The more active approach from the Ministry of Finance and 17 commercial banks in promoting the tax-free shopping comes after only 7,000 people registered to take part in the ministry’s scheme.

Lavaron Sangsnit, director-general of the Fiscal Policy Office (FPO), said the ministry was hoping that hundreds of thousand people would participate in the VAT refund scheme during the upcoming Chinese new year.

Aside from the 7,000 people that have registered, more than 15,000 shops have done so. Registrations opened on January 7 and will close on January 30.

 “Earlier, we had to concede that we conducted less public activities as we were setting up the system. One issue was how many debit cards could be used. Earlier, only card one was allowed,” he said, adding that 10 debit cards are now allowed.

Lavaron said that the 17 commercial banks will help by doing more to publicise the scheme and “we believe that more people will make registrations during the remaining seven days”.

He said that the registration is required due to the laws relating to the handling of personal information. For the holders of debit cards, their banks will separate tax |data from total expenses and send such data to the Revenue Department.

“We don’t want chaos to arise in project participation. But given the legal requirements for information disclosure, we have to ask the scheme’s participants to agree to the information disclosure,” Lavaron said. “And we insist that the registration will not be used for tax considerations.”

For the scheme, the participating shoppers will receive a 5 per cent VAT refund on purchases of at least Bt1,000 or through debit cards or QR code on spending of Bt21,400 per person for products and services from February 1-15. The refund will be made through PromptPay issuing identification cards by November.

“The reason for not making immediate refunds is that the state has not set a budget for it. Next fiscal year, which will start this October, is expected to have a budget of Bt7 billion for the refund,” Lavaron said.

Each registered person can select more than one commercial bank and can spend from more than one account number through debit card or QR code in each bank. Each participant can register no more than 10 account numbers.

Products and services excluded from the scheme extend from liquor, tobacco, oil and oil products to cars and motorcycles.

There are now doubts about the US economy, the one advanced country that has helped lift global growth over the past year. All this is happening amid the US-China trade frictions and broader concerns about the Chinese economy.

Although risks are rising, we expect the world GDP growth to slow, not collapse. We forecast global growth to ease from 2.9 per cent in 2018 to 2.6 per cent in 2019, then 2.4 per cent in 2020.

Slower export growth hit Europe and Japan in 2018, though the direct impact of US tariffs on global trade is only just starting to become apparent. The China-specific tariffs and associated retaliatory action have so far hurt US exports to China more than Chinese sales to the US. China has also been better at diversifying its export growth to more rapidly growing markets.

Soft landings in the US are rare following an interest-rate tightening cycle. After a decade-long expansion it is much more common to see at least a shallow recession. The US Federal Reserve always hopes it can tighten sufficiently to control inflation and unemployment and then ease quickly enough to prevent an outright recession. But gauging the appropriate degree of tightening is particularly problematic at a time of hefty fiscal stimulus and record-low unemployment.

The falling oil price has eased the inflation outlook and we currently expect the Fed to raise rates by a quarter of a percentage point in 2019. But as Washington’s fiscal stimulus fades and the impact of previous rate rises comes through, we expect a half-point cut in rates after mid-2020 to prevent the slowdown becoming a contraction. Money markets are no longer confident the Fed can deliver any rise in 2019.

The paramount concern about the possibility of a recession is what options central banks might still have left to respond.

Lower rates and quantitative easing (QE) by developed countries’ central banks were the response after 2008. However, central banks – particularly in Japan and the eurozone, with their zero rates – will be much more constrained this time, entering the downturn with already bloated balance sheets.

Attention would have to return to fiscal policy – ideally a global response like the one the G20 countries agreed in 2009. If the global economy finds itself teetering on the edge of recession in the next year or two, developed-world bond markets should not prevent governments from borrowing more. And some revival in investment is needed, particularly in Europe.

Governments should focus on projects that would ease private-sector bottlenecks and encourage business activity. For instance, higher spending on research and development and infrastructure might raise medium-term supply potential by boosting productivity.

But which sectors, in which regions, will be willing or able to take on another increase in debt? The fiscal stimulus and QE after 2008 saw public-sector debt rise as the private sector deleveraged. Next time, the US might not want to borrow more; China may not be able to, now that its large current-account surplus has disappeared; and the euro zone looks unlikely to have the political consensus or the institutions to deliver a big stimulus.

