The application will do away with the “middleman” to reduce costs and increase competitiveness of the traditional grocery stores through e-commerce, according to Commerce Minister Sontirat Sontijirawong.

“Our aim is to strengthen the resilience of traditional grocery stores, helping them grow within the new landscape of the local market,” Sontirat said.

The current problem with traditional grocery stores is that they are mostly small operators who are not able to purchase products in bulk, leading to high costs, which puts them at a disadvantage against modern convenience store chains, such as 7-Eleven, he said.

The new application will allow traditional grocery stores to cut out the “middleman” and purchase products directly from the suppliers without extra cost, says Sontirat.

Giant convenience stores, including 7-Eleven do not offer the cheapest products, but their popularity lies in easy access and presentation. By lowering costs, traditional grocery stores can survive in the market through offering cheaper products to their customers, he explains.

The ministry expects up to 100,000 traditional grocery stores to use the new application by the end of 2018.

The new application will also leverage the growing e-commerce industry in the Thai market to deliver products from suppliers to traditional grocery stores.

When asked about potential competition from international e-commerce or e-logistics companies that have established themselves in Thailand in the past decade, Sontirat said the Commerce Ministry welcomes all private e-commerce or e-logistics companies in the Thai market to develop their own services that address the needs of traditional grocery stores.

The goal of the application is not to make profit from the supply chain, but to introduce this new technological disruptor to support traditional grocery stores that are struggling in the market due to higher competition and rising costs, according to Sontirat.

The new application is part of the ministry’s efforts to launch new policies under the theme of “connectivity”, in line with the theme of the next Asean summit, to be held in Thailand.

The current government is undergoing a structural reform in order to boost support for the country’s agricultural industry, he said.

There needs to be more connectivity in information sharing and cooperation between different ministries.

For instance, the Commerce Ministry and the Bank of Agriculture and Cooperatives will jointly launch a project to promote the products of “Smart Farmers” in the local and global markets, he said without disclosing the launch date of the project.

In a press release from the company issued on Friday, it also forecasts the Stock Exchange of Thailand (SET) composite index reaching a record high of 2,000 points in 2019, bolstered by the upward investment cycle, sound economic expansion, a stable currency due to a strong current account balance, and the upcoming general election.

Pornthep Jubandhu, SCBS Senior Vice President, Investment Strategy Department, Research Group, said global equities have rallied continuously since they bottomed out in early 2016, providing investors with a return of more than 50 per cent.

Given the economic conditions, a crisis signal has not yet been found, particularly in Asian stock markets and including the Thai bourse, where stock valuation is more competitive than in the US stock market, the company said.

The macro statistic data released recently by the Bank of Thailand (BoT) shows local spending and investment continuing to increase robustly, with signals that Thailand is entering a new round of the investment cycle, driven by state-supported infrastructure investment, the continued push for implementation of the EEC, and the digitalisation of business organisations.

SCBS projects the SET might consolidate its position amidst external risk factors, but the index will eventually turn to rise based on domestic fundamental factors, which are expected to continue improving in 2019. The equity segment benefiting from an expected increase in capacity utilisation through private-sector investment and FDI will give sound returns based on fundamental factors.

Pornthep noted that the global economy has signalled a slowdown, but it is not critical as many have feared. The world economy is on a recovery path for the second half of the upward economic cycle as can be witnessed by the International Monetary Fund’s downward revision of the global economic estimate and its forecast of continued growth for the world economy, albeit at a slower pace following its peak in 2018.

Although the upward economic cycle has proceeded for a decade since the financial crisis in 2008, it is likely to go further because overall economies around the globe have yet to overheat and inflationary pressure remains insignificant.

Another signal that this upward economic cycle will last longer than usual is the very slow policy interest rate hike by the United States Federal Reserve. The US central bank spent up to three years deciding to raise the policy rate periodically by 2 per cent. Previously, it spent only one year doing that.

Simultaneously, the central banks of most major economies have not yet raised interest rates. The European Central Bank (ECB) is likely to raise the policy interest rate in the 4th quarter of 2019. The Bank of Japan has not yet slowed the purchase of assets concretely, while China has eased its austere financial measures upon concern the economy will be affected by a trade war with the US.

Currency fluctuations in emerging markets are another key risk factor that must be monitored. However, Pornthep said that he did not expect the problem will escalate because the currency volatility is due to specific factors in some countries which lack financial discipline and depend too much on capital inflow as a result of quantitative easing measures.

The economies of these countries might shrink when the US raises the interest rate. But for Thailand, the economy is unlikely to take the brunt of any currency fluctuation because the country has a large amount of international reserves, a small amount of foreign debt, a very high surplus in the current account balance, and a strong fiscal position.

SCBS also forecasts that the 4th quarter of 2018 will see Thailand enter a new round of the upward investment cycle. As of June 2061, FDI in the past 12 months totalled US$11.4 billion (Bt376.64 billion), the highest level since 2014.

More FDI is likely to flow into Thailand, driven by state-supported infrastructure investment projects, investment promotions under EEC-related projects, and the expected relocation of FDI into this region due to a production base shift from China upon concern over the trade war with the US.

