Economic & Commercial Report for the month of March , 2014
1. Business Sentiment
Overall, economic activities in March 2014softened slightly from the previous month. A slow recovery in merchandise exports, due partly to temporary plant shutdowns for maintenance in certain industries, and subdued domestic spending contributed to the ongoing contraction in manufacturing production. The total value
of exports was 19,766 million U.S. dollars, down 2.7 percent from the same period last year. Merchandise imports valuetotaled 16,286 million U.S. dollars, down 13.7 percent from the same period last year in line with subdued economic activities. The contraction was seen particularly in imports of capital goods, raw materials, and intermediate goods. The tourismsector started to stabilize this month after the state of emergency was lifted. However, compared with the same period last year, tourism continued to contract. Tourist arrivals totaled 2.1 million, down 9.4 percent from the level a year ago. Inflation edged up due to increases in prepared food and retail energy prices. The current account registered a surplus mainly because of import contraction. The capital account recorded a deficit owing to Thai direct investment and portfolio investment abroad. Overall, the balance of payments posted a slight deficit. On the stabilityfront, unemployment remained low. Inflation rose on the back of cost pass-through to prices of prepared food as well as an increase in retail energy prices. Overall, the balance of payments posted a slight deficit.
Economic activity in the first quarter of 2014contracted from the previous quarter. The tourism sector contracted further from the previous quarter. Meanwhile, a recovery in merchandise exports could not compensate for the subdued domestic demand, leading to a contraction in manufacturing production. On the stability front, unemployment remained low. Inflation edged up on account of higher prepared food prices. The balance of payments posted a deficit this quarter.
2. GDP
Thai GDP in the fourth quarter of 2013 increased by 0.6%, a slowdown from a 2.7% rise in the previous quarter. This was a result of contraction in domestic demand. After seasonal adjustment, GDP on the quarter-by-quarter basis increased by 0.6%, slowing down from a 1.4% growth in previous quarter. GDP for the year 2013 grew by 2.9%.
3.INFLATION
During the month of March, 2014 headline inflation rose to 2.11 percent (yoy) due to increases in prepared food and retail energy prices. Core inflation was 1.31 percent.
4. TOTAL THAILAND TRADE DURING THE PEIROD JAN. – MAR., 2014 COMPARED WITH SAME PERIOD IN THE PREVIOUS YEAR AND BALANCE OF TRADE DURING THE PREVIOUS YEAR:
Trade during JAN.- MAR. 2014
Trade during JAN.- MAR., 2014
Rate of growth compared to same period in 2013
Total imports during 2013
Total exports during 2013
Balance of trade during 2013
(Amount in billion US$)
111.72
Total Tr. 111.72 Export: 56.21 Import: 55.51 Tr. Bal: 0.705
-8.72%
249.99
228.53
(-)22.19
Source: Ministry of Commerce, Govt. of Thailand
5. TOTAL TRADE IN US$ AND ITS GROWTH TO 20 COUNTRIES DURING THE PEIROD JAN. – MAR., 2014 (Amount in billion US$):
Sl. No.
Country
Thai imports
Thai exports
Total trade
1
China
8.70
6.52
15.22
2
Japan
8.84
5.72
14.56
3
USA
3.48
5.54
9.02
4>
Malaysia
3.18
3.08
6.26
5
Indonesia
1.80
2.41
4.21
6
Singapore
1.87
2.15
4.02
7
United Arab Emirates
3.64
--
3.64
8
Australia
1.22
2.16
3.38
9
Hong Kong
--
3.31
3.31
10
South Korea
2.21
1.03
3.24
11
Saudi Arabia
2.30
0.92
3.22
12
Vietnam
0.83
1.65
2.48
13
Germany
1.34
1.07
2.41
14
Taiwan
1.76
0.56
2.32
15
India
0.75
1.33
2.08
16
Philippines
0.70
1.33
2.03
17
Switzerland
0.97
0.95
1.92
18
Myanmar
0.79
1.08
1.87
19
Cambodia
--
1.15
1.15
20
The Netherlands
--
1.10
1.10
Source: Ministry of Commerce, Govt. of Thailand
6. TOTAL TRADE WITH INDIA
(Amount in billion US$)
Description
2008
2009
2010
2011
2012
JAN. – MAR., 2014
Total Trade
5.97
4.95
6.64
8.19
8.68
2.08
Export
3.34
3.22
4.39
5.18
5.48
1.33
Import
2.63
1.73
2.25
3.01
3.20
0.75
Trade Balance
0.71
1.49
2.14
2.17
2.28
0.58
Growth Rate %
26.34
-17.13
34.23
23.29
5.77
(-)15.88
