Thai economy feels sting from political uncertainty

[rooster59]

Thai economy feels sting from political uncertainty

 

BANGKOK (AP) — Thailand's stagnating economy is unlikely to get much of a boost from a referendum Sunday on a new constitution proposed by the military government, which took power in a 2014 coup. A "yes" vote could, however, tamp down some of the uncertainty that has plagued the country over the past half-decade of instability.

 

An update on how Thailand's economy is faring under military rule:

 

THE OUTLOOK: Government spending and tourism are keeping growth afloat despite weak exports and plunging foreign investment. The World Bank forecasts that the economy will expand at a 2.5 percent annual rate this year, down from 2.8 percent in 2015.

 

LIVING STANDARDS: At $395.3 billion, Thailand is Southeast Asia's second biggest economy after Indonesia. The gap between rich city dwellers and the rural poor is wide, and while extreme poverty has been almost eliminated, one in 10 Thais remain below the official poverty line of $6.20 a day. In the past year, drought and falling global prices have hurt farm incomes.

 

TRADE: Thailand is not part of the U.S.-led Pacific Rim trade pact known as the TPP, or Trans-Pacific Partnership. But some in Thailand are lobbying for it to join, hoping that participation would help boost slumping exports and give the country an edge in a huge potential common market.

 

INVESTMENT: Foreign investment plunged by 90 percent in 2015 from the year before to 106 billion baht ($3 billion), after businesses rushed in 2014 to beat implementation of new rules that cut back on tax incentives for foreign businesses.

 

TOURISM: A bombing of a Bangkok shrine in August 2015 that killed 20 people put a dent in Thailand's economically crucial tourism industry, but the country still received nearly 30 million foreign visitors for the year, as arrivals from China swelled.

 

VITAL SIGNS: Thailand's currency dipped to a six-year low against the dollar last year as foreign investors dumped stocks, and remains at about 35 baht to the U.S. dollar, on a par with 2009. After slashing interest rates twice last year, the central bank held back last week on further cuts that might push the baht still lower, to preserve "policy space" in case conditions worsen.

 

 

-- © Associated Press 2016-08-06

[billd766]

The world economy isn't a lot better either.

[digibum]

Quote

TRADE: Thailand is not part of the U.S.-led Pacific Rim trade pact known as the TPP, or Trans-Pacific Partnership. But some in Thailand are lobbying for it to join, hoping that participation would help boost slumping exports and give the country an edge in a huge potential common market.

 

The part that never gets enough attention in the normal Thai press.  Instead, it's all bluster about how the US can't tell Thailand what to do.  Thumbing it's nose at the US and siding up to China.  But behind the scenes, the government is sucking up because, well, Thailand is an export economy and Thailand needs the US.  

 

Quote

INVESTMENT: Foreign investment plunged by 90 percent in 2015 from the year before to 106 billion baht ($3 billion), after businesses rushed in 2014 to beat implementation of new rules that cut back on tax incentives for foreign businesses.

 

On par with the rice scheme in terms of totally misjudging the market.  

 

 

[shirtless]

Thailand has not yet seen all the effects of poor management and total incompetence of the current government , and everyday Thais do the best to discourage tourists from returning  coupled with emerging tourist destinations , the future does not look to bright even considering the world economy is not fairing to well.

[Remus1830]

11 minutes ago, shirtless said:

Thailand has not yet seen all the effects of poor management and total incompetence of the current government , and everyday Thais do the best to discourage tourists from returning  coupled with emerging tourist destinations , the future does not look to bright even considering the world economy is not fairing to well.

Totally agree 

[mesterm]

3 hours ago, rooster59 said:

as arrivals from China swelled.

 

yay.

[gchurch259]

All these quality tourist who spend little and crowd the other tourist out at all the favorite spot and are loud and annoying. That and all these shut down bars and no alcohol holidays do not encurage tourist.

 

Do not blame everything on the much needed and over due coup that is trying.

 

They need to improve education and keep cleaning out corruption.

[jesimps]

5 hours ago, billd766 said:

The world economy isn't a lot better either.

Got that in before anyone had the chance to hold your beloved junta responsible.

