Thailand likely to hike key interest rate by 25 basis points tomorrow
TUESDAY, JANUARY 24, 2023
Kasikorn Research Centre (KResearch) on Tuesday expected the Bank of Thailand’s Monetary Policy Committee (MPC) to raise Thailand’s key policy rate by 25 basis points to 1.50 per cent to fight inflation.
The MPC, at its previous meeting on November 30, had voted unanimously to raise the interest rate by 25 basis points to 1.25% to control inflation.
KResearch said the Thai economy is continually recovering from the impact of the pandemic due to China’s earlier-than-expected reopening of its borders, which would help the tourism industry.
However, the economy is still being pressured by inflation, the centre said, adding, headline inflation in December had increased to 5.89% while core inflation is still at the same level as the previous month at 3.23%.
KResearch believed that after the revision in January, the MPC would hike the interest rate by 25 basis points one more time to 1.75% within the first quarter of the year, and maintain the rate until the year-end to control the inflation in 2023 within the target of 1-3%.
KResearch forecast that the MPC could be pressured to raise the interest rate to higher than the estimated 1.75% target if Thailand’s inflation continues to rise for too long, or the US Federal Reserve decides to use aggressive rate hikes.
The centre also predicted a K-shaped recovery for the overall economy in 2023 with uneven growth distribution among different industries. Tourism and service industries will enjoy significant growth, while those related to export sectors will suffer from the recessive global economy and the strengthening of the baht.
Location and innovation ‘crucial’ to Thailand Inc’s success in fracturing world
TUESDAY, JANUARY 24, 2023
Thai businesses must adapt to the world’s fracturing geopolitical landscape, using innovation and location to create competitive advantages, Vice Foreign Minister Vijavat Isarabhakdi told industry leaders on Monday.
Vijavat was speaking at the seminar “Geopolitics: The Big Challenge for Business”, organised by Krungthep Turakij newspaper.
He cited global social and economic impacts of the Russia-Ukraine war, including soaring inflation amid food and fuel shortages. He also warned that the conflict shows no sign of ending anytime soon but is instead escalating, with Russia now threatening to use nuclear weapons if western countries continue to provide armaments to Ukraine.
The conflict has raised the spectre of a new Cold War, as the United States leads a coalition of democracies against Russia and China.
But Vijavat also pointed to different headwinds facing Thai business.
“The modern world that has been divided by geopolitics is also filled with other challenges, including Covid-19 crises in several countries, climate change, and digital disruption from demand for e-commerce during the pandemic and the rise of artificial intelligence,” said Vijavat.
Thai businesses need to adjust their strategies to cope with the new geopolitical trend and challenges to stay ahead of the game, he said. Those that stand still are at risk of being forced to change or even being driven out of business by new regulations brought in to govern changing trends, he warned.
Incoming regulations affecting Thai exporters include the European Union’s carbon border adjustment mechanism and deforestation edict.
As digital transformation accelerates, meanwhile, Thai businesses must adopt innovations to strengthen their businesses, including big data, analytic tools, AI technology, and new markets online.
Businesses should also take advantage of Thailand’s geographic position in the heart of Asia’s hotspot for economic growth, Vijavat said.
“Thailand is located in the centre of the ‘growth triangle’ marked by India, China and the Asean region. This area has a high potential for economic expansion despite the ongoing Russia-Ukraine conflict and the pandemic. We must exploit this location advantage by attracting foreign investment, especially from corporations migrating out of conflict zones.”
Vijavat advised giant corporations to pave the way by investing in infrastructure and creating new markets, which would attract small and medium enterprises to join and strengthen the supply chain.
“Using innovation and location advantage is key to boosting Thailand’s competitive edge in the modern world shaped by geopolitics,” he concluded.
Thai businesses must learn to navigate global geopolitical tensions, experts say at seminar
MONDAY, JANUARY 23, 2023
Nongluck Ajanapanya
Geopolitical tensions are challenges global businesses have to learn to deal with, experts and representatives from the public and private sectors said on Monday.
They exchanged thoughts and ideas, focusing on two key words — positioning and sustainability — to adequately prepare Thailand for the current geopolitical atmosphere.
