Thailand

Redazione published in Editorials, Thailand

Editorial | Thailand, Made in Italy relaunched

Editorial by Lorenzo Galanti, Ambassador of Italy to Bangkok

Thailand and most of ASEAN countries are facing an epidemic wave mainly due to the Covid-19 Delta variant with the inevitable measures that limit economic activity and mobility, with a negative impact on growth prospects for 2021. At the same time, the governments are trying to accelerate the vaccine supply. Thailand, which has a very high capacity of inoculation but does not participate in COVAX, is multiplying sources of supply and diversifying vaccines, originally confined to Sinovac and AstraZeneca. It aims to reopen at least partially the Kingdom by October and to vaccinate 70% of the population (about 50 million people) by December.

Meanwhile, the growth estimates of the Thai economy have been revised downwards by the Bank of Thailand which now predicts a modest 0.7% for 2021 and a rebound of 3.7% next year. The recovery of tourism will not be rapid, due to the restrictions on international travel still in force in the main countries of provenance such as China. It is important to increase efforts to attract investments in innovative sectors, thanks to IT infrastructure and 5G. The Bank of Thailand is developing a prototype of digital currency to facilitate transaction and consumption, the Retail Central Bank Digital Currency. On the consumption side, the market has moved a lot online, on digital platforms.

The ICE office Agency in Bangkok, in collaboration with the Italian Embassy, has launched a program with Lazada Thailand, the e-commerce platform controlled by Alibaba, for a virtual pavilion of authentic Italian products. The initiative starts these days on LazMall (the portal of quality brands) and in a first phase is dedicated to food, but it will expand to the non-food sector. At the same time, an offline campaign is being promoted by ICE Agency at the stores of Central Department stores (the main Thai retail group that controls La Rinascente in Italy) to promote Italian products, food and non-food, on the shelves. A first relaxation of the lockdown in Bangkok decided these days will stimulate a recovery in consumption. The first half of the year saw an increase of Thai exports thanks to the traction of the main markets (China and the US) and the weakening of the currency, Thai Baht, but also an increase in imports, which benefited the Italian export that has returned to the levels of 2018. 

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Pierfrancesco Mattiolo published in Economy and trade, Thailand

Wide-open doors to IPOs in Thailand (and ASEAN)

The IPO market is extraordinarily vital around the world, and ASEAN is no exception. The Thai stock exchange is attracting the most capital and it is not going to stop.

While the real global economy has yet to fully recover from the COVID crisis, financial markets are experiencing a period of euphoric expansion. In particular, the IPO market is on fire and investors of all types and sizes have recently become more willing to buy the shares of companies that decide to go public. This may also have been favoured by COVID: central banks have injected a huge amount of liquidity into the market to stimulate economic recovery and the 'new normal' has encouraged the birth and growth of innovative companies, hungry for capital to finance their expansion. The ASEAN stock exchanges are also following a positive trend in terms of the number of IPOs and volume of investments attracted. The Stock Exchange of Thailand (SET) is the fastest-growing stock market in the region and looks set to accelerate even further.

First of all, the IPO is the process by which a private company goes public: by offering its shares to the public on a stock market, the company raises capital to support its growth and its private investors can make huge profits. The company can also seek capital through private equity, remaining private and without having to deal with the compliance (and risks) associated with the IPO, or simply postpone it. In recent years, emerging companies have tended to prefer private equity to the public one. When a company decides to go ahead with the IPO, it has to carefully prepare it. Not only all the requirements set by the stock exchange where the offering will take place and by the relevant regulator must be met, but the company should also seize the moment, enter the market at a favourable time, when it is easier to attract the attention of investors and stand out from other IPOs. For these reasons, companies wishing to go public meticulously prepare their IPOs with the help of investment banks. The whole process also involves a twofold choice. The choice of the company, which has to identify the most favourable stock market on which to bid and list its shares, and the choice of the investors, who have to decide on which stock exchange to focus their attention. The governance of the various stock exchanges can therefore seek to encourage companies to list on their exchange and provide the infrastructure to facilitate investors.

