Economic Outlook and Ease of Doing Business in Thailand

Kobsak Pootrakool August 28, 2019

Topics for Discussion

• Roles of Economic Minister Council in managing the impacts of global economic challenges • Regulatory reform in Thailand

Global Economic Slowdown

The IMF Cut 2019 World GDP Growth Forecast for 4 Times in a Year

3.9

3.7

3.5

3.3 3.2

3

3.2

3.4

3.6

3.8

4

Apr. 18 Oct. 18 Jan. 19 Apr. 19 Jul.19

Source: IMF

Global Economic Slowdown

-2

0

2

4

6

2015

M1

2015

M6

2015

M11

2016

M4

2016

M9

2017

M2

2017

M7

2017

M12

2018

M5

2018

M10

Industrial Production World Trade Manufacturing PMI: new orders

World Trade, Industrial Production, and PMI Industrial Production

-4

-2

0

2

4

6

8

2015

M1

2015

M6

2015

M11

2016

M4

2016

M9

2017

M2

2017

M7

2017

M12

2018

M5

2018

M10

US Japan China Eurozone-4

Source: IMF

Germany GDP (qoq)

Exports Declined Across Various Economies

Source: Bank of Thailand

Export Performance of Asian Economies

Exports Declined Across Various Economies

Economies

Export growth (%YoY) 2019 2019 Q1 Q2

US 1.4 -3.0 Eurozone -3.8 -1.1 (2M) Japan -5.7 -6.2 China 1.0 -1.5 Hong Kong -2.6 -4.6 India 6.7 -1.7 Indonesia -8.2 -9.0 South Korea -8.5 -8.5 Malaysia -4.8 -4.6 Philippines -2.9 1.2 Singapore -2.7 -6.5 Taiwan -4.2 -2.6 Thailand -4.0 -4.2 Vietnam 5.1 9.2

US - China Trade War

Yuan Devaluation is Deployed to Combat Trade Tension

Financial Market Volatility

6

6.5

7

7.5

8

8.5

03/01

/2005

03/01

/2006

03/01

/2007

03/01

/2008

03/01

/2009

03/01

/2010

03/01

/2011

03/01

/2012

03/01

/2013

03/01

/2014

03/01

/2015

03/01

/2016

03/01

/2017

03/01

/2018

03/01

/2019

+10%Depreciation

Source: Bloomberg

9

Financial Market Volatility

Emerging Markets Currencies Movement (YTD)

