by Daryl Lum | Aug 28, 2024 | Bangkok Property Market Updates, Investment Analysis
In July, exports posted their highest growth in 28 months, surging by 15.2%, as easing inflation and improved purchasing power among key trading partners fueled demand.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office (TPSO), reported that exports reached USD 25.7 billion (938 billion baht) in July, largely driven by declining global inflation, which bolstered consumer spending capacity. Excluding gold, oil-related products, and weaponry, real sector exports increased by 9.3%.
Key factors contributing to this growth included rising employment and wage adjustments among major trading partners, particularly in Europe, which led to stronger consumer demand, boosting exports. Major markets showing strong recoveries included the US, China, Southeast Asia, and the European Union.
This trend aligns with the International Monetary Fund’s economic outlook, which points to a lift from China’s export-driven recovery and Europe’s rebound from earlier challenges.
Imports in July rose by 13.1% to USD 27.1 billion, resulting in a trade deficit of USD 1.37 billion. Over the first seven months of 2024, exports grew by 3.8% to USD 171 billion, while imports increased by 4.4% to USD 178 billion, creating a cumulative trade deficit of USD 6.62 billion.
Agricultural and agro-industrial product exports rebounded in July, rising 8.7% year-on-year to USD 4.36 billion, led by strong performance in rubber, rice, poultry, seafood, pet food, and edible oils. However, declines were noted in certain categories, including fruit, tapioca, sugar, and beverages.
Industrial product exports saw a significant year-on-year increase of 15.6% to USD 20.3 billion, recovering from previous declines. Key export drivers included oil-related products, electronics, and air conditioning equipment, while sectors like automobiles and semiconductors experienced decreases.
Mr. Poonpong expects exports to rise by 1-2% in 2024, supported by global economic recovery, industrial production improvements, and growth in the digital economy. However, risks such as geopolitical tensions and uncertainties in economic and trade policies following elections in key countries could weigh on future export performance. The Ministry of Commerce will continue to monitor these risks closely.
Meanwhile, Chaichan Chareonsuk, chairman of the Thai National Shippers’ Council, noted that although sea freight costs have eased, potential baht appreciation in the fourth quarter could pose challenges for exports.
by Daryl Lum | Aug 21, 2024 | Bangkok Property Market Updates, Infrastructure & Urban Development
The State Railway of Thailand (SRT) has announced that a new train service from Bangkok’s Bang Sue Grand Terminal to Penang, Malaysia, will commence within two to three months.
On August 20, Mr. Ekkarat Sri-arayangpong, Chief of the Office of the Governor of SRT, confirmed this development. It was endorsed by Mr. Awirut Thongnet, Deputy Governor of SRT, during the 42nd KTMB – SRT Joint Conference held in Kota Kinabalu, Sabah, Malaysia, from August 13-16.
The initiative aims to strengthen bilateral rail cooperation, improve passenger travel, and enhance cross-border goods transportation between Thailand and Malaysia. It aligns with the broader policy of Mr. Surapong Piyachot, Deputy Minister of Transport, to stimulate economic growth and boost tourism for both nations.
The conference approved the Bangkok Grand Station – Padang Besar – Butterworth, Penang, route in principle, which is expected to enhance travel connectivity and promote tourism and trade between Thailand and Malaysia.
The agreement also includes extending the MySawasdee tourist train service from Hat Yai Junction in Thailand to Surat Thani Station, following positive feedback and full occupancy rates on all trips.
This extension is anticipated to further stimulate tourism and generate increased revenue for both nations. Further discussions will focus on finalizing operational details and implementation timelines.
A joint working group will be formed to advance the launch of the extended Bangkok-Padang Besar-Butterworth service, expected to commence within the next 2-3 months, with an initial 6-month trial period.
Mr. Ekkarat also highlighted that the meeting explored further freight transport cooperation, with the SRT expressing readiness to support cross-border goods transportation through routes such as Padang Besar – Hat Yai Junction, Hat Yai Junction – Bang Klam/Ban Thung Pho Junction/Kantang, and Padang Besar – Bangkok/Sapli/Na Pradu.
In addition, the success of the ASEAN Express train service connecting Malaysia, Thailand, Laos, and China was recognised, and plans to increase its frequency from once a week to twice a week were discussed.
This collaboration marks a significant expansion in Thailand-Malaysia rail connectivity, promoting seamless travel, trade, and tourism while reinforcing Thailand’s ambition to become a regional hub for tourism and logistics.
by Daryl Lum | Aug 20, 2024 | Bangkok Property Market Updates
The registration process for the 10,000-baht stipend under the Digital Wallet program commenced on August 1st, with funds expected to be accessible in the fourth quarter of this year to stimulate economic activity. The initiative is projected to inject 450 billion baht into Thailand’s economy, benefiting 45 million Digital Wallet users nationwide.
