It is expected the project will help spur e-commerce growth, estimated at 10 per cent by the end of this year.

Surangkana Wayuparb, executive director at ETDA, said the agency will also enter a MoU with Srinakharinwirot University for the set-up of the e-commerce park in the premises of the university.

“The e-commerce park will be established at Srinakharinwirot University in an area of 1,000 square metres. The agency expects the park will play a part in boosting e-commerce activities , which is expected to hit Bt2.5 trillion by end of this year, from Bt2.2 trillion last year,” |she said.

The declines in the baht against the US dollar have spooked foreign investors, resulting in a sell-off of short-term bonds that has reached Bt81.9 billion this year, said Tada Phutthitada, president of the Thai Bond Market Association (ThaiBMA), yesterday. The currency’s depreciation has seen foreign holders of bonds with a maturity less than a year left with losing positions on their investments, Tada said.

In contrast to the pressure on short-term bonds, foreign investors have bought Bt84 billion in long-term bonds, resulting in net purchases of Bt2.1 billion – against their net sales of more than Bt190 billion in the stock market.

Foreigners have been investing in government bonds and central bank bonds, while shying away from corporate bonds.

“The bond market is expected to be subject to further volatility until the trade tensions between the world’s two largest economies ease,” said Tada.

The US government yesterday announced that it will impose tariffs of 10 per cent on Chinese goods in the next few months. The announcement sent Asian stock markets down sharply as investors worried about the escalating trade war. The US has accused China of practising unfair trade and, on July 6, slapped tariffs on a list of Chinese products worth $34 billion. Beijing has responded with tariffs of equal value on US imports.

The trade dispute, along with the projected further increases in US interest rates, has driven the US dollar higher against other currencies, including the baht, which has dropped 1.6 per cent this year.

Although interest rates in the domestic market are usually lower than the US rates, the real returns on bond investment are expected to be higher due to lower inflation, Tada said.

He cited as an example that on June 18, the yield on 10-year US government bonds was 2.82 per cent, compared with a yield of 2.79 per cent on equivalent Thai government bonds. However, the inflation rate in US was about 2 per cent, against the Thai rate of about 1 per cent, so the returns on investment to bond maturity in the Thai bonds are higher, he said.

Yields on two-year and 10-year bond Thai government bonds had increased gradually – at 22 and 25 basis points, respectively – in the first half of the year.

Foreign investors hold local bonds representing 8 per cent of total outstanding bonds – covering government and corporate bonds – worth Bt12.2 trillion, Tada said.

The ThaiBMA was not overly concerned about foreign investors selling short-term bonds, which were mostly issued by the Bank of Thailand.

The central bank issued short-term debt in order to draw back some of the excess liquidity resulting from the expansionary monetary policy that has kept interest rates low for a long time.

“The central bank may be happy about the outflows as it could reduce costs by reducing short-term bond issuance and the weakening baht would benefit exporters,” said Tada.

The ThaiBMA expects large firms will issue more corporate bonds in the second half of the year, after long-term bond issuance rose 1.4 per cent to Bt435 billion in the first six months of 2018. This would bring total long-term corporate bond issuance to between Bt760 billion and Bt800 billion by the end of this year. Last year saw record-breaking issuance of Bt830 billion.

Large firms are expected to take advantage of low interest rates and look for merger and acquisitions, Tada said. Short-term debt issuance was worth Bt1.5 billion in the first half of the year, up 30 per cent.

Thailand can depend on its savings, as capital outflows from the stock market would not have much effect on interest rates in the domestic market, said Tada, adding that investors could borrow more cheaply at home compared with US-denominated debt.

Thailand, with its large current account surpluses since 2006, could withstand capital outflows, in contrast with some other emerging economies that would need to start raising interest rates, Tada said.

The tariff, though would not take effect until September at the earliest, marks a dreadful escalation in international trade conflict.

With the details of the affected products being released, Tisco Economic Strategy Unit (ESU) assesses the potential impact of the trade war on the Thai economy.

First, we analyse the direct impact from the tariff on washing machines, solar cells, steel, and aluminum products on which tariffs are being imposed directly on the Thai exports into the US.

Then, we estimate the knock-on effects from the US-China trade war, in which Thailand could be caught in the crossfire as the country is deeply integrated into the Chinese supply |chain.

The direct impact is quite limited, in our view. The four products subject to US import tariffs added up to only $885 million or 0.37 per cent of Thailand’s exports in 2017. Factoring in the value-added to Thai GDP in the production of these products, the potential impact on GDP will be at the most 0.10%.

