The two parties have agreed to continue ongoing collaboration in three key areas. First is “One Stop Service” centre, which will start to provide services for listed companies in September this year. Second is “One Report” which will be implemented next year, aiming at reducing two forms of report – the annual registration statement (Form 56-1) and annual report (Form 56-2) – to be a single form of report in order to cut redundancy. Third is “One ESG”, designed to drive ESG development among listed companies by focusing on implementation. Moreover, the two organisations will debut their collaboration in research by starting with studying investors’ behavioural cluster and the study will provide input for formulating long-term policies, SEC Secretary-General Ruenvadee Suwanmongkol said.

SET President Pakorn Peetathawatchai said under the SET’s key strategy “Creating Partnership Platform to Drive Inclusive Growth,” the bourse aims to become a comprehensive platform for the Thai capital market. SET has enhanced ease of accessing funding sources for the real sector and has also continuously promoted sustainability for inclusive growth.

Therefore, the cooperation with the SEC and related parties towards a holistic approach will drive the capital market to benefit the economy, the society and the country sustainably.

“Officials have been working to come up with a stimulus package, as we expect the economy to slow down e second half of the year. The economic package would be proposed to the new government,” said Lavaron Sangsnit, director-general at the Fiscal Policy Office.

His comments came amid a slowdown in the Thai economy due to the impact of the trade tensions between the US and China. Thai exports in the first four months contracted by 1.9 per cent year on year.

“We are hoping the economy does not see a sharp slowdown, hence the stimulus would not be a big one, as exports are not expected to contract significantly,” he said.

The Finance Ministry projects that trade tensions between the world’s two largest economies would ease as leaders of the United States and China will meet at the G20 summit.

The stimulus package will be aimed at boosting consumption among low-income groups as they have a tendency to spend all the money that government puts into the economic lifeline, he said.

The ministry will also offer tax incentives to the middle-income group in order to encourage them to spend more. Usually, middle-income group spends about 80 per cent of their earnings, he said.

Recently, the government provided tax incentives for those who go shopping and travel in the country. The new measures may include a Bt1,500 allowance to citizens for domestic travel, according to Lavaron.

Asked about the impact on public debt due to the series of economic stimulus packages, Lavaron said the ministry has the fiscal space to spend more and it would not affect fiscal discipline.

Limited fiscal space

Officials at the ministry, however, revealed that the government has only limited fiscal space for spending to boost the economy.

The fiscal discipline law caps quasi-fiscal measures or loans from state-owned banks at 30 per cent of annual budget and the current government has already used up 28 per cent, they said.

The government has set annual spending for 2020 at Bt3.2 trillion, up from Bt3 trillion for the 2019 fiscal year. The 2020 fiscal year starts in October.

Previous quasi-fiscal activities to finance government projects have played a key role in increasing public debt and public contingent liability.

Meanwhile, Somprawin Manprasert, chief economist and executive vice president, head of research division at Bank of Ayudhya Plc (BAY), is sceptical about how effective a new stimulus package can be.

It cannot do much as the world economy has been slowing down, he said.

BAY projects that Thai exports will contract by 1-1.5 per cent this year, down from the previous projection of 3.5 per cent rise. Economic growth will decelerate to 3.2 per cent this year against the previous projection of 3.8 per cent growth.

Some farmers and small businesses deserve public support, as they were affected greatly by the falling prices of farm products and export contraction, he said. He agreed that extra public spending would be appropriate but a policy rate cut would not work.

Athiphat Muthitacharoen, an economist at Chulalongkorn University, said he was worried about the impact of fiscal discipline due to many rounds of short-term economic stimuli.

While short-term measures might not help much, the government should think about long-term impact, he warned.

A feared price spike failed to materialise after Iran threatened on May 8 to reduce its pledge to the 2015 nuclear deal. Brent prices dipped below $70.50/barrel (Bt2,246.13/barrel), despite the move that adds to an already combustible Persian Gulf region where a fifth of the world’s seaborne crude is exported.

Tehran’s decision follows US President Donald Trump ending waivers for key customers of Iranian crude and guaranteeing the security of supplies through the Strait of Hormuz, the world’s busiest crude transit chokepoint. The sanctions clampdown is expected to reduce Iran’s exports of oil and condensate to 500,000 barrels a day (b/d) by the second half, down from 1.3 million b/d earlier this year.

Saudi Arabia, the UAE and Russia stand ready to make up for the lost barrels by potentially adding 970,000 b/d to supplies, according to S&P Global Platts Analytics. However, the growing number of potential geopolitical disruptions is a potential risk to supply. Platts Analytics expects OPEC’s spare capacity to fall by half to below 1 million b/d by the end of the year, leaving the group with little room to react should the situation in Venezuela, Libya or the Gulf deteriorate.

“This will make markets especially nervous given uncertainties in Libya and Venezuela, as well as an unsettling recent uptick in small-scale disruptions in Nigeria,” cautioned Paul Sheldon, geopolitical adviser at Platts Analytics.

Stocks are also looking tight. Platts Analytics forecasts total commercial oil stocks will fall by more than 400,000 b/d this year, with big drops expected in the fourth quarter leading to higher oil prices.

OPEC meets with its main allies led by Russia in late June in Vienna. By then a clearer picture of how tight the market could get later this year should emerge. Platts Analytics sees a chance of crude retracing back to $80/b by year end. Of course, failure to diffuse a trade war between the US and China, along with stronger than expected supply growth in the Permian could still dampen expectations.

