But the key question is whether export recovery can be sustained in the coming quarters.
Although export’s share of gross domestic product fell from 59 per cent in 2011 to 54 per cent in 2015, it is still the largest engine of the economy, compared with 52 per cent for private consumption, and is five times the 11 per cent from rapidly growing tourism revenue.
From 2001-2012, the Thai economy followed an export-led growth strategy. Export value grew by 12.1 per cent annually and GDP expanded by 4.6 per cent on average. Then global trade experienced a major downturn.
From 2012-2015, global export value shrank by 3.8 per cent per annum. Thailand’s exports fared relatively better, but still contracted 2.2 per cent, with annual GDP growth softening to 2.1 per cent. The export engine had lost its traction.
That engine was restarted, however, in August and September this year, when growth turned positive at 6.5 and 3.4 per cent respectively. The improvement was broad-based, led by automotive products, electrical appliances, and electronics. Agricultural products also saw growth turn positive for the second time in two years, while oil-related items continued to recover in line with energy prices.
At Tisco, we believe the export recovery will be sustained in coming quarters, thanks to a continued rise in commodity prices, which would have two important effects on Thailand’s exports.
First, improving commodity prices will increase purchasing power of Thailand’s trade partners and thus demand for Thailand’s products. Commodity exporters – including Opec members, Brazil, Russia and South Africa, for example – accounted for 18 per cent of Thailand’s exports in 2015. However, they were responsible for 59 per cent of the export decline between 2012 and 2015, when oil and other commodity prices plunged.
As commodity prices have already hit bottom, we expect the income effect to edge up gradually going forward.
Second, around one-fifth of Thailand’s exports are commodity products or linked to oil prices. Therefore, a rise in commodity prices will directly benefit exports through the price effect. In fact, growth of Thailand’s export prices had already turned positive in July, and is still improving.
In a nutshell, we view the second half of 2016 as an inflection point for Thailand’s export-led growth trend.
In terms of overall economic outlook, export improvement will also help cushion against any slowdown in private consumption and tourism during the mourning period. Therefore, we expect economic growth to improve in 2016 to 3.4 per cent, from 2.8 per cent in 2015, and then gradually rise to 3.6 per cent in 2017.

Charnon Boonnuch is senior |economist at Tisco Economic Strategy Unit. He can be reached via |ww.tiscowealth.com or harnon@tisco.co.th.

However, banks, regulators, policymakers and law-enforcement agencies must now address the challenge of tackling money-laundering and the financing of terrorism.
One outcome is that some banks are choosing to de-risk their business by exiting correspondent banking in certain markets, with very real implications for the global economy.
With companies of all sizes now involved in global trade, the ability to make and receive international payments is essential. No bank has a global network that can facilitate cross-border payments and collections across all currencies, so correspondent banking fulfils a vital role.
However, there is growing evidence that increasingly stringent regulation, together with the cost and risk of compliance with these regulations, is resulting in some banks choosing to reduce their correspondent banking activities from specific client segments or entire markets.
This particularly applies to regions where banks believe the potential risks and costs of associated controls outweigh the strategic benefits of serving those markets. The Caribbean, East Asia-Pacific, Eastern Europe and Central Asia are the regions most affected.

Access problem: Banks are committed to the fight against financial crime and have invested heavily to reduce access to the banking system by its perpetrators. However, the complexity of compliance with diverse regulations across markets, uncertainty around interpretation and implementation, and risk of significant penalties in case of non-compliance is having unintended consequences.
Specifically, the impact of banks’ decisions to de-risk their business is that local and regional banks, and remittance providers, are finding it more difficult, if not impossible, to access international services. This, in turn, affects cross-border payments and collections and trade finance, endangering already fragile trade and posing a threat to financial inclusion.

IMF concerns: This issue is now being discussed at the top table of international finance. Christine Lagarde, managing director of the International Monetary Fund, has emphasised that regulators in developed and emerging countries have a role to play in halting the decline and helping banks to maintain their correspondent banking relationships.
She added that smaller countries needed to upgrade their regulatory and supervisory frameworks to enhance compliance with international standards, particularly in areas such as anti-money-laundering and anti-terrorism-finance compliance.