The growth of SET should be seen in this light. The Thai stock exchange is the second largest in ASEAN by capitalisation, after Singapore, but it is also the one that recorded the highest average daily turnover last May and attracted the most capital through IPOs in 2020. In an interview with Nikkei Asia in early July, SET chairman Pakorn Peetathawatchai outlined his strategy and goals for the years ahead. The Thai bourse has made listing requirements more accessible in certain sectors, so as to encourage particularly attractive companies, including foreign ones, and SMEs to go public. It has also worked with the Bangkok government to put together a substantial tax incentive package. In this way, SET intends to attract between 30 and 50 IPOs and almost 8 billion dollars each year, competing with Singapore to be the main ASEAN financial market. Looking at the early 2021 results, SET's ambitions seem within reach.

The Thai stock exchange seems to be so attractive because of the variety of players on it. The SET listing includes companies from almost every sector of the economy; companies that attract a balanced mix of investors. Almost 50% of the investors are from Thailand and retail. SET intends to facilitate the transactions of this group by using fintech tools: by the end of 2021, it will launch an online platform for the exchange of assets through digital tokens. This initiative should be seen in the overarching process of "democratisation" of the global investment market, made possible by new fintech platforms. Other stock exchanges in the region, such as those of Singapore and Indonesia, have adopted a different strategy, following a model that has been successful in the US: favouring SPACs (special purpose acquisition companies), companies that attract the funds of several investors, usually through the sponsorship of a well-known and influential entrepreneur, to merge with one (or more) companies at the time of the IPO. SPACs require special conditions to be successful but can allow companies to go public more quickly. SET is cautious about this practice, as are European stock exchanges. This caution should be applied to the IPO market as a whole, according to many observers: the huge success of IPOs in recent years may not last and the great results of certain listings take turns with surprising and unexpected thuds (such as Deliveroo's IPO on the London Stock Exchange). Investors are becoming much more cautious and selective in their choices, and this may slow down, but also stabilise, the race of companies towards listing.

Other ASEAN financial markets are outperforming themselves with their IPOs too, and are trying in various ways to make themselves even more attractive. Singapore is proving particularly inviting for the listing of foreign companies and even tech start-ups and has managed to bring home some major unicorns of the sector. The Indonesian stock exchange has seen an even higher number of IPOs than the Thai one, albeit with a lower value of capital attracted, reaping the benefits of Omnibus Law and the privatisation of some former state-owned enterprises. Vietnam, too, is catching up, thanks to greater coordination between the Hanoi and Ho Chi Minh City stock exchanges and the momentum of its economy, which is among the least affected by COVID in the region. The COVID is perhaps the main shadow cast on the future growth of ASEAN financial markets: the health crisis does not seem under control yet in some countries and certain sectors have not fully recovered - first, tourism, a fundamental sector for Thailand.

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Michelle Cabula published in Culture and society, Thailand

With Jareeporn Jarukornsakul logistics becomes a women’s business

By Michelle Cabula

Jareeporn Jarukornsakul, the 53-year-old businesswoman heading the WHA Group, is listed as one of the 50 richest citizens in Thailand in 2020 by Forbes. Her success story combines women entrepreneurship, attention to sustainability and virtuous synergy between public and private sectors.

After a Bachelor's Degree in Health Science from Mahidol University and a Master's Degree in Business Administration from Bangkok University, aged just 26, Jareeporn Jarukornsakul made her entrance into the field of logistics and in 2003 she co-founded the WHA Group with her husband Somyos Anantaprayoon. Today, she simultaneously holds the positions of Chairman of the Board of Directors and Chairman of the Executive Committee (CEO) of a Thai leading company in the field of integrated logistics, warehousing and industrial facilities.

Besides the US$480 million net worth (which has earned her 48th place in the Forbes’ ranking of her country’s 50 wealthier people), what is surprising is the presence of Jarukornsakul among the most influential figures in a field that is still considered to be predominantly male-oriented. Despite the divorce from her husband has cost her a fall in the ranking (they were ranked 32nd together in 2015), the businesswoman has been able to make a decisive impact on business since she took it over six years ago, intending to turn it into a multinational company within three to five years. Already in 2016, on the occasion of the acquisition of Hemaraj Land And Development Plc. (operating as a real estate developer), Jarukornsakul was determined to expand its business both in the domestic market and in foreign markets, focusing on an increasingly articulated and complete expertise.

