Thailand, as an open pro-export economy with a significant tourism sector, is greatly affected by the pandemic. According to preliminary estimates, the damage may reach a record billion. THB (approx. CZK 1 billion), which represents 7.7% of Thailand’s GDP. This would be a similar drop to the 1997 financial crisis.
In addition to tourism, the measures associated with the fight against the pandemic will also affect industry, including the export-oriented automotive and electrotechnical industries. Fairs, exhibitions and other public events are so far postponed until the second half of the year, mostly from September onwards, or they plan to move to a virtual form. International financial institutions as well as the Thai authorities themselves estimate a decline in the domestic economy of approximately 5-6% this year.
The Thai government has decided to support the domestic economy with several stages of stimulus packages totaling around 10% of GDP. For government support to affected companies, Thailand has a decent starting position – the unemployment rate is still low, public finances are in relatively good condition, the share of public debt to GDP is only about 50% and international rating agencies have long confirmed the country’s positive/stable credit outlook, which works as a good cushion against economic and financial fluctuations. In the same way, Thailand can use the experience of dealing with the financial crisis in 1997 or the effects of the SARS epidemic.
However, the high level of household indebtedness (80% of Thai GDP) combined with the potential growth of unemployment (up to 10 million people are at risk of a temporary loss of income) in the absence of an institutional social safety net, as well as the indebtedness of small and medium-sized companies in particular, pose the risk of an increased economic burden on lower and the middle class, employed in the widespread informal economy. The government contributes to the salaries of the affected companies, has enabled several months’ postponement of tax payments and is trying to support domestic tourism in the form of subsidies for domestic tickets/air tickets and relief from the price of hotel accommodation.
Post-COVID-19 opportunities for foreign exporters
Transport industry and infrastructure
According to allcountrylist, Thailand has a developed system of road and air (domestic and international) transport, but the level of rail passenger and freight transport is insufficient, as well as the transport capacity of urban mass transport systems (especially in the capital city of Bangkok). The expansion of public transport in Bangkok (metro, elevated expressway, potentially trams) and in other areas (for example, the island of Phuket) and also a high-speed railway connecting large international airports, ports and economic zones east of Bangkok (the so-called Eastern Economic Corridor, EEC) are among the government’s development priorities. Due to previous foreign investment in manufacturing, the country has a sufficient level of technical knowledge and skills of workers. The development of transport and the increase of its capacity will continue to be a government priority.
Another item on the list of government development priorities is the field of ICT and digitization of production. A significant number of manufacturing companies, especially foreign investors in the automotive and electrical engineering industries, intend to significantly increase the share of automated and robotic systems. This development will also be supported by the local production of advanced ICT technology.
At the same time, there is an extensive ecosystem of technology companies and start-ups in the country, connected to a top-notch system of science and research, universities, academia and private companies. Thai entities in this field collaborate on a global level with the world’s best workplaces. The greatest potential for Czech companies can be found in the focus on e-commerce, the Internet of Things, artificial intelligence, but also in the defense and security sector (cyber security, personal tracking, thermal scanning, etc.).
Defense and security have traditionally been and remain one of the priority areas. The armed and security forces are one of the pillars of the monarchy and an important social force. Defense expenditures form a significant part of the state budget, but even here allocations are adjusted. Factors related to defense-industrial cooperation, support of Thai industry, joint development or joint expansion into third markets will play an increasingly important role.
Czech companies are offered bilateral mechanisms and platforms created in recent years, which have the potential to be a springboard for long-term cooperation in Thailand and the wider region. The possibilities of cooperation under discussion also have links to the protection of public health, the aviation and automotive industries.
Healthcare and pharmaceutical industry
Thailand can boast of a top healthcare system, which is built not only on a technologically advanced level of equipment, but also on personnel capacities (education and practice of doctors and nurses). At the same time, the government included health care (including cosmetic or the use of cannabis for medical purposes) and the production of medical equipment and medicines among the priority areas of development.
The plan is to make Thailand a regional center/hub for a whole range of medical procedures (joint replacements, gynecology, dentistry, cosmetics, etc.). Czech exports and investments are also boosted by the country’s current efforts to generally strengthen the capacities of the healthcare system with regard to covid-19. The advanced level of medical science and research, as well as higher education, can also be beneficial for cooperation. Another advantage of Thailand is the creditworthiness of local partners and their reach into the region, where they own a number of leading facilities.
Agricultural and food industry
Thailand has ideal climatic and natural conditions for growing a number of export-oriented crops (rice, coffee, tropical fruits, rubber tree), as well as capacities in the field of animal production (poultry, fish, shrimp and other seafood). In the current situation of increased domestic and global demand and following the increase in unemployment, the government’s priority is to support farmers and the processing of agricultural raw materials with higher added value.
Interest in the sector is also supported by a certain amount of Thai patriotism, pride in one’s home cooking and the general popularity of food as an important element of social interaction. The country is dominated by domestic food conglomerates, but there are also a number of manufacturing plants of multinational companies involved in science, research and innovation, especially in the field of biotechnology and “novel foods”. In this priority area, Thailand cooperates with a number of research institutes and universities at the global level.
Embassy of the Czech Republic in Bangkok
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