THAILAND AMIDST COVID-19: CHALLENGES & OPPORTUNITIES - KIRIDA BHAOPICHITR 9 OCT 2020 - Joint Foreign Chambers of ...
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THAILAND AMIDST COVID-19:
CHALLENGES & OPPORTUNITIES
KIRIDA
BHAOPICHITR
9 OCT 2020
proven vaccine will be available
only at least a year from now
• Earliest planned completion date for COVID-19 is September 2021.
Vaccines currently undergoing clinical trials
Source: Vaccine Centre, London School of Hygiene & Tropical Medicine and New York Times 2
Global economy will not recover
until after 2021
• According to IMF, global GDP growth is projected to contract by 4.9% in 2020. In the baseline, global activity
is expected to bottom out in the second quarter of 2020, recovering thereafter and reaching pre-COVID levels
by the end of 2021.
• Advanced economies, including US, Euro, and Japan, will contract by more than developing economies and
will recover to pre-COVID levels only after 2021; China is the only large economy that will expand, albeit
modestly, this year.
• However, recovery will be delayed should the pandemic not end by next year or countries lockdown when
faced with future waves of outbreaks.
GDP Growth Forecasts by IMF
RUSSIA
WORLD Growth in 2020 2021
Growth in 2020 2021
EURO AREA
2019
1.3% -6.6 4.1 % %
2.9 -4.9 5.4
2019
(-5.5%) (3.5%)
% % % Growth in 2020 2021
(-3.0%) (5.8%) 2019
1.3% -10.2 6.0 % %
CHINA
ADVANCED ECONOMIES USA (-7.5%) (4.7%)
Growth in 2020 2021 JAPAN
2019
1.7%
Growth in 2020
-8.0% 4.8%
(-6.1%)
2021
(4.5%)
2019
2.3%
Growth in 2020
-8.0 4.5 %
2021
% MIDDLE EAST
2019
6.1% 1.0 8.2 %
(1.2%)
%
(7.2%)
2019
0.7%
Growth in 2020
-5.8 2.4 %
2021
%
(-5.9%) (4.7%) AND CENTRAL ASIA (-5.2%) (3.0%)
Growth in 2020 2021
ASEAN-5
LATIN AMERICA 1.0% -4.7 % 3.3% INDIA
EMERGING MARKET AND 2019
DEVELOPING ECONOMIES (Indonesia, Malaysia,
Growth in 2020 2021 (-2.8%) (4.0%) Growth in 2020 2021 Philippines, Thailand, Vietnam)
2019
3.7% -3.0% 5.9% AND THE CARIBBEAN 2019
4.2% -4.5 6.0 Growth in 2020 2021
(-1.0%) (6.8%)
2019
0.1%
Growth in 2020
-9.4 3.7 %
2021
%
%
(1.9%)
%
(7.4%)
2019
4.9% -2.0 6.2 %
(-0.6%)
%
(7.8%)
(-5.2%) (3.4%)
Note: shows increase/decrease compared to previous year; Number in bracket is forecast in April 2020; Size of circle is the size of economy
Source: World Economic Outlook (June 2020), International Monetary Fund and TDRI calculation 3
US-China trade war could step up
this year as phase 1 deal breaks down
• China is unlikely to meet the target China’s purchases of US goods under US-China Phase 1 Deal
(as of May 2020)
with phase one deal. 180 Purchase commitment
(Chinese imports)
• In first 4 months of 2020, China 160 $172.7 billion
140 Purchase commitment
imported only 45% of what it would (US exports)
120 $142.7 billion
have to buy to be on pace to meet 100
the deal. 80
• In particular, China’s imports of oil 60
40
from US is falling far behind target, $32.7 billion actual purchases, based on Chinese imports
$26.9 billion actual purchases, based on US exports
20
while it imports from Saudi Arabia
0
and Russia. 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: Peterson Institute for International Economics
• Trade war will continue post US
US view of China
elections as more Americans have 80
66
70 60
been viewing China more 60 52 50 49 51 52 55 54 55
Unfavorable
47 47
unfavorably since the trade war and 50 43 42 42 40
40
COVID-19 pandemic began. 30 39 39 38 36 36 40 37
44