[Alive]

What we can see doesn't look to good but this regime is doing a lot of secretive things as well no doubt as there are no free independent observers of the regime. What will come out later about these junta years that we don't know now?

[Sirbergan]

13 minutes ago, Alive said:

What we can see doesn't look to good but this regime is doing a lot of secretive things as well no doubt as there are no free independent observers of the regime. What will come out later about these junta years that we don't know now?

 

Hard to say for sure, but every single Junta government over the course of history has been a disaster for the relevant country's economy. I see no reason why this one should be any different, but time will tell.

Edited August 6, 2016 by Sirbergan

[ScotBkk]

37 minutes ago, jesimps said:

Got that in before anyone had the chance to hold your beloved junta responsible.

 

Don't worry a jot

TAT will fudge the figures no matter what the outcome. 

[ozyjon]

It's only numbers,  you can manipulate them to your advantage.

 

[yellowboat]

2 hours ago, gchurch259 said:

Do not blame everything on the much needed and over due coup that is trying.

There are no brownie points or sympathy for deposing and elected government then giving yourself total immunity, and then giving yourself god like powers.  Elections and universal suffrage are messy and should not be interfered with by a few inbred elites.    

 

Now that the coup is going to over take the rice pledge scheme in costs to the Thai people, it only shows that the coup was not needed much less over due. 

 

What is it with farangs who hate universal suffrage?

[Eric Loh]

41 minutes ago, Sirbergan said:

 

Hard to say for sure, but every single Junta government over the course of history has been a disaster for the relevant country's economy. I see no reason why this one should be any different, but time will tell.

 

Empirical studies agree with you. The economic damages will go beyond the tenure of the junta government. The sharp drop in foreign direct investments will stunt growth post junta for years to come. The benefactors will be Vietnam, Mynmar, Indonesia and even Cambodia who see their FDI go up. Thailand will lose these investments and also employment, technology and export potential. Coup and economic are never a good mix. 

[elgordo38]

7 hours ago, billd766 said:

The world economy isn't a lot better either.

Your kidding the US market is making new highs every day. 72% of American industries declared increased profits thanks to buying back their own stocks at high prices. New jobs increased by 255,000 last month 70,000 over estimate. What a leap from 11,000 in May. Even though Europe is falling apart their 3 main markets are riding the US markets tail up up and away as is Japan. European banks are mostly broke but their markets keeps going. Japan adds tons of stimulus and the Yen gets stronger but the government wants it to weaken strange. China keeps bringing out numbers exactly on what they are forecasting genius or what. Yes I know American GDP was half or less of what was expected but hey you cannot win em all.

[goldenbrwn1]

I don't think it really matters what happens to the Thai economy. They could have a civil war and the baht would probably climb, investment would rise.  Where as a developed economy could have a few jitters or some uncertainty around its economic future and that countries currency would drop against the US dollar like a ton of bricks, and investment will slow ect ect.

 

Im obviously no economist but are they making this  s#it up as they go along ??

Edited August 6, 2016 by goldenbrwn1

[goldenbrwn1]

Sorry about those graphs, I have no idea how they ended up on my post and even where they came from. They came on after I edited my post for a spelling mistake, weird. 

Edited August 6, 2016 by goldenbrwn1

[digibum]

1 hour ago, Eric Loh said:

 

Empirical studies agree with you. The economic damages will go beyond the tenure of the junta government. The sharp drop in foreign direct investments will stunt growth post junta for years to come. The benefactors will be Vietnam, Mynmar, Indonesia and even Cambodia who see their FDI go up. Thailand will lose these investments and also employment, technology and export potential. Coup and economic are never a good mix. 

 

Yeah, when someone decides to put a few hundred million into a factory in Vietnam instead of investing in Thailand, you don't get that opportunity back in a few years.  That's a decade or more long loss.  

 

And the previous high points in Thailand's economy like being the #1 supplier of computer hard drives obscures the fact that they've secured zero investment in solid state drives which will ultimately replace hard drives.  Hard drives are a dying storage media platform.  No, they won't be entirely gone in 2 or 3 or 4 years but it's a tech that will slowly be replaced as the price of SSD storage declines.  

