Thai minister admits Covid-19 exposed cracks and faults in economy

BANGKOK (The Nation/ANN): The Covid-19 outbreak that hit Thailand since April has exposed the fragility of the economy and shed light on the fact that we rely too much on export and tourism, Deputy PM Supattanapong Punmeechaow said.

The deputy PM, who also holds the Energy portfolio, was speaking at the “Restart Thailand 2021” dinner talk held on Thursday (Dec 17) by Thansettakij and Krungthep Turakij newspapers at Siam Paragon shopping complex in Bangkok.

“The outbreak has had an especially heavy impact on small and medium businesses, prompting the government to spend over Bt800 billion on SME aid measures including postponing debt repayment worth over Bt6.8 trillion for 12 million SMEs, ” he said.

“However, from July onwards, economic indicators have been pointing toward an improving, trend thanks to cooperation from all parties in outbreak prevention, despite some minor impact from political situations.

“The tourism industry has shown improvement, with about 30 per cent occupation, jumping from just 6 per cent in April, thanks to the government’s economic stimulus campaigns such as the ‘Let’s Go Halves’ shopping subsidy, ” he added.

“Through the Thai Credit Guarantee Corporation, the government is also planning to provide an additional Bt150 billion in loans to help small and medium businesses.

“The battle against Covid-19 is not over yet. The government still has many projects in the coming year to boost the economy, attract foreign investors and build infrastructure for future expansion, ” the minister added.

“These projects include the construction of 14 Skytrain lines in Bangkok covering 500km in the next four to five years, larger than London’s Underground, and the infrastructure projects in the Eastern Economic Corridor to support digital technology, 5G and robotics industry.

“It is unacceptable to let Thailand slide back to the period before Covid-19. Since the global economy is changing we must be more proactive in attracting foreign investors, and the agencies responsible for this are the Board of Investment Office [BoI] and Eastern Economic Corridor Office, ” Supattanapong said.

“The next step will be to put Thailand on the list of top 10 countries with ease of doing business, which is a goal proposed by five countries who are our major trade partners.”

The deputy PM further explained that next year the government will focus on investing in new industries that will help reduce reliance on export and tourism.

“Bangkok will be the centre of regional offices of multinational companies, while Thailand’s automotive industry will focus on the manufacturing of electric vehicles [EVs], ” he said.

“EVs will create other related industries such as smart equipment manufacturing and electricity generating from renewable energy. This will create a great opportunity for Thailand to further invest in community power plants, as well as biomass and solar power plants in Laos.

The minister predicted that in 2022, the economy will become as strong as, or even stronger than before Covid-19 hit the country.

“The economy next year will still require aid from the government despite the availability of the Covid-19 vaccine. It should take at least six months for the situation to stabilise, and we should see an upward trend in the economy starting from the second half of the year onwards, ” he said.

“Next year the government will also focus on creating economic opportunities at the grassroots level to reduce disparity, ” he added.

“We cannot give people free handouts, we also need to create new jobs and new businesses that will support existing and future industries.”

Supattanapong said the government will not allow the outbreak situation to escalate and lead to a country-wide lockdown for the second time.

“The first lockdown had a heavy impact on the economy and required a long time for us to recover, ” he said.

“We will not let that happen again.

“The government has earmarked Bt3 billion to buy the first batch of Covid-19 vaccines, which will be provided to those in risky groups first, ” he added.

“Then we will use domestic facilities to produce vaccines for the rest of the population. When the outbreak situation returns to normal, we can expect a full recovery of the economy.” – The Nation/Asia News Network

Thai exports seen growing 3%-5% in 2021: shippers’ council

BANGKOK (Reuters): Thai exports are expected to grow 3% to 5% next year after a contraction of up to 7% in 2020, the shippers’ council said on Tuesday (Dec 8), helped by free trade agreements and developments on Covid-19 vaccines, though concerns about a strong baht persist.

“Signing of the RCEP agreement is good news for exporters,” Jintana Sirisantana, secretary general of the Thai National Shippers’ Council said, referring to the Regional Comprehensive Economic Partnership free trade agreement.

News of an effective vaccine and China’s economic recovery also would help exports recover, she added.

Exports, a key driver of the Southeast Asia’s second-largest economy, are expected to contract 6% to 7% in 2020, the group said, adding exports should recover to pre-Covid levels by 2022.

However, an appreciating baht posed a challenge for the recovery.

“We are afraid that short-term capital inflows are appreciating the baht,” Ghanyapad Tantipipatpong, the council’s chairwoman, told a virtual briefing.

The baht is currently trading at 30.12 per US dollar, around an 11-month high.

“The barrier should be at 30 baht because surpassing it would have a sentiment factor, which could further strengthen the currency,” said Ghanyapad.

Malaysia ranks fourth among top economies in cost of doing business, KPMG study shows

KUALA LUMPUR, Nov 3 — Malaysia has been placed fourth among 17 economies in an assessment comparing the economy’s competitiveness as a manufacturing hub in cost of doing business (CoDB), according to a study by KPMG.

The study found that Malaysia is placed ahead of countries in the Asian region such as China, Japan, Vietnam and India.

KPMG Malaysia managing partner Datuk Johan Idris said the study indicates that Malaysia’s CoDB Index results from high scores on the Primary Cost Index where Malaysia emerged at the top of the chart, tied with China, Mexico, and Vietnam.

“The country had outperformed on three factors: hourly compensation costs, real estate costs and corporate tax rates,” he said in a virtual media briefing together with InvestKL today.

He added that in analysing the results further, by changing the weight of the primary costs and secondary costs from equal to 70 per cent-30 per cent, Malaysia would be ranked the number one most cost-effective location in the CoDB Index.

“Malaysia continues to be a prime manufacturing hub for investors despite uncertainties in the current landscape. This is especially significant in our new reality, where operational stability and cost containment are central in every company’s long-term business survival. The results in this study only substantiate what Malaysian businesses already know and are proud of,” he said.

Johan added that as an immediate effect out of the Covid-19 pandemic, companies around the world have begun relooking at their supply chains.

“A study by McKinsey estimates that 16 per cent to 26 per cent of global exports, worth US$2.9 trillion to US$4.6 trillion, could move to new countries over the next five years if companies reshuffle their supplier networks,” he said.

He also emphasised tbat the study by KPMG proves that Malaysia has the factors for moving up the production value chain.

“This is by acting with agility and building on our resilience that we are able to maintain our competitive advantage and remain a preferred destination for high quality investments.

“The promising results of the study support the government’s focus on reviving Malaysia’s investment climate,” he said.

Meanwhile InvestKL chief executive officer Muhammad Azmi Zulkifli said Malaysia offers a thriving ecosystem for companies looking to locate their operations.

He said that Malaysia has the strength of having a pro-business government administration which has pushed the business community further while office rentals are affordable.

“We are boosted by our access to markets, world-class connectivity, infrastructure and highly skilled talent. Greater Kuala Lumpur pivots towards ‘Industries of the Future’ and there is a strong focus on advance manufacturing and services which aims to push the industry up the value chain towards high-impact, high-tech and sustainable activities,” he said.

Muhammad Azmi also said that with the increase in business interest, more high skilled jobs can be created from time to time.

The Malaysian Investment Development Authority (Mida) recently stated that Malaysia recorded a total of RM64.8 billion worth of investments in the manufacturing, services and primary sectors for the first six months of 2020 despite multiple headwinds on the global front.

The manufacturing sector attracted the largest portion of approved investments for the first half of 2020, contributing more than half (55.1 per cent) or RM35.7 billion. — Bernama