Positive steps: Despite challenges, the good news is that banks and key international bodies such as the Financial Stability Board (FSB) are united in their recognition and desire to maintain access to the international financial system for businesses and individuals in many of the world’s most vulnerable regions.
The FSB is working with the Basel Committee for Banking Supervision, the Committee on Payments and Market Infrastructures, the Financial Action Task Force, the IMF, the Legal Entity Identifier Regulatory Oversight Committee and the World Bank to address this issue.
Banks have a role to play by recognising the wider implications of their commercial and regulatory decisions to exit specific markets or activities. There are undoubtedly challenges. However, banks have an important role in collaborating to build consensus over controls such as “know your customer”.

How to support economic development: At Standard Chartered, we take our responsibility for managing financial crime risk very seriously. We have developed a strategy for correspondent banking called “de-risking through education”.
It focuses increasingly on how we partner with those clients who have the right intent but not yet the right tools or experience to build robust controls for financial crime risks. For example, we are actively promoting training and workshops for our clients through our “Correspondent Banking Academy”, as well as continuing to invest in due diligence and oversight.
The value of this approach is not simply to strengthen compliance, but also to build strong, open and pragmatic relationships with clients. We are also collaborating through industry bodies such as the Wolfsberg Group to engage in discussion as to what constitutes an appropriate level of transparency, how the regulators can support correspondent banking, and law enforcement derive benefit from financial intelligence.
These measures will help to make the financial system a hostile environment for criminals and terrorists, while supporting economic development that is important for the societies we serve.

DAVID HOWES, the author, is deputy head of financial crime compliance, Standard Chartered Bank.

Commerce Minister Apiradi Tantraporn yesterday said the government had agreed on a measure to absorb a combined 12.5 million tonnes of paddy rice from the market by providing soft loans for farmers, cooperatives and rice traders.
The package is aimed at delaying sales of new-crop rice and keeping the output in stockpiles during the main-crop harvest season, which runs from early November through to March.
The government will allocate Bt85.91 billion in soft loans for traders to purchase paddy rice and stock the produce for between two and six months, with this part of the package targeting 8 million tonnes of rice.
The Bank for Agriculture and Agricultural Cooperatives, meanwhile, will provide soft loans for farmers and cooperatives to purchase rice at no lower than Bt10,000 per tonne, with farmers receiving Bt1,500 in price compensation for produce that is stockpiled in rice barns.
This part of the package targets another 2 million tonnes of rice.
Lastly, the government will provide a soft loan for farmers’ institutes to purchase rice from their members with a view to processing and adding value to the rice. This measure targets 2.5 million tonnes of paddy rice.
Moreover, the government will facilitate business-matching for farmers to meet with millers in 42 provinces, and will promote rice sales via a number of methods, including government-to-government (G2G), business-to-business and business-to-consumer, the minister said.
To promote G2G sales, the ministry will conduct missions to many rice-import markets, starting with Malaysia early next month, followed by Indonesia, the Philippines, China, Iran, Iraq and African countries.
Missions to Hong Kong, Europe, the Middle East, the United States and Canada will continue throughout next year, Apiradi added.
The government will also encourage more rice consumption, promoting healthy and gluten-free options, as well as promote rice and specialty rice grains as gifts for special occasions.
The Commerce Ministry has also joined hands with modern traders such as UK-Based Tesco with a view to encouraging Thai rice sales at their outlets worldwide, she said.
Meanwhile, the Thai Rice Exporters Association expects overseas shipments of about 700,000-800,000 tonnes this month and next, due to G2G contracts with the Philippines and China, while more orders have been placed for Thai rice – albeit not for large volumes – to African markets.
Charoen Laothammatas, president of the association, said a steady flow of other overseas orders had been placed, although they were not for big lots.
Foreign demand is mostly for Hom Mali rice, following by white rice and parboiled rice.
However, prices of Thai rice have declined slightly in the world market as the Kingdom enters the new harvest season, he said.
Thai rice is currently quoted at US$369 (Bt12,928) per tonne, compared to $371 last week, he said, adding that this is however still higher than Vietnamese and Indian rice, which is quoted at $350 per tonne.
In the first nine months of the year, Thailand exported 6.85 million tonnes of rice worth $3.08 billion, for a year-on-year increase of 3.7 per cent in volume, and 1.6 per cent in value.

