 2%.\u000d\u000aHe said the Bank of Thailand would con\u0002tinue to maintain policy normalisation to \u000d\u000aensure a smooth economic recovery.\u000d\u000aEven though the Thai economy has \u000d\u000arebounded to its pre-pandemic level, it \u000d\u000ahas not reached its full potential rate yet, \u000d\u000asaid Mr Piti. \u000d\u000aAs a result, monetary policy normalisa\u0002tion should open greater opportunities for \u000d\u000afull-potential economic growth over the \u000d\u000alonger term, he said.\u000d\u000aThis positive outlook assumes the infla\u0002tion rate stays in the central bank\u2019s target \u000d\u000arange, said Mr Piti. \u000d\u000aA MIXED BAG\u000d\u000aSomprawin Manprasert, chief economist \u000d\u000aat SCB Economic Intelligence Center (EIC), \u000d\u000aa research house at Siam Commercial Bank, \u000d\u000asaid it forecasts a resilient Thai economy \u000d\u000ain the second half of 2023, mainly owing to \u000d\u000aincreasing tourism activities and recover\u0002ing private consumption, in line with \u000d\u000aquarter-on-quarter growth of 2.7% in the \u000d\u000afirst quarter.\u000d\u000aThe research house projects Thai GDP \u000d\u000agrowth of 3.9% this year.\u000d\u000a\u201cWe expect the Thai economy will resume \u000d\u000aat pre-Covid levels in terms of activity in the \u000d\u000amiddle of this year,\u201d he said.\u000d\u000a\u201cThai GDP growth is still lower than \u000d\u000athe pre-pandemic level by 1.5 percentage \u000d\u000apoints, while the service sector also lags \u000d\u000athe pre-pandemic level by 39.8 percentage\u000d\u000apoints.\u201d\u000d\u000aSCB EIC assesses foreign tourist arrivals, \u000d\u000aespecially if the Chinese return, will reach \u000d\u000a30 million this year, compared with almost \u000d\u000a40 million in 2019.\u000d\u000aThe manufacturing sector and private \u000d\u000ainvestment should also continue to improve, \u000d\u000awith the research house predicting private \u000d\u000ainvestment growth of 3% in 2023. \u000d\u000aSCB EIC projects the country\u2019s export \u000d\u000avalue to grow 1.2% this year. \u000d\u000aGiven external risks and a high base \u000d\u000aeffect, Thailand\u2019s shipments are predicted \u000d\u000ato shrink year-on-year in the second quarter, \u000d\u000awhile improving from the first quarter, in \u000d\u000apart because of China\u2019s economic growth.\u000d\u000aMr Somprawin said internal politics is a \u000d\u000akey factor to monitor as a proposed coalition \u000d\u000aof parties tries to form a government. Under \u000d\u000aits best-case scenario, SCB EIC estimates \u000d\u000anew government formation should not \u000d\u000aaffect the Thai economic recovery. \u000d\u000aHowever, if the formation of a new govern\u0002ment is delayed, it would impact the fiscal \u000d\u000a2024 budget disbursement in the fourth \u000d\u000aquarter this year, with a possible slowdown \u000d\u000auntil the beginning of 2024, according to the \u000d\u000aresearch house. \u000d\u000aGREATER UNEASE\u000d\u000aPayong Srivanich, chairman of the Thai \u000d\u000aBankers\u2019 Association, said the industry will \u000d\u000acontinue to face higher levels of uncertainty \u000d\u000ain terms of business operations because of \u000d\u000aglobal and domestic factors in the second \u000d\u000ahalf of this year.\u000d\u000aHowever, most of these factors such as \u000d\u000athe global economy, inflation, interest rates, \u000d\u000ageopolitics, and domestic politics are baked \u000d\u000ain to the existing forecast, he said. \u000d\u000aBank are prepared to handle the risks \u000d\u000ain the current assessment, with each bank \u000d\u000aadjusting its business tactics in the second \u000d\u000ahalf this year depending on its strategy, said \u000d\u000aMr Payong. \u000d\u000aHe said a higher cost of living and fund\u0002ing costs based on rising inflation and \u000d\u000ainterest rates would affect vulnerable bor\u0002rowers, including both commercial and \u000d\u000aindividual clients.\u000d\u000aHigher expenses would affect retail \u000d\u000aloan customers, especially mortgage and \u000d\u000aauto loan borrowers, rather than small and \u000d\u000amedium-sized enterprise debtors, said Mr \u000d\u000aPayong. \u000d\u000a\u201cDemand for housing and auto loans is \u000d\u000aexpected to slow because of the higher cost \u000d\u000aof living, weakening the purchasing power \u000d\u000aand access to loans of consumers,\u201d he said. \u000d\u000aMr Payong said banks would continue \u000d\u000ato help vulnerable clients, offering them \u000d\u000afinancial assistance through several debt \u000d\u000arelief measures, such as long-term debt \u000d\u000arestructuring schemes.\u000d\u000aWith these instruments, it should help \u000d\u000athe industry to control bad debt, he said.\u000d\u000aPeople check out financial deals from banks at Money Expo 2023.\u000d\u000aA man looks at diving equipment at the Thailand Golf & Dive Expo plus Outdoor Fest 2023 \u000d\u000aheld at Queen Sirikit National Convention Center in May. SCB Economic Intelligence Center \u000d\u000aforecasts an improved economy in the second half of 2023 thanks to tourism activities and \u000d\u000arecovering private consumption.\u000d\u000aPhoto: Somchai Poomlard\u000d\u000aThe atmosphere at Money Expo 2023 as \u000d\u000avisitors explore banking services.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 18\u000d\u000aBANKING","T\u000d\u000ahe Thai insurance sector is expected \u000d\u000ato remain robust in the second half \u000d\u000aof 2023 amidst the possibility of \u000d\u000aa global recession, thanks to new \u000d\u000aproducts and growing concern for \u000d\u000ahealth post-Covid, say industry leaders. \u000d\u000a\u201cAs economic activity increases and \u000d\u000aconsumer spending continues to rise, the \u000d\u000ademand for non-life insurance products \u000d\u000asuch as motor, travel and health insurance \u000d\u000awill continue to grow,\u201d said Claude Seigne, \u000d\u000achief executive of AXA Insurance Plc.\u000d\u000aMEETING DEMAND\u000d\u000aInsurers in Thailand will remain very \u000d\u000acompetitive in terms of pricing, with inno\u0002vative products designed to meet customer \u000d\u000ademand such as insurance for electric vehi\u0002cles (EVs) projected to grow, said Mr Seigne.\u000d\u000aContinued digital transformation will \u000d\u000aencourage more Thais to purchase insur\u0002ance policies online, leading to a decrease \u000d\u000ain operational costs, he said.\u000d\u000a\u201cLike many other companies, AXA has \u000d\u000abeen re-examining our products and service \u000d\u000aThe AXA Insurance booth at a Money Expo. The firm says post-election political uncertainties have not affected the non-life insurance business.\u000d\u000aPhoto: Nutthawat Wicheanbut\u000d\u000aThai insurers expect innovative products and competitive pricing\u000d\u000aare key components to a healthy second half of 2023,\u000d\u000awrite Nareerat Wiriyapong and Nuntawun Polkuamdee\u000d\u000aA BROADER AND WEALTHIER MIDDLE CLASS WITH \u000d\u000aMORE REAL ASSETS SUCH AS CARS, HOMES AND \u000d\u000aSMALL BUSINESSES THAT NEED TO BE PROTECTED \u000d\u000aCAN GIVE A BOOST TO THE INSURANCE BUSINESS.\u000d\u000aTHOMAS WILSON, CHIEF EXECUTIVE, ALLIANZ AYUDHYA ASSURANCE\u000d\u000aPROMISING OUTLOOK FOR\u000d\u000aA NIMBLE SECTOR\u000d\u000aofferings, looking for innovative and cost-ef\u0002fective solutions that can appeal to a wider \u000d\u000ademographic,\u201d Mr Seigne told the Bangkok \u000d\u000aPost. \u000d\u000a\u201cFinancial measures such as reinsur\u0002ance optimisation and cost containment \u000d\u000aare also being used. We are continuing \u000d\u000ato explore digital solutions to expand our \u000d\u000aThe AXA Insurance \u000d\u000abooth at a Money \u000d\u000aExpo. The firm \u000d\u000asays post-election \u000d\u000apolitical uncertainties \u000d\u000ahave not affected the \u000d\u000anon-life insurance \u000d\u000abusiness.