Source: Ministry of Commerce, Govt. of Thailand
7. TRADE FIGURES OF TOP 10 COMMODITIES WITH INDIA:
7 (a) Imports from India during the period JANUARY – MARCH, 2014
Sl No
Commodity
Import value (Value: billion US$)
1
Jewellery including silver bars and gold
0.093
2
Vegetables & vegetable products
0.078
3
Chemicals
0.078
4
Parts & accessories of vehicles
0.074
5
Machinery & parts
0.072
6
Other metal ores, metal waste scrap and products
0.056
7
Yarn and Fibres
0.039
8
Medicinal and pharmaceutical products
0.037
9
Iron Steel and products
0.032
10
Electrical machinery and parts
0.025
Source: Ministry of Commerce, Govt. of Thailand
7 (b) Exports to India duringthe period JANUARY – MARCH, 2014
Sl No
Commodity
Export value (Value: billion US$)
1
Chemical Products
0.132
2
Polymers of ethylene, propylene, etc. in primary& forms
0.131
3
Air-conditioning machines and parts thereof
0.102
4
Precious Stones and jewellery
0.079
5
Spark ignition reciprocating internal combustion piston engines & parts thereof
0.077
6
Motor cars, parts & accessories
0.067
7
Iron & steel and their products
0.064
8
Machinery and parts thereof
0.056
9
Rubber
0.053
10
Automatic data processing machines and parts thereof
0.050
Source: Ministry of Commerce, Govt. of Thailand
8. MAJOR INVESTMENTS IN THAILAND
8 (a) According to latest data available, the Board of Investment, Thailand approved 449 projects during the period January - March, 2014 with a total investment of 34.8 billion baht. Out of 449 projects, 157 were 100% foreign investment, 83 JVs and 209 were 100% Thai investment.
INVESTMENT STRUCTURE
Year
No. of Projects
Investment (billion US$)
100% Thai
100% Foreign
JVs
Total
100% Thai
100% Foreign
JVs
Total
2011
672
608
372
1652
4.90
5.66
4.41
14.97*
2012
813
886
563
2262
7.96
9.41
14.31
31.88**
2013
677
808
531
2016
10.92
7.66
14.86
33.44***
Jan- Mar., 2014
209
157
83
449
0.40
0.36
0.30
^^1.06
*US$ 1 = Baht 30 (Average: 2011)
**US$ 1 = Baht 31.06 (Average: 2012)
***US $1= Baht 30.73 (Average: 2013)
^^ US $1= Baht 32.66 (Average rate for the period Jan. – March, 2014)
8 (b) INVESTMENT FROM INDIA TO THAILAND
Several Indian companies are operating in Thailand. Indian FDI into Thailand is around US$2 billion since 1970s. 13 new FDI proposals/projects from India were approved with a total investment of 1740 million baht (US$ 56 million) in 2010. In 2011, 15 projects with a total value of 1693 million baht (US$ 56 million) were approved. In 2012, twenty seven (27) applications worth 18415 million baht were received, while twenty five (25) applications worth 6100 million baht were approved. In 2013, seventeen (17) applications worth 5296 million baht were received, while sixteen (16) applications worth 1621 million baht were approved.
During the period January – March 2014, three (03) applications for projects worth 445 million baht were received while four (04) application worth 1244 million baht were approved. Major investments from India to Thailand were seen in the following sectors:
(1) Agricultural products (2) Minerals & Ceramics (3) Light Industry (4) Metal Products and Machinery (5) Electric and Electronic products (6) Chemical & Paper (7) Textiles
8 (c)INVESTMENTS FROM THAILAND TO INDIA
Actual inflow of FDI from Thailand into India from April, 2000 to February, 2014 (for the period data are available) is registered as US $172.05 million. Thai investments are mainly in infrastructure, real estate, food processing sectors, chemicals, hotel and hospitality sector. [Source: DIPP, MOC, GOI]
8(d) INVESTMENT NEWS
According to Thai Board of Investment, during the period January – March, 2014, 231 applications of Foreign Direct Investment with investment value of 20.78 billion Baht were approved which showed decrease in applications by 35.11 percent ( from 356 applications during Jan-Mar 2013) and decrease in value by 87.96 percent ( from 172.645 billion Baht during Jan-Mar 2013). Out of total 231 approved applications, 157 were 100% foreign investment. Japan remained largest foreign investor in Thailand with investment of 10.978 billion Baht and the second was Singapore with 2.270 billion baht. China was third with 2.020 billion Baht.