Under the leadership of Jarukornsakul, the activities of the WHA Group have been intertwined with the Eastern Economic Corridor (ECC) initiative, the Thai government pilot project aiming to convert the Eastern coastal provinces - Chachoengsao, Chonburi and Rayong - into a regional technological and industrial innovation hub through the development of public transportation and logistics infrastructure. The company is committed to meet the needs of high-tech industries on different levels, being ready to operate in advance in those commercial districts designated to become increasingly attractive to investors in the future.

With an investment plan of 43 billion THB (approximately US$1.4 million) announced in August 2016, the Chairman has also made clear the company’s intention to become the leading provider for comprehensive logistics, real estate and industrial solutions in the Asian Economic Community (AEC). “Through Hemaraj, we play an instrumental role in the development of the automotive, electronics and petrochemical clusters, and we are now committed to being an active partner in the development of future industries”, she declared.

The launch of the WHA Industrial Zone – Nghe An in February 2017 represented "a firm statement of the company’s commitment to the country and the Southeast Asian region", to the point that the company is already thinking of replicating the experience. Future plans include the realization of another industrial zone near Hanoi that would become a new production base for Chinese, Japanese and Taiwanese companies and ASEAN investors looking to relocate their businesses to escape economic damages originating from the US-China trade war.

Jarukornsakul has defined Vietnam as "the new bright star" of the area, stressing that its geographical location, its rapidly expanding economy, the availability of an educated workforce and its involvement in numerous free trade agreements make it a privileged destination for investment by the company, which already has 30 years of experience in Thailand. According to the company’s website, the WHA Industrial Zone - Nghe An takes advantage of existing infrastructure to contribute to economic expansion and the creation of new job opportunities in the Nghe An region, in the respect of social, cultural and environmental aspects. 

At the end of last year, the WHA Group was awarded the "Thailand Sustainability Investment 2020", an award granted by the Stock Exchange of Thailand (SET) to companies that pay particular attention to environmental, social and governance issues (ESG). The group has proven sensitive to sustainability issues, in the awareness that "growth and progress must come with responsibility", as stated by Vivat Jiratikarnsakul, Chief Operating Officer Industrial and International for the company.

The WHA Group’s attention to social issues was concretely reflected in the virtuous project Clean Water for Planet. The initiative launched in 2016 consists of a series of collaborations with various educational institutions and government agencies aimed at raising awareness of the importance of proper management and protection of water resources and at providing clean water to local communities. The program also provides wastewater management services to customers: in 2019, the company announced the completion of a facility in the Pluak Daeng district in Rayong Province designed to treat wastewater through biological purification processes.

The initiative embodies the principles of the Sufficiency Economy Philosophy (SEP) conceived by the late King Bhumibol Adulyadej, father of the current ruler of Thailand. This innovative approach to development "implies that we act with moderation and reasonableness and that we always seek knowledge and morality in proposing and implementing development projects". The business model promoted by Jarukornsakul fits in perfectly with the strategies developed at the national level: a perfect example of how state and enterprise can work in unison. Not surprisingly, in 2021 the Bangkok Post has chosen her as the "woman of the year" for the industrial sector, celebrating her leadership skills and strategic vision.

Jarukornsakul’s story resonates well beyond Thailand, as shown by the numerous international awards that the entrepreneur can boast. Among others, her name appears on Asia’s Power Businesswomen 2020 list, in which Forbes staff brings together those Asian women in leadership positions who, in the face of the pandemic challenge, have been able to show resilience and that are conceivably preparing to lead the enterprises towards the recovery.

In addition to portraying a successful entrepreneur, the story of Jareeporn Jarukornsakul heading the WHA Group tells us about some virtuous corporate social responsibility practices that are taking hold in the area of Southeast Asia. More and more companies are engaged in a shared effort alongside government authorities and regional organisations to generate local development and improve connectivity in the ASEAN area. The pioneering experience of Jarukornsakul also becomes a source of inspiration for future generations of young women and men entrepreneurs who, increasingly sensitive to sustainability issues, will be well disposed to embrace the values of inclusive entrepreneurship and responsible business conduct.

