The country’s economic recovery is broadening in 2018. While rapid export growth continues fuelling the economy, an increase in capacity utilisation and acceleration in capital goods imports suggest a nascent domestic demand recovery as well, the WB report said. Regulatory reforms and overall policy stability are contributing to continuing improvements in business sentiment.

“With economic growth exceeding 4 per cent this year, for the first time since 2012, Thailand has the potential, with intensifying structural reforms, to raise productivity and grow even faster over the medium term,” said Ulrich Zachau, the WB director for Thailand, Malaysia and Regional Partnerships.

“In addition to education and skills reform and strong implementation of quality infrastructure investments, increasing competition, especially in services, will be key for boosting innovation and lifting Thailand on to a new path of higher, long-term growth.

“The new report highlights the importance of innovation for productivity and long-term growth. Thailand, ranked 52 out of 128 [economies] in the ‘Global Innovation Index’ in 2017, has the opportunity, with innovation-friendly policies, to attract and foster high-quality entrepreneurs and innovative investments, both within Thailand and from abroad,” the director added.

To create an environment promoting innovation, the report highlights priority areas for action for Thailand, including strengthening competition policy, opening and liberalising services, establishing a national data strategy, and improving intellectual property rights – all while continuing to pursue skills reforms.

As Thailand seeks to attain high-income status as set out in the 20-year “National Strategy”, research and development for both technological catch-up and innovation will play important roles, it added.

“Thailand cannot attain advanced-country status if it cannot meet the challenges of innovation,” Kobsak Pootrakool, minister attached to the Prime Minister’s Office, said on Monday.

The “Thailand Economic Monitor”, published twice a year, is the World Bank Thailand office’s flagship report, analysing the country’s economic performance and outlook.

The latest edition is themed “Beyond the Innovation Paradox”.

The top five revenue contributors from October 1 to March 31 were the Government Lottery Office, the Electricity Generating Authority of Thailand , Airports of Thailand, Government Savings Bank, and the Provincial Electricity Authority.

The SEPO now forecasts that state enterprises will send Bt137 billion in total to the ministry over the full course of the fiscal year, he said.

Speaking at a seminar titled “The Symbol of Your Visionary: Keep Up with the Economy and Be Investment Leader in 2018”, he said public investment would also be a plus to the economy after certain mega-projects were delayed from last year.

The economy is expected to show stable growth as planned, provided that the government gradually pushes for the enactment of laws related to the Eastern Economic Corridor and the general election, which will be a prelude for rising inflows of foreign direct investment, Predee added.

Nonetheless, the economic recovery will remain challenged by several downsides, especially external factors which are “beyond our control”, he cautioned.

The KBank chief said there were three major trends for the remainder of the year, the first of them being trade protectionism.

Under the leadership of President Donald Trump, the US administration has, from early this year, initiated a string of trade measures, reasoning that they are necessary to protect domestic manufacturing and national security.

The latest in the series is the trade measures against intellectual-property violation, which have sent an impact at the levels of both the products listed and the US’s trade partners, Predee said.

One of the targets is China, which recorded a trade surplus with the US to the tune of US$375 billion (Bt11.72 trillion) last year.

The second trend is international fund movements, he told the seminar.

While waiting for clarification on the trade-protectionism issue, the greenback may weaken, running counter to Asian and Thai currencies, which are strengthened by capital inflows.

However, before such worry eases, the market may shift more weight to other important factors, such as the US Federal Reserve’s signals to increase the policy interest rate, Predee said, adding that these circumstances may accelerate the pace of fund movements, resulting in volatility and fluctuations of currencies and asset values worldwide during the year.

The third major trend is the interest-rate uptrend of major countries.

In particular, close attention is being paid to the US as the market waits to see whether there will be more than three rate hikes in 2018.

Such a decision would impact returns in the international and Thai financial markets, he said.

This is lower than the early estimate by 1.59 per cent, the department’s deputy director, Yanee Sangsrichun said on Monday.

She added that Bt1.28 trillion of the spending so far had gone to paying regular expenses, with the next Bt180.81 billion used for the government’s investments – about 31.3 per cent of the total investment budget of Bt577.29 billion for this fiscal year.

”The department has tried to speed up the budget spending to achieve the target. This is part of the drive to stimulate the country’s economic growth,” Yanee said.

US markets plunged on Friday after Donald Trump warned of tariffs on an additional $100 billion worth of Chinese imports, to which Beijing responded by saying it would stand firm.

The president’s announcement came weeks after his decision to tax imports of steel and aluminium, followed by planned levies on $50 billion worth of goods from China over what Washington says is theft of intellectual property and technology.

China retaliated by unveiling planned levies on $50 billion worth of major US exports.

