“The RCEP negotiations will be the key focus for 2019. Thailand will capitalise on its position as the chair the upcoming Asean summits to finish off the negotiations before the end of next year,” said Auramon Supthaweethum, director-general of the Department of Trade Negotiations,

Auramon was speaking yesterday at an event entitled Knowing Asean Understanding RCEP, co-organised by the department, which comes under the Ministry of Commerce, and Jetro Bangkok.

If negotiations are successful, the RCEP will be the largest multilateral trade pact in history – encompassing China, India, Japan, South Korea, Australia, New Zealand and the 10 Asean nations. The details of the trade agreement are yet to be concluded, but the primary focus is expected to be the lowering of trade barriers on goods. The combined gross domestic product of all the prospective RCEP members accounts for up to 28 per cent of global GDP, said Auramon, adding that the trade value of the RCEP nations amounts to as much as 30 per cent of world trade.

“For Thailand, as an exporting nation, the RCEP is an extremely important trading bloc. Currently, up to 60 per cent of Thailand’s total exports go to RCEP members.”

All prospective members of RCEP agree that it is important to conclude the negotiations before the end of this year, the trade official said. This is because every member recognises the importance of lifting trade barriers in a global trading environment that is growing more volatile and unstable, according to Auramon, citing the trade war between the economic superpowers as the key risk factor.

“Joining RCEP will allow Thailand to benefit greatly from free trade. This will, in turn, help us counterbalance the negative impacts of the US-China trade war, which is growing more and more unpredictable,” she said.

There will be up to four Trade Negotiation Committee (TNC) meetings between the prospective RCEP members in 2019 to discuss the details of the mega-trade pact. The details concerning the host nation and the date of the meetings are yet to be decided. However, Auramon said that Thailand is fully ready to host one of the upcoming TNC meetings.

The RCEP negotiations will cover 20 chapters of an agreement document, seven of which have been completed. Thailand aims to swiftly guide the talks for the completion of the remaining 13 chapters by the end of next year, Auramon said.

She said the department is confident that the new government after the February election will fully back Thailand’s plan to finish the RCEP negotiations before the end of next year.

“The benefits of joining a trade pact at this scale are clear. We are not worried that the new government will shift our current focus away from finishing the trade negotiations and positioning ourselves at the centre of RCEP,” she said.

Meanwhile, she said that a date for Thailand’s entry into he Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is indefinite, although the country fully intends to join the trade pact that currently consists of 11 countries, including Japan, Malaysia, Singapore and Vietnam.

“We are not deciding between joining the RCEP and joining the CPTPP as we see the benefits from joining both trade pacts, and look forward to making progress on both sides,” Auramon said. “However, we have more to clarity and more information on the progress of RCEP as we are in the inner circle and are leading the charge to finish the trade negotiations.”

One of the key challenges for joining the CPTPP involves the need to adjust certain regulations within Thailand, Auramon said. She identified one such area as changing government procurement bidding laws to allow for foreign firms to compete if the procurement reaches a certain value.

“All in all, joining RCEP is in line with the current government’s theme of ‘Advancing Partnerships for Sustainability’ for the Asean summits,” she said. “We will use our position as the chair of the coming year’s summits to advance the negotiations and aim to complete them by the end of next year.”

The collaborative network is part of a key initiative of the United Nations that has been established to drive Thailand towards sustainability goals by means of responsible business in line with global standards. Around 100 companies are expected to be registered in GCNT by the end of 2019.

Suphachai Chearavanont, president of Global Compact Network Thailand, said: “Global Compact is an important initiative set up initially in the United States under the auspices of the United Nations.

“It aims at enabling organisations worldwide to understand and adopt the sustainability principles to create impactful changes.

“Organisations that sign up to the Global Compact are committed to operating their business responsibly in accordance with four core principles encompassing human rights, labours, the environment and anti-corruption.

“For this reason, a number of leading corporates in Thailand that share the values have decided to join the membership of Global Compact Network Thailand.”

Ban said: “By assembling leaders from the Thai private sector to form a Global Compact network, the critical work that you are undertaking to alight your business with the ideals of the United Nations has my deep respect.