9. INDIA’S INVESTMENT INTERESTS
With the signing of the India-ASEAN free trade agreement and the ASEAN free trade agreement (AFTA), Thailand is expected to become an attractive destination for Indian investment, particularly in software development, textile & garment, automobile, infrastructure development, railway construction etc. Since 2005, Indian investments were seen primarily in Agricultural Products, Minerals and Ceramics, Light Industries/Textiles, Metal Products and Machinery, Electric and Electrical Products, Chemicals and Paper and Services.
10. THE TOP FIVE PRINCIPAL IMPORT SOURCES & INDIA DURING THE PERIOD OF JANUARY – MARCH, 2014:
Sl. No.
Country
Import value (Billion US$)
1
Japan
8.84
2
China
8.70
3
USA
3.48
4
United Arab Emirates
3.64
5
Malaysia
3.18
6
India
0.75
Source: Ministry of Commerce, Govt. of Thailand
11. THE TOP FIVE PRINCIPAL EXPORT DESTINATIONS & INDIA DURING THE PERIOD OF JANUARY – MARCH 2014:
Sl No
Country
Export value (billion US$)
1
China
6.52
2
Japan
5.72
3
USA
5.54
4
Hong Kong
3.31
5
Malaysia
3.08
7
India
1.33
Source: Ministry of Commerce, Govt. of Thailand
12. THE TOP FIVE PRINCIPAL IMPORT ITEMS OF THAILAND DURING THE PERIOD OF JANUARY – MARCH 2014:
Sl No
Commodity
Import Value (billion US$)
India’s share (billion US$)
01
Crude Oil
9.14
Nil
02
Machinery & Parts
5.34
0.072
03
Electrical machinery and parts
3.61
0.025
04
Chemicals
3.60
0.078
05
Iron, Steel & products
3.00
0.032
Source: Ministry of Commerce, Govt. of Thailand
13. THE TOP FIVE PRINCIPAL EXPORT ITEMS OF THAILAND DURING THE PERIOD OF JANUARY – MARCH 2014:
Sl. No.
Commodity
Export Value (billion US$)
India’s share (billion US$)
01
Motor cars, parts & accessories
6.22
0.044
02
Automatic data processing machines and parts thereof
4.42
0.050
03
Precious stones and jewellery
3.03
0.079
04
Refine fuels
2.54
0.025
05
Polymers of ethylene, propylene etc. in primary forms
2.40
0.131
Source: Ministry of Commerce, Govt. of Thailand
14. BILATERAL NEWS/NEWS ON INDIAAmbassador’s views on India-Thai trade relations and opportunities
In an interview with Business Talk show of Nation Multimedia Group, Ambassador H.E. Mr. Harsh Vardhan Shringa was positive on conclusion of FTA talks with Kingdom this year. He highlighted the economic, business and other opportunities between the two countries. He said that trade and investment are clearly the most important opportunities. Bilateral trade last year was about [US]$9 billion [Bt290 billion] and expected to take that amount to a much higher level. He also said that we are in the process of negotiating a [comprehensive] free-trade agreement between the two countries. He added that the two countries will continue to negotiate the finalFTA [despite the ongoing political challenge in Thailand] and at an appropriate time, we will be able to conclude the talks, possibly this year. The FTA will cover not only trade but also services and investment.
On India's connectivity with Asean countries he said that it's an integral part of our 'Look East' policy, which means Myanmar and Thailand are among the first countries, as we share the maritime border with Thailand. In terms of tourism, Thailand is a preferred destination choice for Indian tourists with total arrivals of 1 million last year. As a result, we have excellent air connectivity, with about 170 flights per week between the two countries [and] with 10 Indian cities linked by air with Thailand. On land connectivity, he mentioned that the big project is the three-nation highway linking India with Southeast Asia through Myanmar and Thailand. We have built the highway close to the border with Myanmar, while the middle portion has been done by Myanmar and the last portion by Thailand. The 1,500 kilometre highway will be completed in 2016 for the transportation of people, goods and services. There will also be development corridors in which industries will come up along the highway. On sea connectivity, the Dawei deep-sea port project in Myanmar is in fact on the same latitude with India's Chennai port and Bangalore in southern India. He also said that Thailand and India have been closely associated for centuries in terms of culture, spirituality, languages and religion as well as in trade and investment.