 

And then what will Thailand do now that Vietnam has all of the SSD factories and expertise?  Because in addition to the money not coming in, it's going to Vietnam who is rising as a competitor in the region.  Further investment in Vietnam improves their economy, educates their people in various technologies, and make additional foreign investment an easier choice.  

 

So, yes, the investments they are losing today will haunt them for many years to come.  

[Hawk]

Next week the minimum wage will be increased further discouraging foreign investors from investing.

[geisha]

Good éducation is seriously lacking in Thailand. Youths are more interested in their motor bikes and having fun, and even though that's normal, you see kids in neighbouring countries struggling financially to get a good education and their main goal is to go to university.  I travel the area a lot, and I'm always amazed and happy to see these kids from relatively poor families striving to get on in life. Most Thai youth have no command of the English language which is needed today in nearly all careers. Nothing is done by the Thai government, or the parents for that matter, to change this situation. Thailand is in the fast line to being completely left behind.

[digibum]

11 minutes ago, geisha said:

Good éducation is seriously lacking in Thailand. Youths are more interested in their motor bikes and having fun, and even though that's normal, you see kids in neighbouring countries struggling financially to get a good education and their main goal is to go to university.  I travel the area a lot, and I'm always amazed and happy to see these kids from relatively poor families striving to get on in life. Most Thai youth have no command of the English language which is needed today in nearly all careers. Nothing is done by the Thai government, or the parents for that matter, to change this situation. Thailand is in the fast line to being completely left behind.

 

That's the result of 40 years of the world basically being forced to do business with you because you were the least screwed up country in the region.  

 

I always find it so sad when I hear Thais joke about being lazy or how Thai students don't like to study.  To them, it's part of the culture.  Thais like sanook!  Hahahaha.  

 

Guess what Vietnam likes?  A better quality of life and they're willing to work for it.  Guess what Burmese like?  A chance to get out of poverty.  And they're willing to fight for it.  

 

If you view your laziness, apathy, and lack of intellectual curiosity as positive traits, you have no chance.  

 

 

[goldenbrwn1]

18 minutes ago, digibum said:

 

That's the result of 40 years of the world basically being forced to do business with you because you were the least screwed up country in the region.  

 

I always find it so sad when I hear Thais joke about being lazy or how Thai students don't like to study.  To them, it's part of the culture.  Thais like sanook!  Hahahaha.  

 

Guess what Vietnam likes?  A better quality of life and they're willing to work for it.  Guess what Burmese like?  A chance to get out of poverty.  And they're willing to fight for it.  

 

If you view your laziness, apathy, and lack of intellectual curiosity as positive traits, you have no chance.  

 

 

My God that is so true. Just try striking up a conversation about something that's to do with something important, like sorting your financial future and it's like you just told them they are terminally ill.

Edited August 6, 2016 by goldenbrwn1

[gk10002000]

I am small potatoes but after my first few trips to Thailand starting back in 2004 I was completely ready to invest in some businesses, internet cafe, one bar, one bar with rooms, then more if things worked out.  But after the Thaksin overthrow it seemed obvious that anything could happen.   So I put my semi USA retirement plans on hold, and kept doing my engineering contracting work and just vacationing in Thailand.  After a dozen trips and another coup or two it is now abundantly clear to me that the Thai situation is completely unstable and is way too risky to invest any significant monies.  The laws and courts are not under civilian control, and literally anything can happen.

[SaintLouisBlues]

Oh dear, and there was I thinking the coup was intended to solve all of Thailand's problems by providing greater certainty. You live and learn.

[Thailand]

And I doubt that AP will have taken in to account recent reports of the Chinese starting to boycott Thailand and that tourist numbers are sliding.

[cyberfarang]

For me who`s income comes from abroad is hoping that the baht crashes through the floor at rock bottom, but I doubt this is going to happen.

[mogo51]

Why would companies bother to invest in Thailand.  Ask the Australian Mining Company that has been mining gold here for years and has a 'lease; to 2024.  They have been given the shove by the end of the year.  Allegedly due to environmental and health issues for locals, all of which were examined by experts and rejected.

Junta says no mining in Thailand - now that is good sensible economics!