35 35 38 37 38
Favorable
20 29 26 26
10
Source: PEW
0 Research Center
2005 2008 2011 2014 2017 2020 4
oil prices recovered from its trough
but will remain low until next year
Global crude oil spot prices
• In June, Brent spot price was US$40.3/barrel Crude oil, WTI Crude oil, Brent
(-37.3% yoy), up from US$18.4/barrel in April, 90
EIA Forecast
as numerous regions worldwide began to lift 75
(as of July 2020)
US dollar per barrel
lockdowns, while global oil supply fell as
60
a result of production cuts by OPEC+
45
• EIA expects monthly Brent spot prices to
average US$41.5/b (-34%yoy) in 2H2020 and 30
rise to an average of US$44/b in 2021 with 15 Jun
supply reductions and rising demand 2017 2018 2019 2020 2021 2022
Oil production and consumption
• EIA forecasts is based on US gross domestic Oil Production Oil Consumption Oil balance
product declining by 6.4%yoy in 1H2020 before 105
100
rising in Q3/2020 through 2021. Million barrel per day 95
90
• OPEC+ agrees to extend oil production cuts 85
EIA Forecast
through July 2020. 80 (as of July 2020)
75
• US oil rig count falls to lowest level since 2009 20
10
0
-10 Jun
2017 2018 2019 2020 2021 2022
Source: EIA
Note: Oil balance = Production – Consumption 5
Baht/US$ is forecasted to be
around 31-31.50 for the rest of the year
• Baht weakened from Bt31.3/USD in Index of Local Currencies to US dollar (compared to Dec 2019)
Q1/2020 to Bt31.9/USD in Q2/2020, the
weakest in ASEAN-5 after Indonesia 94
(-1.1%) (-1.1%) (0.6%) (0.6%) (3.6%) (3.8%) (3.8%) (5.6%) (6.5%) (6.6%)
rupiah. 96
Index (Q4-2019 = 100)
Strong
98
• For the remaining months of the year, the 100
100
baht is forecasted slightly appreciate to 102
31-31.50 to the US dollar as trade balance
Weak
104
improves with recovery in exports and US 106 Actual Consensus forecast
Q1-20 Q2-20 Q3-20 Q4-20
dollar weakens from H1. 108
Note: Number in brackets are %changes in exchange rate in Q2/2020 from Q4/2019;
- = appreciate (strong), + = depreciate (weak)
USD Trade Weighted Index & Thai baht Thai Baht Movement Drivers
USD Trade Weighted Index THB/USD Current Account Net direct investment SET Foreign Netbuy
128 COVID-19 pandemic 28 Strong
Dollar index (Jan 2006 = 100)
126 Thailand BEX Foreign Netbuy THB/USD (Right axis) Strong
29
124 COVID-19 outbreak in Wuhan lockdown
end
6 Forecast 29
Baht / US dollar
122 30 3 (as of Aug 20) 30
Billion US dollar
Baht / US dollar
120 31
0 31
118 32
116 -3 32
114 33
-6 33
112 34 Sep
Feb
Feb
Apr
Oct
Apr
Jun
Jul
Jun
Jul
Jan
Jan
Nov
Q3F
Q4F
May
Aug
Dec
May
Mar
Mar
Weak
Sep
Feb
Oct
Apr
Jun
Jul
Jun
Jul
Jan
Nov
Aug
Dec
May
Aug
Mar
2019 2020 Weak
2019 2020 Source: SET, ThaiBMA, BOT, CEIC and Consensus Economics Inc. (as of Aug 2020)
Source: Federal Reserve Board and Bank of Thailand Note: Current account and Net direct investment data for July 2020 are not yet released 6
Thailand’s macroeconomic foundation is strongest among ASEAN & india • Thailand’s macroeconomic foundation remains strong even during the Covid-19 pandemic. • Thailand's GDP will contract most this year in ASEAN as its reliance on international tourism is higher than other ASEAN countries’. Source: Compiled by TDRI EIS` 7
Thai Economy
8
Thai economy will only
recover to pre-COVID levels in 2023
• Thai economy could contract by 10% this year and will not reach pre-COVID levels until 2023
as exports, tourism and domestic consumption will only start to pick up once the COVID-19
pandemic ends.
