Thai Economy

[soundman]

This post is directed to other foreigners doing business in Thailand, working for small to medium sized firms, or have a reasonabley good understanding of Thai micro-economics.

What's up with the economy?

In my particular market (professional audio visual), sales are way down year on year. Last year was not a great sales year by any comparisson. Every business I deal with (not just AV industry) is having the same sales slump. Many seem to be contracting their staff numbers to nearly a third of what they had two years ago, myself included. We have recently laid off nearly 10 - 12 staff member in a business that keeps 35 - 40 on the books.

On top of that we have had at least 50 applications for employment this month, for no advertised positions.

There also seems to be a general credit freeze. Companies that previously would offer 60 day terms are now trying to reel that into 30 days or in some cases COD. (we always pay our bills on time, so I can't really see why this is happening)

Reading the Bangkok Post this morning there was an article announcing the first quarterly contraction of the property market in five years. On top of that, the BOT dropped the prime lending rate to about 3.5%.

Is the thai economy (in real terms) on the edge of the abyss? Or is it just a hiccup with people holding off for an end to the political BS?

What's your feeling on the state of the Thai economy?

Cheers,

Soundman.

[cmsally]

We are in tourism related businesses and govt supplies /contracts.

Sales on all fronts well down. I also run a small export business and for that sales are up (none of my customers come to Thailand).

For us we are in for the long term and our overheads are very small - no debts, no rents.

So we can sit it out and be quite comfortable for at least half a year if that is what it takes.

We are still making money but not putting away nearly what we should be.

Everyone I know and talk to is complaining, even the ladies selling in the market say there are no customers, and this is just basic commodities.

As far as I can see you have a massive drop in tourism which takes a couple of months to filter down and affect all businesses. And you have the lack of funds coming from the central govt out to the local. These budgets have a big affect on the local economies. Then there is the property market which has also taken a nosedive which probably stems from mix of above and change and uncertainty for foreigners.

I am not sure what kind of abyss we could be heading for but I would imagine defaulting on loans and repossessions have to increase at some stage.

[soundman]

We are in tourism related businesses and govt supplies /contracts.

Sales on all fronts well down. I also run a small export business and for that sales are up (none of my customers come to Thailand).

For us we are in for the long term and our overheads are very small - no debts, no rents.

So we can sit it out and be quite comfortable for at least half a year if that is what it takes.

We are still making money but not putting away nearly what we should be.

Everyone I know and talk to is complaining, even the ladies selling in the market say there are no customers, and this is just basic commodities.

As far as I can see you have a massive drop in tourism which takes a couple of months to filter down and affect all businesses. And you have the lack of funds coming from the central govt out to the local. These budgets have a big affect on the local economies. Then there is the property market which has also taken a nosedive which probably stems from mix of above and change and uncertainty for foreigners.

I am not sure what kind of abyss we could be heading for but I would imagine defaulting on loans and repossessions have to increase at some stage.

Thanks for the reply Sally.

I would also like to mention a little on govt. spending. Wife's business is in civil construction (level 2 company) ie. roads, bridges etc. According to her, for the last six months available construction projects have been at the lowest levels since the crash in '97. A year ago a 10 mil Baht contract would have attracted mybe 8 - 10 tenders / bidders. In the last 3 months some 2 mil Baht contracts have been attracting 80 - 100 bidders. Not many contracts / much govt. spending on civil works at the moment.

The current regime is promising to free up funds to stimulate the building / construction sectors in the latter part of this year. Whether that happens & how long it takes to filter through various departments, I have no idea.

Cheers,

Soundman.

Edited May 29, 2007 by soundman

[samtam]

If patronage of top restaurants is any guage I have been to three (Maddison's in the Four Seasons, Cy'an in The Metropolitan and the Chinese restaurant in J W Marriot) recently on a Friday or Saturday night and they have been practically empty. These places would only be patronised by wealthy Thais or foreigners, people who would not normally be too worried about spending.

[ludosiam]

I am active mainly in 2 sectors: export business which on turnover value is going steadily up but profits steadily down. Here the government released positive informations that export volume is up by 10% but there is no information about tax revenue from this sector. I believe this has gone down a lot. The official information available seems to be blurred to me when looking at individual company statements. The other sector I am active is environmental stuff like incinerators, bio mass fuel etc. for the local market, sales has gone down a lot. When talking to customers the general tenure is to wait with new investment until business is getting better. Frankly speaking, I don't see this happening any soon. With the Thai Baht being so strong and all the political uncertainties we might have to wait a longer while, my personal estimation is towards the middle of next year, depending on if and what kind of government will be formed.

[soundman]

From today's Bangkok Post -

Somchai Sujjapongse, an adviser to the Fiscal Policy Office, said moves to accelerate spending by government agencies and state enterprises would be critical to improving economic growth this year.

The government has set an ambitious disbursement target of 93% for the 1.57- trillion-baht fiscal 2007 budget. State enterprises are projected to disburse 85% of the 280 billion baht allocated to them for the fiscal year ending on Sept 30.

But the disbursements have been behind schedule due to delays in policy approvals and sluggishness within the state bureaucracy, raising uncertainty about whether the spending targets will meet their goals for the year.

''We expect the second quarter to be the weakest for the year, but that activity will begin to pick up in the third and fourth quarters,'' Dr Somchai said.

As I said - wait to see....

Cheers,

Soundman.

[cmsally]

I will believe it when I see it .

It would be interesting to see a breakdown of how much is for the military or military related projects.

[soundman]

I will believe it when I see it .

It would be interesting to see a breakdown of how much is for the military or military related projects.

I am under the impression that tax revenue collections are at an all time high. Where is all the money going?

Soundman.