The National Economic and Social Development Board (NESDB), in keeping tabs on the superpowers’ dispute, flagged the risk that the United States could, in the next three months, impose its threatened tariff increases on automobiles imported from China. Such an action could broadly affect automobile supply chains, Thossaporn Sirisamphan, the NESDB secretary-general, said.

Thossaporn said that the board has been monitoring the trade war and, based on US President Donald Trump’s recent statements, the conflict will likely be prolonged.

The concern is that, within months, the US Commerce Ministry will prepare its review on the automobile industry and if it deems that it has been threatened or affected, more trade retaliation could be directed to China, Thossaporn said. That spells a renewed risk to associated industries in the automobile supply chains worldwide, he said.

He said that NESDB has been monitoring this dispute closely, while attempting to provide guidance for the private sector on the risks that loom.

Chen Namchaisiri, an adviser to the Federation of Thai Industries (FTI), said that the trade war, Britain’s exit from the European Union and Trump’s proposed wall on the Mexican border have been affecting the Thai private sector. Chen also cited the baht’s appreciation as hurting businesses.

The trade war has been putting the global economy at risk and if it drags down Chinese economic growth to less than 6 per cent a year, the volume of global trade will be reduced.

If the United Kingdom leaves the European Union without an exit deal, there will be risks to the economies of the UK and the Europe due to a large number of their connected businesses and transactions as well as to the global economy, Chen said.

The US Congress has been unable to reach a legislative solution to funding border security, resolving immigration issues and funding Trump’s campaign promise of building the wall. “The impasse could again lead to another government shutdown. On the domestic front, the stronger baht has affected exporters,” Chen said.

“The trade war has generated more impacts to Thai business operators. Despite orders having been received from China over earlier previous periods, the impacts will be felt later if China is unable to export products and then Chinese orders will be cancelled

“Now, Thailand is adjusting its manufacturing to produce more diverse products with higher quality. But the problem is the sharp appreciation of the baht to 31 per US dollar.”

Chatchai Payuhanaveechai, the president of Government Savings Bank, said that a decision by the Bank of Thailand’s Monetary Policy Committee to leave the policy rate unchanged at its last meeting could prevent further baht appreciation.

Even though the prospects for exports may not be so bright this year, there are signals that tourism is increasing, and the bank expects economic growth will be 4 per cent this year. Growth would be constrained by the trade war, Chatchai said.

Somprawin Manprasert, executive vice president at Bank of Ayudhya, said that the economy is believed to be facing pressures from strains in the global economy and is forecast to grow 4.1 per cent this year. Export growth is tipped at 4.5 per cent amid the global economic slowdown, lower purchasing power and a withdrawal of investment.

Prinn Panitchpakdi, chief of CLSA Securities (Thailand), said that the baht’s level now does not reflect the country’s economic structure and the currency should have posted stronger gains.

In the long term, the baht should appreciate to 25-28 per to the US dollar; market intervention had kept it from reaching those levels, he said, suggesting that exporters should not rely on the baht for their competitiveness. They should, rather, improve product quality, penetrate new markets and target groups of customers, he said.

Banjongjit Angsusingh, director-general of Department of International Trade, said that the Ministry of Commerce is targeting export growth of 8 per cent. The department plans to promote the country’s export, highlighting quality, standards and value-added dimensions, but it also wants business operators to expand their investment overseas.

Thanavath Phonvichai, director of University of the Thai Chamber of Commerce’s Centre for Economic and Business Forecasting, expects that small and medium-sized enterprises (SMEs) will improve as a result of increased crop prices and tourism in light of the encouraging US-China trade negotiations and a likely improvement in the Thai economy after the election.

“We are confident that SMEs will gain from these positive factors, which could support this year’s economy,” he said. “We forecast this year’s GDP (gross domestic product) to expand 4-4.2 per cent. SMEs will likely grow more, in the range of 4.5-5 per cent, due partly to last year’s low base.”

He said at a seminar by the National Economic and Social Development Council yesterday.

However, pressured by the trade war between the US and China and the likely global economic slowdown, exports are estimated to grow 5-7 per cent this year, compared with the 6.7 per cent export increase achieved last year, the peak private-sector grouping said.

Growth in gross domestic product (GDP) for last year is forecast to come in at 4.1 per cent.

The JSCCIB expressed concerns over the baht’s seeming upward trend in the first half of this year, warning that exports will be affected if it continues to appreciate.

The currency strengthened 3.4 per cent against the US dollar in January as the greenback depreciated. The baht had the second highest bump among regional peers in the first month of 2019, behind the Indonesian rupiah at a 3.7 per cent appreciation.

With respect to the other major economic indicator – tourism – the number of foreign tourists is expected to rise in 2019 at rate close to last year’s 7.5 per cent growth, with visitor numbers expected to rise from major markets including China.

Other factors to be monitored include Thailand’s election results, the establishment of a new government, progress in the superpowers’ trade dispute, uncertainty over Britain’s exit from the European Union and the baht’s movements.

On the credit front, the Bank of Thailand’s Monetary Policy Committee (MPC) meeting yesterday voted 4 to 2 to maintain the policy rate at 1.75 per cent, according to MPC secretary Titanun Mallikamas.

