Thai exports of completely-built-units (CBU) in April dropped 7.52 per cent year-on-year to 67,114 vehicles .

Almost all destinations saw declines in Thai car exports, except for shipments to Australia and the Middle East, said Surapong Paisitpatnapong, spokesman of the FTI’s Automotive Industry Club.

In the first four months of the year, Thailand’s CBU exports dipped 0.23 per cent to 366,955 units with a total value of Bt185.2 billion, down 2.46 per cent year-on-year.

On the production front, Thailand’s car manufacturing in April increased 11.47 per cent year-on-year to 150,242 cars, mainly due to a 9.37 per cent rise year-on-year in pickup production for exports, a 26.99 per cent increase in passenger car for the local market and an 18.74 per cent increase in pickups for domestic distributions.

Total car production went up 5.52 per cent year-on-year in the four-month period to 711,729 units.

Local car sales climbed 8.7 per cent year-on-year to 86,076 in April, thanks to economic expansion, growing consumer demand , new car models, continued public investment in transportation infrastructure, private investments and growing tourism, Surapong said.

In the first four months of this year, domestic car sales increased 10.5 per cent year-on-year to 349,625 cars.

Supant Mongkolsuthree, FTI chairman, said that the Thai Industries Sentiment Index in April fell for the first time in four months to 95.0 from 96.3 |in the previous month as |manufacturers accelerated |their production in March to compensate an expected drop in production in April due to long holidays.

However, manufacturers are concerned over a possible drop in purchasing power as result of droughts, export contraction and the local political situation.

The April survey was conducted on 1,213 business operators in 45 industries.

The three-month Thai Industries Sentiment Index in April also declined to 101.9 from 104.2 in the previous month with manufacturers troubled by rises in production costs, baht fluctuations and the US-China trade war.

 Lee Quane of ECA International said the MyExpatriate Market Pay report reflected Thai economic growth

He said: “The Thai economy has continued to see an upward trend in recent years, with a steady and sustained increase in overseas business – and consequently, expatriate workers – to the nation.”

“In the strengthened demand for expatriate-standard accommodation has, in turn, resulted in higher wages and benefits as increasing numbers of higher-skilled employees move to Thailand.”

Elsewhere in Asia, expatriate pay packages in Singapore rose by US$13,163 in 2018 to US$236,258, including an average cash salary of US$90,170.

When considering the cost of an expatriate package, companies need to factor in three main elements: the cash salary, benefits – such as accommodation, international schools, utilities or cars – and tax.

To assist companies relocating staff with benchmarking their packages against the market, ECA conducts its annual MyExpatriate Market Pay Survey of pay levels for expatriates, including benefits, allowances, salary calculation methods and tax treatment.

“Expatriate pay packages in Singapore increased across the board in 2018, with salaries increasing by nearly US$5,000 and benefits going up by US$6,400 on average,” said Quane. “However, with minimal increases in personal tax and extremely low tax-related costs as compared to most of the other locations in our rankings, Singapore sits at the 19th position globally. This is good news for companies with employees currently living in Singapore, as the relatively high cash salary and benefits and low taxes result in less expense for employers when relocating staff to the country.”

Hong Kong’s expatriate pay packages continued to grow in 2018, with the average package costing companies US$276,417, including an average salary of US$86,984. The overall expatriate pay package in Hong Kong has risen by US$7,902 since last year, with increases to salaries and benefits making up the vast majority of the rise.

Quane said: “After a slight drop in the average expatriate salary in 2017, the overall pay package in Hong Kong increased significantly in 2018. Salaries rose slightly by an average of just over US$1,500 while benefits, including additional expenses on top of the basic salary such as school fees or transportation costs, increased by over US$6,000. The benefits offered as part of an expat’s pay package have always been high in Hong Kong as the small nation continues to be attractive to companies and expatriates alike. Such high costs in expatriate-level accommodation, education in international schools and other expenses result in Hong Kong being significantly more expensive than most other locations.”

Meanwhile, Japan is no longer the most expensive location in the world to send expatriates, after being overtaken in the rankings by the United Kingdom.

“Despite an increase of over US$30,000 to the average expatriate pay package from 2017, Japan has dropped back into second place in our rankings after overtaking the UK in 2017. Although sending a mid-level overseas employee to Japan would now amount to US$386,451, the cost is still US$35,347 behind the total cost of sending an expatriate to the UK.