For the indirect impact, we assess the impact of US-China trade spat on Thailand’s economy by analysing the list of Chinese export products that would be subject to US import tariff.

The first $50 billion list will mainly affect Thailand’s exports of machinery, plastics and vehicles and parts. In 2017, Thailand exported around $8.8 billion worth of these products to China.

We use OCED data to estimate the extent to which China re-exports these products to US, and found that the amount of Thai exports which could be affected from the first round of US tariffs on Chinese imports would be about $590 million or 0.25 per cent of Thailand’s total exports. Factoring in the value-added portion of these products, the potential impact will be at most 0.06 per cent of GDP.

Lastly, we employ the same technique to estimate the impact of the newly proposed $200 billion list. The potential impact would be 0.6 per cent on exports, and 0.16 per cent on GDP.

All in all, we expect the impact of the trade war, both direct and indirect, to Thai economy will be quite manageable (1.2 per cent of exports and 0.3 per cent of GDP in total).

GDP growth is expected to remain strong in the rest of the year as the recovery in domestic consumption and the investment in infrastructure projects will more than offset the adverse impact from the global trade spat.

KOMSORN PRAKOBPHOL is Head of Strategy at Tisco Economic Strategy Unit. He can be reached via http://www.tiscowealth.com or komsorn@tisco.co.th.

The amount represents an increase from 2.25 billion pounds, announced by the UK Secretary of State for International Trade Liam Fox, on a recent visit to Thailand, and highlights the potential of UK-Thai trade.

“It is good news that the British government has offered a great opportunity for UK businesses to explore the Thai market by allocating a 4.5-billion pounds funding through the UKEF ,” Pisanu said.

This will not only stimulate the economic cooperation between the two countries, but has also come at the right time ahead of Brexit as it will help drive British businesses to look for future markets in other regions. “We are prepared to welcome all British friends to take their opportunities to invest in Thailand, which serves as a genuine gateway to other countries in Southeast Asia. We offer numerous business opportunities in our Eastern Economic Corridor (EEC) project with unparalleled investment privileges in 10 targeted industries. These industries are attractive to UK investors, he added

The Royal Thai Embassy in London will render all possible support to facilitate business decisions and successful operations of our British friends in Thailand, Pisanu said.

UK Export Finance is the world’s oldest export credit agency, with a track record of nearly 100 years of innovation, and provides overseas project sponsors with attractive long-term financing that makes sourcing from the UK more competitive.

Its support takes the form of UK government-backed guarantees on bank loans – in Thai baht or a range of other Asian and international currencies – or loans directly from the UK government.

UKEF can support a range of attractive financing options for buyers in Thailand, including repayment terms of up to 10 years (or more in some sectors), flexible UK and local content requirements, public-private partnerships, project finance and capital markets refinancing.

UKEF has a dedicated international origination network which works with buyers in Thailand and other markets across the Asean region to help them take advantage of the financing on offer from UKEF to support trade with the UK. Vomic Shah is the Regional Head for Asia.

Richard Simon-Lewis, Head of Origination at UK Export Finance, said that Thailand is an important trading partner for the UK, and we at UKEF are committed to supporting further growth in our countries’ relationship to our mutual economic benefit.

UK Export Finance is the UK’s export credit agency and a government department, working alongside the Department for International Trade as an integral part of its strategy and operations.

It can help buyers in Thailand to procure from UK suppliers that offer quality and innovation by providing attractive financing terms, borrow at competitive interest rates from banks with the benefit of a strong guarantee backed by the UK government – with guarantees available for loans in Thai Baht as well as a range of Asian currencies, borrow directly from the UK Government itself at competitive, fixed interest rates, and maintain flexibility, with finance that can also be used to buy local supplies or supplies from other countries, alongside UK supplies.

FAA downgraded Thailand’s aviation safety rating to Category 2 from Category 1, which results in a ban of Thai carriers from expanding current services nor adding new routes in the US.

The CAAT, which has raised its standard on FAA advice, in May submitted a report of its progress to the FAA asking for a re-evaluation. Chula said that FAA had replied that it would conduct the pre-audit on Thailand’s aviation safety standard in September. If after that process, it finds that Thailand has no need to make additional improvement, it will conduct the real official audit soon.

He is confident that such rating would be upgraded back to Category 1 within this year.

For the recertification with the AOC (Air Operator Certificate) by the CAAT under ICAO (International Civil Aviation Organisation) standards, 18 out of 20 carriers registered in Thailand and with international flights have already been recertified. Cula expected that the rest will be recertified in July.