Contributed by JANET HENRY, global chief economist, HSBC

Though the air quality usually worsens to extreme levels this time of year, it is actually a problem that exists throughout the year.

In fact, air pollution has become one of the largest causes of death in modern society, In 2015, there were 3.2 million premature deaths in Southeast Asia, compared to the approximately |316,000 road deaths per year in the region, the World Health Organisation reported.

A major source of the pollution in Thailand is the heavy-duty diesel vehicles, which emit high levels of particulate matter (PM) and nitrous oxide (Nox). This problem can be eased by substituting the heavy-duty ones with the low-emission diesel vehicles available and used in several countries.

To enable a shift to a broader adoption of this cleaner technology, stronger emission standards are required from the Pollution Control Department (PCD).

Scania, a Sweden-based manufacturer of buses, heavy vehicles and diesel engines, is urging the PCD to increase the emissions standard for heavy-duty vehicles from the current Euro 3 to Euro 6. Increasing the standard to Euro 6 will effectively reduce the emission of PM and NOx by 90 per cent.

Setting a higher emissions standard and the resulting reduction in air pollution will not only give Bangkok citizens cleaner air and improved health, it will also boost the city’s reputation among the 20 million tourists visiting every year. Plus, it will prove that Thailand is serious about its quest to be recognised as the automotive hub of Asia.

Other Asian countries have already recognised the urgency to improve air quality and are rapidly improving their emission standards. India, for instance, plans to introduce its own version of Euro 6 (BS 6) next year, as is China (China 6a). South Korea and Singapore have already implemented Euro 6 – the standard for new vehicles in Europe since 2013. Now Thailand has an opportunity to participate in this movement and set a clear timeline for the introduction of Euro 6 emission standards in the transport sector.

Of course, there is a cost to a technology shift like this.

The vehicles are more expensive and refineries need upgrading to lower the sulphur content of diesel below 10 ppm. However, with less air pollution, the cost of healthcare can be expected to drop. According to a Kasetsart University |study on pollution-related health |costs in 2017, every microgram of |PM10 beyond the safe limit costs Bangkokians up to Bt18.42 billion in medical expenses.

However, the expenditure on cleaner air will increase lifespans, which in itself is invaluable.

The government can use subsidies, a scrappage scheme, taxes and other financial controls to support the shift and see this as an investment in the people’s health.

Furthermore, improvements to export opportunities and Thailand’s reputation for innovation are other positive effects that can be expected.

Scania has set its strategy to lead the shift to a sustainable transport system and hopes to collaborate with the government to boost the quality of life for Thais.

STEFAN DORSKI is managing director at Scania Siam Co Ltd.

The SEC is expected to spur 5 per cent annual gross domestic product growth for 10 consecutive years.

Deputy Prime Minister Nattaporn Jatusripitak said that the SEC would span the four upper southern provinces of Chumphon, Ranong, Surat Thani and Nakhon Si Thammarat, impacting the lives of some 3 million people.

The SEC will also draw 1.2 million tourists per year, a Bt200-billion increase in investment in the manufacturing sector which will be upgraded to high-tech and environmentally friendly.

The SEC aims to be Thailand’s western gateway, which will be connected within the area, with the South, the East’s special zones and with South Asia by land, air and water.

Commercial airports in the area will be developed to accommodate at least 10 million passengers per year per airport.

The National Economic and Social Development Board (NESDB) has outlined four dimensions of development for the SEC. The first dimension involves the development of 10 projects worth Bt49.2 billion in the Western Gateway to connect coasts along the Gulf of Thailand, coasts along the Andaman Sea and South Asian countries. The projects include improvement of the Ranong airport and port.

The second dimension involves 31 projects worth Bt39.5 billion for improvement of Chumphon airport and the Royal Coast project on the Samut Songkram-Phetchaburi, Prachuap Khiri Khan-Chumphon-Ranong routes for tourism.

The third dimension is to develop 32 projects worth about Bt6.49 billion for bio-based and processed agricultural industry. Centres for economic aquatic animals and rubber innovations will be set up.

The fourth dimension is to promote 38 projects worth Bt7.12 billion for green culture smart and liveable cities.

At yesterday’s meeting, the Cabinet also gave the nod to eight quick-execution projects worth Bt2.68 billion. These include a Bt70-million infrastructure and marketing promotion project of the Ranong port for the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, the Bt158.2-million Ranong airport improvement project, and the Bt2.23-billion telecommunication infrastructure project for the Asean Digital Hub.