In addition, capacity utilisation in Thailand surged to 68 per cent, the highest in four years, resulting in an increase in private-sector investment. More interestingly, the IMF made an upward revision of Thailand’s economic growth estimate this year and next year, while decreasing the global economic growth forecast.

With robust economic fundamentals, the company projected the SET index will hit an all-time high of 2,000 points in 2019 on an assumption of a price/earnings ratio of 15.6 times, bolstered by the upcoming general election and expected earnings per share growth of the market at around 8-10 per cent, in tandem with strong GDP growth.

Instead, the department plans to have factories adopt a self-declare approach under a reform expected to start late this year or early next year.

Industry Minister Uttama Savanayana said that the department will amend the Factory Act, B.E. 2535 to cancel the licence extension period to facilitate factories. About 60,000 factories nationwide are expected to gain from this planned move.

The legal amendment will go first to a meeting of the Cabinet and then to the National Legislative Assembly.

Meanwhile, the public sector will receive factory-related information that will be used in development of Big Data for the nation’s industrial development.

The department will team up with the Federation of Thai Industries (FTI) to help factories understand the self-declare approach as the planned cancellation of the factory license extension on a five-year basis will be a change in principle. Earlier, department officials examined the practice of factory licence extensions.

Once the legal amendment takes effect, factories will be required to follow the self-declare approach by showing their information – including matters concerning safety and the environment – to certify that their operations comply with the laws. Then, state officials or registered private factory inspectors will inspect the factories thereafter and certify the factories’ information.

This planned measure will facilitate factory operators and boost service efficiency, while reducing the waiting time for requests regarding factory licences as well as address complaints over a lack of transparency in the licence extension process.

Thongchai Chawalitpichaet, the DIW director-general, said that about 60,000 factories will be required to have their licenses extended on a five-year basis from 2019-2023. Once the Factory Act is amended and the new act takes effect, these manufacturers will not be required to seek license extensions for their plants. Under the change, the department will lose fee-based income in the range of Bt1,500 to Bt60,000 per factory.

The department expects the change will bring more convenience for factory operators. This benefit would outweigh the fee income lost, Thongchai said.

FTI chairman Suphan Mongkolsuthree said that the Ministry of Industry’s policy change would greatly benefit manufacturers.

China is committed to facilitating a strong partnership with Cambodia, Laos, Myanmar, Vietnam and Thailand (CLMVT), Yang Yang, counsellor for political affairs at the Chinese embassy in Bangkok, said yesterday at a seminar addressing the infrastructure-focused OBOR initiative and its role in the CLMVT subregion.

The OBOR initiative is an economic development strategy put forward by the Chinese government that addresses infrastructure needs and the development of trading routes covering more than 65 countries, including Thailand its near neighbours.

China will ensure that its investments that further the OBOR vision will also benefit the domestic policies and goals of each country in the CLMVT bloc. In the case of Thailand, it will gear its investment to support the government’s technology-promoting Thailand 4.0 policy and the development of the EEC, Yang said.

She cited planned investments in the manufacturing industry in Rayong province, which is part of the EEC. This is not only so that Chinese businesses can benefit from these investments but also to increase the production capabilities in Thailand, further supporting economic cooperation in the CLMVT subregion, Yang said.

Furthermore, China understands that agriculture is at the root of the economies of the CLMVT countries. Hence, it will further invest in the development of agricultural technologies in these countries to support low-income farmers, Yang said.

The total value of proposed investment both in Rayong and in agricultural technology was not disclosed at the event.

China’s investment plans in Thailand go hand in hand with Bangkok’s economic policy towards the Asean region disclosed at the seminar yesterday, which comes with a heavy emphasis on trade.

Push for connectivity

As the next host of the Asean summits next year, Thailand aims to push for more connectivity within the region, says Sakon Varanyuwatana, Thailand’s Vice Minister of Commerce.

“This includes encouraging the development of cross-border logistics to reduce transportation costs for exporting businesses within the region, and to improve trade regulations between countries to allow for more convenience in trade,” he said.

Thailand will also be putting more emphasis on small and medium-sized enterprises (SMEs) as their exports within the Asean region have been overshadowed by big businesses, despite SMEs making up more than 95 per cent of total businesses in Thailand, according to Sakon. Additionally, Thailand will push for the development of e-commerce businesses with the aim of increasing trade among the CLMVT countries.

In a separate event yesterday, Wu Zhi Yi, president of the Asian International Trade and Investment Association, said that as a result of the US-China trade war, China is looking to increase the value of trade with the Asean region in order to mitigate its risks.

“The trade war has led to an increased economic cooperation between China and Asean countries, which has always been strong. Furthermore, China has been the biggest trader with countries in the Asean region in the past nine years,” Wu said.

“In 2017, the trade value between China and Asean countries stood at US$514 billion, increasing by 6.6 times from 2003. The trade value between China and Asean countries in the first five months of this year stood at US$236 billion, increasing by 18.9 per cent compared to the same period last year.

“We expect the trade value between China and Asean in 2018 to be even higher than last year.”