-7.6% -4.8%

-4.4% -3.8%

-2.5% -2.4% -2.4%

-2.1% -1.1% -0.9% -0.8%

0.6% 1.1%

2.5% 6.0%

6.5%

-10.0% 0.0% 10.0%

KRW COP ZAR TRY CNY BRL CLP

TWD SGD INR

MYR MXN PHP IDR

THB RUB

Source: Bank of Thailand

Dollar Baht Exchange Rate

Yuan Baht Exchange Rate

22,000

23,000

24,000

25,000

26,000

27,000

28,000 Dow Jones

6,600

6,800

7,000

7,200

7,400

7,600

7,800 Financial Times

25,000

26,000

27,000

28,000

29,000

30,000

31,000

Hang Seng

19,500

20,000

20,500

21,000

21,500

22,000

22,500 Nikkei

Financial Market Volatility

The Yield Curve is Inverted Once Again US 2-10 Spread

Financial Market Volatility

Source: Bloomberg

-3

-2

-1

0

1

2

3

4

01/01

/1980

01/01

/1983

01/01

/1986

01/01

/1989

01/01

/1992

01/01

/1995

01/01

/1998

01/01

/2001

01/01

/2004

01/01

/2007

01/01

/2010

01/01

/2013

01/01

/2016

01/01

/2019

Dot Com Crisis Subprime Crisis

14

World Commodity Prices

0

1

2

3

4

5

6

7

1/5…

1/3…

1/1…

1/1…

1/9…

1/7…

1/5…

1/3…

1/1…

1/1…

1/9…

1/7…

USD per kg

Rubber Price

200

300

400

500

600

700

1/5

/52

1/1

1/5

2

1/5

/53

1/1

1/5

3

1/5

/54

1/1

1/5

4

1/5

/55

1/1

1/5

5

1/5

/56

1/1

1/5

6

1/5

/57

1/1

1/5

7

1/5

/58

1/1

1/5

8

1/5

/59

1/1

1/5

9

1/5

/60

1/1

1/6

0

1/5

/61

1/1

1/6

1

USD per ton Rice Price

300

400

500

600

700

1/1

/55

1/7

/55

1/1

/56

1/7

/56

1/1

/57

1/7

/57

1/1

/58

1/7

/58

1/1

/59

1/7

/59

1/1

/60

1/7

/60

1/1

/61

1/7

/61

1/1

/62

USD per ton Sugar Price

0

200

400

600

800

1000

1200

1400

1/5

/52

1/1

1/5

2

1/5

/53

1/1

1/5

3

1/5

/54

1/1

1/5

4

1/5

/55

1/1

1/5

5

1/5

/56

1/1

1/5

6

1/5

/57

1/1

1/5

7

1/5

/58

1/1

1/5

8

1/5

/59

1/1

1/5

9

1/5

/60

1/1

1/6

0

1/5

/61

1/1

1/6

1

USD per ton Palm Oil Price

Source: Bloomberg

Impact on the Thai Economy

1. Export Decline 2. Low Agricultural Prices

3. Weaker Tourist Arrivals 4. Capital Flows Volatility

The Thai Economy Has Been Slowing Since End-2018

Global Financial Crisis Floods Political Conflict Trade Tension

Thailand’s GDP Growth

Source: NESDC

GDP expanded only by 2.3% in 2019 Q2

Thailand’s Economic Forecast 2019-2020

% YoY Actual Forecast (as of Aug. 19) 2017 2018 2019F 2020F

GDP 4.0 4.1 2.7 – 3.2 (3.0) 3.0 – 4.0 (3.5) Private Consumption 3.0 4.6 4.2 4.0 Public Consumption 0.1 1.8 2.2 2.5

Private Investment 2.9 3.9 3.7 4.7 Public Investment -1.2 3.3 4.0 6.8

Export Value (USD,%) 9.5 7.5 -1.2 2.8 Inflation (%) 0.7 1.1 0.7 – 1.2 0.8 – 1.8

Current Account (%GDP) 9.7 6.4 5.8 5.4

GDP Growth Target: 3.0% or above in 2019 3.5% or above in 2020

19

Thailand’s Economic Policies 2019-2020

7 6

2

Assist low-income household and strengthen local economies

1

Assist SMEs

5

4

Support farmers: agricultural prices and farm income

3

Drive Export Performance

Accelerate public sector disbursement

Boost Tourism Sector Attract Private

Investment

Opportunities in Exports

Thai Export to US Thai Export to China

Thai Export under trade war

US

CN

Both

Bang Pa-in – Korat Motorway 21

22

New Tunnel for Dual Track

23

New Dual Track

Alignment of high

speed rail on dedicated

standard gauge track

25

New Extension of Suvarnabhumi Airport

0 2 5 10 กม. Km.

Key Projects: Mass Transit

route km

Red Line (North-South) 80.8

Red Line (East-West) 54

Airport Rail Link 50.3

Dark Green Line 66.5

Light Green Line 15.5

Blue Line ( Circle Line) 55

Purple Line 42.8

Orange Line 37.5

Pink Line 36

Yellow Line 30.4

Total 468.8

10 Line MRT Master Plan

Source: Office of Transport and Traffic Policy and Planning

26

New tunnel under Chaopraya River

New Subway Station

Yellow Line

Yellow Line

31

U-Tapao: Capital of Aviation & Aircraft Maintenance Industries

U-tapao Airport City

32

33

Laem Chabang => Transshipment port for Indochina

34

Ranong Port

35

Thailand’s Western Gateway to Indian Ocean

Opportunities in Tourism

Companies that are now considering relocation to Thailand

Companies that are now considering relocation

Companies that are now considering relocation

Regulatory Reforms

41

42

43

ตวัอย่าง ผลของการปรบัปรงุและยกเลิกกฏหมาย กฏระเบียบ ท่ีไม่จ าเป็น และเป็นอปุสรรคต่อการท าธรุกิจ ในต่างประเทศ

44

Korea

45

Our procedure

46

Three Key Criteria

• Legality • Need • Business Friendliness

Example : Building a warehouse in Thailand

48

New Biz Portal for on-line licence registration

50

7 6

2 Mobile Application (MY ID) by DGA

1 Notification Mobile Application for Those Staying Longer Than 90 Days

4

5

Cancellation of TM6 Form

3

Revision of the Application Processes of Non-Immigrant B Visa and Work Permit

Cancellation of the Requirement that All Private School Executives Must Have Teacher Licenses

Cancellation of the Minimum Area Requirement for Private University Campus

Cancellation of the 3D Printing Machine Import License

10 9 8 Cancellation of the Second-Hand Dealer License

Revision of the List of Dangerous Undertakings Under the Public Health Act B.E. 2535 (1992)

Introduction of Telemedicine License

Licenses/Procedures in the Immediate Reviewing Process