The remaining five projects worth about Bt448.69 million will be financed from the fiscal 2019 budget.

These range from a Bt132.8-million tourism development project for the Phayam island off Ranong, a Bt85.5-million mangrove project off Ranong, a Bt194.6-million integrated herb processing promotion project, a Bt12.64-million project for ageing people in Chumphon and a Bt20-million project to set up a research centre in the SEC.

As an established destination for inbound foreign direct investment, Thailand’s M&A will remain strong due to a number of tailwinds including the government’s “Thailand 4.0 Economic Plan”, the ongoing integration of the Asean Economic Community and the country’s continued development from an emerging economy to a stronger regional and global player.

The significant increase in outbound M&A by a variety of Thai conglomerates is further testament to the strength of businesses in Thailand. Those businesses remain attractive to multinational corporations from developed economies seeking growth, along with private equity funds that see Southeast Asia as an increasingly attractive destination.

The underlying macro-economic fundamentals are relatively healthy. supported by low inflation, a strong current account position, healthy international reserves and low external debt. The banking system is well capitalised, the unemployment rate remains very low, and public infrastructure investment and government spending are also accelerating. However, there are shortages of skilled labour in some sectors, especially as we move towards Thailand 4.0.

KPMG in Thailand drew valuable insights from many leading domestic and international clients who have recently undertaken M&A projects in Thailand – both successful and unsuccessful – who shared their insights on the process, challenges and opportunities via a survey and interviews. Some of the key takeaways bolstered our belief of a fast developing, increasingly active and sophisticated M&A market.

88 per cent of the survey respondents expected to make at least one more acquisition in Thailand within the next five years, with 65 per cent expecting to do at least two, and almost a quarter expecting to do more than six. Food and beverages, FMCG and industrial products were the key sectors of interest.

Based on the survey, Thailand appears to be more attractive than three of the “CLMV” countries (Cambodia, Laos and Myanmar), with Vietnam the only emerging Asean country seeming to compete with Thailand on overall attractiveness.

“We expect to see continued strong deal flows in financial services (driven by consolidation in the banking and insurance sectors and increased adoption of fintech), consumer and retail, technology, industrial markets and infrastructure,” said Ian Thornhill, deal advisory partner, KPMG in Thailand.

“Inbound investments are likely to continue to be driven by Private Equity and Venture Capital funds, along with strategic corporates and other global initiatives such as China’s ‘Belt & Road’ initiative.”

Existing cash and new debt raised inside Thailand were the most common methods of financing deals.

Financing for deals in Thailand is driven by 31 commercial banks, including domestic institutions, subsidiaries of foreign banks and foreign bank branches. Together, these entities account for 50 per cent of the total assets of the financial sector and have been a key source of funds in acquisitions. Larger listed corporates have also tapped the public debenture markets to raise capital for large deals, usually converting bridging funds to lower-cost debentures.

One of the main reasons for failed deals was an inability to mitigate and/or negotiate due diligence findings.

Over 45 per cent of respondents cited that due diligence findings also created issues and delays in completing successful deals. Willingness to negotiate, finalising the SPA and other contractual arrangements and aligning expectations around business plans were also identified as key factors impacting the closure of completed deals. Similarly, a lack of willingness to negotiate, and issues around communication, were cited as key reasons for failure on unsuccessful deals.

“Due diligence, in many areas, should be done carefully,” says a senior vice president of an upstream oil and gas company that was interviewed as part of the survey.

Deal times in Thailand may be quicker than expected.

For the vast majority of respondents, it took six months to one year to convert an investment idea to a completed deal. While the detailed execution phase of many transactions in Thailand (as in any emerging market) can be a drawn out and frustrating process, overall deal timeframes are not prohibitive and in our view will only improve over time. Patience and understanding are nonetheless critical to negotiating any deal in Thailand. Advanced planning for integration can mitigate the main post-deal challenges.

Cultural differences (71 per cent) and lack of strategic alignment (54 per cent) made up almost half of the main post-deal challenges identified by respondents. Followed by change management and the realisation of synergies, this highlights the importance of thinking about and planning for Day One and integration plans earlier in the process.

More than half of acquirers either did no integration planning or took only a very light touch approach.

Contributed by KPMG Thailand, http://www.kpmg.co.th.