Asia well-placed to replace Iranian oil

Meanwhile, Asian importers seem well-placed to make up for Iran’s lost barrels, despite grumbling about sanctions.

China was most vocal in its displeasure and categorically opposed the unilateral US action against Tehran. The world’s second-largest consumer of crude complained that its “cooperation with Iran is open, transparent, lawful and legitimate, and thus should be respected”.

South Korea, which has even more at stake given its alliance with the US, took a more conciliatory approach. Seoul said it plans to find ways to convince the US to consider extending the waivers.

However, Iran’s isolation shows the benefits for Asian customers maintaining a diversity of supply. Chinese refiners have been importing between 400,000 b/d and 700,000 b/d of Iranian crude, comprising a mix of medium and heavy grades. Iran mainly supplies medium and heavy grades, which are currently in tight supply and often available at discounted rates. It could get increasingly tricky to fill those volumes with grades from other suppliers at the right price.

Chinese refiners recently even tried a new medium and heavy grade from Brazil. Meanwhile, in India and Japan, refiners said they would aim to step up crude imports from countries such as Mexico, Iraq and the US to make up for any supply losses.

South Korea is also ready for the complete cut-off of Iranian crude and condensate supply from next month. The country’s refiners have already diversified their feedstock supply sources.

In a rare move, South Korea imported more than 1.6 million barrels of Ormen Lange and Snohvit condensate from Norway in the fourth quarter last year when Asia’s biggest ultra-light crude buyer completely stopped purchasing oil from Iran during September-December 2018, official government data showed.

South Korean refiners have also sharply increased purchases of US crude and condensate to make up for the decline in Iranian oil imports in recent quarters.

Seoul received close to 30 million barrels of US crude in Q1, up five-fold from the same period a year earlier, government data showed.

Besides the big importers, smaller Southeast Asian nations also look set to take US crude oil on a regular basis, with Vietnam and Indonesia making their very first purchase of light sweet WTI crude in recent weeks, signalling that the buyers are also keen to take advantage of favourable US-Asia arbitrage economics this year.

Contributed by Mriganka Jaipuriyar, head of news for Asia, S&P Global Platts.

The National Economic and Social Development Council  (NESDC) has been tasked with putting the team together with input from the Federation of Thai Industries (FTI) and the Thai Chamber of Commerce.

The team will also consider how Thailand can adjust its economy to cope with technological changes.

Somkid, after giving the guidance at a meeting with NESDC officials, said that Thailand had advanced five places, to 25th, in the IMD World Competitiveness ranking due to improved economic performance, government efficiency and infrastructure. But he added that the picture was not all rosy.

The Swiss-based International Institute for Management Development (IMD) grades 63 economies for their economic performance, government efficiency, business efficiency and infrastructure each year.

The challenge for Thailand is how to maintain its good position in the competitiveness score and increase this further, Somkid said.

Despite its improved ranking in economic performance and government efficiency, Thailand performed worse in business efficiency, particularly concerning productivity and efficiency, as well as on attitudes and values.

Thailand’s business efficiency ranking fell two places, to 25th, hampered by a decline in productivity and efficiency, from 40th to 43rd.

The attitudes and values of Southeast Asia’s second largest economy posted the biggest fall, to 26th from 17th. The country’s labour market also declined, to ninth from sixth place.

If these sub-factors continued to fare poorly in the rankings, Thailand is expected to perform lower in business efficiency in the future, the deputy prime minister said.

“The NESDC is an important agency that presents information and study results,” he said. “It must set up a team to discuss measures with the private sector, talking to the FTI and the country’s chamber of commerce in parallel with developing a workforce to match the targets for the country’s future development in regard to the quality of workers’ skills in order to promote industrial development and economic growth.”

Aside from the public sector, the private sector may have to drive the required investment, he said.

The country needs to pursue mega-investment projects as a means of gaining from the global economic recovery, he said. If Thailand has this infrastructure in place, the country will be able to accommodate private investment on the domestic front and from abroad.

Somkid also urged the NESDC to set up a committee to screen project proposals for transparency and compliance with the national strategy and the targets set for the country’s development.

The Fiscal Policy Office (FPO) of the Finance Ministry yesterday said the economy is expected to recover in the second quarter of this year from the first quarter, thanks to an improved month-on-month performance for exports in April.

Pornchai Triraveja, economic and monetary adviser to the FPO and its spokesman, said the April export figure still marked a 2.6 per cent year-on-year contraction and the figure in the first four months of this year shrank 1.9 per cent.

Exports in the second half of this year are also forecast to improve from the first half. The FPO is awaiting the Ministry of Commerce’s export figures before the office makes its economic review in July. Exports are a key determinant of the country’s economic expansion.

The FPO projects that this year the economy will grow 3.8 per cent, with exports expanding 4 per cent.

“The export sector is the only risk to this year’s Thai economic growth. We must closely monitor it. Thai exports are impacted by the global economic slowdown and the prolonged trade war [between the United States and China],” Pornchai said.

He said that the 2020 budget disbursement would not encounter difficulties if the bill for budget for expenditure is delayed.

According to the FPO, the Thai Regional Economic Sentiment Index (RSI) in May indicated economic expansion in all regions of Thailand – led by a gain of 70.4 in the North, 69.7 in the East, and 69.4 in the Northeast.