He highlighted that Thai companies have taken a prominent role in investments in India. Infrastructure investment is an area that we want to encourage Thai firms to invest in India. The Indian government has plans worth up to $1 trillion for infrastructure projects such as ports, roads, flyovers, bridges. For manufacturing and services, there are interests from Thailand to invest in the automotive sector as well as in the jewellery sector.
India ready to sign FTAs
India is ready to sign a comprehensive free-trade agreement with Asean and a bilateral agreement with Thailand soon to ensure continued cooperation with Southeast Asian nations, hoping to take part in the expected benefits
from regional integration while serving India's "Look East" policy. However, India is waiting for Thailand and others to put new governments in place before signing the FTAs. External Affairs Minister of India Mr. Salman Khurshid said that his country understood Thailand's situation and would wait patiently for the right time to sign a bilateral FTA. India expects Thailand to get a new government soon so that the pact can be finalised. The Minister added that although trade deficits are always a risk of liberalisation, India could compensate by investing more in each target country and thereby improving the trade balance. Thailand and India have already implemented some trade liberalisation in the goods sector. The two sides recently also came to a tentative agreement on the service and investment sectors, which they hope to ratify this year. India targets bilateral trade with Asean totalling US$100 billion by 2015, and to $200 billion by 2020. Last year Asean-India trade was valued at $76 billion (Bt2.45 trillion). With a combined population of 1.8 billion and total gross domestic product close to $4 trillion, India is confident such trade targets are achievable. Mr. Anil Wadhwa, Secretary (East) in the Ministry of External Affairs of India said that India had already finalised its negotiations with Thailand and Asean on comprehensive pacts covering trade in goods, services and investment. India is waiting for Asean countries to complete their processes for signature. Also, we are waiting for Thailand to have a new government so that we can sign the comprehensive FTA for boosting trade and investment sustainably. He added that after a comprehensive pact between Thailand and India had been imposed, trade and investment should grow strongly, by 30-40 per cent a year.
To promote closer cooperation and exchange ideas between India and Asean, the sixth Delhi Dialogue was held during first week of March in New Delhi. Foreign ministers or representatives from the 10 Asean states attended this meet. So far, India and Asean have 26 dialogue mechanisms across sectors such as agriculture, trade, tourism, science and technology, energy (new and renewable), environment, and small and medium-sized enterprises.
Tata opts out of eco-car plan
Tata Motors, India's biggest car maker, has shied away from joining the second phase of Thailand's eco-car scheme, stating that the segment has too many players and Tata's sales volume is not big enough to make it competitive. Company said that the eco-car incentives offered by the Board of Investment [BoI] are very interesting, but Tata sees it better to pull out, as there are too many eco-car competitors in the market now led by Japanese automakers, while Tata's sales volume is not yet enough to make the company's vehicles competitive. The Indian car giant applied for the first phase of the BoI's investment promotion in 2007 but dumped the plan after failing to meet the deadline to submit project details. Tata decided instead to focus on conventional passenger cars. The BoI has scheduled a submission deadline of March 31, 2014 for interested investors to submit eco-car investment plans for the second phase. To be eligible for privileges, companies must invest at least 6.5 billion baht to build a new plant with annual production capacity of 100,000 eco-cars within four years of operation. Eligible cars for the second phase must emit less than 100 grammes of carbon dioxide per kilometre. The government will waive corporate taxes and import duties on machinery for the first eight years of operation. Participating car makers will also enjoy excise taxes as low as 14%, with E85-compatible cars taxed at 12%. In Tata's fiscal 2014 starting from April, 2014, Tata plans to introduce two passenger cars to the Thai market: the Nano, the world's cheapest and smallest car, and a multipurpose vehicle, the Aria, both imported from India. In fiscal 2015, Tata plans to make available its Safari Storme sport-utility vehicle, also imported from India. Tata Thailand runs a Samut Prakan assembly plant for pickup trucks, a joint venture with Thonburi Automotive Assembly Plant Co, at an investment cost of 2 billion baht. The plant makes 7,500 Zenon pickup trucks a year out of a total production capacity of 15,000.
In October this year, the company plans to begin assembling the Super Ace, a commercial mini-truck, with an annual production of 2,400 trucks a year at an investment of 150 million baht. It is forecasted that the mini-truck market to increase by 8.3% to 13,000 this year. Tata holds a 15% market share.