\u000d\u000aPhoto: Nutthawat \u000d\u000aWicheanbut\u000d\u000areach, while actively seeking out partner\u0002ships to build out our product portfolio and \u000d\u000aservice offerings.\u201d\u000d\u000aHe said post-election political uncertain\u0002ties have not had an effect on the non-life \u000d\u000ainsurance business. The segment is still able \u000d\u000ato provide the same level of protection and \u000d\u000aservice to its customers, said Mr Seigne.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 19\u000d\u000aINSURANCE","DEMOGRAPHIC SHIFT\u000d\u000aThomas Wilson, chief executive and \u000d\u000apresident of Allianz Ayudhya Assurance, \u000d\u000ashares a positive industry outlook, driven \u000d\u000aby heightened awareness of the benefits of \u000d\u000ahealth insurance following the pandemic.\u000d\u000a\u201cThe growing number of older Thais trig\u0002gered a desire for retirement savings and \u000d\u000alegacy planning, while rising interest rates \u000d\u000amake savings products more attractive,\u201d \u000d\u000ahe said.\u000d\u000a\u201cA broader and wealthier middle class \u000d\u000awith more real assets such as cars, homes \u000d\u000aand small businesses that need to be pro\u0002tected can give a boost to the insurance \u000d\u000abusiness. A positive GDP outlook and \u000d\u000aincreased tourism is driving consumer con\u0002fidence, spurring increased consumption \u000d\u000aand investment in a virtuous cycle.\u201d\u000d\u000aFactors that could limit the growth of \u000d\u000ainsurance premiums include any form of \u000d\u000adomestic or geopolitical instability, which \u000d\u000amay decrease the confidence of households \u000d\u000aor corporations, or any event that causes a \u000d\u000afinancial market crisis or insecurity, such \u000d\u000aas a newer or more virulent strain of Covid, \u000d\u000asaid Mr Wilson.\u000d\u000aKasikorn Research Center expects total \u000d\u000apremiums in the non-life insurance busi\u0002ness to grow 4-5% this year.\u000d\u000aThe Thai Life Assurance Association \u000d\u000a(TLAA) estimates the life insurance business \u000d\u000awill have total premiums of 613-624 billion \u000d\u000abaht this year, representing growth of 0-2%, \u000d\u000awith a policy persistence rate of 81-82%.\u000d\u000aBy segment, car insurance ranks top in \u000d\u000aterms of growth potential, with premiums \u000d\u000aprojected to expand 6.8-7.5% this year amid \u000d\u000aan increase in new car sales and the tourism\u000d\u000arecovery.\u000d\u000aCOVID OVERHANG\u000d\u000aNon-life insurance premiums started \u000d\u000ato recover this year, but the impact from \u000d\u000aguaranteed Covid-19 insurance policies\u000d\u000alingers and requires resolution, say \u000d\u000amarket observers.\u000d\u000aThe life insurance business recovered \u000d\u000awell thanks to new product offerings, mainly \u000d\u000ain the critical illness and unit-linked seg\u0002ments, with the trend likely to continue in \u000d\u000athe second half based on the country\u2019s eco\u0002nomic recovery, said TLAA.\u000d\u000aIn addition, price competition has \u000d\u000adecreased as operating cost dips, particu\u0002larly for the reinsurance business, as some \u000d\u000acompanies declared bankruptcy because of \u000d\u000amassive claims during the peak of Covid-19 \u000d\u000ainfections. \u000d\u000aFrom 2020-22, Covid-19-related claims \u000d\u000atallied roughly 150 billion baht, forcing four \u000d\u000ainsurance companies to shut down and \u000d\u000aanother into the rehabilitation process. The \u000d\u000aGeneral Insurance Fund (GIF) struggled \u000d\u000afinancially with 40-50 billion baht worth of \u000d\u000aoutstanding payments to creditors under \u000d\u000ainsurance contracts at the end of 2022.\u000d\u000aIndustry observers called for the Office \u000d\u000aof the Insurance Commission to inject \u000d\u000amore capital into the GIF to allow it to pay \u000d\u000aCovid-19 insurance claims on behalf of \u000d\u000abankrupted insurers.\u000d\u000aGREATER CLARITY\u000d\u000aInsurance premiums are rising as com\u0002petition decreases, driven by EV insurance, \u000d\u000awhich has average premiums of roughly 20% \u000d\u000ahigher than policies for other types of cars.\u000d\u000aIndustry analysts believe there should \u000d\u000abe greater clarity on premium rates and \u000d\u000aspecific conditions for EV insurance at the \u000d\u000aend of this year, as more consumers buy \u000d\u000aEVs. Insurance providers should make EV \u000d\u000ainsurance premiums more reasonable to \u000d\u000asupport EV usage, said the analysts.\u000d\u000aFor the life insurance business, TLAA \u000d\u000apresident Sara Lamsam said factors worth \u000d\u000amonitoring include global economic vola\u0002tility, the economic recovery in Thailand \u000d\u000aand interest rate trends.\u000d\u000aHowever, insurers are prepared to adjust \u000d\u000aportfolios both in terms of investment and \u000d\u000aproduct mix, as well as shift strategies as \u000d\u000athe market demands, including compliance \u000d\u000awith international legal procedures, he said.\u000d\u000aInvestment-linked life insurance products,\u000d\u000aincluding universal life and unit-linked \u000d\u000aproducts, should continue to grow as inves\u0002tors look for new investment products with \u000d\u000ahigher returns and acceptable risk, said \u000d\u000aMr Sara.\u000d\u000aHe said TLAA plans to promote the deve\u0002lopment of new life insurance products, \u000d\u000aautomate the product approval process, \u000d\u000arelax the calculation of claims, and edu\u0002cate the public about insurance protection \u000d\u000aand technology development to prevent \u000d\u000aagainst fraud.\u000d\u000aInsurers in \u000d\u000aThailand will \u000d\u000aremain very \u000d\u000acompetitive in \u000d\u000aterms of pricing, \u000d\u000asays Mr Seigne.\u000d\u000aThe headquarters of the Office of the Insurance Commission on Ratchadaphisek Road.\u000d\u000aPhoto: Pornprom Satrabhaya\u000d\u000aMr Wilson says the insurance industry has a positive outlook driven by heightened awareness of \u000d\u000athe benefits of health insurance following the pandemic.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 20\u000d\u000aINSURANCE","The merger between True Corporation and DTAC was completed in March.\u000d\u000aThe mobile phone service sector is expected to post revenue growth of 4% this year, up from 1% last year, according to Kasikorn Securities. \u000d\u000aWhile investors are skittish about potential state regulations, headwinds to enter \u000d\u000athe telecom field mean anxiety is likely overblown, writes Komsan Tortermvasana\u000d\u000aANALYSTS TENSE\u000d\u000aAS SECTOR DEVELOPS\u000d\u000aT\u000d\u000ahe telecom sector and the mobile \u000d\u000aphone service segment recorded \u000d\u000arevenue growth this year as the \u000d\u000aeconomy recovered, driven by a \u000d\u000atourism revival, higher consumer \u000d\u000apurchasing power and a decelerating infla\u0002tion rate following the pandemic.\u000d\u000aWhile the telecom market is less com\u0002petitive than in previous years, the mobile \u000d\u000aphone service sector is expected to post\u000d\u000arevenue growth of 4% in 2023, up from 1% last \u000d\u000ayear, said Pisut Ngamvijitvong, senior equity \u000d\u000aresearch analyst at Kasikorn Securities.\u000d\u000aUncertainty surrounding the formation \u000d\u000aof a new government is unlikely to impact \u000d\u000athe telecom sector as access to mobile \u000d\u000abroadband service is now considered a\u000d\u000anecessary commodity for everyday life. \u000d\u000aUsage of internet bandwidth for both fixed \u000d\u000aand mobile broadband has been soaring \u000d\u000ayear-on-year, recording double-digit growth.