Anticipating the road ahead
While inflation looms, there are sure to be a wealth of opportunities this year
If 2021 proved a tough survival test for businesses, 2022 could be the right time to accelerate adaptive ability by capitalising on trends.
Inflation has picked up around the world because of higher costs for raw materials, constraints on the supply of goods, stronger consumer demand as economies reopen as well as prices bouncing back from drops in some sectors during the pandemic.
A sharp rebound in consumer demand coupled with supply disruptions and depleted supplies have pushed up prices and shipping costs globally.
Mounting inflationary pressure is anticipated in Thailand in 2022, with the Commerce Ministry -- which gauges headline inflation through the consumer price index -- predicting the highest level in the country in a decade, reaching 3% from a range of 0.8% to 1.2% in 2021.
E-payment transactions in Thailand have gained popularity since implementation of PromptPay in 2017. Chakrapan Natanri
The surge in the rate of inflation is mainly attributed to cost-push factors, including rising prices of imported raw materials, a recovery in domestic demand, relatively high oil prices and a labour shortage.
Ronnarong Phoolpipat, director-general of the Trade Policy and Strategy Office (TPSO), said the growth in demand both domestically and overseas has arrived in line with GDP growth, recovering tourism, robust exports, higher production and a series of economic stimulus measures from the government that would encourage purchasing power and be instrumental in driving headline inflation in 2022.
Higher demand for energy based on a recovery of the global economy will also affect retail gasoline prices, which make up a large proportion of the inflation basket, he said.
On the supply side, raw food is showing inflationary signs, following higher demand and damage related to the climate, while other prices were quite stable and moved in line with an increase in production and logistics costs as well as the baht depreciation, said Mr Ronnarong.
Representations of cryptocurrencies Bitcoin, Ethereum, Dogecoin, Ripple and Litecoin are placed on PC motherboard in this illustration. REUTERS
DIGITAL ASSET BOOM
Regulators are expected to implement rules governing digital assets to minimise possible risk to the financial system, while large local banks and corporations have been getting involved in digital asset investment in line with positive growth in the market.
The popularity of cryptocurrencies has attracted a specific group of investors, largely speculators hoping for outsized returns in a short time from investing in digital currencies, both globally and locally.
According to the Securities and Exchange Commission (SEC), the number of crypto traders surged to 1.77 million accounts as of October 2021, rising significantly from around 700,000 accounts in 2020.
Several firms now allow customers to pay for goods and services using digital currencies, starting with the property sector, followed by others including retail businesses.
However, the Bank of Thailand has made it clear it does not support the use of digital assets as a means of payment for goods and services because they are associated with high price volatility and risks in terms of cyber theft and money laundering, which could be detrimental to merchants, businesses and consumers.
The central bank, in coordination with the SEC and other relevant agencies, is considering guidelines to regulate the use of digital assets as a means of payment for goods and services to limit the risks.
Although the idea of digital assets becoming a mainstream payment method is still a long way off, their role as a fundraising and lending instrument was strengthened in 2021 by the proliferation of initial coin offerings, decentralised finance (DeFi), and game DeFi.
An electric vehicle charges at Motor Expo 2021. Pattarapong Chatpattarasill
The global and Thai cryptocurrency markets are expected to continue attracting new waves of investors, growing with intensified competition from the entry of several traditional financial institutions this year.
According to data from the SEC, the trading value of cryptocurrencies in Thailand on five digital asset exchanges and a broker surged to 8.16 billion baht as of the end of November 2021, up 181% from 2.9 billion in January 2021.
As Thais gain greater access to the internet and social media, they also gain access to a vast amount of information and knowledge regarding cryptocurrencies, increasing their awareness of the assets.
One hypothesis is more crypto traders were attracted to the market during the pandemic because trading cryptocurrencies became more convenient and suitable to changing lifestyles and evolving technologies.
Traders can open a trading account online and verify their identities through the know-your-customer (KYC) process, then start trading anytime as digital markets never close.
According to Jirayut Srupsrisopa, chief executive and founder of Bitkub Capital Group Holdings, Bitkub has 2 million traders going through the KYC process, while Zipmex has 9,000.