• Post-COVID, exports will be affected by lower Household debt
global purchasing power and higher trade Household debt % of GDP (right axis)
barriers; tourism will recover to pre-COVID 13.6 80
levels only in 2023 when the pandemic is 13.4 79.5
behind and international movements of 13.2 79
people fully resume.
Trillion baht
13 78.5
• With rising household debt burden and fall in 12.8 78
incomes and savings, household 12.6 77.5
consumption could take up a year to recover 12.4 77
to its pre-COVID level after the pandemic is 12.2 76.5
over. 12 76
Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19
• Rising NPLs and excess capacity will lead to Source: Bank of Thailand
a slump in private investment and delay
adoption of automation until 2022.
9Exports to recover in 2020H2
But could contract by 10% this year
Growth of Thai export value by Major Products
• In 7M2020, exports declined by 7.7% yoy; excluding Agriculture Manufacturing Arms & ammunition
gold and ammunitions, export declined by 10.2%yoy, Gold Other exports
Total exports Total exports (excl. gold, Arms & ammunition)
the lowest in 5 years. 20
• Exports to all market have collapsed with 10
the exception of US & China 0
Percent
• Exports in 2020H2 are expected to recover from H1 as -10
major markets gradually open. However, exports for -20
the entire year may contract up to 10%. -30
Q1 Q2 Q3 Q4 Q1 Q2 Jan Feb Mar Apr May Jun Jul
2019 2020
Destination %YoY Growth of Thai export %Share
Q3-19 Q4-19 Q1-20 Q2-20 May-20 Jun-20 Jul-20 2018 2019 2020YTD 2020YTD
Japan 2.8 -5.3 -5.5 -13.5 -24.2 -21.6 -17.5 13.0 -1.7 -10.5 9.7
EU 28 -5.2 -5.9 -3.9 -30.3 -39.7 -22.7 -17.0 5.2 -5.9 -16.8 8.8
ASEAN -14.2 -8.3 4.3 -22.3 -27.9 -30.3 -19.9 14.9 -8.3 -10.6 24.6
ASEAN-5 -12.7 -9.9 5.7 -19.7 -27.9 -38.8 -24.6 13.6 -9.8 -9.7 14.0
CLMV -16.2 -6.2 2.7 -25.8 -28.0 -17.8 -13.2 16.7 -6.3 -11.8 10.6
USA 7.7 5.5 -2.7 8.9 -17.3 14.5 17.8 5.5 11.8 4.5 14.5
Middle East 1.9 5.6 0.4 -19.7 -26.4 -7.9 -20.1 -0.1 0.4 -10.6 3.3
Australia 14.0 -14.9 -3.3 -16.1 -7.4 -16.7 -10.4 2.6 -5.1 -9.8 4.1
China 2.8 1.6 -0.9 12.1 15.3 12.0 -2.7 2.7 -3.8 4.5 12.8
Total exports -0.5 -4.4 0.9 -15.2 -22.5 -23.2 -11.4 6.9 -2.6 -7.7 100.0
Total exports
-5.2 -4.2 -0.5 -18.7 -27.8 -16.8 -13.6 7.7 -5.0 -10.2 95.3
excl. gold, arms & ammunition
Source: Bank of Thailand with TDRI calculation 10Tourism receipts (18% of GDP)
will be almost 70% below last year’s
Tourism receipts
• From Jan-July, tourism receipts fell Tourism receipts: Thai Tourism receipts: Foreigner
by 60%yoy with international tourists collapsing to YoY growth: Foreigner YoY growth: Thai
350 20
6.7 million visitors.