This program is anticipated to generate four significant economic “whirlwinds,” revitalizing the manufacturing sector and bolstering confidence in Thailand’s economy. The disbursement of funds will drive consumer spending, encourage transactions in both small and large businesses, create new investment opportunities, and boost purchasing power, ultimately doubling economic activity and reviving the production sector.
Key Highlights
Overview of the Digital Wallet Initiative
- The Digital Wallet initiative is a 450-billion baht program launched by the Thai government.
- It aims to increase monetary circulation, reduce living costs, improve quality of life, strengthen economic resilience, create job opportunities, and support the advancement of digital technology and innovation.
- The program commenced on August 1, with registration open until September 15 for eligible Thai citizens.
- Eligible participants include those not serving prison sentences, not required to refund previous government assistance, and not disqualified from other governmental programs.
Economic Impact of the Initiative
- The initiative is expected to generate four key economic “whirlwinds”:
- The first “whirlwind” will boost consumer spending and support grassroots economic growth.
- The second will promote spending at both small and large businesses.
- The third will encourage spending between major retailers, fostering investment opportunities.
- The fourth will temporarily increase purchasing power, leading to doubled economic activity, a revived production sector, and renewed confidence in Thailand’s economy.
Registration and Disbursement Details
- Participants can register via the Thang Raj app or through personal registration from September 16 to October 15 for those without smartphones.
- Businesses interested in participating can begin registering on October 1, with around two million stores expected to join.
- Funds will be disbursed in the fourth quarter, with spending restrictions for those without smartphones, who must present their ID cards for in-person purchases.
- Purchases are limited to goods or services within the recipient’s registered district, excluding items on a designated “Negative List.”
Funding for the Initiative
- The program will be funded through multiple sources:
- 165 billion baht from the 2024 fiscal budget, including a 122 billion baht supplementary budget and 43 billion baht from budgetary management.
- 285 billion baht from the 2025 fiscal year budget.
- The Deputy Finance Minister has confirmed that funding the initiative poses no issues.
The Growing Influence of Digital Wallets
Digital wallets are rapidly transforming the financial sector, revolutionizing how consumers and businesses handle transactions. Finance ministers globally are increasingly acknowledging the potential of these digital payment systems to enhance economic efficiency, improve transaction security, and foster financial inclusion. As more people adopt digital wallets for their convenience and accessibility, governments are beginning to observe changes in spending behaviours and economic dynamics.
Digital wallets have the power to significantly increase consumer spending by removing the need for physical cash and offering easy access to funds. This convenience encourages spontaneous purchases and smooth transactions, leading to heightened economic activity. Additionally, digital wallets often include budgeting tools that help users manage their finances better, boosting overall economic confidence.
For businesses, digital wallets streamline transactions and reduce the costs associated with handling cash. Small and medium enterprises, in particular, can benefit from faster transaction times, allowing them to serve customers more efficiently. The integration of digital wallets with loyalty programs and targeted promotions also enables businesses to collect valuable customer data, enhancing personalized marketing efforts and fostering customer loyalty, which is crucial in a competitive market.
On a broader scale, digital wallets can play a critical role in financial inclusion, especially in regions with limited banking infrastructure. By providing a platform for unbanked populations to participate in the economy, these wallets can stimulate local businesses and contribute to economic stability. As finance ministers recognise the potential of digital payment solutions, they are likely to implement supportive policies, creating conditions for economic “whirlwind” effects that benefit both consumers and businesses.
by Willie Tan | Aug 19, 2024 | Bangkok Property Market Updates
Paetongtarn Shinawatra was officially confirmed as Thailand’s prime minister by the king on Sunday, August 18, following her election by parliament two days earlier. This sets the stage for her to form a new Cabinet in the coming weeks.
At 37 years old, Paetongtarn is Thailand’s youngest prime minister, succeeding Srettha Thavisin, who was removed by the Constitutional Court, an institution often at the centre of the country’s ongoing political unrest. Paetongtarn is the daughter of Thaksin Shinawatra, a prominent and polarizing political figure, and she secured the position after receiving 319 votes in the House of Representatives, making her Thailand’s second female prime minister and the third member of the Shinawatra family to hold the office, following her father and aunt Yingluck Shinawatra.