According to October’s economic forecast, this year’s growth will be in a range of 3.0-3.5 per cent, he said. Last year’s GDP growth was 2.8 per cent, said Krisda, who also acts as director-general of the ministry’s Fiscal Policy Office.
The government’s budget disbursement has accelerated, particularly on road systems, water management projects, and the urgent phase of the transport-infrastructure project, he said.
The country has also seen a sharp rise in the number of tourists, and this could boost expansion of the tourism-related industries, he said.
Private consumption will likely continue its rise from the previous year in light of increases in income and employment in the service sector, while private investment is expected to make a recovery thanks to low interest rates and the progress of government projects, he said.
However, Thailand is still expected to see export contractions due to economic slowdowns in trading-partner countries, he said.
This year’s headline inflation is forecast at 0.4 per cent with an expected range of 0.1-0.6 per cent after a recovery in domestic demand, and is expected to remain low, following world crude-oil prices.
Next year’s GDP growth is expected in a range of 2.9-3.9 per cent from consistently increasing government expenditures, particularly for new transport-infrastructure projects and expected increases in farm income, which could boost private consumption, he said.
Transport-infrastructure projects expected to commence in the latter half of 2017 include railway double-tracking and urban rail projects.
Exports next year will likely gain from expected expansion in Thailand’s trading partners and depreciation of the baht, Krisda said.
Headline inflation is forecast at 2.1 per cent in 2017 with an estimated range of 1.6-2.6 per cent on the back of likely rises in crude-oil prices and a weaker baht, he said.

UK developers have always been keen on the Thai market and have promoted their projects here for three to four years.
However, the market was not that active and the project choices were limited until the electorate voted in June for the UK to leave the European Union.
UK developers are now capitalising on the current situation by becoming increasingly aggressive in overseas marketing.
Since the Brexit vote on June 23, CBRE has hosted up to five London property exhibitions and seminars for Lincoln Square, One Nine Elms, Lillie Square, Centre Point and Hampstead Manor.
With Thai buyers’ interest clearly on the up, more developers are planning marketing campaigns and roadshows here.
Centre Point was marketed to Thai buyers twice last year and has grown in popularity in the local market following the Brexit vote, with the number of apartments sold to Thai nationals in the development having doubled.
A range of projects is being exhibited, from the most prestigious addresses in the heart of London’s West End, such as Centre Point and Lincoln Square with prices ranging from Bt1 million to Bt1.9 million per square metre, to Fulham Reach, which is located on the fringe of London’s Zone 1 with a more affordable entry price of Bt580,000 to Bt870,000 per square metre.
The typical budget for Thai buyers is 1.5 million pounds, or about Bt64.5 million and above per unit.
This proves the market has the purchasing power and willingness to pay, so long as buyers find the right property in the right location.
Local buyers are now also opting for larger two-bedroom units, instead of entry-priced studios or one-bedroom units.
The favourable exchange rate plays a key part in the buyers’ budget, as they can afford a higher price tag in pounds than they could with the same baht budget.
To put things in perspective, a 90-square-metre, two-bedroom unit at Lincoln Square cost around Bt100 million in April when it first launched.
In September, the same unit cost Bt92.9 million.
This is a significant saving for local buyers of nearly 8 per cent in just a few months, during which sterling dropped from Bt50.45 to Bt46.60.
If we compare last year’s exchange rate in October – Bt55.47 per pound – to where the UK currency had dipped even further to Bt43.90 as of last week, a saving of 20 per cent is immense for buyers.
With London prices at an all-time low, the opportunities are plentiful for Thai buyers to secure great deals.
At a time like this, developers are capitalising on the weak pound to aggressively market overseas, while buyers are taking advantage of the increase in options to choose from and the discounted prices.