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Stefano Rinaldi published in Economy and trade, Thailand

Surfing the wave at the right time: Flash Group’s case

Although in a sea of giants, the Thai scale-up aims to be the logistics leader for ASEAN e-commerce

Southeast Asian e-commerce is now booming with rosy growth prospects: the trend has already been analysed previously and is now a widespread belief among financial analysts. With a 46% growth rate for 2021, an annual business volume of $80 billion, ASEAN e-commerce has strong prospects for sustained growth, mainly due to the massive increase of online consumers in a few years, with over 350 million more in just 2021.

However, it is important to analyse how the e-commerce industry in ASEAN is changing and to highlight new trends that may lead to new opportunities, both present and future.

For example, a crucial factor that enabled the shift from offline to online retail was the necessary - but sudden and unexpected - increase in logistics traffic in the region's commercial hubs. This happened not only in the larger ports but also and above all in the smaller realities, where people used to live 'on the street' to get commodities.

We must indeed note that Asia is the second most integrated commercial system globally, second only to the European Union. In addition, the regional intra-trade volume here exceeds 58% of the total. It is not surprising that a region that was already best in class for commercial traffic management has managed to evolve and prosper, despite the emergency caused by the pandemic.

In general, many countries in the region (Thailand in particular) are accelerating the implementation of fifth-generation infrastructure networks, intending to reduce disruption during potential lockdown periods.

In this sense, entrepreneurs often refer to the action of ‘surfing the wave when is high, at the right spot and in a favourable wind’. This is this philosophy that has led Flash Group, a Thai scale-up, to attract more than $150 million in its first financing round.

Flash operated in the logistics sector, and in specific in e-commerce logistics. Kosman Lee, its founder, started the company at age 29 and with $1 million, but with the explicit goal of becoming a guiding light for logistics for the ASEAN online sector.

Although ambitious, the project has conquered the hearts of regional institutional investors such as Siam Bank, PTT Oil (Thai oil leader) and Buer capital, a Singaporean fund.

As a result, in the immediate future, the group expects to handle 2 million goods per day in its warehouses, increasing traffic 10-fold compared to the current volume.

However, competition is extremely tough here: industry players such as Best Inc. (China) and Kerry Express (Hong Kong SAR) make Flash’s goal extremely difficult to reach, especially for the short term. In addition, Flash Group wants to develop an in-house e-commerce platform, so as to enter a promising but exceptionally competitive market: it not only would compete with JD (the leader in Thailand), but also with regional conglomerates such as Sea, Grab and Tokopedia.

Such obstacles could discourage any entrepreneur. However, a golden rule of international trade must be remembered: if the pie gets bigger (or it is made bigger) everybody grows with it, and no one can lose in the immediate future. There is no industry in which this phenomenon is as clear-cut as in international logistics traffic.

 

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Niccolò Camponi published in Economy and trade, Thailand

The sufficiency economy philosophy

Thailand has designed an economic theory of development envisioned by the late King Bhumibol Adulyadej to modernize the country

Thailand is one of the countries that has benefited most from economic development since the 1990s, but the foundations of this development can also be traced back to the Sufficiency Economy Philosophy (SEP) conceived by King Bhumibol Adulyadej. Over the past three decades, the king has always spurred his people towards a gradual and balanced approach to development, that is, towards an economy of sufficiency that could guarantee basic needs for everyone without blindly pursuing economic growth as an end in itself. After the 1997 economic crisis, the king revised the SEP, to be interpreted also as a path through which to guarantee economic recovery and build a more resilient and sustainable development, able to face the challenges deriving from globalization. In 1999, the National Economic and Social Development Board gave the following definition of SEP: National Economic and Social Development Board ha dato la seguente definizione della SEP: 

"Sufficiency Economy" is a philosophy that stresses the middle path as an overriding principle for appropriate conduct by the populace at all levels. This applies to conduct starting from the level of the families, communities, as well as the level of a nation in development and administration to modernize in line with the forces of globalization… Sufficiency means moderation, reasonableness, and the need for a self-immunity mechanism for sufficient protection from impact arising from internal and external changes… In addition, a way of life-based on patience, perseverance, diligence, wisdom and prudence is indispensable to create balance and be able to cope appropriately with critical challenges arising from extensive and rapid socioeconomic, environmental, and cultural changes in the world.