Several commercial banks and financial institutions such as SCBx Group and Kasikornbank hopped on the bandwagon and invested in digital platform startups and digital asset exchanges, making it likely different types of digital tokens and cryptocurrencies could grow this year, according to industry analysts.
Cloud computing is projected to gather momentum in Thailand in 2022.
Thailand is using less cash for transactions because of collaboration by related parties to develop the county's digital payment platforms. E-payment transactions in Thailand have risen significantly since the implementation of the government's national e-payment project -- PromptPay -- in 2017.
Intensifying competition in mobile banking services has boosted the popularity of the e-payment channel. Banks have waived fees for online transactions, including cash transfers and payments, since March 2018.
The central bank and the local banking industry promoted a QR code payment solution, which has now been expanded to cover cross-border QR payment within Asean.
The Covid-19 outbreak added a catalyst to Thailand's e-payment adoption among consumers, helping people to maintain social distancing during the pandemic.
The central bank also developed a digital payment platform for businesses under its Smart Financial and Payment Infrastructure for Business project. The project builds the country's digital trading ecosystem in three core areas: e-invoices, e-tax invoices and e-payment for businesses, which are expected to be operational in the second half of 2022.
As PromptPay led to a revolution in digital payments for consumers, so will the Smart Financial project for businesses, said Bank of Thailand governor Sethaput Suthiwartnarueput.
Remote work became a trend in part because of the Covid-19 pandemic.
RISE OF EVS
The country's electric vehicle (EV) market looks set to enjoy bright prospects in 2022, with automakers exciting buyers with environmentally friendly models amid global campaigns aimed at reducing carbon dioxide emissions.
More policies to cope with greenhouse gas emissions have been launched by many countries, including Thailand, which should promote investments in EV technology and infrastructure, said Krisda Utamote, president of the Electric Vehicle Association of Thailand (EVAT).
Governments view EV development as part of their efforts to achieve a net-zero goal, a balance between greenhouse gas emissions and absorption, as all types of EVs require less or no fossil fuel.
"The world is promoting technology to make environmentally friendly cars, using them as a key tool to reduce carbon dioxide and other air pollutants," said Mr Krisda.
These environmental concerns, together with a shift towards this generation of cars, is fuelling the growth of the EV industry.
Newcomers in the domestic EV market, including Chinese manufacturer Great Wall Motor, have rolled out cars with novel designs, providing more choices for consumers.
In Thailand, around 3,200 EVs were registered between January and August, 2021, up from 2,999 units recorded for the whole of 2020, according to EVAT.
Plug-in hybrid EVs could be an appropriate choice for most Thais as they allow drivers to travel a considerable distance without worrying about locating an EV charging outlet, said Surasak Suthongwan, executive vice-president of Lexus Group under Toyota Motor Thailand Co.
CLOUD, AI AND CYBERSECURITY
Cloud computing, artificial intelligence (AI) and cybersecurity are projected to gather momentum in Thailand in 2022, while the metaverse is still in its infancy.
Digital transformation is expected to continue among organisations as the pandemic shifts consumer behaviour towards online engagement.
Cloud computing should continue to accelerate, not just in the area of infrastructure as a service, but also through greater adoption of software as a service. Cloud service models featuring pay-per-use or subscriptions are suitable for many corporations with tight budgets.
Meanwhile, cybersecurity spending is expected to surge as enforcement of the Personal Data Protection Act starts in June 2022, which requires organisations to employ sufficient security measures to ward off data breaches.
Industry analysts predict AI will become a common technology adopted by organisations to help make decisions and gain customer insights.
Hyper-automation could be more widely adopted as corporations aim to scale up productivity and rely less on a human workforce to observe social distancing measures, said analysts.
Regarding the metaverse, consultancy McKinsey & Co indicated the value proposition of metaverse for firms could be substantial, including greater touchpoints for connecting with new generations of consumers.
However, the metaverse still requires multiple technologies to be integrated.
There are various trends that could push the metaverse towards long-term growth, such as further penetration of e-commerce, virtual worlds becoming more mainstream, adoption of decentralised technologies and involvement by financial players, according to McKinsey. It is premature to determine how the metaverse will evolve, the company said.