The EIC said the Thai beauty-supplements market now was worth about Bt14 billion, or 21 per cent of the total dietary-supplements market consisting of health and medicinal, beauty, and performance-enhancing supplements.
The past five years saw impressive growth in the beauty-supplements sector, with a compound annual growth rate of 12 per cent between 2011 and 2015. Top sellers include supplements for skincare and for weight loss. However, in 2016 and 2017, the market’s annual growth rate is expected to drop to 8-9 per cent, and it is likely to decline further.
The EIC expects more challenges ahead for the beauty-supplements market, as market saturation among the main consumer group – mostly teenagers and first-jobbers (under 30) – has almost been reached. Skin-brightening or lightening supplements are particularly popular among this consumer group, as they respond to general trends presenting healthy and fit men and women with bright and light skin tones.
However, this consumer group’s spending on dietary supplements has almost reached the ceiling, considered by the EIC to be Bt1,000 per month, reflecting relatively limited income. They also tend to be healthy, and therefore are not prioritising health supplements.
It is worth noting, moreover, that their number is going to drop. In 2011, they made up 40 per cent of the Thai population. In 2020, however, this age group is projected to make up only 35 per cent of the population, with signs of further declines in the future. The potential for growth of existing beauty products accordingly will be limited by the decreasing demand.
The more promising consumer group, professionals and middle-aged adults (older than 30), are more interested in health than beauty supplements. A survey of this group’s consumer behaviour reveals that the demand for beauty supplements drops in reverse proportion to the increase in age, as the demand for health supplements rises.
The most popular supplements among this group are products for health, brain functions and eyesight, in that order. Reasons include work-related stress, lack of rest, and eye strains from overuse.
This finding clearly indicates that this consumer group tends to become more concerned with health than with beauty as they age, corresponding with another result of the EIC’s survey: Regardless of gender, they are more inclined to exercise to stay healthy.
The survey further reveals that more than 45 per cent of supplement buyers among this age group are spending less than Bt1,000 per month on the products, although they have the potential to spend seven times that.
“We can surmise that today there is still no clear winner in the supplements market as there is no product that can fully satisfy the demand of this consumer group,” the EIC survey report said. “Future growth in the market therefore will depend on how much sellers can directly produce the right product to match customer needs.”
In the medium and long terms, the EIC recommends that sellers of beauty supplements prepare for future challenges and look for new opportunities for growth. If sellers still continue to offer the same old products, they will only face fiercer competition amid declining growth, since their main consumers like to try out new products and follow new trends, as can be seen in the current trend for natural-extracts supplements. For the continual expansion of their businesses, supplement sellers should try to reach consumers with high spending potential (older than 30). This group promises a bigger market, likely continual growth, and significant demand, the EIC said.

The resumption of normal programming with commercials will follow the conclusion of the 30-day mourning period for the media industry after the death of His Majesty the King.
The request to resume normal programming was raised yesterday by representatives from digital terrestrial TV broadcasters.
In response to the request, Natee Sukonrat, chairman of the broadcasting committee at the National Broadcasting and Telecommunications Commission, said he would raise the matter for consideration at a meeting on Monday.
“If the panel agrees with this request, it will also implement it for radio broadcasting services,” Natee added.
TV and radio stations suspended their commercials and top-rated entertainment line-ups after a government request to pay tribute to His Majesty the King Bhumibol Adulyadej, who passed away on October 13.
The broadcasting committee, which is playing the role of coordinator between the government and radio and TV operators over the matter, understands the tough situation the operators are in. Therefore, on Wednesday the panel made a decision at a special meeting to ease some restrictions to help financially struggling digital-TV operators.
Under the newly revised guidelines, radio and TV stations will be able to announce the names of advertisers and sponsors or display the logos of sponsors while broadcasting for the rest of mourning period.
Last week, the broadcasting committee decided to grant them greater freedom to show prime-time dramas for children and families and paid commercials, but TV stations must strictly abide by the guidelines imposed by the watchdog.
Despite the greater flexibility, TV channels and the advertising agencies are still hesitant about broadcasting ads under these unique conditions.
Chalakorn Panyashom, chief operating officer of Workpoint Entertainment, the operator of Workpoint TV, said some major advertisers were apparently confused about what to show, and his station felt the same way.
“Some advertisers decided to replace their planned ads with a message of condolence over the death of Thailand’s revered King. The ad replacements have been in effect since Saturday,” he said.