\u000d\u000aINVESTOR CONCERNS\u000d\u000aMr Pisut said the victory of the Move For\u0002ward Party (MFP) in the general election \u000d\u000ahas shaken investor sentiment for large\u0002cap stocks expected to be hampered by the \u000d\u000aMFP\u2019s policy of promoting fair competition \u000d\u000ain every business segment.\u000d\u000aAmong the shares likely to be affected by \u000d\u000asuch concerns are Advanced Info Service \u000d\u000a(AIS) and its parent company Gulf Energy \u000d\u000aDevelopment, along with True Corporation.\u000d\u000aInvestment sentiment in the Thai bourse \u000d\u000ais expected to improve once there is greater \u000d\u000aclarity concerning the new government and \u000d\u000aprime minister, which could take several \u000d\u000amonths, he said. \u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 21\u000d\u000aTELECOMMUNICATIONS","CLARITY REGARDING A NEW \u000d\u000aGOVERNMENT SHOULD INCREASE \u000d\u000aCONFIDENCE IN TERMS OF \u000d\u000aSTATE POLICIES TO MANAGE \u000d\u000aTHE ECONOMY AND POTENTIAL \u000d\u000aINVESTMENT FLOWS FROM BOTH \u000d\u000aDOMESTIC AND INTERNATIONAL \u000d\u000aBUSINESSES. \u000d\u000aSOMCHAI LERTSUTIWONG, \u000d\u000aCHIEF EXECUTIVE, ADVANCED INFO SERVICE\u000d\u000aShoppers take a mobile \u000d\u000abreak at Siam Paragon.\u000d\u000aPhoto: Pattarachai \u000d\u000aPrechapanich\u000d\u000aThe telecom market is less competitive than in the past.\u000d\u000aMr Pisut said the use of broadband \u000d\u000ainternet has been soaring year-on-year, yet \u000d\u000aoperators\u2019 margins have declined thanks \u000d\u000ato greater competition following a series \u000d\u000aof promotional packages and operators \u000d\u000aexpanding their network capabilities to sup\u0002port remote work, in addition to the use of \u000d\u000astreaming applications.\u000d\u000aThese developments resulted in opera\u0002tional expenses rising 7-8% last year from \u000d\u000a2021, he said.\u000d\u000aSomchai Lertsutiwong, chief executive of \u000d\u000aAIS, the country\u2019s leading mobile operator \u000d\u000aby revenue, said the new government would \u000d\u000anot have any effect on the routine operations \u000d\u000aof telecom services, which have become a \u000d\u000avital public commodity.\u000d\u000aAIS\u2019s revenue growth is typically 1-2% \u000d\u000ahigher than the country\u2019s annual GDP gain, \u000d\u000asaid Mr Somchai.\u000d\u000aClarity regarding a new government \u000d\u000ashould increase confidence in terms of state \u000d\u000apolicies to manage the economy and poten\u0002tial investment flows from both domestic \u000d\u000aand international businesses, he said.\u000d\u000aAIS targets revenue growth of 3-5% this \u000d\u000ayear, up from 2.3% last year.\u000d\u000aPOLITICAL SCENARIOS\u000d\u000aA telecom analyst who requested ano\u0002nymity outlined possible scenarios for the \u000d\u000aindustry based on which party leads a coa\u0002lition government.\u000d\u000aIf the government is led by the MFP, \u000d\u000awhich has pledged to promote fair compe\u0002tition and prevent monopolistic practices, \u000d\u000athis could impact the telecom industry. The \u000d\u000aMFP campaigned on a policy promoting \u000d\u000athe participation of newcomers in the tele\u0002com market, though it is a difficult market \u000d\u000ato enter. \u000d\u000aNewcomers would have to make sig\u0002nificant investments in infrastructure and \u000d\u000afrequencies, while there is still no effective \u000d\u000atelecom infrastructure-sharing practice \u000d\u000athat would reduce the network investment \u000d\u000acost. New market entrants also face risks \u000d\u000afrom regulation and a saturated market, the \u000d\u000aanalyst said.\u000d\u000aIf the government is led by the Pheu Thai \u000d\u000aParty and a coalition of lesser parties such \u000d\u000aas Palangpracharat and Bhumjaithai, it \u000d\u000awould have a smaller impact on the sector \u000d\u000aas Pheu Thai does not share the same stance \u000d\u000aon monopolistic practices as the MFP, said \u000d\u000athe analyst.\u000d\u000aAIS-3BB DEAL\u000d\u000aThe ongoing takeover deal of fixed broad\u0002band service 3BB by AIS might face scrutiny \u000d\u000aif the incoming government is led by the \u000d\u000aMFP, according to a telecom veteran who \u000d\u000arequested anonymity.\u000d\u000aThe deal could be monitored more \u000d\u000aclosely than in the past, although the deal \u000d\u000asubmitted for consideration to the National \u000d\u000aBroadcasting and Telecommunications \u000d\u000aCommission (NBTC) complies with the \u000d\u000aregulator\u2019s conditions, said the veteran.\u000d\u000aThe NBTC board recently approved \u000d\u000ain principle guidelines for the purchase \u000d\u000aof fixed broadband service 3BB by AIS \u000d\u000aand its investment in Jasmine Broadband \u000d\u000aInternet Infrastructure Fund (JASIF). \u000d\u000aThe owner of 3BB is Triple T Broadband \u000d\u000a(TTTBB). The guidelines were proposed by \u000d\u000aNBTC\u2019s management.\u000d\u000aThe NBTC office was later assigned to \u000d\u000aset up four subcommittees to verify the \u000d\u000adetails and conditions of the two deals. \u000d\u000aThe next step requires the subcommit\u0002tees to conclude the details of the deals \u000d\u000aand forward them for the NBTC board\u2019s \u000d\u000aconsideration, said NBTC chairman Dr \u000d\u000aSarana Boonbaichaiyapruck.\u000d\u000aAIS said the company remains commit\u0002ted to acquiring 3BB and owning a 19% \u000d\u000aholding in JASIF, even though JASIF share\u0002holders rejected AIS\u2019s proposed amend\u0002ments to optical fibre cable (OFC) rental \u000d\u000aagreements between TTTBB and JASIF.\u000d\u000aThe AIS board passed a resolution for its \u000d\u000amanagement to proceed with the acquisi\u0002tions of 3BB and JASIF units as they would \u000d\u000aenhance AIS\u2019s service quality and innova\u0002tions to transform Thai home broadband.\u000d\u000aThe telecom veteran said any ruling on \u000d\u000athe deal has to go through the NBTC board, \u000d\u000awhich was appointed by the Senate and \u000d\u000abacked by the acting government. \u000d\u000aRegarding the merger of True Cor\u0002poration and Total Access Communica\u0002tion (DTAC), the process was completed, \u000d\u000aapproved by a majority of NBTC board \u000d\u000amembers. The merged company already \u000d\u000aoperates under a single management\u000d\u000ateam.\u000d\u000aDr Sarana said the four subcommit\u0002tees tasked with verifying the details and \u000d\u000aconditions of the AIS-3BB deal will perform \u000d\u000atheir duties on a step-by-step basis. This \u000d\u000ameans they have 30 days during the first \u000d\u000aphase to conclude their studies.\u000d\u000aIf the panels cannot conclude their \u000d\u000aduties on time, they can extend the dead\u0002line by 30 days, and then another 90 days, he \u000d\u000asaid. All these procedures mean the NBTC \u000d\u000acould have a period of five months to mull \u000d\u000aapproval of the deal.\u000d\u000aDr Sarana said he believes a conclusion \u000d\u000acould be reached before the fourth quarter \u000d\u000aof 2023.\u000d\u000aAIS executives said initially they expected \u000d\u000athe takeover deal to be completed by the first \u000d\u000aquarter of 2023. They revised their forecast, \u000d\u000apredicting a completed deal by June.\u000d\u000aThe company said its mission is to \u000d\u000adevelop its broadband network to provide \u000d\u000afull coverage for all Thais, while accelera\u0002ting the rollout of the country\u2019s digital\u000d\u000ainfrastructure.\u000d\u000aNo matter which party leads the next \u000d\u000aadministration, some state-run telecom \u000d\u000aprojects could be reviewed, said the tele\u0002com veteran. One example is the Net Pra\u0002charat (national broadband for villages) \u000d\u000aproject, supervised by state enterprise \u000d\u000aNational Telecom.