Trump’s moves, part of his protectionist “America First” agenda, have rattled world markets, fearing a trade war between the world’s top two economies could reverse the tentative global recovery.

“Much ink has been spilt over trade wars in the last few days, and we now wait to see what the Trump administration does next,” Stephen Innes, head of forex trading for Asia Pacific at OANDA, said in a note.

There are hopes Trump’s headline-grabbing tariffs are part of a plan to take a harsh line as a bargaining tactic towards a deal with China.

And on Sunday Trump tweeted that he saw an end to the dispute, saying: “China will take down its trade barriers because it is the right thing to do.”

However top advisor Larry Kudlow, who has often suggested the tariffs might not go into effect, warned Friday the announcements were not negotiating tactics, while Treasury Secretary Steven Mnuchin said the White House hoped to negotiate but acknowledged a trade war was a possibility.

All three main indexes on Wall Street ended more than two percent down Friday.

But US futures rose Monday and Asian markets, after fluctuating in early trade, pushed higher.

Tokyo ended 0.5 percent higher, Hong Kong climbed more than one percent in the afternoon, Shanghai was 0.2 percent up and Sydney put on 0.4 percent.

Singapore was 0.1 percent higher, Seoul gained 0.6 percent and Wellington added 0.7 percent, while Taipei, Bangkok and Jakarta also rose.

Xi speech in focus

“Focus this week will remain the trade issues between the US and China… as some people began to have an optimistic view on the outcome of the issue. It’s getting harder to predict what will come next,” SBI Securities said in a commentary.

Investors will be keeping a close eye on comments Tuesday by Chinese President Xi Jinping at the Boao Forum — dubbed the Asian Davos — to see if he comments on the brewing row.

Greg McKenna, chief market strategist at AxiTrader asked: “Will Xi crank the handle on rhetoric or will he strike a more conciliatory tone?”

A report Friday showed the US created far fewer jobs than expected in March, tempering expectations of sharp interest rate rises by the Federal Reserve.

Markets tanked in February on worries a stronger economy and rising inflation would prompt the central bank to raise rates more than initially thought, bringing an end to years of crisis-era stimulus.

Fed boss Jerome Powell signalled it still plans to press ahead with additional increases this year but did not provide a timeline or idea about the number of increases.

“The Fed seems likely to keep raising interest rates every quarter this year and probably in 2019 as well. If it wants policy to bite and slow down growth then interest rates need to go above neutral — still about one percent higher than current levels — which is probably in (the second half of) 2019,” said Richard Jerram, chief economist at Bank of Singapore.

The dollar held up against its main peers, with yen traders awaiting Bank of Japan governor Haruhiko Kuroda’s speech later in the day as he starts his second term.

Oil prices rose on bargain-hunting following last week’s losses, but analysts warned of further volatility caused by the trade dispute uncertainty.

Prices are getting support from the high level of compliance with output cuts by the Saudi-led OPEC cartel and Russia, though rising US production could undermine their efforts.

Key figures around 0710 GMT

Tokyo – Nikkei 225: UP 0.5 percent at 21,678.26 (close)

Hong Kong – Hang Seng: UP 1.2 percent at 30,194.81

London – FTSE 100: UP 0.2 percent at 3,138.29

Euro/dollar: DOWN at $1.2274 from $1.2281 at 2100 GMT on Friday

Dollar/yen: UP at 107.10 yen from 106.92

Pound/dollar: UP at $1.4100 from $1.4088

Oil – West Texas Intermediate: UP 25 cents at $62.31 per barrel

Oil – Brent North Sea: UP 27 cents at $67.38 per barrel

New York – Dow: DOWN 2.3 percent at 23,932.76 (close)

That is the verdict in a special report published today by S&P titled “China’s Belt and Road Initiative: Is This The World’s Largest Venture Capital Project?”

“[The] success of the Belt and Road Initiative (BRI) will ultimately rest on whether China’s initial ‘seed money’ will create creditworthy projects that attract true private sector outside money,” said Paul Gruenwald, S&P Global Ratings’ chief economist.

“Seen in this way, the initiative is arguably the world’s largest attempted venture capital project”.

Another key measure of success is whether the Belt and Road can win local hearts and minds in the recipient countries.

The initiative aims to connect the Eurasian supercontinent through land and sea “Silk Roads” using infrastructure and industry projects.

“The UK has had some success in driving ahead through a creative economy. We want to find a way to collaborate with the UK to develop a creative economy in Thailand,” said Sontirat. “This is apart from improving and adding value to Thai products.”

Trade between Thailand and the UK at the end of 2017 amounted to US$7.01 billion, of which Thai exports totaled US$4.07 billion and imports from the UK were US$2.94 billion.