The event was part of a seminar on “Geopolitics: The Big Challenge for Business”, organised on Monday by Krungthep Turakij newspaper under the Nation Group.
The goal of the seminar was to explore the best ways for Thailand’s economy to continue to grow in the face of tensions between several superpowers, particularly the United States and China.
All eight panelists agreed that geopolitical tensions have become a normal challenge for global businesses to deal with if they want to continue operating and survive.
These tensions have restructured the established world order and would continue to cause uncertainties in global trade and investment for many years to come, they said.
The trade war between the United States and China, the war in Ukraine, the China-Taiwan cross-strait tensions, the imbroglio over the South China Sea, the recovery path in the aftermath of Covid-19, climate change, and digital transformation are all major issues that Thai entrepreneurs must confront along with tactical risk management, the panelists advised.
Vijavat Isarabhakdi
Vijavat Isarabhakdi, vice minister at Thailand’s Ministry of Foreign Affairs, stated in his keynote speech that as the government agency in charge of international relations, the ministry sees an opportunity for Thailand to position itself as friendly to all parties.
Thailand has obviously taken the position that it would partner any country for mutual benefit, he stated.
He cited the country’s participation in several agreements, including the Indo-Pacific Economic Framework for Prosperity (IPEF) with the US, the Regional Comprehensive Economic Partnership (RCEP), bilateral free trade agreements with the European Union, Asean members, and countries such as India and Saudi Arabia.
Auramon Supthaweethum
Auramon Supthaweethum, director-general of the Ministry of Commerce’s Department of Trade Negotiations, added that in addition to wisely implementing several trade agreements with many countries, Thailand should forge new partnerships while increasing close collaboration with its Southeast Asian neighbours.
Auramon added that Thailand must rapidly improve its business model to include greater responsibilities to the community, people, and the environment.
That means Thailand must have strong and fair labour regulations, use clean energy with green technology, and have credible product traceability to ensure the country’s products are truly eco-friendly.
Arm Tangnirun
Arm Tangnirun, director of Chulalongkorn University’s China Study Centre, believes that tensions between the United States and China will never end. The level of tensions, however, would vary, depending on the leaders’ policies and other factors, such as the recent Chip and Science Act or issues related to Taiwan that challenge Beijing’s “One China” policy, Arm said.
He advised Thailand to focus on improving the country’s resilience and adaptability, invest in more human resources, adopt digital technology and innovation, and position itself as the gateway to Asean to assist other countries in trading with the region.
Thitima Chucherd (center)
Thitima Chucherd, director of Economic and Financial Market Research, Economic Intelligence Centre, Siam Commercial Bank, endorsed Arm’s ideas. She stated that in addition to its current markets, Thailand should make new friends outside major economies, such as in Latin America, the Middle East, and South Asia.
She also recommended that Thai entrepreneurs research hard in order to outline their own risk management strategy, focus on their target customers, and transform their business model with advanced technology and skilled labour.
Wisit Limluecha (center)
According to Wisit Limluecha, vice chairman of the Thai Chamber of Commerce, Thai entrepreneurs cannot afford to stay in their comfort zones.
He warned that in the current climate of uncertainty and geopolitical tensions, doing nothing and simply resting in their safe zone would be a recipe for disaster. Entrepreneurs must take calculated risks while determining how to sustain their businesses using the Bio-Circular Green model, clean energy, and digital technology, he advised.
Meanwhile, Rak Vorrakitpokatorn, president of Thailand’s Export-Import Bank, noted that Thai entrepreneurs should improve their skills in order to be smart investors.
He encouraged Thai businesses to invest abroad and bring the profits back home. He also urged the government and the public sector to work together to promote the country’s entire ecosystem and infrastructure in order to attract foreign direct investment to Thailand’s high-value industries.
Sampan Silapanad
The president of Thailand’s Electronic and Computer Employers’ Association president, Sampan Silapanad, pointed out that Thailand must accept it is not capable of competing in the field of advanced innovations.
Hence, Thailand should now concentrate on its strengths, like making electronic parts and appliances.
He said geopolitical tension is just another condition of doing business, but Thailand’s real challenges right now are inflation, technological disruption, and climate change. Thai manufacturers and entrepreneurs should consider how to strengthen their position and prepare to adapt to high-tech environments that are more concerned with environmental issues.