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 22\u000d\u000aTELECOMMUNICATIONS","Tourists ride elephants on the beach at Koh Chang on April 9.\u000d\u000aPhoto: AFP\u000d\u000aTourists admire the sights along the Chao Phraya River aboard a vessel near Rajinee Pier in Bangkok\u2019s Pak Khlong Talad neighbourhood.\u000d\u000aPhoto: Apichart Jinakul\u000d\u000aKey players in tourism and hospitality feel certain that the recovery\u000d\u000ain the first half will continue throughout the year,\u000d\u000awrites Molpasorn Shoowong\u000d\u000aRESURGENCE POISED \u000d\u000aTO PERSIST\u000d\u000aT\u000d\u000aourism operators are optimistic \u000d\u000aabout the high season after Thai\u0002land recorded 11 million foreign \u000d\u000aarrivals in the first five months \u000d\u000athis year.\u000d\u000aThe Tourism Authority of Thailand (TAT) \u000d\u000apredicts at least 25 million arrivals this year, \u000d\u000agenerating tourism revenue of 2.38 trillion \u000d\u000abaht, or 80% of the amount recorded in\u000d\u000a2019.\u000d\u000aAccording to the TAT, the short-haul \u000d\u000amarket will continue to dominate the coun\u0002try\u2019s tourism industry, bolstered by Chinese \u000d\u000aarrivals, which have grown steadily since its \u000d\u000aborders reopened in January.\u000d\u000aA rebound in international flight capa\u0002city to 70% of the level recorded in 2019 \u000d\u000acombined with profitable hotel operations \u000d\u000ameans the tourism industry is expected to \u000d\u000aimprove in the second half.\u000d\u000aAs Thailand awaits a new government, \u000d\u000atourism operators say there are challenges \u000d\u000afor the industry that require state action, \u000d\u000aespecially on the supply side, such as costs \u000d\u000afor travel and business operations as a global \u000d\u000aeconomic recession and geopolitical con\u0002flicts loom.\u000d\u000aREADINESS REQUIRED\u000d\u000aChamnan Srisawat, president of the\u000d\u000aTourism Council of Thailand (TCT), said \u000d\u000atourism demand is no longer a problem \u000d\u000afor the country as it is on track to attract 30 \u000d\u000amillion tourists with a high level of spending \u000d\u000apower this year.\u000d\u000a\u201cI\u2019m more worried about the prepared\u0002ness of the supply side, especially small \u000d\u000aoperators. How can we get ready for a \u000d\u000asurge during the high season in the fourth\u000d\u000aquarter?\u201d said Mr Chamnan.\u000d\u000aHe said one solution is to accelerate \u000d\u000areskilling and upskilling programmes for \u000d\u000aworkers in the industry, focusing on recently \u000d\u000arecruited employees.\u000d\u000aCompanies and government institutions \u000d\u000athat support small and medium-sized enter\u0002prises (SMEs) still need to provide financial \u000d\u000asupport, said Mr Chamnan. Unlike large \u000d\u000aoperators, most SMEs still struggle to gen\u0002erate the same level of revenue as before \u000d\u000athe pandemic.\u000d\u000aOnce a new government has been \u000d\u000aformed, TCT wants to set up tourism \u201cclinics\u201d\u000d\u000ain 10 major cities covering every region of \u000d\u000athe country with a budget of 5-10 million \u000d\u000abaht from the government for each city. The \u000d\u000aclinics would operate for 3-6 months.\u000d\u000aThe council plans to recruit experts from \u000d\u000athe private sector and universities to offer\u000d\u000aconsultation services on languages, technology\u000d\u000aand financial advice to local operators.\u000d\u000aMr Chamnan said the government \u000d\u000ashould also consider establishing a tourism\u000d\u000afund for SMEs, as well as improve regu\u0002lations to allow smaller hotels to register. \u000d\u000aAnother goal should be destroying networks \u000d\u000aof \u201cgrey\u201d businesses that use Thais as their \u000d\u000anominee owners, he said.\u000d\u000aOne effort to stimulate the market during \u000d\u000athe low season in the third quarter is public \u000d\u000asector spending on meetings and seminars \u000d\u000ain the provinces, said Mr Chamnan.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 23\u000d\u000aTOURISM","Tourists crowd the departures hall at Suvarnabhumi airport in April ahead of this year\u2019s Songkran festival. According to the Tourism Council of \u000d\u000aThailand, the country is on track to attract 30 million tourists with a high level of spending power this year. Photo: Wichan Charoenkiatpakul\u000d\u000aTourists seek blessings during a visit to Wat Pho in Bangkok following \u000d\u000athe Songkran festival in April 2023.\u000d\u000aPhoto: Pornprom Satrabhaya\u000d\u000aLOOKING AHEAD, WE BELIEVE THAILAND IS IN\u000d\u000aA STRONG POSITION TO BENEFIT FROM PENT-UP \u000d\u000aDEMAND FROM CHINA, AS WELL AS INCREASING \u000d\u000aFLIGHT AVAILABILITY FROM OTHER KEY GLOBAL \u000d\u000aSOURCE MARKETS THAT WILL UNLOCK DEMAND\u000d\u000aFOR TRAVEL IN SOUTHEAST ASIA.\u000d\u000aDILLIP RAJAKARIER, GROUP CHIEF EXECUTIVE, \u000d\u000aMINOR INTERNATIONAL\u000d\u000aAIR TRAFFIC REBOUND\u000d\u000aAirlines in Thailand are finally posting \u000d\u000aprofits from operations in the first quarter \u000d\u000aas air traffic resumed.\u000d\u000aPuttipong Prasarttong-Osoth, president \u000d\u000aof Bangkok Airways, said the airline expects \u000d\u000asignificant business growth for the remain\u0002der of the year, driven by the increase in \u000d\u000aforeign visitors.\u000d\u000aHe said the International Air Transport \u000d\u000aAssociation (IATA) predicted air traffic in \u000d\u000aAsia-Pacific would resume to 70-80% of the \u000d\u000alevel recorded in 2019 this year.\u000d\u000aTicket sales revenue of Bangkok Airways \u000d\u000ashould reach 15 billion baht in 2023, almost \u000d\u000a80% of the amount generated in 2019, from \u000d\u000aa total of 50,000 flights carrying 4.4 million \u000d\u000apassengers, said Mr Puttipong.\u000d\u000aThe airline will continue to resume popu\u0002lar routes this year, such as Samui-Hong \u000d\u000aKong in July, followed by Samui-Chongqing \u000d\u000aand Samui-Chengdu to accommodate a \u000d\u000asurge in demand from the Chinese market, \u000d\u000ahe said.\u000d\u000aHowever, Mr Puttipong said the airline \u000d\u000awill be cautious in terms of global economic \u000d\u000arisk, particularly inflation and recession in \u000d\u000aEurope, high interest rates, high energy \u000d\u000aprices, as well as the war in Ukraine.\u000d\u000aHe said the strategy for Bangkok Airways \u000d\u000ais to diversify its market segment to seek \u000d\u000aa balance.\u000d\u000aAs Chinese passengers only account for \u000d\u000a10% of its current business, Mr Puttipong \u000d\u000asaid the airline is not affected much by the \u000d\u000adeflation risk in China at the moment.\u000d\u000aEven though average airfares remain high \u000d\u000abecause of the soaring cost of jet fuel and \u000d\u000alimited capacity on certain routes, prices \u000d\u000aare gradually decreasing and should reach \u000d\u000aa similar level as in 2019 by the end of this \u000d\u000ayear, he said.\u000d\u000aNew airlines entering the industry give \u000d\u000atravellers more options.\u000d\u000aMr Puttipong said he believes Bangkok \u000d\u000aAirways has an advantage because it has 26 \u000d\u000acodeshare partners and owns three regional \u000d\u000aairports in Samui, Sukhothai and Trat.\u000d\u000aAs Thai aviation revives, he said the \u000d\u000anew government should keep the excise \u000d\u000atax reduction and maintain the quality of \u000d\u000athe hospitality sector to ensure the country \u000d\u000aremains an attractive destination for\u000d\u000atourism, business activities and investment.\u000d\u000aHIGHER ROOM RATES\u000d\u000aHotel businesses also anticipate a posi\u0002tive outlook for the second half.\u000d\u000aDillip Rajakarier, group chief executive of \u000d\u000aMinor International Plc and chief executive \u000d\u000aof Minor Hotels, said Thailand would play a \u000d\u000acrucial role as a gateway to Southeast Asia \u000d\u000aover the next 2-3 years.