Business Meeting organised by Embassy of India, Bangkok
On 21st March, 2014, Embassy of India, Bangkok organized a Business Meeting with Chief Executive Officers/Representatives of various Indian Companies operating in Thailand and Thai Companies operating in India. Apart from representatives of companies, representatives of Thai Board of Investment, Federation of Thai Industries, and Department of Industrial Trade Promotion also attended the event. The event began with the screening of a documentary produced by IBEF, India entitled “Eternal Resilient India”. Ambassador H.E. Mr. Harsh Vardhan Shringla addressed the gathering. H.E. Ms. Srirat Rastapana, Permanent Secretary, Ministry of Commerce who was the Chief Guest of the event delivered a speech during the event. Mr. Sanjay Bhattacharayya, Joint Secretary (South), Ministry of External Affairs, India, also addressed the meeting. Various issues related to promotion of bilateral trade, early conclusion of bilateral FTA between India and Thailand, trilateral highway project, Dawei Special Economic Zone project, Delhi Mumbai Industrial Corridor etc were highlighted by the speakers during their respective addresses in this meeting. Details of investment opportunities available for Thai investors in India were also disseminated during the meeting. The event was successful in strengthening and promoting trade and economic activities between the two countries.
Indian businesspeople maintain confidence in Kingdom's potential
Local Thai media reported that the Indian business community in Thailand strongly believes the Kingdom has the potential to recover soon after a new government is installed, as more Indian investors see this country as a centre of Asean. Indian Ambassador Mr. Harsh Vardhan Shringla said that his country had well understood Thailand's situation as a fellow democracy. He said that India was also waiting for a general election in May-June, while Thailand is expected to have one by the middle of the year. The ambassador expected that after the comprehensive FTA between Thailand and India gets signed, the value of two-way trade should increase by 30-40 per cent each year. The comprehensive pact would cover all sectors, including more than 5,000 goods and liberalisation of services and investment. The ambassador also said that many new Indian investors were looking at Thailand as their manufacturing base for distribution to other countries, not only in Asean but also to other markets. On the other hand, he also urged more Thai investors to do business in India, as many opportunities are waiting. They would find a ready source of labour in various sectors and high-technology development, while the Indian government has also accelerated infrastructure development to facilitate more investment.
Heads of various Indian companies operating in Thailand had maintained full confidence in this country's potential for business growth, despite its political problems. They will continue their investment in Thailand. Indian companies expect that the new government should focus more on increasing competitiveness of Thai industries, as there are many issues of concern such as the high cost of energy and the rising costs of labour and production. The government should also focus more on language training for Thai workers, especially English.
Thai Prime Minister met Indian Ambassador
Local media reported that caretaker Prime Minister and Defense Minister Ms. Yingluck Shinawatra specified delayed election and government establishment result in opportunity loss on free trade area (FTA) between Thailand and India. Ms. Yingluck posted message on the Facebook “Yingluck Shinawatra,” specifying it was good that she could meet Mr. Harsh Vardhan Shringla, Indian ambassador in Thailand, who came to visit her while taking up his new post. Important issues discussed were progress on trilateral highway and Dawei Deep Sea Port. However, an issue regarded as opportunity loss of both Thailand and India was progress on negotiation on FTA between Thailand and India since 2003, which could only be finalized at the level of government officers now owing to incomplete process of election and government establishment in Thailand.
Visit of Thai delegation to India
A delegation of 15 Thai business representatives from the logistics sector and five officials from the Department of Business Development, Ministry of Commerce, Government of Thailand visied Kolkata and the North-East during 24-27 March, 2014. The visit paved the way for greater cooperation between Thailand and India in the fields of logistics management and connectivity. Delegation visited Guwahati, Kohima and Imphal.
Indian city expects Thai film-makers to shoot after FTA signed
Ramoji, the world's largest film city, located in Hyderabad, is expected to find more Thai and Asean film-makers, due to the Asean-India Free Trade Agreement, which covers service liberalisation and is expected to be signed soon. Mr. Rajeev Jalnapurkar, Vice President of Ushakiron Movies, the operator of Ramoji Film City, said that Thai production houses can come to Ramoji, as it provides world-class facilities. It can also adapt or decorate scenes to meet producers' demands. It is also a perfect place for outdoor shoots. Due to similar culture and familiar atmosphere, Ramoji can serve not only movies, but also soap operas, music videos and advertisements. He added that the Indian government's plan to allow visas on arrival for Asean visitors following the FTA should encourage more businessmen and tourists from Asean to visit the city.
15. ECONOMIC/INDUSTRY NEWS FROM THAILAND
Bangkok is world's 61st priciest city
Bangkok is ranked 61st in Economic Intelligence Unit's list of the world's priciest city to live in. Bangkok is more expensive even to Kuala Lumpur, ranked the 90th. Top of the list is Singapore. Trailing behind are Paris, Oslo, Zurich, Sydney, Caracas, Geneva, Melbourne, Tokyo and Copenhagen.
