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Thailand’s economy is yet to bottom out although it should not sink any further because there are measures that are to be put in place by the new government, while at the same time the country should not witness any more coups as the ‘circle’ does not exist anymore, said former Prime Minister Thaksin Shinawatra during a late evening talk yesterday.
“Today I view that the Thai economy is yet to bottom out, but it should not go any deeper than this as the government is looking to take on various measures that would help it sustain any further decline,” the former PM said during his first gathering at Nation’s event.
“If it goes beyond this then it is going to be painful, and the job is to curtail any further decline and push it upward with the private sector and especially the Bank of Thailand (BoT) and the Thai Banker’s Association.”
Thaksin, who marked his 1st year of return from self-exile after 17-years today, came out to say that the move to revive the economy must come in various forms be it lowering of the rates, the soft loans etc.
He avoided pinpointing the BoT to lower the rates only saying that ‘we have to talk on ways to go forward and how all sides can help’ while giving the BoT the independence they need.
Comparing the current economy to those of 1997 financial crisis or what is called as the Tom Yum Krung crisis, he said that in 1997 the reserves were totally depleted, but today the reserves are very strong, and banks are very strong too because of their experience during the 1997 crisis.
“Today the reserves of BoT is more than its requirement,” Thaksin said.
Thaksin talked about various issues ranging from the possibility of another coup to the underground economy to the debt trap that the country is facing and some solutions. We at Thai Enquirer have listed each of these issues below for the international community to be able to understand as the talks were in Thai.
Commenting on the possibility of a coup, a rumor that has been talked about for months, he said that this was not anymore, a possibility and that those ‘circle’ that masterminded such action are no more there. He did not mention who was that ‘circle’.
As for question on whether Pheu Thai party would join hands in the future with now People’s Party, Thaksin said that it was a possibility, but the etiquette stipulates that once a government is in power then after the next elections, the 1st preference should go to those who joined hands the last time around.
He said that Pheu Thai surely will come out as the single largest party in the next elections as it will do all it can to be able to better people’s lives in the remaining 3-years.
(For those plagiarizing to send as notes to clients or rewrite it for their use, do give credit for it takes a lot of effort to sit and transcribe Thai language to English, as AI has not yet perfected that technology yet).
Debt Trap
Thailand is caught in a debt trap as the current debt to gross domestic product (GDP) ratio is 91-92%. He stated that the rising public debt-to-GDP ratio could be mitigated by promoting GDP growth and expanding the tax base, which would generate higher government revenue and enhance the country’s debt repayment capacity.
However, the current challenge lies in high household debt, which has already surpassed 91%+ of GDP, primarily driven by mortgage and auto loans.
Thaksin pointed to a proposal for the Bank of Thailand to consider lowering the contribution rate that commercial banks pay to the Financial Institutions Development Fund from 0.46% to 0.23%. This reduction would enable banks to allocate the savings to assist borrowers who are at risk of losing their homes and cars. He urged the Ministry of Finance to evaluate this proposal.
Personal Loan Restructuing
Thaksin said that it would not be like the business restructuring; the government would have to talk to the banks because they already have provisioned for some of the bad loans. What the has to look at is for the banks not to book it as a total write off or else they will lose money, but the provisions they have undertaken whether the government could buy it out.
Say if the loan is for 100, the banks have provisioned 50 then can the government buy it at 60 and the bank would still gain 10 and then the government can negotiate with the debtor on how to resolve their debt.
Foreign Land Ownership
Thaksin touched upon this issue saying that this is something that can be undertaken and would help the country. There are solutions to it and one of the solutions is for a 99-year leasehold to foreigners to be able to own the land and the building.
He said that the key for the transaction would be for the buyer and seller to agree privately and then once the deal is done, the seller of the land/building could go to the Treasury Department and transfer the deed to the Treasury Department, the Treasury would then have a 99-years lease agreement with the foreign buyer who would feel more comfortable dealing with the Treasury Department for long-term leases.
At end of the 99-years of lease, the land would then be owned by the Treasury Department, and this would help mitigate the call for ‘protecting’ the land from being fully controlled by foreigner.
Stock Market
Thaksin said that the Stock Exchange of Thailand (SET) has been witnessing a gradual decline due to the lack of trust and confidence. He said that there was an issue that needs to be urgently tackled.
“The SET is the face of the country’s economy and the in the recent past, trust & confidence has been lost. Foreign investors have been selling and the market is down, and there are problems of corporate governance,” Thaksin said.
Adding that the way to tackle corporate governance has not been strong enough and fast enough. And today there needs to be solutions and regain the trust and confidence.
He added that one way for the decline in the market is for the Vayupak Fund, a government initiative that acts like a sovereign fund, to start buying stocks in the SET100 and/or SET50 if they fall below the ‘fundamental’ value.