SEP is a guiding principle to be applied at all levels, from the single individual to relations between states and the natural world. In the long run, it aims to build a socially balanced Thailand capable of responding to rapid and extensive changes in society, in the environment and in culture due to globalization. To achieve this result, SEP implies acting with moderation and reasonableness, seeking knowledge and morality in proposing and implementing development projects.

The most practical example of SEP implementation is in the proper management of land and water resources. This new approach to agriculture is commonly known in Thailand as New Theory Agriculture, which is based precisely on sustainable agriculture that guarantees self-sufficiency for rural families and a life in harmony with nature. The New Theory is divided into three phases: 1) sufficiency at the family level, 2) sufficiency at the community level, 3) sufficiency at the national level. In practice, it is a matter of guaranteeing access to food and increasing the income of rural families; increasing cooperation between farmers within the community and the creation of a social safety net within it; finally, reaching national sufficiency thanks to corporate social responsibility towards rural communities and the support of the public sector which facilitates trust between rural actors through institutional agreements.

In 2003, the NESDB launched a movement in favour of SEP to make it better known within and outside the country. Authorities hope that a better understanding of the concept among people will lead to a wider recognition of SEP, its greater application on a larger scale and potentially even its possible expansion outside the country. The movement also plans to create a network to facilitate understanding about SEP in all sectors and at all levels of society. It is composed of four distinct implementation programs: 1) development and coordination of the learning network, 2) creation of new knowledge through study and research, 3) production of new curricula and review of the learning process, 4) dissemination of information and knowledge to the public.

The purpose of establishing this propaganda movement in favour of SEP is to allow Thailand to pursue balanced and sustainable development in the globalized world. The promoters are aware that the theory will help build and develop solid foundations for society and improve the ability to adapt to any internal or external change and shock. Ultimately, the ultimate goal is to achieve the welfare of the Thai people as a whole.

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Agnese Ranaldi published in Economy and trade, Thailand

Lack of tourism in Thailand causes baht depreciation

Public intervention does not seem to be enough to rescue the national economy from the pandemic

“A perfect storm is engulfing Thailand’s baht and the one group of people who can save it are stuck in lockdown, thousands of kilometers from the arrivals lounges of Bangkok, Phuket and Chiang Mai.” A un articolo di Bloomberg article opens in these terms, noticing how the absence of tourists in Thailand translated into a depreciation of the national currency. Indeed according to the author, baht is currently the worst performing currency in Asian emerging markets. Several factors contributed to this decline: deficit in the balance of payments, the contextual increase of the dollar and the seasonal repatriation of dividends by Japanese investors. But the dire outlook on tourism is the real weak link in the national recovery.

In general, emerging economies of Southeast Asia are deeply embedded in the webs of globalization, which is why the consequences of the Covid-19 crisis were quickly transmitted from one country to another. The entire region based its economic growth on exports, attraction of foreign direct investments and global value chains - hardly hit by the pandemic. The contraction in global trade has strongly affected the economic stability of these countries, even though ASEAN maintained positive growth rates in 2020. In short, the picture is not the brightest: a series of systemic contributing causes afflict the region.

As argued by Victoria Kwakwa, Vice President of the World Bank for East Asia and the Pacific, political and health performances of ASEAN countries are commendable, but this is not enough for countries that heavily rely on the one sector that cannot be digitized: tourism.

ASEAN has pledged to do everything in its power to remedy the situation. It promoted the Development Framework, the 2020-2030 Work Plan and the White Paper for the implementation of intra-regional and international tourism. But in 2019 in Thailand tourism-driven services contributed to the 62% balance of payments surplus, and the situation has dramatically worsened since then. The current account deficit recorded in the first quarter of 2021 overwhelmed the Thai baht, which fell by 3% in March. According to economist Prakash Sakpal, an Asia’s expert, the current deficit of $ 1.7 billion in the first two months of 2021 compared with the surplus of $ 8.8 billion in the same months of 2020 clearly describes the situation. The Bank of Thailand hoped that a depreciation could have revived the economy, making Thai exports more competitive and favoring tourism. However, while most ASEAN countries have experienced a vigorous recovery in exports since mid-2020, Thailand has maintained a negative trend, declining 1.2% year-on-year in February last year.