\u000d\u000a\u201cLooking ahead, we believe Thailand is \u000d\u000ain a strong position to benefit from pent-up \u000d\u000ademand from China, as well as increasing \u000d\u000aflight availability from other key global \u000d\u000asource markets that will unlock demand for \u000d\u000atravel in Southeast Asia,\u201d said Mr Rajakarier.\u000d\u000aFocusing on maximising daily room \u000d\u000arates, Minor Hotels reported a quarterly \u000d\u000arevenue per available room (RevPar) rate \u000d\u000athat matched the level in 2019 for two \u000d\u000aconsecutive quarters from the fourth quar\u0002ter of 2022.\u000d\u000a\u201cWe expect this growth to continue in \u000d\u000athe second half of this year and beyond,\u201d\u000d\u000ahe said.\u000d\u000aWith a diversifying portfolio, Minor \u000d\u000aHotels hopes to introduce new brands to \u000d\u000aThailand, led by NH Hotels, which is a well\u0002known brand in Europe.\u000d\u000aThe company also plans to launch \u000d\u000aBDMS Wellness Clinic at Anantara River\u0002side Bangkok Resort, a partnership with \u000d\u000aBDMS, to capture demand for health and \u000d\u000awellness tourism.\u000d\u000aMr Rajakarier said Minor remains \u000d\u000aunfazed by economic recession and geo\u0002political tensions.\u000d\u000aHe said the majority of its customers are \u000d\u000ain the upscale segment, which will not be \u000d\u000aaffected by such developments.\u000d\u000aHowever, as inflation might have an \u000d\u000aimpact on its bottom-line expenses, Minor \u000d\u000aHotels has to stimulate revenue growth to \u000d\u000acompensate for rising costs.\u000d\u000aMr Rajakarier said hotels will not feel \u000d\u000apressure from domestic political issues, \u000d\u000aas the company has been through such \u000d\u000arepetitive cycles during its long presence \u000d\u000ain Thailand.\u000d\u000aHe said the new government should \u000d\u000aimprove connectivity to attract more tourists\u000d\u000ato secondary destinations, distributing more \u000d\u000awealth to local communities.\u000d\u000aThe government should invest in infra\u0002structure development, elevating the capa\u0002city of provincial airports and expanding \u000d\u000amass transport and roads between major \u000d\u000aand secondary cities, said Mr Rajakarier.\u000d\u000a\u201cBig private investment including new \u000d\u000ahotels will eventually reach new areas \u000d\u000afollowing such transport development,\u201d \u000d\u000ahe said.\u000d\u000aAmid the optimistic outlook for tourism, \u000d\u000aMinor Hotels plans to grow its portfolio to \u000d\u000a600 properties in 59 countries with more \u000d\u000athan 91,000 rooms by 2025.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 24\u000d\u000aTOURISM","THE NEW GOVERNMENT \u000d\u000aSHOULD IMPLEMENT \u000d\u000aMEASURES TO PERSUADE \u000d\u000aFOREIGNERS TO SHIFT \u000d\u000aFROM SHORT STAYS TO \u000d\u000aLONG STAYS, FROM BEING \u000d\u000aTOURISTS TO BECOMING \u000d\u000aCONDO BUYERS. \u000d\u000aVICHAI VIRATKAPAN, \u000d\u000aACTING DIRECTOR-GENERAL, \u000d\u000aREAL ESTATE INFORMATION CENTER\u000d\u000aPeople examine property deals at a fair\u000d\u000aheld at Future Park Rangsit in Pathum Thani \u000d\u000aprovince. Photo: Apichit Jinakul\u000d\u000aMr Vichai says interest rates are still on\u000d\u000aan upward trend, possibly rising 0.75-1%\u000d\u000ain 2023.\u000d\u000aA man browses condos for sale at a house and condo fair in Bangkok. Photo: Pattarachai Preechapanich\u000d\u000aProblems are piling up for the Thai \u000d\u000areal estate market, with rising \u000d\u000ainterest rates and tight loan rules \u000d\u000aadding to fears over delays\u000d\u000ain forming a new government,\u000d\u000awrites Kanana Katharangsiporn\u000d\u000aPROPERTY \u000d\u000aUNDER \u000d\u000aPRESSURE\u000d\u000aT\u000d\u000ahe delay in establishing a new govern\u0002ment will weaken the country\u2019s \u000d\u000aeconomy in the second half, ulti\u0002mately dampening the housing \u000d\u000amarket, which is already facing \u000d\u000apressure from higher interest rates and dif\u0002ficulty in accessing mortgages, according \u000d\u000ato developers.\u000d\u000aALL EYES ON POLITICS\u000d\u000aMany developers agree a government \u000d\u000ashould be established as soon as possible to \u000d\u000aensure a timely injection of public spending \u000d\u000ainto the economy during the second half \u000d\u000aof this year.\u000d\u000a\u201cThe country\u2019s economy relies on govern\u0002ment spending as a crucial driving force, \u000d\u000aespecially as other current factors are not \u000d\u000afavourable,\u201d said Channarong Buristrakul, \u000d\u000amanaging director of Khon Kaen-based \u000d\u000aproperty developer Piman Group.\u000d\u000aThongchai Busrapan, co-chief executive \u000d\u000aof Noble Development Plc, said most com\u0002panies are eagerly anticipating the forma\u0002tion of a new government and hoping to \u000d\u000aavoid any unrest, as the potential impact \u000d\u000aof such risks would be huge.\u000d\u000a\u201cIf the transition to a new government is \u000d\u000asmooth, regardless of who forms the new \u000d\u000agovernment, it has the potential to lift Thai\u0002land out of its current state of decline,\u201d said \u000d\u000aMr Thongchai.\u000d\u000aThe housing market in the first half of \u000d\u000athe year confronted various negative fac\u0002tors, including high household debt, rising \u000d\u000ainterest rates, the end of relaxed loan-to\u0002value (LTV) limits, and unfavourable eco\u0002nomic growth.\u000d\u000aFRAGILE ECONOMY\u000d\u000aVichai Viratkapan, acting director-general\u000d\u000aof the Real Estate Information Center \u000d\u000a(REIC), said the Thai economy is under\u0002going an incomplete recovery and remains \u000d\u000afragile. \u000d\u000a\u201cThe Thai economy is heavily reliant on \u000d\u000atourism income,\u201d said Mr Vichai.\u000d\u000a\u201cHowever, if geopolitical conflicts \u000d\u000aescalate, there is a risk of a global eco\u0002nomic downturn.\u201d\u000d\u000aThis could have adverse effects on both \u000d\u000athe export sector and tourism industry, \u000d\u000asignificantly affecting Thailand\u2019s economic \u000d\u000agrowth and stability, he said.\u000d\u000aHousehold debt also remains at a high \u000d\u000alevel, at nearly 90% of GDP, compelling \u000d\u000afinancial institutions to enforce strict lend\u0002ing criteria and adhere to stringent credit \u000d\u000astandards. \u000d\u000a\u201cHomebuyers in the upper end of the \u000d\u000amarket will experience minimal impact, \u000d\u000abut middle- to lower-income earners are \u000d\u000afacing challenges in accessing mortgages,\u201d \u000d\u000aMr Vichai said.\u000d\u000aLENDING RATES\u000d\u000aHe said interest rates are on an upward \u000d\u000atrend and could increase by 0.75-1 percentage\u000d\u000apoints in 2023.\u000d\u000aThe industry is monitoring interest rate \u000d\u000aadjustments by the US Federal Reserve and \u000d\u000athe Bank of Thailand.\u000d\u000aThe ability to purchase homes and obtain \u000d\u000aresidential mortgages has diminished as \u000d\u000ahousing prices rise, LTV limits return to \u000d\u000anormal levels, and purchasing power among \u000d\u000ahomebuyers stagnates, said Mr Vichai.\u000d\u000aAs a result, housing market sales and \u000d\u000atransfers are expected to decline in 2023, \u000d\u000awith REIC projecting a 10.2% decrease to \u000d\u000a352,761 units for housing transfers nation\u0002wide, valued at 1 trillion baht, a 4.5% dip.\u000d\u000a\u201cWe are awaiting the new government\u2019s \u000d\u000astance on LTV limits, which could provide \u000d\u000amore opportunities for the public to have \u000d\u000aeasier access to homeownership,\u201d said Mr \u000d\u000aThongchai from Noble.