Tourism receipts (billion baht)
300 0
• International tourist arrivals for 2020 will not be
YoY growth (%)
250 -20
many more than 6.7 million (39 million last year) 200 -40
• Travel bubbles are starting with international 150 -60
visitors such as businessmen, medical 100 -80
tourists, education-related visitors, migrant 50 -100
workers, or long-stay tourists. 0 -120
Feb
Apr
Feb
Apr
Oct
Jun
Jul
Jun
Jul
Nov
Jan
Jan
Aug
May
May
Dec
Mar
Mar
Sep
2019 2020
Tourism revenue in ASEAN in 2018 Source: Ministry of Tourism and Sports
Toursin revenue (left axis) Average growth in 2008-2018
70 50%
58.08
60 39.0%
40%
50
Billion US dollar
40 30%
30 21.77 20.42 20%
10.5% 15.60 10.5% 11.4% 12.7% 10.8%
20 8.2% 10.08
6.4% 9.73 10%
10 1.3% 4.83 1.67 0.76
0 0%
Thailand Malaysia Singapore Indonesia Vietnam Philippines Cambodia Myanmar Lao PDR Source: World Bank
11Which businesses are
affected most during Covid-19?
NEGATIVE IMPACT ON BUSINESS POSITIVE IMPACT
HIGH MODERATE LOW ON BUSINESS
employees
>1 Million
• Shopping malls
• Hotels
• Retail shops • E-commerce (Food,
IMPACT ON EMPLOYMENT
online Marketplace, etc.)
• Delivery services &
• Airlines packaging
100,00 – 1 Million
• Wellness, Spa • E-services (education,
employees
• Hair salons, Barber • Restaurants banking, movies, etc.)
shops • Construction • Electronics • Digital services
• Pubs & bars • Telecom services
• Automobile and parts • Medical supplies (face
• Garments mask, alcohol, vitamins,
etc.)
• Entertainment • Public transportation • Insurance
employees
• Electricity, gasAlmost 10 million are
severely affected by covid-19
• Jobs of 9.7 million people are severely affected by the lockdown from Covid-19 outbreak, with
the largest group being retailers followed by cooks & waiters, hair dressers, tour guides and taxi,
van and motorcycle drivers.
Employed persons impact from COVID-19 by occupation (Million persons) Low impact
Low impact occupation* 12.1 million persons
Agriculturists 11.8 Moderate impact
High-skill Technicians, tailors
Retailers
3.9
5.1
15.6 million persons
Cooks, waiters, hair dressers, tour guides 1.6
Taxi, van & motorcycle drivers 1.2
Low-skill workers 0.6
Street vendors 0.4
Hotel or restaurant managers 0.3 High impact
General hired workers
Assistant cook
0.3
0.1
9.7 million persons
Head chefs, museumand art center directors 0.1
Tourism operators and hotel staff 0.04
Singers 0.02
General customer service 0.02
Controllers, technicians on ships & airplanes and pilots 0.01
Source: BOT, Labor Force Survey Q3:2019 with TDRI calculation
Note: Low impact occupation include State employees, heath care workers, chemists, physicists, computer programmers, telecom workers and
high-skilled workers 13shift from full-time employment
to part-time has been significant
Number of part-time workers by industry (million persons)
8
• The number of part-time workers rose by 5.68 Apr-2019 Apr-2020
6
5 million in April 2020 compared to April 4
4.20
2019, while 2.6 million lost their overtime 2 0.94 1.03 0.85
0.31 0.18 0.58 0.34 0.21
and 3.5 million lost their full-time jobs. 0
Agriculture Manufacturing Construction Wholesale Hotel &
• Sector wise, overtime was cut in all & Retail Restaurant
sectors, while full time workers fell in all Number of overtime workers by industry (million persons)
sectors except manufacturing. Workers 3
Apr-2019 Apr-2020
1.77
were reduced to part time in all sectors. 2 1.59
1.26
1.01 0.87 0.88
1 0.67 0.55
0.39
0.13
Number of workers 0
40 Agriculture Manufacturing Construction Wholesale Hotel &
Part-time & Retail Restaurant
35 6.0 (49 hrs. per week) 8
20 Apr-2019 Apr-2020
Full-time 6 4.99 5.17
15 4.10 4.40 4.32 3.87
24.7
(35-49 hrs. per week)
21.2 4
10 1.85 1.42 1.92 1.37
Source: Labor Force Survey 2
5
with TDRI calculation
0 0
Apr-2019 Apr-2020 Agriculture Manufacturing Construction Wholesale Hotel &
& Retail Restaurant 14Farm incomes may recover in
2020H2 but remains less than last year’s
• Farm incomes in the 5M2020 declined by 1.2% YoY Growth of Farm income by Crops (5M2020)
Price Production Farm income
yoy from down in paddy and sugarcane 30
production. 20
• In 2020H1, Production of rice fell by 35.7% 10
and sugarcane by 14% from severe drought 0
Percent
-10
• Rubber and sugar prices have declined with
-20
oil prices.
