Strong baht, external factors cloud prospects of Thai growth

[webfact]

Strong baht, external factors cloud prospects of Thai growth

By Wichit Chaitrong

The Nation

 

 

Foreign investment, foods, telecom and tourism are the main drivers of Thai economic growth this year, say business leaders while raising concerns over risks and challenges ahead.

 

WHA, a major industrial park operator in Thailand and Vietnam, has reaped much benefits from the recent wave of production base relocation from China to Thailand due to the US-China trade war, rising labour costs and regulatory issues, said Jareeporn Jarukornsakul, chairman and Group CEO of WHA Corporation Plc. 

 

“Manufacturers in China have faced rising labour and regulatory costs for many years while the recent trade dispute between US and China served as a catalyst for plant relocation,” she said at an annual  seminar hosted by the Economic Reporter Association on Wednesday (January 15).

 

Although the US and China have reached a first phase trade deal, conflicts  between the world’s two largest economies is expected to continue due to their rivalry for global leadership, she said.

 

The trade dispute combined with Thailand’s Eastern Economic Corridor project helped pull in foreign investment last year after the country had gone out of favour for foreign direct investment for many years, she said.

 

WHA’s industrial land sales have risen substantially in recently years. Between 2018-2019, Chinese investors outpaced their Japanese counterparts in  buying industrial land parcels from the WHA Group, she said.  

 

WHA's industrial land sales rise

 

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Key manufacturing moving to Thailand are electronics, auto and consumer goods  , she noted. However, auto and auto-parts manufacturers prefer Vietnam as their first destination, followed by Thailand among Asean countries.

 

For the bigger picture of manufacturing relocation out of China,  26 plants have moved to Vietnam, eight to Thailand, four to Cambodia, three to Malaysia and two to Indonesia, she said.

 

 If the 10 Asean nations and countries in Asia Pacific could sign a free trade deal under the Regional Comprehensive Economic Partnership (RCEP) next month as expected, it will accelerate foreign direct investment in Thailand and the region, she said.  However, Jareeporn said, investors and exporters have raised concerns about the strengthening baht.

 

“Rising baht value has increased investment cost in Thailand while exports face fierce competition,” she pointed out. Thailand also faces the challenge of producing more skilled workers to meet the demand of foreign investors, she added.

 

Visit Limlurcha, president of the Thai Food Processors’ Association, said the value of food exports is expected to expand between 2 to 5 per cent this year after contracting 1.3 per cent last year, the deepest drop in four years.  In 2019, the export value of farm products contracted 2 per cent while processed food exports grew 2 per cent. Appreciation of the baht and intense competition from neighbouring countries were the main factors, he said.

 

He said exports to China and the US expanded last year although the two countries were engaging in a trade war. China imported more chicken from Thailand due to the outbreak of swine African flu in the country.

 

Value of food exports amounts to Bt 1 trillion annually compared to Bt 2 trillion in the domestic market. The home market could expand further given the Thai population of 70 million plus the annual arrivals of 40 million foreign tourists, he said. 

 

 

Thai export performance this year is closely linked to the US-China trade relation, and the US-Iran conflict. Prolong conflicts could dampen consumer confidence and spending, he noted.

 

Drought may adversely affect production of farm products this year, Visit said.  

 

Tourism Council of Thailand’s president Chairat Trirattanajarasporn, said  the industry is expected to expand this year. The government has estimated foreign arrivals to reach 41 million this year, up from 39.7 million last year. However, local hotels and tour operators have to adjust amid intense competition as travellers now have more choices in accommodations, including   house rental while the number of free independent travellers (FIT) is rising, currently accounts for 60 per cent of all arrivals. 

 

With more tourists not being parts of large tour groups, tour operators have to change their business strategy, he said.

 

He raised concerns about the price war among tour agents. “Cutting prices will make everyone worse off, we should not compete on pricing but the quality of services,” he suggested.

 

Meanwhile, Wichian Premchaiswadi, vice chairman of the Digital Council of Thailand, is optimistic on the advent of 5G,  the next generation of mobile technology, saying that it will boost most Thai businesses this year. 

 

When consumers can download media content faster, they may change their behaviour due to user experience. How fast and widely the public will adopt 5G technology depends on the readiness of the infrastructure, resolving issue of 5G standards and service cost, he added.

 

Source: https://www.nationthailand.com/business/30380620

 

-- © Copyright The Nation Thailand 2020-01-16

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[RichardColeman]

3 hours ago, webfact said:

“Cutting prices will make everyone worse off, we should not compete on pricing but the quality of services,” he suggested.

Well, that wont end well then. More like price up and worse service

[Sydebolle]

WHA certainly know how to blow their own trumpet ........ next please! 

[Isaan sailor]

Trade war begins to subside.  Yet they still use this as an excuse.  The overpriced Baht must help someone in Thailand—just not the economy...

[hotchilli]

Thailand is known for "cheap & cheerful" if it wants to boast quality then lets see it..

not the same old tack at double the price!

[Isaanbiker]

Thailand also faces the challenge of producing more skilled workers to meet the demand of foreign investors, she added.

 

How should that work? Knowing the quality of their education, nearly impossible. 

[DrTuner]

 

Invasion well in progress.

[canuckamuck]

2 hours ago, rhyddid said:

Favorable from "TARDE"  war ? 

Guessed it was a Trade war!

No I think tard war is appropriate.

[Redline]

What if there were no excuses?