Citing the instance of how companies undertake ‘Treasury Stock’ Thaksin said that Vayupak should be able to undertake such moves.
Taxes
Thaksin said that there was a need for Thailand to expand its tax bracket with every citizen filling out tax returns and if they do, they could see taxes returned (if they do not reach the tax bracket). In what he says ‘negative income tax’ he said that the Ministry of Finance should look at ways to lower the personal income taxes and even corporate income taxes to make Thailand attractive to people.
He said that with more taxpayers it would help the economy and the government would not raise the current Value Added Taxes which currently are at 7%.
10,000 Baht Digital Wallet
Pheu Thai party’s 10,000 Baht Digital Wallet scheme that has been touted as the cornerstone policy of the government has been in doldrums as reports have emerged that it would be shafted but Thaksin came out to say that as of September 2024 as many as 14.5 million Thais would get the 10,000 Baht in Cash.
Thaksin said that the plan for the ‘Digital Wallet’ was to kill 3 birds with 1 shot, but despite the good intentions there are many people and organizations that have opposed it.
“There are people who are opposing, and they may not know what the solution is, and they may oppose despite them being the reason for the Tom Yum Krung crisis,” he said without naming any organization or person. The statement looked as if it was aimed at the Bank of Thailand which has bitterly opposed the move.
He said that the aim of this project is to
- To create liquidity in the system and the system at the moment is that the banks which are flush with liquidity are buying central bank bonds to avoid lending and keep themselves safe from any adverse economic downturn.
- To allow the famers to learn about digital technology.
- To use super application that can be used for all kinds of government and in the future the bonds of the government can be issues using digital wallet and they can use it to buy and sell goods and services or get interest.
Thaksin said that but because there are so many who oppose this move, the 145 billion Baht, would be used 13.5 million people who are registered in the system for being the recipient of the ‘government welfare’ and the nearly a million people who fall in the handicapped category.
These people will get 10,000 Baht by September 2024 under the 2024 budget. While the others who register and are deemed eligible would get their money in October but through the digital wallet program.
Global Thai Players
He said that Thai companies also need to expand away from their comfort zone of homebase. Very few Thai companies have taken that step, and the government should look to promote such outward expansion.
Citing the example of the financial sector from Singapore – United Overseas Bank (UOB), he said that when UOB first moved into Thailand nearly 25-years ago, acquiring Radanasin bank (the good bank from the then defunct Laemthong Bank) the bank paid 5 billion Baht but today they have expanded to make Thailand their 2nd largest operations outside Singapore with the acquisition of ABN AMRO Bank of Asia and then recently the retail operations of Citibank (Thailand).
Thaksin said that only Bangkok Bank had taken the plunge among Thai banks to take a bet in Indonesia, and “I am happy for that as Indonesia is a country that’s growing fast.”
He added that in the next few years Indonesia is going to be in G7 but today Thailand is at number 24 and even Philippines is above, and, in the future, they could be G20.
“This shows that there is a lack of strategy and the willingness by businesses to take the fight to their doorstep and the Ministry of Foreign Affairs and the Ministry of Commerce should take these issues to various countries to push forward,” he said.
Financial Center
Ministry of Finance, he said needs to work on this issue so as to make Thailand the financial center as Singapore is too strict in its regulation whist Dubai is too lenient.
He said that there must be a balance between the 2 current financial centers in Asia and Thailand could fill that gap.
But he cautioned that such a move would only be for international operations and not allowed to partake in domestic banking because to do domestic banking, these international players would need full domestic banking license.
Small & Medium Sized Enterprises (SME)
Commenting on the issues related to the problems of the SME sector, he said today they are dying because they are the same. He said that the SMEs in Thailand are not offering anything ‘unique’ and with goods from China that is killing the SMEs.
Online retailers such as TEMU (a Chinese online retailer that has made headlines in Thailand recently) is another scare crow. China has the economy of scale, and they sell their excess capacity to other countries, and we have to look at ways to make our SME more modern and unique.
Thaksin said that technology can be used to scan goods that are shipped from China and into Thailand through blockchain and if the declared goods from China does not match the scanned goods at the Thai ports, then the containers could be opened, and action undertaken.
Thailand has to look at whether the products that are coming into Thailand that are legal or not and we have to more vigilant on the incoming goods.
“The world is moving towards protectionism, and we must look at ways to do that too. We don’t hate Chinese products, but it is also about protecting our businesses,” he said.
Chinese Electric Vehicles (EV)s
Another issue that was touched upon was the influx of Chinese EVs into Thailand and that it is starting to kill the internal combustion engine makers that have set up operations in Thailand.
Citing the example of Charoen Pokphand Group’s plans to having all righthand drive MGs made out of Thailand’s production facilities, Thaksin said that other Chinese makers such as BYD, GWM etc. need to use Thailand as a base to make the right-hand drive vehicles and leave the left-hand drive ones in China.
