Meanwhile, Bank of Thailand’s assistant governor for corporate strategy and group relations, Chantavarn Sucharitakul said that overall, the trade war is having a net negative impact on the global economy and financial markets. This is because it will affect economic activities in three areas.

First, the slowdown of world trade will affect local economies that depend on external economies for growth such as that of Thailand, which depends on a combination of trade, foreign investment and tourism for growth.

Second, Thai products will be negatively affected by trade diversion as various Thai goods are in the supply chain that is being affected by the US tariffs on China. However, Thailand may stand to benefit from replacing some Chinese goods in the US market.

 Third, as a result of investment diversion there may be a relocation of production bases from China to Thailand and the Asean region as manufacturers in China aim to avoid the new rounds of US tariffs.

Overall, the trade war has made the global trade and investment environment uncertain. Therefore, the BOT will continue to evaluate the impact of the trade war on the Thai economy, Chantavarn said.

In just days, the US-China trade war has escalated after seemingly little progress was made on the trade negotiations between the two countries.

Last Friday, the US launched a new round of tariffs on Chinese imports, raising them from the previous 0-10 per cent to 25 per cent on US$250 billion worth of goods and products. These massive payments go directly to the Treasury of the US.

Meanwhile, on Monday, China retaliated by announcing its plan to increase duties on US imports valued at a total of some US$60 billion (Bt1.89 trillion), to begin in June.

To cap it off, the US administration yesterday morning released its plans to further increase tariffs on up to $300 billion worth of Chinese goods.

“The escalation of the trade war will have a significant impact on the Thai economy,” Aat told a press conference yesterday. “If China follows through and hikes their tariff on US goods in June, Thai exports may only grow by 0.5 per cent in 2019, down from our original forecast of 3.2 to 4.6 per cent growth.”

This marks a massive deceleration of exports growth compared to last year’s 6.7 per cent, which was already considered low compared to the Commerce Ministry’s year-on-year target of 8 per cent growth. Growth of 0.5 per cent would be the lowest level of export growth the Kingdom has seen since 2016, according to the director.

Thailand is negatively impacted by the superpower trade tensions because it is part of the supply chain affected by the US tariffs on China. The US tariffs target technological goods such as machinery parts, electrical circuits and auto parts that are manufactured in Thailand. These goods are then shipped to China, from where they are exported to the US after value addition.

Key exports to China which will face negative impacts from the trade tensions include rubber, chemicals, and automotive and parts. Meanwhile, exports to the US which are expected to reduce include fabric, and machinery and parts.

Furthermore, Aat predicted the Chinese Yuan would depreciate by up to 20 to 25 per cent to absorb the negative impacts of the US tariffs. “This will mean that Chinese goods will flood the global market, especially the Asean market, due to their cheaper price,” he explained.

“To cope with these negative impacts, Thailand must gear up its efforts to negotiate more free trade agreements (FTAs) with other countries. One such agreement is the Regional Comprehensive Economic Partnership (RCEP), which may help absorb these negative impacts to some extent,” Aat suggested.

Furthermore, Thailand should start targeting newer markets to diversify its export destinations. Aat pointed specifically to the export potential of the BRICS nations – Brazil, Russia, India and South Africa.

In the year’s first quarter, Thai exports were valued at US$61 billion, a 1.64-per-cent contraction compared to the same period last year.

Speaking at the TDRI annual conference, Somkiat said that the country’s entry into an ageing society has created both challenges and opportunities.

As the number of elderly increase, it reduces the number of working-age people and leaves fewer labourers entering the market each year, he said. As people get older, their productivity also falls with their ages, causing a significant impact on economic growth in the long run, and potentially shedding gross domestic growth by 0.8 percentage points annually. For example, if the economy had the potential to expand 3.8 per cent, actual performance would be only 3 per cent, he said.

He said statistics show that over the last six decades Thais have increased their lifespans, living about 4.4 months longer per year. Average life expectancy of Thais was 75.3 years in 2016. And it is projected that those who were born that year could live to between 80-98 years. The number of people aged over 100 years in 2017 were 9,041, and that number is expected to steadily rise over the coming years.

As people live longer, it would put pressure on the pension fund and if nothing were done, the pension fund under the Social Security programme would collapse by 2047, he said.

The proportion of the elderly aged 60 years and over accounted for 13.2 per cent of total population in 2010, and that would increase to 19.1 per cent by 2020, while the total population of children aged 0-14 years would then be at 16.8 per cent. The elderly would increase to 32.1 per cent of the total population by 2040, while children under 14 would be at around 12.8 per cent then. While the proportion of working age population aged 15-59 years old accounted for 67 per cent in 2010, they would be reduce to 64.1 per cent of in 2020 before further dropping to 55.1 per cent in 2040, according to the National Statistical Office.

