Ministry officials met representatives of the Housing Business Association, Thai Real Estate Organisation and Thai Condominium Association and 19 financial institutions earlier in the day to brief them on the“Good house with down payment”campaign.

It is one of the government’s latest economic stimulus measures unveiled on Tuesday.

To reduce the cost of buying a home, the government will offer Bt50,000 cash-back per buyer on the down payment.

Buyers must earn no more than Bt100,000 a month and be registered on the Revenue Department’s tax database.

The campaign began on Wednesday and continues through next March.

Several banks have introduced their own down-payment measures to support the campaign.

Krungthai Bank president Payong Srivanich said it fully supported the ministry’s approach.

Speaking at a separate event, Finance Minister Uttama Savanayana likened the Thai economyto a sick person needing a remedy to prevent the condition getting worse.

The government must thus keep introducing economic stimuli, he said, but it must do so cautiously.

Bank of Thailand (BOT) Governor Veerathai Santiprabhob said the current interest rate spread — the difference between the bank’s lending rate and deposit rate — is about 2.7 to  2.8 per cent.

Compared to rate spreads  in the region, the interest rate spread in Thailand is in the middle range — not too large, or too small.

The interest rate spread in Singapore is much lower at 1.5 per cent.

Singapore’s banks have fewer branches, are widely adopting electronic services and most of their customers are big businesses, so lending risks are much lower, he said. This allows banks to offer lower lending rates, he said.

The BOT is not satisfied with the high spread, he said, adding, the high spread is derived partly from the higher operating costs as banks have to have more branches, he said.

Thai banks offer lower lending rates to affluent customers than they do to less affluent customers. Smaller customers also get lower deposit rates from banks as they do not have much bargaining power.

One solution is to open the market for non-bank operators to compete in financial services for retail clients. This could ease the financial burden on those who have little bargaining power, he said.

Many people use the minimum lending rate minus deposit rate, resulting in an interest rate spread of 6 per cent which is misleading because banks have other operating costs, he noted.

The BOT estimates that the real interest rate spread is between 2.7 and 2.8 per cent, he said.

The central bank has succeeded in lowering the fee for financial transactions after implementing the electronic transaction system. Earlier, banks did not charge affluent customers but they levied a fee of between Bt25- Bt30 per transaction on small customers. After implementing the electronic payment system, the fee has been cut substantially.

However, he admitted that it was more challenging to narrow the interest rate spread since lending to rich customers have lower risks while loans to less-affluent clients have more risks.

Naris Sathapholdeja, the head of TMB Analytics, said the net interest margin (NIM) of the Thai banking system was at 2.75 per cent  at the end of the third quarter, compared to 1.93 per cent in Malaysia, 1.88 per cent in Singapore and 2.01 per cent in South Korea.

Part of the issue is that Thai banks have loaned more clean loans (no collateral required).

Among large banks, Siam Commercial Bank has the highest NIM rate at 3.65 per cent , followed by Krungsri 3.47, Kasikornbank 3.31, Krung Thai Bank 3.08 and Bangkok Bank 2.26 per cent.

Delegates at the “ASEAN Market Attraction” forum organised by Handicraft and Wood Industry Association of HCM City (HAWA) and the ASEAN Furniture Industry Council (AFIC) agreed that the region boasts many great advantages in terms of materials, production, design, distribution and market size in wood and furniture processing.

Last year, the countries in the region exported US$12.1 billion worth of wooden furniture out of the global total of $150 billion, with the US, Europe, Japan, Korea, and Canada being their main markets.

Nguyen Quoc Khanh, HAWA chairman, said Vietnam, Malaysia, Indonesia, Thailand, and the Philippines are fast growing furniture suppliers with two-thirds of their production prioritised for export.

Their export to production ratio is more than double the global average of around 30 per cent with Southeast Asia’s wood and furniture exports meeting 5 per cent of demand in the US and 2 per cent in Western Europe, he said.

Nguyen Xuan Thuy, deputy director of the Ministry of Industry and Trade’s Industry Development Centre, said with a population of over 600 million, rapid economic growth and increasing income, Southeast Asia is a huge market with high demand and purchasing power.

“But intra-regional trade is still low compared to the potential. A lot of things are needed to improve [this].”

Khanh said: “While the ASEAN market is obviously large, the question is how to enable Vietnamese and regional enterprises to exploit that potential? The most convincing answer is creating a ‘Cooperation – Link – Alliance’ model between Vietnamese enterprises and between businesses and associations in the region.

“Vietnam’s wood industry is leading the region in terms of potential, but most businesses only focus on their own interests, brands and products without seeing the great benefits of building an industry brand.

“ASEAN countries compete with each other. Therefore, a larger common goal is needed to create cohesion, consensus and co-operation for mutual prosperity.

“A combination of everyone’s strengths and alliances with regional partners will create a value chain in the wood industry.”

Co-operation in the regional wood industry should be based on the potential of countries and the strategy of enterprises, he said.

There should be vertical links between strong producers like Vietnam, Indonesia, Laos, and Myanmar and those strong in trade, design and services like Thailand, Singapore, Malaysia, and the Philippines, he said.

The horizontal links should be between AFIC member associations in strategic orientations and alliances for sustainable development of the industry, he said.

With the impact of the US-China trade war, many buyers have shifted their orders from China to Southeast Asia.

In the first seven months of this year, Chinese wooden furniture and furniture exports to the US fell by 18.3 per cent year-on-year to $14.3 billion.

Khanh said: “Most US and European customers want to source goods from outside China, and this is a great opportunity for AFIC to have a common vision and undertake activities to seize this valuable opportunity and enhance the position of the region.

“We should link to supplement each other and become stronger to counterbalance and compete in other production markets such as China and Europe.”

Emmanuel Padiernos, president of AFIC, said in addition to gathering twice a year, “We have started organising trade missions to each other countries. I think trade missions play a very important role in developing intra-ASEAN trade across different segments.”

Delegates also suggested that Vietnamese and ASEAN businesses should embrace digital transformation to better meet customers’ demands and promote consumption of their products since customer buying behaviours and expectations have changed dramatically.

Tran Viet Tien of HAWA said the ASEAN wood industry has been responding positively to changes in global markets by introducing national mechanisms and policies and changes in business and production activities at the enterprise level.

“The highest and consistent goal of the ASEAN Market Attraction forum is to promote and support links between Vietnamese enterprises and between regional enterprises and alliances between member associations for a prosperous and sustainable ASEAN wood industry.” — VNS

During her visit, Lam will hold talks with Prime Minister Prayut Chan-o-cha and participate in a meeting of the Thailand-Hong Kong High Level Committee with Deputy Prime Minister Somkid Jatusripitak.

Lam and Somkid will sign six memorandum of understanding on strengthening economic relations.

The MoUs will pave the way to negotiations of a Thailand-Hong Kong free trade agreement, Korbsak said.

He said Hong Kong was interested in using Thailand as a gateway to CLMV countries: Cambodia, Lao, Myanmar and Vietnam.