He said that by doing so the local eco-system for the automotive market will remain vibrant and thus the local content negotiations can start off right away.
He added that Thailand could also make its location closer to the equator to its benefit as it could be used for the 100s of satellites that China is launching into space as it enters the 6G era. He said while Thailand is still using 5G network, China is already testing 6G and this offers opportunities for the country.
Tourism Sector
Tourism, which has been the saving grace for Thailand is another area that needs to be tapped and further expanded, Thaksin said.
He said that the sector needs to see greater efficiency and although the numbers are looking good, there is a possibility of rising the numbers even more.
“Today we are located in the center of China and India, which together make up nearly 1/3 of the global population, we therefore can tap more tourists into our country,” Thaksin said.
He said that more airports around the country would be upgraded, and even the main airports in Bangkok would see more facilities and runways added.
“I had laid the groundwork for the 3rd runway in 2007 and 17-years since then they are paving the 3rd runway with concrete with planned opening of the 3rd runway in November this year,” Thaksin said.
There is a need for 4th runway and a new terminal as well, which are being worked out.
Apart from that Thailand needs to build more facilities for tourists such as ‘clean’ toilets for tourists and not be like what tourists in the past used to talk about China of how dirty their public toilets were. Today, he said, China’s public toilets are among the cleanest in the world.
Also, Thailand needs to build more manmade tourist attractions to raise its status as destination of choice among tourists.
To attract higher end tourists, he said that there was a need to change the laws to allow private jets to have maintenance, repair and overhaul (MRO) as well.
Underground Economy
Thaksin stated that Thailand’s economy is being impacted by an illegitimate underground economy that accounts for 50% of legal businesses above ground. He said that bringing underground businesses into the formal economy would increase Thailand’s GDP by as much as 50%.
He said that oday Thailand is like Mexico or Philippines in the past. They were developing and there is heavy reliance on the underground economy. In the past 1/3 was underground but today is justground,49% and if that can be taken on the ground then the GDP will rise by as much as 50%.
This will help the debt to GDP to fall and the ability to pay off the debts be more efficient.
He said that the underground economy was in 2 areas Drugs and Gambling and has value in excess of US$ 5 billion.
If taxes can be collected to the tune of just 90 billion Baht and it can be used for things like education fund for future generations.
One way to get rid of illegal gambling is to have entertainment complexes.
Entertainment Complex
The entertainment complex is another issue that was discussed with Thaksin saying that this was needed to raise the tourism level. These venues would have parks, theme parks and casino would be less than 10% of the overall complex but their investments would have to be heavy.
“What we are looking at is at least 2 in Bangkok to create competition,” he said adding that each would need to invest no less than 100 billion Baht.
Investments in the complexes located outside Bangkok would be around 50 billion Baht each and he said there could be as many as 5 such projects across Thailand without putting out the possible venues.
Rail & Landbridge Project
Thaksin said that there was also a need for high-speed rail from Nongkai to Nakorn Ratchinasma to Bangkok. Next year is the 50th anniversary of diplomatic relations between Thailand and China and it should be pushed forward.
He added that there was also a request to change the route to go to south whereby the Chinese would build the rail project to help facilitate the movement of goods and services to the ‘Landbridge’ project that is set to take shape.
Thaksin added that there was a local Thai business group that wants to build the port linking the Andaman side only but want to build the rail network to that port via drilling in ‘a few tunnels’ and that is something that is being considered.
He said that the pros and cons of one port only would be weighed with those interested in having both sides and a decision would be made at a later date.
Mass Transit & Congestion Charge
Thaksin said that the government was going to look at ways to reduce the fares of mass transit in Bangkok to 20 Baht/trip and to be able to do that some of the mass transit lines may need to be repurchased back from the concessionaires that are holding the concession.
He said an ‘infrastructure fund’ may need to be set up to raise the funds to buy these mass transit lines because if these lines remain in the hands of the private companies and they are listed, then their top aim would be to raise profits to be able to meet the shareholders needs and to keep their share prices high in the market.
The Pheu Thai party has bene pitching the notion of 20 Baht/trip and has said that it should have that implemented by late 2025.
Apart from this Thaksin for the 1st time in Thailand raised the issue of having a ‘congestion charge’ as Thailand is one of the few countries that do not do it and have too many cars. He added that the funds received from the ‘Congestion Charge’ would be used to help the Infrastructure Fund to help pay for those using the mass transit at 20 Baht/ride.
Natural Resources from Gulf of Thailand
Thaksin said that the overlapping area between Thailand and Cambodia needs to be tapped as soon as possible because over the next few decades the use of fossil fuel may not be the thing. It would become useless if these reserves are not tapped.
He said that both the countries would share 50:50 on the resources extracted from the overlapping area and use the funds gained from such project to pay off to bring down the electricity cost and/or use the revenue like what Norway is doing with its earnings from oil and gas.