-30
• This is despite the Bt56 billion transfers
-40
under Price Insurance schemes for rice, Total Fruits Fowl Swine Sugar Rubber Cassava Shrimp Paddy
rubber, cassava , oil palm, maize from cane
Oct 2020 to July 2021. Agricultural Production
2019 2020 (Forecast)
• Farm incomes should recover in 2020H2 but -0.7%
100
remain lower than last year’s as
80 74.9 74.4
• Production and prices recover, but will
remain lower than last year’s 60 -6.6%
Million tons
+3.0%
• Overall incomes of agriculture households will 40 31.3 29.3
+1.4% +8.4%
16.8 17.3
fall this year as 65% of their incomes are from 20
4.8 4.9 4.3 4.7
remittances & non-farm work which have 0
collapsed after the COVID-19 outbreak. Sugarcane Rice Oil Palm Rubber Maize
Source: Office of Agricultural Economics with TDRI calculation
15Public investments are on-going
• The central government’s expenditures on
infrastructure has not decreased much.
• Factors that led to the lag in spending are
usually related to complications that arise
from putting plans into practice, not from
COVID-19.
• Projects in the pipeline, including those in
the EEC, are on-going.
16Eastern Economic Corridor (EEC)
development is progressing
• Except for the airplane maintenance and repair operations (MRO), other projects in the EEC are
on-going.
The Eastern Economic Corridor BOI-approved investments in EEC
(Chachoengsao, Chonburi, and Rayong provinces)
BOI-approved Foreign Direct
Investments
Source: Thailand Board of Investment 17How much government cash transfers
so far to mitigate covid-19 impacts?
Government Cash Transfers
Welfare card Bt3.6bn
• Government has transferred Bt612 billion Fragile groups Bt20.3bn
Water Bt2.8bn
(4% of GDP) to almost 30 million Thais Electricity Bt32.7bn
from May to July.
• The largest number of transfers is for the Agriculture
‘We Do Not Leave One Another’ program Bt111.0bn Social Security
Bt229.0bn
in which Bt15,000 were transferred to
14.2 million informal sector workers,
followed by transfers of Bt15,000 to 7.4 612.5
Billion baht
million agriculturists.
• So far, only Bt344 billion out of the Bt600
billion loan amount are used for
the transfers.
Informal sector workers/ We Do Not Leave One Another Program
Bt213.0bn
Source: Related ministries and government agencies
18Less than BT50 has been
approved from the bt400 billion loan
• Of the Bt1,448 billion (46,111 projects) proposed, Bt93 billion baht (195 projects) have passed NESDC’s
screening, of which 70% are job creation and agriculture-sector projects, 26% are tourism related projects
and only 2% are construction projects.
• So far, only Bt38 billion or 0.25% of GDP (7 projects) have been approved for implementation by the Cabinet,
of which Bt23 billion are tourism-related and the rest agriculture-related projects; most projects are nation-
wide and can be disbursed within this September.