According to Forbes, the country hopes that easing restrictions on intra-regional tourism will encourage people to travel more. The Center for Economic Situation Administration is considering welcoming vaccinated visitors without quarantining them for some destinations, starting in July 2021. However, different variants of Covid-19 could further slow the recovery of tourism, and perhaps the recovery for the whole country will be slower than expected. A rapid distribution of vaccines is crucial in this sense, especially with regard to international tourism - which is why the slowness of Europe, the third country of origin of tourists visiting Thailand after East Asia and Southeast Asia, does not bode well.

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Redazione published in Asean, Culture and society, Thailand, Vietnam

Off on the Phad Thai foot

Southeast Asia is increasingly establishing itself in Italy and Europe thanks to its rich culinary offer.

“Don't eat anything your great-great grandmother wouldn't recognize as food” said the American writer Michael Pollan. Who better than Italians, always ready to criticize any foreign dish, to agree? And yet, in the latest years Southeast Asian cuisine is overcoming geographical boundaries and winning over even the most sceptical hearts. Not only are countless Thai and Vietnamese restaurants opening all around Italy, but even new TV series are being made to portray the scents, taste, and colours of Asian dishes. But which are the most popular in Europe and Italy today, that even your great-great grandmother would be fond of?

One could fill lots of book trying to illustrate the richness and variety of ingredients in Vietnamese cuisine, and it still wouldn’t be enough. When France colonised Vietnam and its neighbours in 1887, it formed the Indochinese Union and heavily influenced this region’s cuisine. But before that, the culinary heritage of Vietnam was influenced by China, which provided a fundamental contribution to the birth of Vietnamese popular dishes. Wontons, wheat noodles, chili peppers and corn can be found in both countries’ culinary heritage. When the French arrived, the ingredients list expanded to include potatoes, asparagus, onions, coffee, and many others. And today, two of the most beloved typical Vietnamese dishes both by locals and Europeans are the outcome of French influence!

The first one is Bánh mì, a delicious baguette-shaped bread made with rice flour instead of wheat flour. Fillings can be very fancy, but the most cherished one is a combination of grilled meat, coriander, pickled vegetables and sauces. The second dish is the world-renowned Pho: a soup of Vietnamese rice noodles and meat broths. It is common belief that the word Pho (pronounced fuh) derives from the French pot au feu (stew). The presence of beef meat, rarely seen in other typical Asian dishes, is further evidence of the influence left by the French colonisation.

As far as Thai cuisine is concerned, the birth of new Thai restaurants everywhere in Italy (not only in Rome and Milan) is a clear sign of its increasing success. Besides the classic Phad Thai (stir-fried rice noodles with vegetables, eggs, roasted peanuts, fish sauce, tamarind juice, garlic, chilli pepper, lime and palm sugar), there are many more creative combinations of flavours that are winning hearts in the West to the extent that Thai Massaman curry, the “king of curry”, was awarded first place in the CNN’s “The world's 50 best foods” list. The reason? “Even the packet sauce you buy from the supermarket can make the most delinquent of cooks look like a Michelin potential”.

While it is still hard to find Indonesian or Singaporean restaurants in Italy, the interest toward Southeast Asian countries’ cuisine seems to be a fast-growing trend. Suffice it to say that many other dishes in the aforementioned list come from ASEAN countries. Even Netflix, the media giant always very careful about its viewers’ needs, own two series that frequently portrait the cuisine in Bali, Yogyakarta, Cebu, and other Southeast Asian locations: Street Food Asia and Chef’s Table.

All encouraging signs that show once again the increasing interest in ASEAN countries’ history, traditions, and rich culinary offer in Europe and worldwide.

By Valentina Beomonte Zobel

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Francesco Brusaporco published in Politics and strategy, Thailand

The Reasons for Thai Resilience

Diplomatic acumen and economic choices will determine Thailand's ability to continue its development story

Even in an exceptionally diverse context such as Southeast Asia, Thailand still stands out for several reasons. First, "the Land of the Free" - the actual meaning of Thai Land - is the only ASEAN country which never fell under the colonial yoke of the West. Second, the extraordinary complexity of Thai culture is held in high regard by Western tourists and Asian powers alike. Finally, thanks to a favorable geography and a shared history, Thailand can make a great contribution to bridging the gap between China and India and finding a common ground among the often-squabbling ASEAN countries.

