Thailand’s economy is facing a “critical situation” that necessitates urgent stimulus measures and a potential rate cut, according to officials from the prime minister’s office on Monday (Mar 4). The country is striving to attract new investments from companies like EV maker Tesla.

 

Prime Minister Srettha Thavisin, who assumed office last August, is committed to revitalizing Southeast Asia’s second-largest economy, which has been hampered by weak exports and a slower recovery from the pandemic compared to its regional counterparts.

 

“Our data indicates we are not in good shape,” stated Prommin Lertsuridej, the prime minister’s chief of staff, highlighting issues such as low industrial capacity utilization and rising household debt.

 

Unexpected economic contraction in the fourth quarter of 2023 and a downgraded growth outlook for this year have intensified pressure on the central bank to heed the prime minister’s frequent calls for an interest rate cut.

 

Prommin, an experienced political strategist, noted that there is room for rate reductions, which would alleviate the financial burden on households by increasing their disposable income. However, he emphasized that the government would not interfere with the central bank’s decision-making process.

 

Srettha aims to position Thailand as a regional hub for various sectors, including electric vehicles (EVs), aviation, finance, and the digital economy. He has also urged lawmakers to enhance Thailand’s status in food, wellness, and tourism.

 

“We are taking all possible measures,” Prommin said, referring to initiatives like visa-free tourism, policies addressing household debt, and support for the vital agriculture sector.

 

A key election promise to distribute 10,000 Thai baht (US$279) to 50 million Thais for local community spending is in the works, with implementation expected by late May, he added.

 

Critics have expressed concerns that the government’s numerous measures, especially the US$14 billion “digital wallet” handout scheme, may not be fiscally sustainable and could fuel inflation.

 

Negotiations with Tesla

 

Thailand is in ongoing discussions with Tesla about potential investments in the country, an official from the prime minister’s office confirmed.

 

The government has proposed offering Tesla access to 100 percent clean energy for a facility in Thailand that could include EV and battery production.

 

“The decision now lies with Tesla,” stated Supakorn Congsomjit, without providing additional details.

 

Late last year, Tesla explored potential locations in Thailand, he added.

 

Traditionally dominated by Japanese automakers like Toyota and Honda, Thailand has recently attracted significant investments from Chinese EV manufacturers, including BYD and Great Wall Motor, totaling more than US$1.44 billion.

 

To attract more foreign investment, Prommin said the government is working on several initiatives, including easing visa regulations, amending laws to improve business operations, and upgrading both physical and digital infrastructure.

 

Source: CNA

 

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