“Our world is going through pronounced changes resulting in elevated uncertainties and new risks. Keep working to make business a force for good. Together, we can respond to the urgency of our global challenges and construct a better tomorrow.”

GCNT’s operations will focus on encouraging the private sector to operate with responsibility and engage in strategies that correspond to the four core principles of sustainability.

The majority of activities initiated by GCNT will be training courses about the latest discoveries and global trends relating to sustainable development, knowledge-sharing seminars on topics such as child labour, and other activities that allow participants to share experiences and discuss ways to promote responsible business practices for sustainable development.

“We expect the GDP growth for 2019 to be at least 4 per cent. However, the economic growth for 2019 is expected to be slower than 2018,” Apisak said at an event organised by engineering faculty alumni of Chulalongkorn University on Tuesday night.

“The peak of the current economic cycle was during the first two quarters of last year, followed by an acute slump in the third quarter. Given that consumption and private investment are still continuously growing, we expect the economy to continue to grow in 2019, but at a slower pace.”

The first two quarters of this year saw growth of 4.8 per cent year on year. The economy managed growth of only 3.3 per cent in the third quarter and a recovery is expected in the fourth quarter, but not at the pace seen for the first two quarters, Apisak said at the Chulalongkorn event, the Engineering Dinner Talk.

Growth in exports is also expected to slow in 2019. This is due to the lagging negative impact of the trade war between the US and China, with some of the consequences to be felt next year.

“Many have suggested that Thailand can gain from the trade war through replacing Chinese goods in the US market and manufacturers moving their production base from China to Thailand. However, in the long-term, the trade war will only hurt the Thai economy,” the minister said. This is because Thailand is deeply entrenched in the supply chain, which is affected by the tariffs imposed by the two economic giants, he said.

At the event, Apisak addressed the relationship between the upcoming election and growth in foreign direct investment in the Kingdom.

“After talking to many foreign investors, they have said that they are holding off investing in Thailand until after the election. This is because they fear that political stability will be damaged as a result of the election,” said Apisak.

The final key factor likely to contribute to slower economic growth in 2019 is the decline in tourism. Visitor numbers have slumped significantly since a boat accident near Phuket in the middle of this year.

In August, 867,000 Chinese tourists visited the Kingdom, down 11.7 per cent month on month. In September, only 648,000 came, marking an even steeper 14.89 per cent fall month on month, according to the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB).

Apisak said the boat accident – which claimed the lives of dozens of mostly Chinese tourists – had led many Chinese to question Thailand’s safety standards, but it was not the only cause of the fall in tourism numbers.

“Tourism has also fallen as a result of external factors which we cannot control,” he said. “The slowing global economy has led key tourist groups visiting Thailand to decrease.

“The slowing of the Chinese economy as a result of the trade war and the weakening of the yuan currency have led to falls in the number of Chinese tourists globally.”

With the declines in exports and tourism, Apisak said investment in the Industry 4.0 policies championed by the government, with the Eastern Economic Corridor (EEC) as a major component, will be the key driver of growth in 2019.

“The EEC is expected to be a key focal point of investment in 2019,” Apisak said. “With strong private investment levels in 2018, we expect this trend to continue into next year. Public investment in infrastructure and transportation throughout the country will intensify in 2019.

“Meanwhile, foreign direct investment into the EEC is also expected to rise after the election in February next year.”

In marking the 160th anniversary of diplomatic relations between Thailand and Denmark with a discussion about future cooperation between the two nations, Wolffhechel, said they have a lot to gain from each other. Denmark has much to offer in the way of high technology, for example, while there are also untapped business opportunities in such sectors as food processing, tourism, clean energy and innovation.

There are more than 100 Danish companies now established in Thailand, he noted, and they employ more than 50,000 people.

Danish companies run many kinds of businesses in Thailand, including service and consultancy, machinery, manufacturing and engineering, transportation, logistics and shipping, healthcare and life sciences, energy and environment, as well as design and creative industries, according to the Danish Embassy in Bangkok. Danish exports to Thailand last year were worth Bt10.7 billion and Danish imports from Thailand topped Bt13.7 billion, resulting in a trade surplus for Thailand.