The king’s approval, a formal requirement, was announced during a ceremony in Bangkok by the House Secretary, Apat Sukhanand. Paetongtarn, dressed in official attire, knelt before a portrait of King Vajiralongkorn to pay her respects and delivered a brief speech expressing gratitude to the king and parliament. She emphasized her commitment to working with legislators openly and listening to all viewpoints to ensure the country progresses with stability.
Despite her lack of previous government experience, Paetongtarn faces significant challenges, including a struggling economy and declining support for her Pheu Thai Party, which has yet to fulfil its promise of a 500 billion baht (approximately USD 14.46 billion) digital wallet program.
After receiving the royal endorsement, Paetongtarn embraced her father and family members. In her initial press conference, she pledged to continue the policies of her predecessor, Srettha, focusing on economic stimulus, drug enforcement, healthcare improvement, and promoting gender diversity. She reaffirmed her commitment to the digital wallet policy, although she intends to review it to ensure fiscal responsibility.
Paetongtarn stated she has no plans to appoint her father, Thaksin, to any government position but will seek his counsel. She also mentioned that her government’s policies will be presented to parliament next month.
The recent dismissal of Srettha after less than a year in office serves as a warning of the risks Paetongtarn faces in a political environment characterized by coups and court rulings that have repeatedly disrupted governments. The Shinawatra family’s political legacy and future are also at risk, as their once-dominant influence suffered a setback in the last election, forcing them to collaborate with their long-time adversaries in the military to form a government.
Recent events suggest a breakdown in the fragile agreement between Thaksin and the royalist establishment. This facilitated his return from 15 years of self-exile in 2023 and Srettha’s brief tenure as prime minister. A week earlier, the court that removed Srettha also disbanded the Move Forward Party, which had won the 2023 election, over its campaign to amend a royal defamation law, arguing it threatened the constitutional monarchy. The popular opposition party has since reorganized under a new banner, the People’s Party.
by Daryl Lum | Aug 14, 2024 | Bangkok Property Market Updates, Investment Analysis, New Launches & Project Previews
Clients often ask us whether developers will increase their prices as time passes. The answer in most cases is yes. If you made a purchase during launch, the price which you paid for that development is typically lower than what you would pay if you bought into the development after a few years.
An example of this:
Let us take a look at a very popular project in the Rama 9 area. This project is Nue District R9. It is located next to Jodd Fairs, behind Grand Central Rama 9. This area is often heralded as the second central business district with the Sathorn Financial District being the first. Companies like Unilever and Huawei are in this area. So are the Stock Exchange of Thailand and the Chinese Embassy.
Back in 2022, the per square meter of a unit in Nue District R9 was about THB 130,000 to just above THB 140,000 per square meter.
Fast forward to July 2024.
This is the current pricing for the last eight units in the development. The per square meter pricing, before discount, has gone up to about THB 200,000 per square meter. After the discount, the per square meter pricing is averaging at just under THB 200,000 per square meter.
The increase in pricing is more than 30% from the launch.
We make this comparison because we sold units in Nue District R9 in 2022 and today in 2024, a client wants to purchase a unit in the same development.
To summarise, buying a development during launch is advantageous for two main reasons.
- Prices are cheaper during launch.
- You have more choices when choosing a unit.
To ensure this, may we suggest a few pointers.
- Always buy from a reputable developer.
A large local Thai developer that is listed on the Stock Exchange of Thailand. Such developers have holding power and have reputations to maintain. They will not slash prices and will gradually sell units at higher prices over time. There is no time limit for Thai developers to sell out their stock. Nue District R9 is by Noble Development. Noble Development was the developer behind Noble Ploenchit. Noble Ploenchit was completed in 2016. The development was sold out only this year. The developer took their time selling their unsold stock.
- Buy a development in a prime location.
The reason why Nue District R9’s pricing increased is because it is located in the Rama 9 financial district. It is within walking distance of Phra Ram 9 MRT Station. There are development plans in the area moving forward. The land that Jodd Fairs is sitting on will eventually become a mixed development with offices and hotels. Yes, we agree that there is a lot of vacant land in Thailand. However, land is extremely limited in the core regions of Bangkok like Siam, Ratchathewi, Ploenchit, Rama 9, Sathorn, Silom, Thong Lor and Ekkamai.
There is a new development in the Rama 9 area called Nue Epic Asok-Rama 9. Prices start from about THB125,000 per square meter. This is significantly lower than the current price of Nue District R9.
Here is a review of Nue Epic Asok-Rama 9: https://daryllum.com/my-review-of-nue-epic-asok-rama-9/