“Although the overall cost of the pay package for an expatriate in Japan increased by an average of 8.5 per cent in 2018, Japan would most likely have remained at the top of the rankings if not for the significant rise in accommodation costs in the UK last year,” added Quane.

The pay and benefits package of an expatriate living and working in China saw a significant rebound last year, after falling in 2017. The average package is now valued at US$310,204 – an increase of over US$33,000. This pushes China up one place in the rankings to the third position.

Quane said: “Expatriates in China have seen a big jump after a bad year in 2017, which saw the value of the average package drop in all areas. The Chinese yuan experienced a better year in 2018 due to a stronger economy and currency, and has resulted in a considerable improvement in the pay package for overseas workers in China.”

Somchai Amornthum, executive vice president of KTAM, said that the deepening conflict between the economic giants had sunk stock markets worldwide, including in Thailand.

The fund company remains cautious on stock investments, and says it is keeping a close watch on the back-and-forth trade negotiations between the superpowers. Currently, there is a pause in discussions.

On the upside, interest rates are not on the rise, as they were last year and pressure to cut the rates has started, given the global liquidity to possibly support risky assets at a certain level, Somchai said.

The Thai stock market is expected to gain if the political situation is more certain and economic stimulus measures could follow after the formation of a new government.

MSCI’s rebalancing to include Thai stocks into its index could encourage new capital to flow into the Thai market, while low interest rates and high local liquidity will likely help sustain asset prices in the country.

The economy, which appears to have weakened in the first half of this year, will require close observations on its prospects for recovery in the second half, Somchai said. KTAM expects the economy to improve gradually, mainly from domestic consumption and investment.

The Stock Exchange of Thailand (SET) Index is forecast to rise gradually to 1,740 points, he said.

Yesterday, the SET Index rose 1.02 per cent to close at 1,626.91, with daily trading turnover of Bt50.93 billion.

The current prices of stocks are well below their fundamentals and Thailand still has stability in the economy, especially with low external debts, a healthy current account surplus and high foreign exchange reserves. Thailand’s political situation has become more certain.

The SET Index is not expected to see sharp falls, said Somchai, adding that the trade conflict between the US and China has given a chance for more investment in the country.

Given the very low possibility for a rise in US interest rates, in light of the trade spat, capital could move back to emerging-market countries including Thailand, he said.

KTAM is focusing on investing in domestic plays with gains from Thailand’s economic expansion and the recovery under way in consumption and investment. It is avoiding those stocks affected by external factors.

It could be an opportunity to accumulate risky assets when markets have sharply fluctuated with expected weight on high-growth markets, particularly emerging markets and developed markets that have already experienced corrections, such as the US, Somchai said.

Among this, China’s tech giants have caught the lion’s share of the headlines with the likes of Alibaba and Tencent Holdings entering the region, and JD.com investing in Thai online fashion brand Pomelo.

That China has begun to increasingly invest in Southeast Asia’s technology should not come as a surprise, given the commercial and manufacturing potential that Southeast Asia offers.

With more than half of Asean’s 650 million citizens younger than 30, its young and tech-savvy consumer base is open to trying – and buying – new things, preferably online or via mobile devices. Indeed, according to a Google/Temasek report, Asean’s digital economy is projected to exceed US$200 billion (Bt6.3 trillion) by 2025 and many Chinese companies are looking to capitalise on this potential.

On the manufacturing side, Asean has been perceived as a strong production option for multinationals given its role within existing supply chains, growing consumer base and strong trade and investment ties.

The rapid and all-consuming nature of digital and technology means that nearly all sectors are considered technology plays and opportunities – from medical to education to traffic. The sectors are only going to widen into areas like construction, real estate and logistics,

So, if 2017 and 2018 have been the breakthrough years, what’s next for China’s tech investment into the region?

An interesting space to look out for will be investment in tier-two tech players in Southeast Asia.

China is among the top three countries for venture capital investment in digital technologies, and Asean remains relatively under-represented in terms of startups, so the potential to scale up is huge. This is starting to happen with the likes of Malaysia-based Glueck Technologies – which develops sophisticated AI – and Singaporean e-grocery site RedMart – having both received substantial investment from mainland investors.

Another avenue could be Asean’s Smart Cities Network, which aims to use technology to improve urban planning in areas like transport management and other utilities across 27 Asean cities. With more than 500 smart city projects underway, China has the largest number of smart cities in the world and certainly has the experience to make a meaningful contribution.