In the first two months of 2018 Thai exports to the UK were US$676.13 million, while imports from the UK were worth US$469.63 million.

Thailand’s main exports to the UK included cars and auto accessories, processed chicken, motorcycles and accessories, plus electrical parts.

Major imports from the UK have been machinery, alcoholic drinks and medicine, according to the Commerce Ministry.

“Over the next decade, Japanese auto manufacturers and associated industries will make sizeable up-front investments in alternative-fuel vehicle technologies while bearing the risk that these vehicles may ultimately not be taken up by the market,” says Motoki Yanase, a Moody’s Vice President and Senior Credit Officer.

“In addition to the direct impact on the auto, steel and refining sectors, electrification – and the resultant drop in gasoline consumption – will also reduce a meaningful source of government tax revenue, which funds road construction and public works programs.”

Moody’s conclusions are included in its just-released report “Cross-sector: Push for alternative-fuel vehicles presents challenges for Japan Inc.” Japan Inc. refers to Japanese auto manufacturers and associated industries.

The agency’s report highlights that tightening emission requirements, changing consumer preferences amid growing concerns over climate change, and technological innovation were all driving the push for alternative-fuel vehicles.

Moody’s estimates that electric vehicles and other alternative-fuel vehicles, including hybrids, plug-in hybrids and fuel-cell vehicles, could account for around 35 per cent of new vehicle sales globally by 2030, compared to less than 5 per cent in 2017.

At the same time, one of the biggest risks was the uncertainty of even attempting to forecast likely trends, it warned, making it very challenging for automakers to adopt a strategy that ensured they remained competitive and profitable.

For automakers, the rising R&D costs and capital investments needed for the shift to alternative-fuel vehicles could squeeze their already-thin margins. In addition, the entry of new carmakers will increase competition, while emerging technologies will take automakers beyond their core skills and toward new business models.

The national digital identification infrastructure will bring the Thai economy to another level due to expected massive cost savings and enhancement of efficiencies for citizens, businesses and government, Anuchit Anuchitanukul told The Nation in an exclusive interview

“I believe it will upgrade our country and our economy to the next level,” said Anuchit, an advisor to the national committee responsible for the development of the national digital identification platform.

Anuchit, who is also head of the process and product improvement and alternative channels group at Kiatnakin Bank, claimed that the platform would be robust and resilient and is expected to be better than Singapore’s digital ID model.

Still under development, the national infrastructure system is expected to be tested in June with pilot services starting in the third quarter of this year.

The new digital infrastructure would eliminate the need to submit paper copies of their ID when contracting for services with businesses and government agencies. It would also do away of people needing to visit business or government offices in person. As related works go online it would result in a cost reduction for every party.

Main actors in the platform comprise three groups: the party giving service to the user, an identity provider authenticating the user and the authoritative source holding the user’s information.

The system begins with a user who wants to get service online from a business or government. For example, someone applying for a mortgage loan from Bank A could use a mobile phone to request a loan.

Bank A will send a request asking for verification of the loan applicant’s identity to the identity provider which might be another bank or perhaps government agencies. Bank A will also ask for the record of the loan applicant’s credit history from the National Credit Bureau (NCB), which is acting as the authoritative source. The loan applicant must confirm their identity and also give a consent to the NCB to release the credit information to Bank A.

After Bank A processes all information received from the identity provider and authoritative source, it would decide whether or not to approve a housing loan for the applicant.

Regarding concerns over cybersecurity, Anuchit said the Thai digital ID infrastructure would be flexible and resilient, allowing identity providers to use various methods such as facial recognition technology, touch ID, smart cards or pin codes.

In Singapore, there is only a single ID provider – the Singapore government. That single-provider approach makes Singapore prone to cyber attack, potentially causing the system to crash, said Anuchit.

Regarding the possibility of information breach, Anuchit noted that Thailand’s law protects people’s information in the current system. A bank, for example, cannot access a client’s credit history from the NCB without client consent. For the online system, the law would still protect bank client information but it make the process more transparent as the bank would ask for consent via the electronic platform.

By the third quarter of this year, 11 pilot services will be available online for testing via the national digital ID platform.

These services will include opening a bank account for both individuals and companies; opening an investment account with the Stock Exchange of Thailand’s “FundConnext”, a technology-enabled fund service platform to process buying and selling of mutual fund orders; opening an account for share trading with brokerage firms; applying for an online loan from a bank; reporting online credit; opening an e-wallet account; buying life assurance and insurance; applying for student loans and filing the annual tax return.

Banks are likely the first group to provide online services related to the digital ID platform as they have already invested a lot of money in the computer system, said Anuchit.