Thailand's vehicle sales to decline 11.7%According to the consultancy agency Frost & Sullivan, total vehicle sales in Thailand is expected to dip 11.7 per cent year-on-year to 1.175 million units in 2014 due to the current political turmoil and post-election uncertainties. Weak economic growth and slowing demand will also shrink the automotive market in 2014.
Energy Ministry eyes new MoU with IEA
Thai Ministry of Energy plans to propose a new memorandum of understanding on cooperation with the International Energy Agency (IEA) for the next government to sign. The ministry believes the MoU would be beneficial to the stability of Thailand's long-term energy supply as Asia's energy demand is expected to increase considerably, making imports from other regions necessary. The IEA projected that Thailand's energy demand would soar along with Asean's expansion. Asean will become a major importer of oil, fourth in the world behind China, India and the European Union. Oil imports are projected to rise from 1.9 million barrels a day to 5 million, posing a risk to supply stability in the future.
Board of Investment applications down 60%
Investment applications sent to the Board of Investment (BoI) fell by nearly 60% year-on-year in the first two months of 2014 as investors adopted a wait-and-see approach amid the country’s ongoing political impasse. In January and February, 2014, 188 projects worth a combined 63.1 billion baht were submitted to the BoI, representing a decrease of 46% and 58%, respectively, from the same period last year. Foreign direct investment (FDI) dropped 40% year-on-year in terms of application number to 121 projects while the value dipped 43% to nearly 47.3 billion baht. Investments from Japan, which has long been the top foreign investor in Thailand, plunged by 63% compared with the same period of 2013 to around 17.4 billion baht while the number of projects fell by 42% to 61. At present, investment proposals worth around 500 billion baht are still awaiting approval from the BoI’s main board which has yet to be appointed since October last year because of the country's prolonged political restiveness. Mr. Udom Wongviwatchai, Secretary-General, BoI said that of the total value, about 10% are from Japan while some are projects of Thai companies as well as other countries including the US. BoI has maintained a target of 900 billion baht for 2014. Last year, 2,237 projects valued at 1.1 trillion baht applied for privileges, slightly lower than the 2,437 projects worth 1.18 trillion in 2012.
Despite the decline in overall investment value, investment proposals worth 22.5 billion baht applied for the BoI’s incentives in the petrochemical, paper and plastic industries. In the automotive and car parts industry, investment applications were valued 17.4 billion baht while 13.5 billion baht worth of projects were submitted in the services and infrastructure sectors.
Commerce Ministry to go ahead with FTA talks and AEC goal
Permanent secretary in Thai Ministry of Commerce, Ms. Srirat Rastapana said that international trade negotiations would continue in spite of the prevailing domestic situation, given that all political parties wanted the economy to grow and free-trade talks to come to fruition. Moreover, although a new government is yet to be formed, state agencies would continue functioning and pursuing the aim of making the country the hub of Asean. She said that under the ministry's blueprint for the upcoming Asean Economic Community (AEC), eight strategies would be carried out through its agencies in all 76 provinces and 44 countries. Among these is prioritizing moves towards establishing a Regional Comprehensive Economic Partnership (RCEP), discussions about which are well under way. She also added that the Commerce Ministry has upgraded its trade services to facilitate the private sector through its 87 AEC Business Support Centres, and a Trade Dispute Solution Centre.
End of emergency brings hope
Tourism businesses and foreign investors have welcomed the government's decision to lift the state of emergency in Bangkok, expecting the move to facilitate the recovery of the tourist trade within one or two months. However, if the political dispute that triggered the emergency decree in the first place is not resolved soon, they believe the overall economy will need more time to recover. Mr. Yutthachai Soonthronrat-tanavate, president of the Association of Domestic Travel, said that there was no doubt that lifting the decree would be a boon to inbound tourism. It will help restore foreigners' confidence in travel to Thailand, especially among Japanese and Chinese. Also, it should ease the problem of travel-insurance firms refusing to cover damages due to political causes. However, some markets, especially Hong Kong and Taiwan, will remain cautious after the Internal Security Act replaces the emergency decree to handle the protesters in Bangkok. The Hong Kong government says it will have to evaluate the situation for at least 10 days before making any changes to its travel warnings.
