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https://www.nationthailand.com/business/40014370

Spurred by growing domestic demand for electric vehicles, manufacturers in Japan and China are set to seek government subsidies to cut EV prices in Thailand, according to a Finance Ministry source.

Toyota is expected to join the Excise Department’s subsidy programme later this month, the source said.

“It will be the first Japanese car manufacturer to take part. This move is expected to prompt other carmakers from Japan and Europe to join so that they can avoid missing out on business opportunities,” the source added.

Chinese automakers Geely, Neta and Changan have also expressed interest in the subsidy programme and are in talks with the Excise Department, according to the source.

Meanwhile, Japanese carmaker Honda will likely postpone its participation until next year as it prepares its EV assembly operation in Thailand, the source said.

The Excise Department is offering subsidies ranging from 70,000-150,000 baht, depending on the size of battery used.

The subsidies are already being applied to cars offered for sale by Chinese brands such as MG, Haval and Ora – both completely knocked down (CKD) and completely built-up (CBU) models. Under the subsidy deal, carmakers can import CKD and CBU units for sale for two years. In the third year, they must make one unit in Thailand for every unit they import. That ratio rises to 1.5:1 in the fourth year.

Failure to meet those terms will be penalised with fines and additional import and excise taxes.

The Excise Department sees signs of increased interest in EVs among Thai consumers, said director-general Lavaron Sangsnit.

He pointed out that 3,000 EVs were reserved at the latest Thailand Motor Show, representing 10 per cent of all bookings made at the expo, which finished on April 3.

“This was a very good sign. We believe the momentum is quickly going in this direction,” he said.

The National Electric Vehicle Policy Committee headed by Energy Minister Supattanapong Punmeechaow will visit Japan early next month for talks with Japanese carmakers about potential investment in EV manufacturing in Thailand, Lavaron said.

Published : April 09, 2022

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https://www.nationthailand.com/business/40014347

Consumer sentiment in March dipped to 42.0, the lowest in six months, because of Omicron worries and the Russia-Ukraine war fallout, the University of the Thai Chamber of Commerce (UTCC) announced on Friday.

UTCC rector Thanawat Polwichai announced at a press conference the results of the survey on sentiment indices compiled by his university’s economy and businesses forecast centre.

Thanawat said the consumer confidence index in March was 1.3 points lower than February’s 43.3, and the confidence index has fallen for three months in a row.

The university explained that an index lower than 100 points showed weak purchasing power because of slow economic recovery.

Thanawat said the key factors that prompted consumer sentiment to fall were people’s worries about the Omicron situation and the fallout from the Russia-Ukraine war.

He said the high infection rates affected the tourism and service sectors, which have not recovered yet. The situation was aggravated by the fallout from the war that had caused oil prices to rise sharply, affecting the cost of goods manufacturing.

Thanawat said the rising oil prices and manufacturing costs had stepped up pressure on the recovery of the global and Thai economies and Thai exports, as a result consumer sentiment had dropped because people’s incomes could not match the rising cost of living.

He said the UTCC expects consumer sentiment to improve in May when the government’s measures to mitigate the people’s cost of living would take effect.

He said the UTCC still maintained its economic growth forecast at 3.5 per cent.

Thanawat said there were good signs that consumer sentiment would rise in the late second quarter because the Centre for Covid-19 Situation Administration has eased travelling restrictions on foreign arrivals since April 1. The CCSA lifted the requirement of an RT-PCR test before departure to Thailand. The relaxation of measures would help the tourism sector to start recovering and becoming a boon to the economy.

He said if the government continues the co-payment subsidy scheme for consumers in June, it would help the economy recover in the late second quarter.

The rector said it is expected that the number of Covid infections would rise to about 50,000 or 100,000 a day after the Songkran holidays, but the UTCC believes the government would not lock down the country again as it would hurt the economy.

He called on the government to relegate Covid-19 to an endemic in June instead of July since most people have already received booster jabs. He said the announcement a month ahead of schedule would help quicker recovery of the Thai economy and it would add about 0.1 or 0.2 per cent to the growth.

But if the government fails to announce Covid-19 as an endemic soon, Thailand’s economic growth would fall by 0.5 per cent, or about Bt70 billion to Bt100 billion.

Thanawat added that the UTCC also found the Thai Chamber of Commerce’s confidence index had dropped to 35.5, the lowest in four months. The index gauges the sentiment of the business sector and chamber members in all provinces.

Published : April 08, 2022

By : THE NATION

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https://www.nationthailand.com/business/40014331

Thailand’s sovereign credit has been rated at Baa1, or equivalent to BBB+, by Moody’s Investors Service, which maintained the country’s outlook at stable, Patricia Mongkhonvanit, director-general of the Public Debt Management Office (PDMO), said on Friday.