The figures of the economy have certainly contributed to creating the myth of Thai exceptionalism: GDP grew on average by 7.5% per year through the period 1960-1996, making Thailand one of the greatest success stories of international development. A smart policy mix of incentives and investments have persuaded numerous car manufacturers to move their production plants to the country, transforming Bangkok into the "Detroit of Asia". The rapid growth of the average income enabled Thailand to join the middle-high income country club in 2011. A few years later, the government drafted the Thailand 4.0 masterplan, betting on smart cities and the Internet of Things to avoid the "middle income trap".

In fact, over the last two decades, Thailand's GDP slowed down, following the ups and downs of global trade, while the country was facing the return of poverty and a threatening growth of inequalities. The Covid-19 pandemic has exposed the structural weaknesses of the Thai economy and its excessive dependence on external demand. The unexpected yet inevitable shutdowns of national borders, for instance, caused the collapse of the tourism industry, worth about 15% of Thai GDP, putting 2.5 million jobs at risk. The Bank of Thailand has projected an 8.1% decrease of the GDP in 2020: the lowest point after the 1997-1998 Asian financial crisis.

The compounded economic and health crisis found the cabinet of Prayuth Chan-o-cha already confronted with the thousands of Thai students who have taken to the streets since February to protest against the government of the former-general-who-became-Prime-Minister. The protests have been characterized by an explicit criticism of the King Maha Vajiralongkorn, a rather unusual occurrence in a country where those who breach the strict lese-majesty law face up to 15 years of prison. In general, however, the protests are a dramatic manifestation of the enduring tension between the progressive quest of the working classes and the youth and the more conservative stances of the military and political elites.

Thailand enjoys a relatively young population (about 1/3 is under 25 years old), fairly good infrastructure (constantly expanding), and a rather beneficial geographical position, right in the centre of the Beijing-Delhi-Jakarta triangle. Such "Optimal general features,” together with the traditional resilience of the main economic indicators and a few significant socio-economic trends, as the presence of a robust urban middle class, help explain the renewed interest of investors in the Thai market. The recent economic choices of the government, which seems to reflect a changing attitude towards internal consumption and expansionary fiscal policies, may open a new window of opportunity for Italian companies exporting industrial machinery and consumer goods to Thailand.

As a matter of fact, the full recovery of the Thai economy will depend on the ability of the government to leverage the distinctive strengths of the country which Kishore Mahbubani, former Singaporean top diplomat and keen observer of regional affairs, singles out in 'The ASEAN Miracle.' Its unique national sentiment, a mindful use of soft power and well-demonstrated mediation skills will prove essential for Thailand to overcome the difficult economic and social contingency and enable the country to carry on its history of growth and development.

By Francesco Brusaporco

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Redazione published in Politics and strategy, Thailand

Thailand's response to the Covid-19 crisis

Thailand's response to the Covid-19 crisis Thailand has effectively addressed the economic and health consequences of the coronavirus pandemic standing out as a model for all.

On July 9th, the Italy-ASEAN Association organized a webinar on Thailand and its response to the crisis caused by Covid-19 with the President of the Italy-ASEAN Association, Enrico Letta, the Ambassador of Thailand in Italy, Chirdchu Raktabutr, the Ambassador of Italy to Thailand, Lorenzo Galanti, the President of the Foreign Affairs Commission of the Thai Senate, Pikulkaew Krairiksh, the Thai Minister for Social Development and Human Security, Chuti Krairiksh and Ducati's CEO, Claudio Domenicali. The meeting was moderated by the Vice-President of the Italy-ASEAN Association and former Ambassador of Italy to Thailand Michelangelo Pipan.

Although Thailand was the first country after China to confirm a Covid-19 case on its territory in early January, the management of the coronavirus pandemic by Thai authorities has since then emerged as one of the greatest success stories in South-East Asia and beyond. At the moment, in fact, Thailand is only the 99th most hard-hit country in the world, with an extremely low total number of cases, at about 3200 units as opposed to a population of over 70 million inhabitants, and a proportion of deaths in relation to the overall population among the lowest in the world. These enviable epidemiological outcomes are the result of effective governmental action, which imposed restrictive measures in a timely fashion, but are also a by-product of the incredible social discipline of Thai citizens.