Apart from trade, the two countries could increase cooperation on sustainable development, climate change, education collaboration and environmental production, said Wolffhechel.

In the past Thailand and Denmark had many development projects in Thailand, with the Thai-Denmark milk project best know. The milk has become a strong brand here.

Thailand has quickly developed its economy and can now stand on its own feet, he said.

Wolffhechel said Denmark supports free trade and wants to reduce trade barriers between Thailand and the European Union, which counts Denmark as a member. “We all would like to see it happening. It is a process, there are some political issues to it about how soon Thailand returns to democracy. [When democracy returns] the EU would be ready to start the process to have a free trade agreement,” he said.

He said that there were technicalities involved and it could take a few years to get through the negotiations before a free trade agreement could be reached. He noted that Denmark and EU had developed from free trade and globalisation, and so have a great interest in [achieving] free trade with Thailand.

Among the Asean countries, only Vietnam and Singapore have so far signed a free trade agreement with the EU. The EU suspended talks with Thailand when the military overthrew the civilian government in 2014.

The junta lifted the political ban on Tuesday , paving the way for a general election on February 24.

Asked about his opinion about a trade war between the United States and China, Wolffhechel said Denmark, like Thailand, has a small and open economy and strongly supported free trade.

“The market is keenly watching what policies the political parties will present to voters, whether they are long- or short-term,” Amornthep Chawla, chief researcher at CIMB Thai Bank, said.

The National Council of Peace and Order lifted the ban on political activities yesterday.

However, Amornthep said investors might adopt a wait-and-watch approach on the next government and look at its policies before making new investments.

“If the next administration is a minority government, then it may find it difficult to implement its policies, which could have an adverse impact on confidence,” he said.

However, he is optimistic that the elections will boost confidence and the government will be able to negotiate free-trade agreements with countries that shunned Thailand after the 2014 coup.

Besides this, there are many other challenges awaiting the next government, ranging from industrial reforms to dealing with the widening gap in income.

Private consumption may slow down, and car sales may also drop next year.

Consumption by low-income groups has not yet recovered due largely to the slump in the prices of farm products. Farm products will continue to play a key role next year, in terms of spending by low-income earners.

Amornthep said the other big threat to the Thai economy next year is the impact of the US-China trade war, especially if it escalates.

China will probably import fewer Thai products if the trade tensions continue. Another factor that may affect imports from Thailand are China’s large stock of raw materials, such as rubber sheets. China’s gross domestic product (GDP) may expand between 6.4 and 6.5 per cent, compared to 6.7 per cent this year.

CIMB estimates that Thailand’s growth will be 3.7 per cent next year, less than the anticipated 4 per cent this year.

“Slower growth is not necessarily bad, but the key is whether the growth will be sustainable,” he said, adding that slower growth next year might be in line with a global slowdown.

“There are no outstanding factors to drive the economy next year,” he said.

He also predicted that the Bank of Thailand might start increasing the policy rate in March, and may do it again later to bring the rate up to 2 per cent from 1.5 per cent at present.

Amornthep also expects the US Federal Reserve to increase the rate twice next year from the previous market projection of three times.

Given such a scenario, capital should start flowing back to Thailand and other emerging markets, he said, adding that the baht might start strengthening to Bt32 against the dollar from Bt32.50 this year.

Foreign investors have pulled investments worth Bt280 billion out of the Stock Exchange of Thailand so far. He also reckons that the overall volatility of global financial markets will not worsen next year.

“The announcement to allow political activities to resume in the country is a milestone that will increase the confidence of investors in the Thai economy,” said Yunyong Thaicharoen, first executive vice president and head of Siam Commercial Bank’s Economic Intelligence Centre.

“The announcement itself will have minimal impact on markets or investor confidence in the economy, but the election will certainly have an impact on the market. Hence, the announcement to allow for political activities will have a positive impact on investor confidence in the economy, but the signs of rising in confidence will not be immediate,” he cautioned.

“Furthermore, this announcement means that political parties can now more openly share their policies with the public, which is expected to be watched closely by investors and those within the private sector,” he said.