Two members voted to raise the policy rate by 0.25 percentage point from 1.75 to 2 percent. One MPC member was unable to attend the meeting.

In deliberating their policy decision, the committee assessed that the economy would continue to gain traction on the back of domestic demand despite a slowdown in external demand.

Headline inflation was restrained by lower energy prices and subject to increased downside risks, while core inflation would edge up in line with previous projection. Overall financial conditions remained accommodative and conducive to economic growth.

However, there were risks to financial stability in the future that warranted close monitoring. The committee viewed that the current accommodative monetary policy stance had contributed to the continuation of economic growth and was appropriate given the inflation target. Thus, most members decided to keep the policy rate unchanged at the meeting.

The two dissenting members viewed that the economy had continued expanding around its potential, and that overall financial conditions would remain accommodative to economic growth despite an additional 0.25 percentage point increase in the policy rate. Hence, their voted to raise the policy rate in order to curb financial stability risks.

The economy is projected to continue to gain traction although the external demand might slow down. The committee viewed that “accommodative monetary policy would remain appropriate in the period ahead, and it would continue to monitor developments of economic growth, inflation, and financial stability, together with associated risks.”

  The Stock Exchange of Thailand (SET) Index ended January at 1,641.73 points, a 5 per cent increase over December’s mark.

In late January, the Election Commission (EC) announced that the long-awaited election will be held on March 24.

“The key domestic factor push?ing the level of investment in Thailand’s capital market is the clarity on the election date,” Soraphol Tulayasathien, senior executive vice president and head of corporate strategy division for the SET, said yesterday at a press conference.

Soraphol told reporters that the external risk factors remain the same as in 2018, consisting of the US-China trade war and the prospects for the US Federal Reserve to increase interest rates.

“However, the Feds announced towards the end of last year that they will take a more careful approach to their monetary policy, and we have since seen a rebound in the level of investors’ confidence, leading to increased investment in January,” he said.

Soraphol sees the SET Index rebound in January as a positive indicator that the exchange will start to recover from the fund out?flows trend in 2018, which saw a 10.8 per cent index decrease year on year.

SET president Pakorn Peethathawatchai is also looking for post-election stability.

“In the upcoming months, the prospects for the stock market hinge on the stability in the road towards the upcoming election, as well as the level of post-election political stability. Furthermore, we will also have to keep an eye on the developments of the trade war as well as US interest rates,” said Pakorn.

Soraphol said the January fund flows into the SET reached $214 million (Bt6.68 billion). This marks a significant improvement after the SET saw a negative flow through?out the four quarters of 2018.

The liquidity of the Kingdom’s stock market also improved in January, seeing an increase in the level of daily trading from Bt42.057 billion in December last year to Bt48.582 billion. Of the total daily trading in January, Bt5.708 billion was from proprietary traders, Bt6.241 billion from local institutions, Bt18.866 billion from foreign investors and Bt17.766 billion from local investors, according to figures from the SET Market Analysis and Reporting Tool (SETSMART).

The level of foreign investment resurged in January, increasing by up to 6.8 per cent month on month. Pakorn cited the strengthening of the baht, as well as the prospect of the Bank of Thailand increasing interest rates in 2019, as the key pull factors for foreign investors.

Thailand is the regional leader in the total value of initial public offerings so far in 2019, coming first in the Asean region with $150 million in share sales in January. It was followed by Indonesia at $75 mil?lion, Malaysia at $25 million and Singapore at $9 million, according to the SET.

The US S&P500 gained 8 per cent in January, the best January gain in more than 30 years.

Propping up the market is the relentless flow of good news such as a dovish signal from the US central bank that it will be “patient” in raising interest rates, the progress in US-China trade negotiations that fuel hopes of reaching a trade deal before the March deadline, and the rapid 20 per cent rebound in oil prices this year.

Gauging from the recent price action in stocks, bonds and exchange rates, the financial markets appear to be pricing in the most optimistic outcomes. The heightened optimism leaves little room for a positive surprise.

As far as the Fed’s dovishness goes, the futures market is pricing no further rate hikes in 2019. Bond traders even envisage a rate cut in 2020. Expectation of an ECB lift-off is also being put off well into 2020.

The US-China trade agreement also appears to be fully-priced in as the Yuan strengthened to hit 6.7 per dollar, the level last seen in July 2018 when the US proposed a 10 per cent tariff on $200-billion (Bt2.26-trillion) worth of Chinese goods. The actual outcome is far from certain as differences remain on several key issues, including the Chinese government subsidy in hi-tech industries. The development in the legal case against Huawei could also further complicate the negotiation. High hopes aside, recent macro readings are painting a bleak picture for the global economic outlook. The Purchasing Managers’ Index (PMI) suggests China’s manufacturing sector has plunged into contraction. PMIs in Japan and Europe showed that growth has ground to a halt in January. Export numbers were also flashing red with China, Japan, Thailand and Korea seeing negative export growth in December.

With expectations running high, the stock market may be setting itself up for big disappointment. Given the soft economic data, the stock market rally is more likely to soon run its course rather than to carry on.