• For the rest of the year, out of the projects that have passed the NESDC’s screening, those that can be
quickly implemented will be prioritized such as in agriculture, job creation and SME business promotion
(the latter is Bt2 billion).
EXPECTED 2020
IMPLEMENTED BUDGET DISBURSEMENT
PROJECT NAME ACTIVITY AREAS (Billion Baht) (Billion Baht)
We Travel Together Increase consumption and boost tourism sector All provinces 20 20
Kumlungjai Increase consumption and boost tourism sector All provinces 2.4 2.4
157 wildlife refuges
Developing Potential in Wildlife Tourism Develop quality tourism 7.4 0.4
(57 provinces)
Safe Tourism Zones Develop quality tourism Potential provinces 0.15 0.06
One Tambon 1 New Agricuture Theory Develop New Agriculture Theory: self-dependence All provinces 9.8 3.9
Developing model areas in promoting quality of life
according to the new agriculture theory towards the Develop New Agriculture Theory: self-dependence All provinces 4.9 3.1
“Kok Nong Na Model”
Developing One Stop Service for Soil and Fertilizer for
Develop large and modern agriculture All provinces 0.2 0.06
Communities
Source: Compiled by TDRI; Disbursements calculated by TDRI 19GOVERNMENT STILL HAS ROOM TO SPEND
The FY2021 Budget • Total FY2021 Budget is Bt3.3 trillion (+3.1% from
3.5
3.3 FY2020); excluding debt repayment is Bt3.0
0.19 Interest Payment
trillion or 17.8% of GDP (+4.3% from FY2020)
3.0 0.1 Principal Repayment
• Current Expenditure (excl. interest payment) 70.6%
0.67 Capital Expenditure (+4.2% from FY2020)
2.5
• Capital Expenditure 20.5% (+4.7%)
2.0
• Central Fund in FY2021 Budget is Bt614.6 billion
Trillion bath
(Bt518.8 in FY2020) of which Bt40 billion are
1.5
COVID19 pandemic-related expenses.
Current Expenditure
2.33 (excl. Interest Payment) • Additional borrowing can be up to Bt1.9 trillion
1.0
in Y2021 (12% of 2021 GDP) if public debt were
0.61 Other Central Fund not to exceed the current 60% of GDP ceiling and
0.5
0.48 Expenses for
the COVID-19 Outbreak
up to Bt2.7 trillion (17% of 2021 GDP) if the public
0.1 Contingency Fund debt ceiling is lifted to 65% of GDP.
0.0 for Emergencies
FY2021 Budget Central Fund • Only Bt100 billion soft loans for SMEs have been
Source: Budget Bureau extended (out of Bt500 billion).
20Sectoral trends
post-COVID
21Digitalization will continue
to sharply expand
ONLINE COMMERCE/SERVICE FROM-HOME ECONOMY
MARCH 2020
• From-home economy will drop from current level but
will continue as it saves money and helps attract
employees, and related infrastructure has already
been invested. As a result, there will be
• demand for technology enablers (5G, platform, cloud
service, electronic device) and employment of IT
workers.
• some shifts to suburban homes for WFH workers.
TELEMEDICINE
JULY 2020
• COVID-19 has migrated patients to telemedicine
• Ping An Good Doctor’s users grew 900% (Dec
2019
65/
35
to Jan 2020) and is eyeing on ASEAN market
• Doctor Raksa, partnered with Bamrungrad, saw its
registered online users increased from 300K to
Note: Data on 400K in April 2020 alone.
YouTube numbers
in July table are
• ASEAN has potential for telemedicine due to low
as of March 2020 access to medical services. 22tourism will recover Post-COVID
Domestic tourism • Domestic tourism will start recovering in Foreign tourism • International tourism will start to
Q3/2020 with FIT, seminars, conferences, slowly recover end-2020 with focus
and leisure travel; it will not fully recover on selected business and medical
to pre-COVID level until 2022. travelers.
