Paetongtarn Shinawatra's recent ascension to prime minister, following the Constitutional Court's dismissal of her predecessor Srettha Thavisin over ethics violations based on a cabinet appointment, and the dissolution of the progressive Move Forward Party, which won the last election, presents a complex interplay of economic, political and social challenges for the nation.
As the youngest prime minister in Thai history and the daughter of former premier Thaksin Shinawatra, her leadership comes as Thailand searches for political stability, economic revitalisation and social inclusivity.
How Ms Paetongtarn, who recently turned 38, manages these challenges will be critical in shaping the country's future amid long-standing political divisions and economic headwinds.
ECONOMIC PRIORITIES
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the policy priorities for Ms Paetongtarn's administration should focus on clear guidelines to implement the digital wallet scheme and other immediate stimulus measures.
He also highlighted the need to address nationwide flooding and drought issues, as well as stabilising the baht because its recent appreciation affected agricultural and food exports. This is a concern as the government aims for export growth of at least 2% this year, said Mr Sanan.
The government, in collaboration with public and private agencies, should seek to improve Thailand's competitiveness by accelerating negotiations for free trade agreements to increase trade and exports, he said.
As Thailand's tourism revival gains momentum, with 3 million foreign arrivals per month on average, Mr Sanan proposed the government set service and safety standards at attractions nationwide to meet the target of securing 36-37 million foreign arrivals.
The administration should also continue to promote 10 pilot second-tier provinces as tourism destinations, he said.
The private sector is keen for speedier fiscal budget disbursement to revive the economy, including the fiscal 2025 budget, according to the chamber.
A challenge facing the new government is the revival of local entrepreneurs, particularly small and medium-sized enterprises (SMEs) that are grappling with an influx of cheap goods from China.
Many Thai SMEs, unable to compete with Chinese products on price, have shut down, creating a ripple effect in the economy and reducing domestic purchasing power as people lose jobs and income.
More organisations are calling for government measures to deal with this threat and tighten law enforcement of Chinese imports, said Mr Sanan.
Siriyupa Roongrerngsuke, executive advisor for the office of the CEO, Bumrungrad International Hospital, said the new government's top priority should be to put "the right man in the right job".
Thailand needs ethical and competent ministers to achieve meaningful results, rather than relying on quota-based appointments as in the past, she said.
"The focus should be on revitalising the economy and enhancing Thailand's reputation as a stable, democratic nation that is highly attractive to foreign direct investment [FDI] on the global stage," said Ms Siriyupa.
She highlighted the need for Thailand to restructure its economy to foster innovation and competitiveness.
The new government must develop policies that deliver both immediate benefits for the country and long-term initiatives that promote sustainable growth, rather than pursuing short-term populist measures aimed solely at winning votes, said Ms Siriyupa.
Thailand's workforce lacks essential employment skills, making the development of strong human capital through upskilling and reskilling crucial, she said.
"By focusing on economic restructuring and human capital development, Thailand will become more appealing for FDI," said Ms Siriyupa.
DOUBLE CHALLENGE
Supant Mongkolsuthree, honorary chairman of the Federation of Thai Industries (FTI), said the Paetongtarn government faces a significant challenge in addressing the nation's declining purchasing power, compounded by the prime minister's limited experience in steering Thailand through an economic downturn.
"Most people are worried about having insufficient or no money for spending," he said, adding this is a major factor contributing to the economic slowdown and requires immediate attention from the new government.
A thorough investigation into the causes of weak consumer spending should be the new cabinet's first priority, said Mr Supant.
A contributing factor is the high level of household debt, which is adversely impacting several industries, he said.
The auto sector has been hard hit, with domestic car sales declining 8.6% year-on-year in 2023. Mounting debt exacerbated the situation, causing a further 24.1% drop in car sales from January to June this year, according to the FTI.
The federation attributes this sharp decline primarily to banks tightening their criteria for auto loans, concerned about non-performing loans.
Mr Supant also expressed doubts about the effectiveness of the controversial 10,000-baht digital wallet handout to significantly improve the economy or benefit many businesses.
"It seems that large enterprises, such as department stores, are likely to benefit the most," he said.
Ms Paetongtarn's limited experience in formulating and implementing socio-economic policies is another concern for Mr Supant, although the new premier has some managerial experience as a company executive.
He said the new premier could seek guidance from her father, a former prime minister, as his extensive connections could help her select capable individuals to support her administration.
INFRASTRUCTURE
Kettivit Sittisoontornwong, chief executive of MAI-listed LEO Global Logistics, said the economy is more fragile based on the decline in domestic consumption, as the real estate and auto markets recently slumped.
However, he said the export sector is resilient and major sales events such as 10.10, 11.11, Thanksgiving and the year-end shopping season remain in the last four months of this year.
Mr Kettivit said Thailand lacks mega-project investment and the government should offer promotions and incentives to attract foreign ventures to invest in the Eastern Economic Corridor's special development zones.
"We should consider incentives deployed by neighbouring countries to draw foreign investors' attention," he said.
Mr Kettivit proposed the government emphasise infrastructure development whether by land, water, rail or air to attract investment, including facilitating customs procedures to enhance Thailand as a regional logistics hub based on the country's strategic geographical advantages.
"The government should have a clear logistics strategic plan led by the Transport Ministry, in collaboration with other agencies," he said.
Referring to the proposed 1-trillion-baht Land Bridge project that aims to develop a logistics network connecting Ranong to Chumphon, Mr Kettivit said the mega-project may not be economically feasible, even though it could reduce shipping time by circumventing the Strait of Malacca.