\u000d\u000aHe said the financial eligibility of certain \u000d\u000aprofessions might be unclear and the use \u000d\u000aof credit scores is another factor that needs \u000d\u000amore collective consideration.\u000d\u000aIf there were more lenient policies in \u000d\u000aplace, it would improve access to home\u0002ownership, said Mr Thongchai.\u000d\u000aFOREIGN DEMAND\u000d\u000aMr Vichai said the challenges domestic \u000d\u000abuyers face in obtaining mortgages means \u000d\u000athe residential market has to depend on\u000d\u000aforeign buyers to drive growth this year.\u000d\u000a\u201cThe new government should implement \u000d\u000ameasures to persuade foreigners to shift \u000d\u000afrom short stays to long stays, from being \u000d\u000atourists to becoming condo buyers,\u201d he said.\u000d\u000aAccording to REIC, the total number \u000d\u000aof condo transfers nationwide in the first \u000d\u000aquarter of 2023 increased by 18.7% to 23,669 \u000d\u000aunits, with a total value of 70.5 billion baht, \u000d\u000agrowth of 34.7%. \u000d\u000aThis uptick was primarily driven by an \u000d\u000aincrease in transfers to foreign buyers, rising \u000d\u000a79% to 3,775 units, with a total value of 17.1 \u000d\u000abillion baht, up 67.6%.\u000d\u000a\u201cThe three preferred destinations among \u000d\u000aforeign buyers were Phuket, Chon Buri and \u000d\u000aChiang Mai,\u201d said Mr Vichai. \u000d\u000a\u201cThe top two source markets for buyers \u000d\u000awere Chinese and Russian, accounting for \u000d\u000a46% and 10% of the total, respectively. The \u000d\u000aremainder in the top 10 accounted for less \u000d\u000athan 4%.\u201d\u000d\u000aKajonsit Singsansern, chief executive of \u000d\u000adeveloper Siamese Asset Plc, said domestic \u000d\u000ademand for condos in Bangkok remained \u000d\u000asluggish, yet demand from foreign buyers, \u000d\u000aparticularly Chinese, was exceptional \u000d\u000aduring the first half this year.\u000d\u000a\u201cWe are planning to establish an overseas \u000d\u000abranch in Hong Kong to capitalise on this \u000d\u000amarket opportunity, as we were recently \u000d\u000aapproached by 20 overseas property agents,\u201d \u000d\u000ahe said.\u000d\u000a\u201cOne of our potential projects will be \u000d\u000alocated on Rama IX Road.\u201d\u000d\u000aOVERSUPPLY\u000d\u000aSimon Dervill\u00e9, managing partner and \u000d\u000aexecutive director of real estate advisory and \u000d\u000aasset management firm Capital Solution \u000d\u000aAsia, said the launch of new condo supply \u000d\u000ain the second half of the year would prove \u000d\u000achallenging because of a market glut.\u000d\u000a\u201cThere is a significant amount of com\u0002pleted condo supply that remains unsold \u000d\u000ain Bangkok. These units are offered at older \u000d\u000adevelopment costs, resulting in lower prices \u000d\u000acompared with new supply,\u201d he said.\u000d\u000a\u201cThe sales prices of units in new pro\u0002jects will be 15-20% higher than those \u000d\u000aof completed, unsold supply because \u000d\u000aof higher development costs, including \u000d\u000arising land prices and increasing construc\u0002tion expenses.\u201d\u000d\u000aREIC forecast a decrease of 10.5% in \u000d\u000atotal residential supply of new launches in \u000d\u000aGreater Bangkok this year, falling to 98,132 \u000d\u000aunits from 109,591 units in 2022. \u000d\u000aThe decrease is mainly attributed to \u000d\u000acondos, which are expected to decline by \u000d\u000a28.5% to 40,086 units.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 25\u000d\u000aPROPERTY","AD_UOBAM_FP.indd 1 6/16/2023 4:09:58 PM\u000d\u000aF\u000d\u000aollowing a slowdown caused by the \u000d\u000apandemic, Thailand\u2019s retail industry \u000d\u000ahas experienced a notable increase \u000d\u000ain activity.\u000d\u000aRetailers across various formats \u000d\u000ahave resumed their investments this \u000d\u000ayear, leading to a more vibrant indus\u0002try landscape.\u000d\u000aThe Thai retail business started to \u000d\u000arebound in the second half of 2022, attri\u0002buted mainly to economic growth and \u000d\u000athe recovery of tourism since the country \u000d\u000areopened its borders in June last year. The \u000d\u000aupward trend in retail continued into the \u000d\u000afirst quarter of this year, buoyed by several \u000d\u000apeak seasonal shopping sessions during \u000d\u000athis period.\u000d\u000aIn the second quarter of this year, retail \u000d\u000agained further momentum, driven by \u000d\u000anational election campaigns. However, \u000d\u000aafter the conclusion of the campaigns and \u000d\u000athe start of the new school year, there was \u000d\u000aa slight decrease in shopping sentiment \u000d\u000ain May.\u000d\u000a\u201cThe current retail landscape appears \u000d\u000asomewhat stagnant because of the absence \u000d\u000aof government policies and major invest\u0002ments. However, an improvement in retail \u000d\u000ais anticipated in the second half of this year, \u000d\u000aprimarily because of an expected increase \u000d\u000ain Chinese tourists visiting Thailand,\u201d \u000d\u000asaid Tareetip Wongsaengpaiboon, senior \u000d\u000avice-president at Kasikorn Securities Plc.\u000d\u000aShe said consumer purchasing power \u000d\u000ashould rise if the minimum wage is \u000d\u000aincreased and electricity and fuel costs are \u000d\u000acut, as pledged by various political parties.\u000d\u000aSTRATEGY REJIG\u000d\u000aBoth small and large retail operators \u000d\u000aBoth foreign visitors and locals throng CentralWorld department store in February. Photo: Apichart Jinakul\u000d\u000aThe sector has returned with a vengeance this year, \u000d\u000awith investments resuming and shopping booming, \u000d\u000awrites Pitsinee Jitpleecheep\u000d\u000aWE WOULD LIKE THE NEW GOVERNMENT TO FOCUS \u000d\u000aON PRIORITY POLICIES THAT HAVE THE MOST \u000d\u000aSIGNIFICANT IMPACT ON THE ECONOMY AND \u000d\u000aEXECUTE THEM PROMPTLY, AS THAILAND IS NOT \u000d\u000aONLY COMPETING DOMESTICALLY, BUT ALSO ON A \u000d\u000aGLOBAL SCALE.\u000d\u000aNATTAKIT TANGPOONSINTHANA, HEAD OF MARKETING, CENTRAL PATTANA\u000d\u000aRETAIL BOUNCES BACK\u000d\u000aacross various sectors, including conve\u0002nience stores, health and beauty, home \u000d\u000aimprovement, supermarkets and hyper\u0002markets, are continuing with their invest\u0002ment plans. However, some recently made \u000d\u000aadjustments to their strategies because of \u000d\u000auncertainties surrounding the minimum \u000d\u000awage and global inflation.\u000d\u000aShoppers at Future Park Rangsit mall \u000d\u000ain Pathum Thani.\u000d\u000aPhoto: Apichit Jinakul\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 26\u000d\u000aRETAIL \u000d\u000aContinued on page 28","AD_UOBAM_FP.indd 1 6/16/2023 4:09:58 PM","A digital rendition of Central WestVille, a semi-outdoor development worth 6.2 billion baht\u000d\u000aon a 40-rai plot in Ratchaphruek, which is scheduled to open in October of this year.\u000d\u000aThe interior of Central Ramindra \u000d\u000ashopping centre in Bangkok\u000d\u000ais dominated by pink.\u000d\u000aPhoto: Varuth Hirunyatheb\u000d\u000aMs Tareetip said CP All Plc, the operator \u000d\u000aof 7-Eleven stores, plans to open 700 con\u0002venience stores this year and will actively \u000d\u000aexpand into Cambodia.\u000d\u000aCentral Retail Corporation (CRC) revised \u000d\u000aits investment plan for Vietnam, reallocating \u000d\u000abudget to acquire potential land plots and \u000d\u000arenovate existing stores instead of open\u0002ing new ones. CRC will also restructure its \u000d\u000ainvestment budget for the domestic market, \u000d\u000awith a greater focus on online business.