• Government’s domestic tourism stimulus • Foreign tourists who are vaccinated
packages of Bt22.4 billion from July to can start to come in 2022.
October 2020 will also help.. • Full recovery will not be until 2023
TRANSITION PERIOD POST-COVID
• Health consciousness will shift pattern of tourism • Pre-COVID patterns of tourism will return.
• from mass tourism to FIT and mainly domestic tourists • There will be opportunities in medical tourism and
• from large hotels to boutique hotels health & wellness as Thailand has strengthened its
• from long distance to shorter travel distance as long- reputation from handling the pandemic e.g. Dusit
distance flights are few and more expensive.
Thani has partnered with a hospital to start a
• Air travel cost will be higher as there are fewer wellness facility in Hua Hin.
flights and aviation rules require physical • Regional tourism will increase as international
distancing in long flights. tourists, especially from China, will reduced their
• Air Asia, for example, may increase prices by 10-15% travel budgets; Chinese tourists will prefer to travel
to break even. to countries that do not have an anti-Chinese
• Many M&As in hotel and airline businesses are sentiment.
expected. • AR/VR in tourism will not happen.
23Opportunities for Manufacturing
and Agriculture
MANUFACTURING AGRICULTURE / FOOD
TRANSITION PERIOD TRANSITION PERIOD & POST-COVID
• COVID-19 has confirmed the need for companies to • Demand for food falls as demand from
balance cost effectiveness with risk management by tourists and export markets decline, and
• relocating the production for non-Chinese markets out some countries’ governments promote
of China
domestic production of staple foods.
• diversifying sources for raw materials and parts
• Some purchases will be diversified to
• increasing stock levels
Thailand to reduce supply disruptions.
POST-COVID
• Demand for meats from Thailand will be
Global supply chain for manufacturing could be in
3 overlapping models:
higher as many countries e.g. China fear
DIVERSIFICATION
animal disease outbreaks and contagion to
IN CHINA, RELOCATIO
FOR CHINA N/ON- Sourcing of raw humans.
Production SHORING materials and parts
that serves Relocation of are diversified • Bio-products such as plant based meats and
the Chinese production away from China.
market will for non- Although the cost bio-degradable products continues to be the
remain in Chinese is higher but lowers
China. market out of risks of supply new trend and can make use of abundant
China. disruption.
agricultural produce in Thailand.
24Companies from china
have relocated to Thailand
• To diversify risks, firms have been moving out of Examples of relocation from China in 2019
China.
• Vietnam has received the majority of the
relocation in labor-intensive to high-tech
industries
• Thailand is the second highest recipient of the
relocation, with Japanese companies being the
majority, particularly in automotive parts,
electrical appliances, and electronics.
Source: TDRI EIS from various sources
Note: Automotive & Parts Computer & Parts Electrical Appliances Petro-chemical Products Footwear Machinery
are Japanese, American, South Korean, Chinese and Taiwanese companies, respectively 25Opportunities in Thailand’s
real estate market
2020 Transition Period
• The total number of registered housing units fell
• Freeze new condo projects; finish existing projects
since February both yoy and qoq as purchases
• Move to housing units
from both Thais and foreigners (around 10% of
• Reduce cost e.g. bargains with suppliers and use digital
annual purchases) fell.
technology for marketing.
• Property sales, particularly of condominiums, will
• Secure liquidity – many small developers & hotels that have
remain subdued for the rest of the year, limiting
low liquidity will need to sell their projects or refinance their
new property projects, while sale prices of units
corporate bonds at high interest rates.
in existing projects are reduced.
Post-COVID-19
• Mix of condos and houses in Bangkok will not change much; there may be small shifts to suburban
houses for those who can afford transportation and can WFH.
• Housing and condominiums in EEC and industrial estates will return as manufacturing production
picks up.
• Large hotels will be back in demand and so will co-working spaces.
• High-end senior housing and facilities as well as wellness facilities will be in increasing demand.
26Thank you
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