That should be enough to keep the country’s economy going for the next few years, Sampan said.
In terms of other challenges, Wisit urged the government to simplify the process of doing business in Thailand, while Sampan advocated deeper and more consistent collaboration among all businesses of all sizes. Rak, meanwhile, advised Thai entrepreneurs to take financial literacy seriously.
Robert F Godec
The seminar also heard a keynote address by Robert F. Godec, US Ambassador to Thailand, on the direction of current geopolitics.
He emphasised that the priority of the United States was to build partnerships for peace and prosperity.
“The United States will work with our partners, friends and allies to tackle shared challenges and seize common opportunities,” he stated.
Although he did not specifically mention China or Russia, Godec stressed that when countries reject international rules, others must band together to promote justice and accountability.
“Our future depends on our willingness to work together and to respect international norms and agreements. Respect for international rules provides businesses with the stability and predictability to invest and grow,” he said.
Meanwhile, he praised the US-Thailand partnership as a model for the Indo-Pacific region. The two countries’ trade relationship is strong and expanding. The US continues to be a major investor in the Thai economy.
He noted that US firms are operating in diverse sectors, such as automobiles, healthcare, and high technology, with mutual collaboration on digital economic development to promote innovation.
He assured that the US was determined to actively collaborate with Thailand and its allies to create a better future.
Jurin heading to Brussels to jumpstart FTA talks with EU
MONDAY, JANUARY 23, 2023
Commerce Minister Jurin Laksanawisit will be in Brussels on Wednesday and Thursday to push for negotiations on a free trade agreement (FTA) with the European Union.
Jurin said on Monday that the Thai private sector is placing high hopes on this agreement even though talks have been stalling since 2014.
He added that he will meet Valdis Dombrovskis, European commissioner for trade, to show that Thailand is ready to work on the FTA.
“The upcoming negotiation will indicate whether or not the Thailand-EU FTA will succeed,” he said.
He added that this FTA should boost trade between Thailand and the EU, especially when it comes to exporting goods to 27 EU countries and exemption of tariff.
EU is considered Thailand’s fifth biggest trade partner after Asean, China, the US and Japan, accounting for 6.95% of the Kingdom’s global trade.
Last year, Thailand-EU trade was valued at US$41.03 billion (1.46 trillion baht), of which $22.79 billion accounted for export and $18.24 billion for imports.
Thailand’s main exports to the EU were computers, gems and jewellery, air conditioners and rubber, while imports were machinery and pharmaceutical products.
Chonburi debt restructuring fair a success, says Finance Ministry
MONDAY, JANUARY 23, 2023
Thousands of people took part in a fair for debtors to enter the restructuring programme in Chonburi province this month, making the event a success, a spokesman for the Finance Ministry said on Monday.
Pornchai Thiraveja, director-general of the Fiscal Police Office and spokesman of the Finance Ministry, said the fair, which was held from January 20-22, drew over 5,000 applications. It was the fourth debt restructuring fair held by the Finance Ministry.
He said most applicants were teachers and Education Ministry officials.
Pornchai said the total requests during the fair together with 1,800 applications submitted by Chonburi residents earlier, added up to some 1.9 billion of debt for which applicants sought debt restructuring.
A total of 180,000 people have joined the debt restructuring programme started by the Finance Ministry in September last year, Pornchai said.
He said a lot of teachers had joined the fair in Chonburi after the Finance Ministry urged the Education Ministry to inform their personnel to visit the fair and seek financial advice.
At the Chonburi fair, 800 applicants sought additional loans totalling 1.6 billion baht, while 1,200 other applicants sought career advice and loans totalling 400 million baht.
The fifth debt-restructuring fair will be held in Songkhla province from January 27-29, the spokesman added.
Vijavat Isarabhakdi
Auramon Supthaweethum
Thitima Chucherd (center)
Wisit Limluecha (center)
Sampan Silapanad
Robert F Godec
At the Chonburi fair, 800 applicants sought additional loans totalling 1.6 billion baht, while 1,200 other applicants sought career advice and loans totalling 400 million baht.
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