\u000d\u000aHome Improvement Center Plc, the \u000d\u000aoperator of HomePro home decoration \u000d\u000aand improvement stores, plans to shift its \u000d\u000afocus to opening Mega Home stores, capi\u0002talising on improving purchasing power in \u000d\u000atourist destination provinces. The company \u000d\u000awants to open 10 Mega Home stores and 2-3 \u000d\u000aHomePro stores this year.\u000d\u000aSiam Makro Plc, the operator of Makro \u000d\u000acash & carry stores and Lotus\u2019s hyper\u0002markets, allocated 25.3-27.5 billion baht \u000d\u000athis year to expand its retail and whole\u0002sale businesses.\u000d\u000aAccording to Saowaluck Thithapant, \u000d\u000agroup chief executive of Siam Makro, the \u000d\u000aeconomic and tourism recoveries after the \u000d\u000afull reopening of Thailand are expected to \u000d\u000ahave a positive impact on wholesale and \u000d\u000aretail businesses, as well as hotels, restau\u0002rants and the catering industry, which is the \u000d\u000acompany\u2019s customer base.\u000d\u000aOf the planned investment, 13.1-14.1 bil\u0002lion baht is for Makro\u2019s wholesale business, \u000d\u000awhile 12.2-13.4 billion baht is for Lotus\u2019s \u000d\u000aretail business, including branch expansion \u000d\u000aand developing distribution centres, digital \u000d\u000asystems and new businesses.\u000d\u000aIn 2023, Makro wholesale plans to open \u000d\u000a12 new branches in Thailand and 4-6 \u000d\u000abranches in other countries where Makro \u000d\u000aalready has a business presence.\u000d\u000aAs for Lotus\u2019s retail business, it plans to \u000d\u000aopen 3-4 hypermarkets and 10-14 super\u0002markets in Thailand and Malaysia, and 100-\u000d\u000a150 Lotus\u2019s Go Fresh branches.\u000d\u000aCentral Pattana Plc, a retail and property \u000d\u000adeveloper, is scheduled to open its latest \u000d\u000aproject, Central WestVille, a semi-outdoor \u000d\u000adevelopment worth 6.2 billion baht on a \u000d\u000a40-rai plot in Ratchaphruek, in October.\u000d\u000aThe Mall Group Co, another prominent \u000d\u000aretail operator, plans to open The Emsphere \u000d\u000amall near The Emporium in December. \u000d\u000aThe Mall Group also intends to open 2-3 \u000d\u000aGourmet Market stores this year, with \u000d\u000aone already operational at Design Village \u000d\u000aBangna starting in May, and another set to \u000d\u000aopen in December.\u000d\u000a\u201cWe have seen positive signs since the \u000d\u000abeginning of this year. Same-store sales \u000d\u000agrowth for Makro in the first two months of \u000d\u000athe year exceeded 10%,\u201d Mrs Saowaluck said.\u000d\u000aSTORE MAKEOVER\u000d\u000aMajor retailers are focusing not only on \u000d\u000aopening new stores, but also renovating \u000d\u000atheir existing ones this year.\u000d\u000aAsset World Corp Plc (AWC), an inte\u0002grated lifestyle real estate group, recently \u000d\u000areopened its Pantip Pratunam IT centre, \u000d\u000awhich will be rebranded as AEC Food \u000d\u000aWholesale Pratunam in June.\u000d\u000aMBK Plc, the operator of MBK Center, has \u000d\u000aundertaken renovations of Paradise Park \u000d\u000aand The Nine Shopping Center on Rama \u000d\u000aIX Road. The makeovers are expected to be \u000d\u000acompleted in the fourth quarter of this year.\u000d\u000aThe Mall Bangkae and The Mall Bangkapi \u000d\u000aare also scheduled to finish their renova\u0002tions by the end of this year.\u000d\u000aGaysorn Group plans to reopen Amarin \u000d\u000aPlaza, renamed as Gaysorn Amarin, located \u000d\u000aat the Ratchaprasong intersection, with the \u000d\u000alettable retail space reduced from 19,600 \u000d\u000asquare metres to 17,600 sq.m.\u000d\u000aGaysorn Amarin features four compo\u0002nents: fashion, food, life and wellness, and \u000d\u000aworkstyle. The reopening is due to take \u000d\u000aplace in the last quarter of 2023.\u000d\u000aACTIVE FOREIGN INVESTMENT\u000d\u000aThailand has been a prominent player in \u000d\u000athe global shopping scene for a long time. \u000d\u000aVarious foreign businesses, spanning from \u000d\u000afood to fashion, debuted in Bangkok during \u000d\u000athe second quarter this year.\u000d\u000aTesla opened its first supercharger station \u000d\u000aat CentralWorld, while Shake Shack, the \u000d\u000apopular American burger brand, also made \u000d\u000aan appearance at that mall.\u000d\u000aCarlyn, a South Korean bag brand, and \u000d\u000aCraft, a Swedish sportswear brand, chose \u000d\u000aThailand to open flagship stores, opting for \u000d\u000aSiam Discovery mall. New fashion brands \u000d\u000afrom Japan opened stores at The Empo\u0002rium mall.\u000d\u000aA new fine dining restaurant based in \u000d\u000athe UK is also planning to open a branch in \u000d\u000aBangkok in the upcoming months.\u000d\u000aNattakit Tangpoonsinthana, the head \u000d\u000aof marketing at Central Pattana, said the \u000d\u000aretail business has already experienced a \u000d\u000afull recovery in the first half of this year, \u000d\u000apartially attributed to the revival of the \u000d\u000atourism sector.\u000d\u000a\u201cAmid these positive developments, \u000d\u000aThailand\u2019s retail industry can look forward \u000d\u000ato a brighter outlook in the second half of \u000d\u000athis year. Overseas tenants have already \u000d\u000abegun reopening their shops in our retail \u000d\u000acomplexes, and we continue to expand our \u000d\u000abusiness despite the absence of a new govern\u0002ment,\u201d said Mr Nattakit.\u000d\u000aChadatip Chutrakul, chief executive of \u000d\u000aSiam Piwat Co, the operator of Siam Para\u0002gon, Siam Center and Siam Discovery malls, \u000d\u000asaid the new government should prioritise \u000d\u000athe ongoing development of infrastructure, \u000d\u000apromote Thailand as the headquarters of \u000d\u000aSoutheast Asia, and provide comprehen\u0002sive one-stop services to foreign investors, \u000d\u000asimilar to what Vietnam has done.\u000d\u000aShe suggested the establishment of a con\u0002sulting company that can provide detailed \u000d\u000ainformation to foreign investors on various \u000d\u000aaspects, including legal regulations, taxation \u000d\u000aand free-trade zones.\u000d\u000a\u201cWe would like the new government to \u000d\u000afocus on priority policies that have the most \u000d\u000asignificant impact on the economy and exe\u0002cute them promptly, as Thailand is not only \u000d\u000acompeting domestically, but also on a global \u000d\u000ascale,\u201d said Ms Chadatip.\u000d\u000a\u201cBusiness operators are concerned about \u000d\u000athe lack of adequate measures during the \u000d\u000atransition period prior to the formation of \u000d\u000athe new government.\u201d\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 28\u000d\u000aRETAIL \u000d\u000aContinued from page 26","INVEST","T\u000d\u000ahe adoption of digital transforma\u0002tion by public and private organi\u0002sations has continued this year as \u000d\u000athese institutions seek to strengthen \u000d\u000atheir performance amid a challeng\u0002ing economic outlook.\u000d\u000aThe availability of generative artifi\u0002cial intelligence (AI), cloud computing \u000d\u000asystems, and demand for more stringent \u000d\u000acybersecurity accelerated spending on digi\u0002tal technology.\u000d\u000aDuring the recent general election cam\u0002paign, many political parties pledged to \u000d\u000akeep pushing the deployment of advanced \u000d\u000atechnology to empower many sectors, from \u000d\u000aagriculture to public health, to drive the \u000d\u000acountry\u2019s competitiveness.\u000d\u000aPloyrawee Krirkphankul, director of the \u000d\u000aDigital Economy Drive Division of the Office \u000d\u000aof the National Digital Economy and Society \u000d\u000aCommission, said Thailand aims to increase \u000d\u000athe digital contribution to GDP to at least \u000d\u000a30% by 2027. The proportion is forecast to \u000d\u000areach 14.9% of GDP in 2023, or around 2.6 \u000d\u000atrillion baht.