"As a cargo ship carries thousands of containers, transferring containers from ship to rail and back to another ship could consume more time than plying the Malacca route," he said.
Mr Kettivit proposed the government develop Ranong port instead, as logistics operators from Thailand and China can connect to it via rail, using the port for transport to the Indian Ocean.
He acknowledged the influx of cheap and substandard goods from China via both online and physical platforms has affected Thai businesses, eroding their competitiveness because of the cut-rate prices.
The government should urgently develop policies and measures to address the flood of cheap Chinese products, said Mr Kettivit.
"Authorities should be able to collect taxes from foreign online vendors who sell products in Thailand, ensuring a level playing field for Thai vendors who pay taxes," he said.
STOCK MARKET
Rongrak Phanapavudhikul, senior executive vice-president and spokesman of the Stock Exchange of Thailand (SET), said the bourse is hopeful a new government can support the establishment of a reworked Thai ESG Fund (TESG) and Vayupak Fund.
"Both projects will greatly support the capital market," he said.
The Securities and Exchange Com- mission recently issued regulations and conditions to establish a new version of the TESG, and investment management companies are preparing to launch fund options, said Mr Rongrak.
Meanwhile, the sale of units of the Vayupak Fund was approved by the previous cabinet.
"If the new government drives for the successful launch of Vayupak Fund sales, it will attract significant investment to the stock market," he said.
Once the economy revives, the performance of listed companies will improve, attracting investors to the Thai stock market again, said Mr Rongrak.
"Stimulus measures are vital because they contribute to economic growth by creating short-term capital circulation in the economy," he said.
ENERGY
Teerapat Wongraveekul, chief financial officer of SET-listed Banpu Power, the power generation subsidiary of energy conglomerate Banpu Group, said the new administration should mull establishing a merchant market that enables free electricity trade between buyers and sellers.
He said this should be a priority for policymakers, alongside efforts to enhance the adoption of renewable energy, as outlined in the 2024 Power Development Plan, which is pending approval from the new government.
Thailand traditionally operated under power purchase agreements (PPAs), where companies that win bids to develop power plants sell electricity to the authorities, who then distribute it to consumers in the business and residential sectors.
In a merchant market, consumers can choose their electricity providers and the associated tariff rates, which are used to calculate power bills.
This system fosters competition among power companies, potentially leading to lower tariffs, which benefits consumers, said Mr Teerapat.
In Southeast Asia, the Philippines and Singapore have already implemented merchant markets in their energy sectors, he said.
A merchant market would also align with the government's decision to pilot a direct PPA project in the renewable energy segment, said Mr Teerapat.
In June, the National Energy Policy Council committed to advancing this project, which would allow businesses -- particularly electricity-intensive data centres -- to purchase electricity directly from producers.
Peer-to-peer power trade in the renewable energy sector has yet to be approved in Thailand.
PROPERTY
Issara Boonyoung, chairman of the Committee for Real Estate Development at the Thai Chamber of Commerce, emphasised the urgent need for the new government to facilitate mortgages with low interest rates.
"Although the policy rate was recently maintained at 2.5%, introducing mortgages with low fixed interest rates is crucial to support homebuyers with limited purchasing power and improve access to loans, especially given the high rejection rates for mortgages," he said.
Mr Issara said there is a backlog worth 50 billion baht in mortgages, with an average interest rate of 3% for 4-5 years, pending approval.
However, the cabinet's dissolution following Mr Srettha's dismissal by the court ruling has delayed the process.
"The 70% rejection rate for mortgages must be addressed, as it is attributed to high household debt levels," he said.
"The low-interest mortgages offered by the previous government as part of property stimulus measures in April proved highly effective."
Mr Issara said there was a significant impact on homebuyers, who transferred units priced at 1.5 million baht in the second quarter, following the Government Housing Bank's introduction of low-interest mortgages.
The scheme's 20 billion baht in loans was quickly utilised, prompting the government to release an additional 50 billion just before the court ruling.
"This shows that low interest rates can greatly benefit homebuyers, reducing their monthly payments by more than half -- from 7,000 baht to just 3,000 baht for a loan of 1 million baht," he said.
"Reviving the economy through financial policies can have an immediate impact, unlike government spending on projects, which take several months to show results."
HOSPITALITY
Marisa Sukosol Nunbhakdi, executive vice-president of Sukosol Hotels Group, said hoteliers want the new government to take immediate action to control rising operating costs, which have grown faster than tourism income.
While Thailand's booming tourism sector continues to attract new hotel investors, she said local hotels -- especially mid-scale and smaller operators -- are struggling to remain competitive because of escalating costs related to maintenance, labour, supplies and energy.
Mrs Marisa also highlighted the tourism industry's susceptibility to unforeseen disruptions, such as the recent confirmed case of mpox in Thailand.
She called for the government to be vigilant and prepared to respond swiftly to any crisis.
"Addressing weak infrastructure and bolstering domestic consumption and tourism are urgent priorities for the new government," said Mrs Marisa.
"Improving infrastructure would ensure long-term sustainability, while strengthening domestic tourism could help balance the market and reduce dependence on international visitors, which are subject to external influences."
DIGITAL EFFORT
Pochara Arayakarnkul, chief executive of digital transformation consultancy Bluebik Group, said the incoming administration should focus on accelerating the development of digital government services.
Thailand still lags countries such as Estonia in digital government ratings, according to Mr Pochara.
He also pointed to the importance of promoting open data initiatives across state agencies and leveraging big data for decision-making.
Strengthening the country's cybersecurity to mitigate cyber-threats should be a continued focus, said Mr Pochara.