Somkiat said the new government needed to tackle problems related to the ageing society. One solution is to cut the number of the annual conscription for the armed forces by half. Currently, the military drafts about 100,000 men to serve in the army. If the number could be cut half it could contribute six per cent to solving the age-related problems. Having a large number of military personnel draws vital labour resources from economic sectors. Another option is to increase the number of foreign workers by an additional 100,000 yearly, a move that would reduce the economic problem by 3.1 per cent. However, there would remain a drawback for increasing the number of migrant workers – their labour productivity is not as high as that of Thai workers.

The sustainable solution would be to employ increased automation to production, increase robotics in factories and employ artificial intelligence (AI) to production and services, he said. If technological investment increased by 1.1-1.6 per cent annually, or about Bt40 billion in 2020, the problem could be 100-per cent solved, he added.

Saowaruj Rattanakhamfu, a senior researcher at TDRI, told the meeting that the rate of adopting new technology in Thailand is quite low compared with competitors. Most factories are still employing a large numbers of workers to produce goods for the mass market. Factories were still in 2.0 while the government has been talking about Thailand 4.0, she said.

The advantage of having entered into an ageing society before other countries in Asean, is that Thailand could develop new industries and services aimed to meet demands of the ageing-society market. The domestic market serving that demographic is small, with the value of consumption by people aged 50 years and over estimated at Bt2.8 trillion, or 18 per cent of GDP in 2017. Therefore, Thailand needs to explore export markets for tourism and other services.

“Under the policy ‘From Local to Global by Marketing Innovation’, we aim to work with up to 57,000 SMEs throughout the year to empower them with the knowledge of how to increase their product value and survive in the digital technology by utilising e-commerce platforms,” DIP director-general, Kobchai Sungsitthisawad, yesterday told a press conference.

SMEs can now come to the DIP to seek advice on how to increase their online presence and shift from traditional stores to selling their products on e-commerce platforms, he said. The DIP will “coach” SMEs on the necessity of having an online presence in today’s market, increase their online presence through helping them create a website and Facebook account and, eventually, through helping establish an e-commerce account, Kobchai said.

“There are two key challenges in helping traditional SMEs shift to e-commerce. First, there are many competing e-commerce platforms that SMEs will have to get acquainted with. Second, e-commerce platforms may charge an entry fee of up to Bt50,000. Many SMEs still do not fully understand the opportunities that e-commerce bring, and hence some of them do not think that the fee is a worthwhile investment,” the director-general told reporters during a sideline interview.

Approximately 4,000 SMEs have been working with the DIP to increase their online presence since October last year, and 1,000 have already started to sell their products on e-commerce platforms.

When it comes to enhancing the country’s startup ecosystem, progress has been made on the Thailand Inno Space, an innovation hub for startups around the country to gather and exchange knowledge, as well as receive funding to do research and development on their products. Thailand Inno Space is modelled after Hong Kong’s Cyberport.

“Key parties from the private sector have agreed to jointly establish the Thailand Inno Space, which will be located in Rayong,” said Kobchai. “The Thailand Inno Space will also be expected to have a venture capital budget of around Bt500 million to fund startups in the country.

The key contributors are PTT Plc, expected to contribute Bt100 million, Thai Beverage Plc, expected to contribute Bt100 million, and CP All, expected to contribute another Bt100 million, according to the director-general. The DIP will host their annual Thailand Industry Expo event July 17-21 this year. Top SME and startup products will be selected for display at the event to increase their visibility and to attract funding.

The collaboration will feature a conference to exchange knowledge of the “creative economy” and promotional measures for Indonesian and Thai business collaboration. The objectives are to help creative businesses and industries in Asean to be competitive in the global market.

In addition, CEA is prepared to discuss lessons learned and the restructuring of national economic development in order to promote Thailand as an “incubator for creative industries” on the global scale.

The two agencies recently signed a Memorandum of Understanding for collaboration in the creative industry, at the Thailand Creative & Design Centre (TCDC, Bangkok).

Atchaka Sibunruang who chairs to board at Creative Economy Agency Thailand, said that many countries in the Asean region now see the importance of increasing the value of creative industries, which are a major cog in driving the national economy.

CEA saw the opportunity to strengthen capacities and was ready to upgrade Thai business sectors and creative industries to be competitive in the international market.

This collaborative project focuses on developing creative industries in both countries. The value of creative industries in Thailand is as high as Bt1.61 trillion, 13.18 per cent of gross domestic product, according to a 2014 report of the Office of National Economic and Social Development Council. The top three industries with the highest potential are fashion, design and broadcasting sectors, according to Atchaka.