\u000d\u000aHowever, growth of the digital economy \u000d\u000ahas largely relied on big corporations. In \u000d\u000a2018, large companies contributed 86% of \u000d\u000athe digital economy, medium-sized firms \u000d\u000aprovided 7.59%, and small companies \u000d\u000aamounted to 6.4%.\u000d\u000aIn 2021, large companies contributed \u000d\u000a86.5% of the digital economy, medium-sized \u000d\u000aones provided 7.36%, and small firms \u000d\u000aamounted to 6.19%.\u000d\u000aSPENDING BOOM\u000d\u000aSandra Ng, group vice-president and \u000d\u000ageneral manager for IDC Asia/Pacific, said \u000d\u000aspending on digital technology by organi\u0002sations in the region is expected to expand \u000d\u000aby 3.5 times higher than economic growth \u000d\u000ain 2023.\u000d\u000aDigital business-related projects should \u000d\u000abe less affected by budget cuts in a strug\u0002gling economy, she said. For Thailand, IT \u000d\u000aspending is expected to expand nearly 6% \u000d\u000athis year, or 4% in the worst-case scenario.\u000d\u000aPrapussorn Pechkaew, research manager \u000d\u000aat IDC Thailand, said the country needs to \u000d\u000aleverage data to gear up for digital transfor\u0002mation. Many initiatives have been deve\u0002loped to transform Thailand into a data\u0002driven nation, including Open Government \u000d\u000aData of Thailand, a centre where the public \u000d\u000acan easily access state information.\u000d\u000aAccording to the IDC Asia-Pacific cloud \u000d\u000asurvey in 2021, 92% of Thai organisations \u000d\u000aresponding plan to increase the use of cloud \u000d\u000aservices in the next 12 months, providing \u000d\u000aa huge opportunity for cloud business in \u000d\u000athe country.\u000d\u000aThailand\u2019s public cloud service market \u000d\u000ais expected to reach $7 billion by 2025, with \u000d\u000aa five-year (2020-25) compounded growth \u000d\u000arate of 23.4%.\u000d\u000aThai organisations are expected to spend \u000d\u000a54.8 billion baht on public cloud services in \u000d\u000a2023, up 31.7% from 2022, according to the \u000d\u000alatest forecast from Gartner Inc.\u000d\u000aHyperscale cloud providers are driving\u000d\u000athe cloud agenda, said Sid Nag, vice\u0002president analyst at Gartner.\u000d\u000a\u201cOrganisations today view cloud as a \u000d\u000ahighly strategic platform for digital transfor\u0002mation, which is requiring cloud providers \u000d\u000ato offer more sophisticated capabilities as \u000d\u000athe competition for digital services heats \u000d\u000aup,\u201d he said.\u000d\u000aAccording to Gartner, cloud computing \u000d\u000ais driving the next phase of digital business, \u000d\u000aas organisations pursue disruption through \u000d\u000aemerging technologies like generative AI, \u000d\u000aWeb3 and the metaverse.\u000d\u000aAI A RISING STAR\u000d\u000aSarana Nutanong, chief executive of Visai \u000d\u000aAI Co Ltd, a Thai startup that provides com\u0002prehensive AI solutions for businesses, said \u000d\u000aAI and other related technologies will be \u000d\u000aapplied in various industries to transform \u000d\u000aservices and business operations.\u000d\u000aFor example, healthcare service can le\u0002verage AI and data analytics tools together \u000d\u000ato improve health diagnoses. In terms of \u000d\u000acommunications, chatbots will be used as \u000d\u000apersonal assistants, said Mr Sarana.\u000d\u000aIn the gaming and entertainment indus\u0002tries, AI will help create characters that can \u000d\u000ainteract with players, providing person\u0002alised experiences. AI also plays a crucial \u000d\u000arole in developing algorithms for cyber\u0002security solutions.\u000d\u000aHe said as business competition in \u000d\u000adomestic and international markets \u000d\u000aintensifies, it is both an opportunity and \u000d\u000aDigital transformation continues as state and private organisations look to improve their \u000d\u000aperformance amid a competitive economic landscape.\u000d\u000aThe healthcare sector can leverage AI and \u000d\u000adata analytics tools together to improve \u000d\u000ahealth diagnoses, says Mr Sarana.\u000d\u000aAdoption of artificial intelligence and the cloud is increasing in Thailand\u000d\u000aas the public and private sectors strive to embrace the trend,\u000d\u000awrites Suchit Leesa-nguansuk\u000d\u000aORGANISATIONS \u000d\u000aTODAY VIEW CLOUD AS \u000d\u000aA HIGHLY STRATEGIC \u000d\u000aPLATFORM FOR DIGITAL \u000d\u000aTRANSFORMATION, WHICH \u000d\u000aIS REQUIRING CLOUD \u000d\u000aPROVIDERS TO OFFER \u000d\u000aMORE SOPHISTICATED \u000d\u000aCAPABILITIES AS THE \u000d\u000aCOMPETITION FOR DIGITAL \u000d\u000aSERVICES HEATS UP. \u000d\u000aSID NAG, VICE-PRESIDENT ANALYST, \u000d\u000aGARTNER\u000d\u000aDIGITAL TRANSFORMATION \u000d\u000aCONTINUES APACE\u000d\u000aa challenge for AI companies to develop \u000d\u000ahigh-quality products that are user-friendly \u000d\u000aand provide value for customers.\u000d\u000aRecently SCB 10X, a subsidiary of the SCB \u000d\u000aX Group, partnered with the Vidyasirimedhi \u000d\u000aInstitute of Science and Technology to col\u0002laborate on R&D for WangChanGLM. This \u000d\u000alanguage model, specialising in Thai and \u000d\u000acapable of supporting other languages, is \u000d\u000aa generative AI and large language model \u000d\u000aavailable under a commercial-use permis\u0002sible licence.\u000d\u000aOffering abilities in content summa\u0002risation, idea generation, and article writing \u000d\u000ain Thai, this technology aims to enhance \u000d\u000aequal and effective access to AI for people, \u000d\u000aaccording to SCB X Group.\u000d\u000a\u201cEarly foundational models like ChatGPT \u000d\u000afocus on the ability of generative AI to aug\u0002ment creative work, but by 2025, we expect \u000d\u000amore than 30% [up from zero today] of new \u000d\u000adrugs and materials to be systematically dis\u0002covered using generative AI techniques,\u201d \u000d\u000asaid Brian Burke, research vice-president \u000d\u000afor technology innovation at Gartner.\u000d\u000a\u201cThat is just one of numerous industry \u000d\u000ause cases.\u201d\u000d\u000aDIGITAL LABOUR SHORTAGE\u000d\u000aAs Thai businesses steadily transform \u000d\u000athemselves, the demand for digital profes\u0002sionals constantly rises, leading to a labour \u000d\u000ashortage and high personnel costs, accord\u0002ing to the Digital Industry Sentiment Index \u000d\u000ain the first quarter of 2023, conducted by the \u000d\u000aDigital Economy Promotion Agency (DEPA).\u000d\u000aMany entrepreneurs want the govern\u0002ment to provide a specific solution, making \u000d\u000afinancial resources more accessible and \u000d\u000aattracting digital talent from around the \u000d\u000aworld to meet rising digital workforce \u000d\u000ademands, the survey found.\u000d\u000aThe index surged to 54.0, up from 49.0 \u000d\u000ain the fourth quarter of 2022, rising above \u000d\u000athe threshold of 50 for the first time in 12 \u000d\u000amonths, a three-year high.\u000d\u000aThe index was driven by entrepreneurs\u2019 \u000d\u000aconfidence as the Thai economy recovers \u000d\u000athanks to a tourism rebound and higher \u000d\u000aforeign investment. The survey is conducted \u000d\u000aquarterly by sampling around 500 enter\u0002prises in the digital industry.\u000d\u000aThe index is projected to rise to 60.8 in \u000d\u000athree months, according to DEPA, based on \u000d\u000adigital business operators\u2019 confidence in the \u000d\u000acountry\u2019s improved outlook.\u000d\u000aDEPA previously collaborated with \u000d\u000avarious state agencies and private enterprises\u000d\u000ato offer digital workforce training programmes\u000d\u000athat could produce 30,000 trainees each \u000d\u000ayear. However, demand for a skilled digital \u000d\u000aworkforce now totals 100,000 employees \u000d\u000aper year.\u000d\u000aECONOMIC REVIEW \u000d\u000aMID-YEAR 2023 30\u000d\u000aIT","",""]