Contributed by KOMSORN PRAKOBPHOL, head of TISCO Economic Strategy Unit (ESU).

Last year, French investments in Thailand totalled Bt8 billion, ranking the third-largest investor from Europe after German and the Netherland.

Most of the investments were in the auto assembly, aircraft-parts, and medical equipment sectors .

“They are also keen on the maintenance and assembly of airplanes and the rail system,” he said.

E-commerce

If you searched “top 5 countries for the highest internet usage in 2018”, in which position would you expect to find Thailand?

According to Digital 2018 global review, on average, Thai people spent around 9.38 hours per day on the internet. This gave Thailand first ranking for the highest internet usage in the world.

Moreover, the internet penetration rate here is high relative to neighbouring countries and continues to increase. A study from Internet World Stats indicated that around 57 million people or 83 per cent of Thailand’s total population used the internet in 2017. Over half of them are using it for online shopping.

In 2018, e-commerce businesses in Thailand enjoyed 8.8 per cent growth, and were valued at Bt3.06 trillion, according to ETDA. Driving the growth is the ease and shortened time required for online shopping. People can filter what they want and compare prices – all within a search lasting just a few minutes and so saving time and travelling costs. Additionally, e-commerce can deliver to customers rare items from far away or hard-to-access sources.

Digital Marketing

Due to the proliferation of e-commerce and a shift in customer behaviour, the consumption of traditional channels, such as TV commercials, has been decreasing. Meanwhile, digital-channel consumption – such as YouTube, Facebook and Instagram – is taking their place.

In the era of Thailand 4.0, our digital ad-spending will see much faster growth. Our current spending on digital ads is just 0.4 per cent – or 10 times lower than in the US where it accounts for 4 per cent of e-commerce revenue.

Therefore, marketing strategies need to keep up with the pace of digital trends and the shift in Thai behaviours. Although it seems on the surface that businesses could benefit more from promoting their brands on digital ads such as through social media, in reality businesses can’t win the jackpot just by picking the right channel alone. The key success factor is to also concentrate on customer experiences. Ambassador Consulting found that 71 per cent of customers are likely to recommend a brand to others if they had a good customer experience on social media services. Additionally, 29 per cent of customers who are ignored on social media are more likely to turn to competitors instead, according to Sprout Social. In this case, chatbot can be used to ensure real-time responses.

To maximise customers’ satisfaction and minimise time wasted on searching, personalised content is really important. However, customers’ privacy should be ensured during data collection processes for personalisation. If privacy is not ensured, customer will avoid sharing information publicly.

Cybersecurity

The cybersecurity industry is on an upward trend in Thailand 4.0 due to the heightened risk of cybercrime associated with increased business digitalisation. It is inevitable than an increase in cyberattacks will occur, along with resultant huge fines and damages.

Mordor Intelligence predicts that the global cybercrime market, which was approximately Bt3.3 trillion in 2017, will grow at 15 per cent CAGR from 2018 to 2023, reaching about Bt7.6 trillion in 2023.

In Thailand, according to Thai Tech, victims of cyberattacks lost approximately Bt1 billion in 2015. Hence, enterprises need to prepare and invest in security systems to stay out of trouble.

In particular, there is a need to focus on data breaches, one of the most crucial issues in cybercrime. In Europe, the GDPR (General Data Protection Regulation) law protecting data of EU citizens was launched in May 2017. Under this law, Facebook could be fined Bt51 billion in the event of a data breach of over 50 million accounts. The regulation deliberately includes fines against firms that failed to take sufficient action to prevent a data breach.

Cybersecurity is critical because the cost of cyberattacks is not limited to the monetary impact on profits, but rather includes reputation damage as well as sustainability.

We’ve looked at the three rising stars of business in 2019. In particular, the e-commerce market and digital marketing compare to offer huge opportunities for growth for Thailand in comparison to developed markets such as the US. Moreover, the cybersecurity business will also enjoying rising demand since Thailand is one of the world’s top targets for hackers. To push these businesses forward towards global competitiveness, the public sector has a probably role to develop and facilitate digital-related processes, as well as regulations, at the same pace as the private sector.

Views expressed in this article are those of the author and not necessarily of TMB Bank or its executives.

Contributed by CHANIPUN CHATRUNGRUEANGCHAI.

She can be reached at tmbanalytics@tmbbank.com

The world’s top 250 retailers generated aggregated revenue of US$4.53 trillion (Bt141.83 trillion) in fiscal 2017, representing composite growth of 5.7 per cent, according to the Deloitte Global report “Global Powers of Retailing 2019”.

“The global economy is currently at a turning point,” said Deloitte Global chief economist Ira Kalish. “Until early 2018, it displayed strong growth. With inflation accelerating in major markets, governments making shifts in monetary and fiscal policies and most emerging markets experiencing significant currency depreciation, the global economy will slow down in the near future.

“For retailers, this will mean slower consumer-spending growth, higher consumer prices and disrupted global supply chains.”

In Southeast Asia, retail growth is likely to continue to be driven by the consumer’s ever-growing demand for convenience.