Court’s ruling will affect the infrastructure projects
With the government’s ambitious 2-trillion-baht infrastructure plan frozen by a court ruling, logistics systems and construction machinery are expected to experience zero growth or even a contraction this year. Mr. Yoo Chienyuenyongpong, Chairperson of the Land Transport Federation of Thailand, said that logistics system business worth about 1 trillion baht a year is expected to see zero growth this year after the recent judgment of the Constitution Court that ruled against the government’s infrastructure plan. The ruling is a blow to the country's economic outlook, with dim prospects as business confidence and tourism lag. The infrastructure projects were expected to drive economic growth from last year but were stalled in court. Mr Yoo suggested that the development of some infrastructure projects can still move ahead with funding from the government's annual fiscal budget.
Dip in foreign firm approvals
Fewer foreign investors have won approval to do business in Thailand this month under the Foreign Business Act than a year ago, as the country's political woes caused hesitation among overseas interests. The Business Development Department yesterday reported that 26 foreign companies had been approved for setting up business in the Kingdom this month, bringing in about Bt2.22 billion of initial capital. Ms. Srirat Rastapana, permanent secretary of the Commerce Ministry, said that the approvals should create at least 354 new jobs for Thais. The lower number of approvals may have been a result of a lower number of requests amid concerns over political instability. For the first quarter of this year, a total of 86 foreign firms have been approved under the FBA, bringing in Bt4.8 billion initial investment capital. The number of approved companies dropped by 13 per cent compared with the first quarter of 2013, but initial capital was up by 32 per cent year on year. Most of the firms approved this month are related to financial services, consultancy and management for subsidiary companies, and firms contracted with state-owned enterprises.
Turmoil to cost B430bn
Thailand is expected to lose as much as 430 billion baht in revenue in the first half of 2014 due to the prolonged political protests. According to a joint survey conducted by the Thai Chamber of Commerce and the University of the Thai Chamber of Commerce (UTCC), the economy could also contract by 1% this year if a new government is not installed by the middle of this year. The study estimated the revenue loss to tourism and domestic consumption at about 250 billion baht, while investment has been hit by 50-100 billion baht. The other lost revenue was expected to come from the government's 2-trillion-baht infrastructure development plan, now frozen after a court ruling. However, the economy should recover in the third and fourth quarters as the cancellation of the emergency decree boosts tourism and domestic consumption.
Otop interested in Asean markets
According to the Thai Industrial Promotion Department, sales of One Tambon One Product (Otop) goods are expected to reach 100 billion baht in 2015 from 87 billion last year, as production and exports have not been affected much by the political unrest. DG of the department said that Thai small and medium-sized enterprises plan to raise the quality of Otop products in preparation for the Asean Economic Community to help improve sales in neighboring countries. A total of 70,960 Otop products were introduced from 2002-13, earning revenue of 650 billion baht. In 2013 alone, revenue reached 87 billion baht. Otop revenue is projected to rise to 9.1 billion baht this year. The department has received 117 million baht in funding for Otop promotion this year and will develop more products in five major areas — fabrics and apparel, food and beverage, decorative items, herbal products and souvenirs.
TAT to analyse economic risks of major markets
The Tourism Authority of Thailand (TAT) is preparing to define its marketing plan for 2015 by analysing possible economic risks in three major markets: Japan, China and India. The authority has assigned its planning department to start analysing economic policies in the three nations, including an increase in value-added tax in Japan, a weaker yuan in China, and slower economic performance of India. Its analysis is aimed at getting clearer information before defining marketing strategy, as the economic performance in those three countries will have an impact on the Thai tourism industry. Then a flexible marketing plan would be mapped out for 2015 that will look for optional markets. In case of India, even as its economy slows, the TAT hopes arrivals from this market will grow by 8-10 per cent by focusing more on high-spending tourists, especially wedding groups.
Board of Trade to seek excise revamp
The Board of Trade of Thailand plans to propose that the next government restructure the excise-tax system as an urgent need to increase transparency and prepare for the upcoming Asean Economic Community. The board will conduct a study on excise-tax restructuring, to be complete within next five months. Mr. Kitipong Urapeepatanapong, chairman of the Board of Trade's tax law committee said that Thailand has faced three main problems related to inefficient collection of excise tax, namely lower revenues, complexity and lack of transparency, and inappropriate rates. According to board, the government could collect more than Bt430 billion in excise tax each year, amounting to 17 per cent of its revenue. However, this year it will likely fall short of that figure, due to various reasons.
Industry Ministry gets tough with waste plants
Thai Industry Ministry will inspect 1,700 waste sorting and recycling plants nationwide following claims that some are operating illegally. The move was part of a series of measures proposed by the ministry after a meeting with industrial offices in 20 provinces and four major waste disposal companies. The ministry is also planning to increase penalties for wrongdoers, who are currently liable to a maximum penalty of two years in prison and a 200,000-baht fine. The department said there are 1,256 waste sorting factories and 446 recycling factories nationwide.
