Bolstering Thai Economy: Key Recommendations for Government

Bolstering Thai Economy: Key Recommendations for Government

Streamlined E-receipt System Boosts Thailand Industry Sentiment Index (TISI); FTI Urges Government Action to Address Cargo Ship Importation.

The Vice Chairmen of the Federation of Thai Industries (FTI), Mr. Montri Mahaplerkpong and Mr. Apichit Prasoprat, reported a notable increase in the Thailand Industry Sentiment Index (TISI) for January 2024, rising to 90.6 from 88.8 in December 2023. This upswing in TISI can be attributed to various contributing factors.

One significant catalyst has been the surge in domestic demand, driven by heightened orders and sales, particularly in consumer goods, in anticipation of the Chinese New Year festivities. The implementation of the Easy E-receipt initiative, active from January 1st to February 15th, 2024, has notably bolstered domestic spending.

Additionally, the Visa-Free policy, aimed at promoting tourism, has led to a substantial year-over-year (YoY) increase of 27.8%, equivalent to 2,743,147 additional tourists visiting Thailand. Moreover, the export sector has experienced a resurgence, buoyed by heightened global demand, particularly from key trading partners such as the United States, the Middle East, and India.

Despite this positive trajectory, challenges persist, particularly concerning adjustments to rising minimum wages and consistently high interest rates. These factors have led to increased operating costs, significantly impacting small and medium-sized enterprises (SMEs). Financial institutions are exercising caution in loan approvals, citing concerns over household debt levels.

Furthermore, importers and exporters are grappling with escalated international shipping costs, including freight rates, fees, and insurance premiums. These costs have surged following recent attacks on cargo ships in the Suez Canal and the Red Sea region, causing disruptions in shipping routes between Asia and Europe. As a result, rerouting through the Cape of Good Hope has incurred additional expenses.

In response to these challenges, the FTI urges government intervention to engage in discussions with carriers to facilitate the importation of cargo ships and containers, mitigating the impact of rising transportation costs on businesses and ensuring sustained economic growth.

According to the TISI survey conducted in January 2024, 1,331 entrepreneurs across 46 industry clubs of FTI expressed their concerns regarding various factors. The survey revealed that 82.5 percent of the participants were worried about the global economy, followed by 73.7 percent concerned about loan interest rates, 50.1 percent and 45.2 percent anxious about fuel prices and the domestic economy, respectively. Conversely, the exchange rate of Thai Baht against USD and politics were less critical factors, with only 41.5 percent and 35.0 percent of the participants expressing concern, respectively.

The TISI forecast for the next three months is expected to rise to 98.4, marking an increase from 96.2 in December 2023. This positive shift can be attributed to the continuous expansion in domestic and global demand, supported by corrective measures that involve informal loans and debt moratoriums for SMEs. Despite this optimistic outlook, there are noteworthy factors that necessitate careful monitoring. The ongoing geopolitical tensions in the Red Sea region may have a broad impact on Thailand’s exports in the near future, influencing the resilience of the supply chain and contributing to energy price volatility. Additionally, Thai entrepreneurs have persistent concerns over the decelerating Chinese economy, particularly due to the real estate crisis, which may result in weakened consumer purchasing power and diminished demand for Thai products.

Recommendations to the Government sector:

  1. It is recommended that the government expedite discussions with carriers to increase the importation of cargo ships and containers into the country to prevent shortages. Additionally, it is crucial to explicitly announce shipping route plans and provide details about the increase in freight rates.
  2. The government should facilitate Thai-Myanmar border trade as well as Thai investors investing in the area to mitigate the impact of unrest in Myanmar.
  3. Expedite approval for the fiscal year 2024 budget and prepare for targeted spending, particularly in investment budgets and procurement, to stimulate the economy.

In addition, the Federation of Thai Industries (FTI) has compiled the results of the TISI survey and data on economic and industry indicators from various agencies for the past three years. It is available as a dashboard published on the Industry Data Space (iDS) website of FTI to facilitate entrepreneurs and the public in accessing helpful information for their business operations. You may access the mentioned information service at The Federation of Thai Industries (FTI) aims to "Strengthen Thai Industries for a Stronger Thailand."

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