Trade & Investment Committee: Covid-19 impact on the Thai economy, thriving in the new normal?

 On May 25, Dr. Amonthep Chawla, Head, Research Office, CIMB Thai Bank Public Company Limited, presented to nearly 60 AMCHAM attendees on the impact of covid-19 on the Thai economy and outlook and discuss the pandemic’s implications to Thailand’s trade and investment dynamics.

Dr. Amonthep  started his presentation by saying even though the economy will recover, the road to recovery will not quite be the same as in the case of the financial crisis in the 1990s or the great depression.  Businesses will need to restructure how they do business, adopt new skills and technologies in order to respond to the evolving trade dynamics and practicalities of running their day to day operations.

He shared global economic outlook and shared statistics such as the expected fall in world trade between 13% and 32% as the pandemic disrupts normal economic activities and supply chains around the globe. Credit markets are still in disarray, stock markets have plummeted, and many companies are still grappling with the economic damage. At the same time, new trends and technologies have emerged strongly out of this, including the accelerating rise of e-commerce and innovative outsourcing practices.

Amonthep compared Thailand’s position to its neighboring countries such as Vietnam and Malaysia and stated that the Thai economy has probably been hit the hardest due to its high dependency on the travel and tourism industry. He projects that the revival of the Thai travel and tourism is unlikely to happen until 2023 as Thailand continues to discourage outbound tourism and increase domestic travel but the quality of traveler will improve.

In response to covid-19, Amonthep mentioned that the Thai Government’s financial stimulus package, and cash to those unemployed has helped the economy significantly but in order to build resilience for future disruptions, the Government will need to implement short term and long term reforms especially in tourism, and take important decisions on which industries to grow first, find new avenues for diversification of business and harness local opportunities.

While some sectors will take longer to recover, he sees the growth of other sectors by helping domestic demands in other countries such as exports to the U.S., food and beverages, and embracing digital transformation to strengthen the Thai economy. With more and more companies and even small businesses embracing technology such as restaurants moving their food delivery online or payments to digital platforms, he emphasized on the possibility that further development in certain tech features and industry relocation, especially in the EEC could help Thailand to benefit from the U.S.-China trade war. He mentioned that Thailand was in a better position to attract foreign investments into the region, especially if they are able to lower land prices, reskill their workforce, upgrade industries from skill based to tech based, and lead digital transformation in the EEC region. Another industry that Thailand could focus on in its road to recovery is medical tourism.  Advising SMEs, he said that SMEs with supply chain to China may need to rethink to go to ASEAN for business opportunities.

As his parting advice to AMCHAM’s business community, Amonthep sees Thailand as a hub for logistics, IT and technology development in ASEAN. The U.S. China trade war and relocation to Vietnam, will bring opportunities and strength, and foster Thailand’s images as a good partner with US.

Members also asked if the current 4.0 is sufficient for solving unemployment issue. He mentioned that those who can adapt and embrace digital technology, adopt automation, will be able to survive but for people who cannot, the Government will need to reskill them or educate them.

Special thanks to AMCHAM’s Trade and Investment Committee, Tipwadee Thaisiri, Souvik Roy Chowdhury, Maarten Degryse, and Noah Shepherd for leading and organizing this event. The presentation for this event will be available on the member portal.