Alarm raised over revenue for tourism
Tourism Council of Thailand (TCT) warned that Thailand's 2014 tourism revenue target of 2 trillion baht is in danger if the caretaker government does not campaign seriously to restore tourist confidence damaged by the political unrest of the past five months. It suggests the caretaker government urgently approve an additional 250 million baht for a new tourism campaign. The remaining 50 million baht would support campaigns by private tourism operators. The TCT now projects Thailand will lose tourism revenue of 82.7 billion baht in the first half of 2014, extending that to 116 billion if the protest violence ratchets up.
16. ECONOMIC AND BUSINESS NEWS RELATED TO OTHER COUNTRIES:Japan SMEs eye Thailand
Japan's investors, especially small and medium-size enterprises (SMEs), are seeking to invest in the Asean region and believe that Thailand could be a trading hub for the region despite the ongoing political conflict. Japanese Prime Minister Shinzo Abe's outward-looking economic policy and Japan's shrinking domestic market are driving locals to look for ventures outside, andAsean is very attractive due to low production costs, high growth potential, the large market and the prospects of theAsean Economic Community (AEC). Many Japanese investors were still looking to invest in Thailand, judging from the rising number of applications with the Board of Investment (BOI).
Asean to resume FTA talks with EU after AEC in place
Speaking at the sixth "Delhi Dialogue", the Asean Secretary-General Mr. Le Luong Minh said that Asean is planning to resume free-trade talks with the European Union after its 2015 integration, as every country in the trade bloc is ready for more market liberalization with developed countries. Presently, some Asean countries have negotiated individual FTAs with the EU, including Singapore, Malaysia, Vietnam and Thailand. However, Minh believes that the other countries should be prompted to be more committed through the AEC. The secretary-general said that after 2015 Asean should be focused more on the Regional Comprehensive Economic Partnership, which would be one of the world's largest FTAs and consist of Asean and six key trading partners. They are China, Japan, South Korea, India, Australia and New Zealand. Minh said that although it was a different playing field between Asean and EU countries, it should not obstruct the talks or have a negative impact on Asean countries, as an FTA between the two regions should help increase development and cooperation. FTA talks with the EU began in 2006 but because of concerns, including the internal politics of some Asean members, several Southeast Asian countries decided to ink separate agreements.
Growth of oil and gas exploration in SE Asia
According to Frost & Sullivan, Asia-Pacific accounts for nearly 2.5 per cent of global oil and gas reserves, making it an oil and gas hub with exploration expansion in Malaysia, Indonesia and Thailand. This increase in exploration and export capacity has significantly enhanced the demand for manufacturing execution systems (MES). In 2013, the market generated revenue of US$39.0 million and it is estimated to reach $51.6 million in 2017.
More FDI in Asean-5 than China
As per media reports, Foreign Direct Investment (FDI) into the five big economies of Southeast Asia continued to strengthen last year and overtook FDI into China. FDI into Asean-5 climbed 7 per cent to US$128.4 billion in 2013. FDI into China, based on official FDI utilized, fell 2.9 per cent to $117.6 billion.
Dawei project
There are some important developments in the massive Dawei project, as no interested bidders have applied for concessions opened in February 2014 for three jobs; a dual-lane highway linking Thailand with the site in eastern Myanmar, a small port and a 30,000-rai industrial estate. It is also understood that the terms of reference for the three projects could be revised to make them more appealing to foreign investors. Under the original schedule, Dawei SEZ Development Co (DSEZ), a special-purpose vehicle, had planned to open bidding for the three construction jobs in February 2014 and announce the results in April 2014. Thailand and Myanmar officially agreed to push the ambitious scheme forward with three memoranda of understanding (MoU) signed by the two countries. Mr. Chanvit Amatamatucharti, Deputy Secretary-General of the National Economic and Social Development Board, said that the Neighbouring Countries Economic Development Cooperation Agency has already approved 18 million baht to finance a study to revise the terms of reference for the three projects and make them more flexible and attractive to foreign investors.
17. TRADE ENQUIRIES HANDLED BY THE EMBASSY DURING THE MONTH OF MARCH 2014:
From Thailand: 06 From India: 28
[Approximately 100 -115 trade enquiries attended over telephone]
18. BUSINESS VISAS ISSUED IN MARCH 2014: 547
Source: Commercial Section, Embassy of India, Bangkok