According to the Moody’s report, the affirmation of the Baa1 ratings reflects Moody’s expectations that Thailand will continue to display economic resiliency to future shocks, underpinned by its large and diverse economy and strong macroeconomic policy effectiveness.

“The rating also takes into account material downward pressure on the economy’s growth potential from rapid population ageing and likely long-term economic scarring from the pandemic,” said the report. 


“While Moody’s expects Thailand’s government debt to increase and remain markedly higher than pre-pandemic norms, leaving the government with weakened fiscal strength for some time, Thailand’s fiscal metrics will still be stronger than most Baa-rated peers. Further, Moody’s assesses it likely that the government will quicken its pace of fiscal consolidation in the next two to three years once the economic recovery takes hold.

“The stable outlook indicates balanced risks to Thailand’s credit profile. Thailand’s economic strength may benefit from productivity gains, including through the ramp-up of the Eastern Economic Corridor to a greater extent than Moody’s currently expects. By contrast, the economic and social costs of ageing and Thailand’s capacity to absorb them have yet to be tested,” added the report.

“Meanwhile, the authorities’ track record of effective macroeconomic policies, including prudent fiscal policies, despite noise in the political landscape, contributes to the stable outlook,” the report said.

“Moody’s expects Thailand’s real GDP growth to come in at above potential rates for the next two to three years, as the effects of the pandemic fade and the tourism industry is slowly recovering,” said Patricia.

“The rating agency has, therefore, projected the economy to expand by 3.4 per cent in 2022 and 4.8 cent in 2023, which is not far from the estimation of the Asian Development Bank, which recently forecast that Thailand’s GDP will grow by 3 per cent this year and 4.5 per cent in 2023.”

Published : April 08, 2022

By : THE NATION

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https://www.nationthailand.com/business/40014332

Finance Minister Arkhom Termpittayapaisith on Thursday dismissed concerns of six former central bank governors, saying the government has been using proper finance policies and the country still enjoys financial strength.

Arkhom was responding to six former central bank governors, who had expressed concern during a recent seminar that excessive spending by the government would expose the country’s financial status to risk. They had also criticised the government for using deficit budget for several consecutive years.

Arkhom defended the government, saying the current spending in comparison with revenue could not be considered excessive, arguing that the deficit ratio in the national budget had actually dropped for fiscal 2023.

“Anyway, a deficit in the budget is still necessary but we have reduced the ratio,” Arkhom said.

He said the Finance Ministry had to make sure that the policies would facilitate economic recovery.

“In the past, the central bank used to increase the policy interest rate once it saw signs of economic recovery but I have to thank the current central bank governor for understanding the situation [and not increasing the policy rate],” Arkhom said.

“The Covid-19 situation is not over yet. This shows that the fiscal policies are in line with the policies of the Finance Ministry.”

The minister said the government had to borrow to tackle the Covid-19 crisis during the past two years and the practice was similar to what was done during the financial crises in 1997 and 2009.

“Every crisis needs money, so the government has to take recourse to a deficit budget and this policy is used in every country,” Arkhom said.

The minister said the government had raised the public debt ceiling, as had been done in the past, but the ceiling would be lowered once the economy recovers.

The finance minister accused previous governments of failing to restructure the country’s tax base after they introduced policies to reduce tax rates, such as corporate tax rates, leaving the present government with inadequate revenue. He said the current government is trying to restructure and expand the tax base.

“In the past, we didn’t do this but the government’s expenditure has been rising from investments, such as investments for roads to connect to rural areas, to allow rural people to bring their products to markets.

“And fixed expenditure is also rising, especially spending for various welfare schemes. Now, we have to take care of the elderly as well, so we have to restructure the tax structure,” Arkhom added.

The minister dismissed concerns that Thailand would face stagflation, a scenario in which the country’s inflation rises while the GDP declines.

He said the country’s GDP is rising but the cost is rising as well. “So, the economy is expanding quantitively and it’s not a concern. We only have concern about inflation because the rising cost would slow down spending by consumers. So, we must be able to control the inflation,” Arkhom said.

He said the government would not launch the THB1,500 cash subsidy co-payment scheme again because the economy has started to revive and the people are regaining their purchasing power. Instead, the government would provide purchase subsidies to only vulnerable groups, such as the registered poor who hold state welfare cards.

Speaking at the same press conference, Krisada Chinavicharana, permanent secretary for Finance, said the country has been using a deficit budget for most of the past 40 years.

He said Thai governments had been successful in making a balanced budget for only two years in the past 40 years.

He explained that Thailand is a developing country that needed to invest in infrastructure, so it needed to use a deficit budget.

He said the government could still manage the public debt because the current ratio of public debt is 60.17 per cent to GDP, well below the 70 per cent ceiling.

He said the treasury reserve now stands at about THB580 billion and the government is expected to receive revenue of THB2.4 trillion at the end of the fiscal year and treasury reserves would remain at about THB500 billion.

Published : April 08, 2022

By : THE NATION