[helpisgood]

14 hours ago, elgordo38 said:

Your kidding the US market is making new highs every day. 72% of American industries declared increased profits thanks to buying back their own stocks at high prices. New jobs increased by 255,000 last month 70,000 over estimate. What a leap from 11,000 in May. Even though Europe is falling apart their 3 main markets are riding the US markets tail up up and away as is Japan. European banks are mostly broke but their markets keeps going. Japan adds tons of stimulus and the Yen gets stronger but the government wants it to weaken strange. China keeps bringing out numbers exactly on what they are forecasting genius or what. Yes I know American GDP was half or less of what was expected but hey you cannot win em all.

 

As for the US, how do these higher numbers you cite truly affect the average American's life?  Yes, maybe there are more jobs but what kind of jobs and at what wages?  And yeah, it may be better than what it was during and just after the Lehman Bros, et al., 2008 crash, but that's a pretty low bar. 

 

If your point is that the US as a country is doing better than the rest of the world, then I can believe that.  However, for the average, or maybe the non-wealthy American, who really cares?

[spidermike007]

22 hours ago, digibum said:

 

The part that never gets enough attention in the normal Thai press.  Instead, it's all bluster about how the US can't tell Thailand what to do.  Thumbing it's nose at the US and siding up to China.  But behind the scenes, the government is sucking up because, well, Thailand is an export economy and Thailand needs the US.  

 

 

On par with the rice scheme in terms of totally misjudging the market.  

 

 

 

Correct. Thailand listens to, and obeys the US, for the most part, despite the rhetoric. Just look at the recent crackdowns on the sex industry. Does anyone really think that is coming from within? I would guess absolutely not. It is more than likely coming as a result of pressure from the US government, and it's band of NGO's. 

 

And all of this uncertainty is happening at a time when Malaysia, Indonesia, the Philippines, Vietnam, and even Burma are going out of their way, and offering progressive policies (something that is virtually unheard of here), incentives, tax breaks, long term visas, relative stability, the right to own land (in some cases for individuals, or businesses that invest enough capital) and more. Thailand is quite literally being left in the dust by their neighbors, who are simply trying harder, and making sense. And applying practical policies, and reason. 

 

What percentage of the total GDP in Thailand is generated by the more than 7,000 Japanese companies doing business in Thailand, many of them whom are manufacturing here? If that was taken out of the equation, where would the economy be? Will those companies stay here, in the long term? For how long? With the continued political instability, periodic flooding, and the emergence of this countries neighbors, what impact will that have?

 

As an example:

 

Cambodia has one of the most open economies in what is a generally very open economic region. According to the Heritage Foundations Index of Economic Freedom which is complied annually Cambodia ranked 35th among 170 countries in 2003 in terms of economic freedom. This puts it on a par with Japan and well ahead of several of its neighbors (Malaysia, 72nd; Indonesia, 99th; Viet Nam, 135th; and Lao People’s Democratic Republic, 153rd). The Index noted the Cambodian government’s positive policies in terms of the level of fiscal burden, labor market restriction, regulatory barriers and trade policy.

 

http://www.business-in-asia.com/why_cambodia.htm

 

Edited August 7, 2016 by spidermike007

[billd766]

16 hours ago, jesimps said:

Got that in before anyone had the chance to hold your beloved junta responsible.

 

How sad that you think that I HAD to get in before anyone else.

 

I generally log on around 11.30 am and firstly look at any notifications and then scroll down new topics for things I may be interested in. If I am, then I read the thread and post a reply if I want to. It doesn't matter to me if I am the 1st, 2nd, 19th or whatever poster I come in the list.

 

It may matter to sad people like you but not me.

Also they are not  MY beloved junta but they are the people in charge at the moment, though hopefully not forever.

 

If you live in Thailand, have a family, business you need to adapt with the times. I have during my time in Thailand.

 

Like Thaksin they have done some good things and some not so good.

 

I did hope in the early days that they would be an improvement on the last lot but it hasn't happened yet.

 

We as farangs, have to live with whoever is in charge, just as the Thai people do. The difference is that no matter what we think, say or post, nothing we do will change the way that Thailand is run.