We’ve begun to see this already. In Malaysia, Kuala Lumpur signed an agreement in January 2018 with Alibaba’s cloud service, “City Brain”, to work on traffic management, town planning and incident response. In Thailand, Chachoengsao province is likely to host the smart city for the smart infrastructure development in the Eastern Economic Corridor (EEC) in collaboration with China and Japan. The government plans to further develop 30 smart city zones in 24 provinces this year and extend its target to 100 zones in 77 provinces by 2020.

A third area could be improving Asean countries’ ability in global supply chain sectors like electronics and automotive. Chinese businesses want to see Southeast Asia position itself as a viable alternative for lower-end production, but the region cannot expect a wide-scale widening of supply chains to the region unless production technology and capacity increase. A clear example is Chinese carmaker Geely being able to drastically cut production costs at Malaysian carmaker Proton through technology transfer.

Asean’s urbanisation, digital adoption and consumer growth make it an attractive investment destination. However, its geographic diversity, ease of business and different foreign investment laws can sometimes make it a tough nut to crack. Despite this, Chinese companies have signalled their intention to expand, and Asean seems keen to reciprocate. For example, driving the digital agenda is the focus of Thailand as part of its chairing of Asean in 2019.

The digital marketplace is both an opportunity and a challenge to businesses, as it brings both customers and competitors to corporate doorsteps.

Investment and growth-hungry local companies are alive to the commercial opportunities spinning out of Asean’s burgeoning digital consumers as well seeing the potential of China’s tech companies as potential partners or investors.

But the competition for funds is heating up.

Attracting investment requires setting up the right environment, culture, and mindset within the company to be actively seeking technology disruption before it gets thrown upon you. More specifically, this means adopting an open and digital-first mindset to engage the tech community, encouraging innovation and being open to new ideas. It also requires an openness to see investors as partners who can drive a business to higher levels of growth and performance.

For many companies, beefing up their technology credentials will not be a straight-line process nor will it be without its challenges, but it is important to start making the shift now to capitalise on these opportunities. After all, the digital arena – like time – waits for no one.

KELVIN TAN is the chief executive officer of HSBC Thailand.

“The escalation of the trade war is the key issue affecting the Thai economy,” NESDC secretary-general Thosaporn Sirisumphand said yesterday during a quarterly press conference. The adjustment to GDP forecast made in from February was made yesterday.

There are worrying signs that the trade war will become a long-term issue for the Thai economy, especially given the recent signs of escalation, he said.

Thosaporn was referring to the series of retaliatory tariff hikes by the two countries, which were ignited by the US imposing a 25-per-cent tariff on US$200 billion (Bt6.38 trillion) worth of Chinese goods on May 10.

In the first quarter of 2019, Thai exports contracted by 3.6 per cent year on year, causing the government advisory body to lower its export growth forecast to only 2.2 per cent for this year.

This would be a significant reduction in the country’s export growth, which last year achieved 7.2 per cent, according to the NESDC.

“Exports account for more than 70 per cent of the country’s GDP,” said Wichayayuth Boonchit, the NESDC’s deputy secretary-general. “Hence, the dampening export figures will certainly have negative impacts on the GDP growth this year.”

The trade war, Wichayayuth said, is negatively impacting Thai exports in three ways. First, it slows down global trade, leading to a general drop in shipment orders. Second, Thailand is in the supply chain affected by the tariffs imposed by the US, causing Thai exports of various electronic goods to also fall. Finally, the trade war creates uncertainty, which in turn discourages investment and damages consumer sentiment.

The delay in public investment could also lead to slower economic growth. The NESDC officials expect key infrastructure projects to continue throughout 2019; public investment in the first quarter actually contracted by 0.1 per cent year on year.

Wichayayuth said that thus far, the level of public investment had not been as high as expected. Furthermore, the NESDC is assuming that the new government will be established in May, and would require up to six months to implement a new budget after announcing its policies. That would delay the spending rollout. The NESDC is predicting that public investment will grow by 4.5 per cent this year compared to 3.3 per cent in 2018.

It is crucial that there be political stability after the new government takes office, Thosaporn continued.

“This way the new government can swiftly implement new policies and seek new markets for exporters to diversify their market destinations, maintain the level of tourism arrivals at 40.5 million this year and keep up public investment in mega-infrastructure projects,” he said.

As for the private sector, exporters should seek out key opportunities to replace Chinese goods in the US market, as they become less competitive due to the US tariffs. To do so, Thai companies need to find ways to reduce their costs to ensure their goods are more competitive when exported to the US, Wichayayuth added.