On the economic front, Thailand has greatly suffered from the collapse of international trade and international tourism, both of which are key sectors for the economy of the Kingdom. The most recent estimates from the Thai Central Bank and from the World Bank project a GDP contraction between 5 and 8 percentage points in 2020 and a partial recovery between 4% and 5% in 2021. The Thai government has thus responded to the grave economic crisis by launching a 64 billion US dollars stimulus package, amounting to 16% of the country's GDP, designed to assist families, businesses and local development projects in the area. In spite of the inevitable economic devastation caused by the coronavirus pandemic, thanks to the financial solidity of the Kingdom, which can count on a 44% debt-to-GDP ratio, the Thai government is confident it can control the damage and get the economy back on its feet in a relatively short time. 

The evolution of the Covid-19 crisis in Thailand has shown a certain resilience of the country to external shocks. On both the economic and health front, Thailand has shown great resistance and flexibility in its response to the pandemic. However, the current goal of the Thai government in the medium-term is to carry out a cautious reopening to international trade and tourism, while at the same time seeking to reduce its excessive dependence on external factors. The government has shown intention to pursue a political strategy based on the notion of "immunity", combining health security, economic resilience and preparation for external crises. The Thai government thus intends to strengthen its economic self-reliance, in an attempt to limit excessive exposure to international upheavals, while maintaining a high degree of openness of the national market to foreign trade and tourism.

Thailand has proven itself to be a resilient country in its approach to the coronavirus pandemic, doing everything possible to limit the economic and health consequences of the Covid-19 crisis. The challenge for the Kingdom in the coming years will be to further increase its resilience to external shocks in the event of new crises of analogous seriousness.  

Article edited by Andrea Dugo.

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Redazione published in Politics and strategy, Thailand

La Deutsche Bank in Thailandia

Nel 1978 la prima filiale e da allora un continuo espandersi in tutto il Paese

Il 16 aprile 2020, la Deutsche Bank, nell’ambito di un programma di modernizzazione dei pagamenti guidato dal governo della Thailandia e volto a sostenere l’inclusione finanziaria e l’introduzione dei pagamenti elettronici, ha lanciato il servizio di pagamenti istantanei “PromptPay”. Tale piattaforma, utilizzando un numero di conto o un proxy-id (numero identificativo dell’imposta sulle società), consente di ricevere pagamenti e rimborsi delle imposte sul reddito direttamente dal Dipartimento delle Entrate, senza alcun costo aggiuntivo.

Questa innovativa modalità di pagamento, già introdotta in ASEAN con le piattaforme “Fast” a Singapore e “DuitNow” in Malesia – come osservato da Burkhard Ziegenhorn, responsabile ASEAN del settore Corporate Bank di Deutsche Bank – accrescerà l’efficienza e la velocità dei pagamenti per le aziende nazionali, agevolandole nella sostituzione graduale delle tradizionali transazioni commerciali. Infatti, da un recente report di DB sull’argomento risulta che l’Asia è più propensa all’abbandono di carte di credito e contanti in favore dei pagamenti online ritenuti più sicuri ed affidabili; propensione che l’Istituto tedesco intende assecondare e valorizzare nel continente. Del resto, sin dal 1870, anno della sua fondazione, la Deutsche Bank ha sempre avuto l’ambizione di divenire una banca dal respiro internazionale. Tanto è vero che già nel 1872 vennero aperte le prime due filiali a Shangai e Yokohama e nel 1906, con il nome di Deutsche-Asiatische Bank, la prima filiale di Singapore. Alla fine degli anni’70 la Banca di Francoforte sul Meno approda anche in Thailandia; più precisamente, l’8 settembre 1978, l’Istituto tedesco inaugura la sua prima sede nella capitale Bangkok, operando sotto il nome di Banca Asiatica Europea. Solo pochi anni prima, infatti, la Deutsche-Asiatische Bank e le sue filiali erano state accorpate nella neonata Banca Asiatica Europea (Eurasbank), che diverrà nel 1986 Deutsche Bank (Asia).I primi tentativi e colloqui esplorativi per aprire filiali in Thailandia risalgono al 1960, tuttavia solo nel 1977 il ministro delle finanze thailandese concederà la licenza per l’apertura di una filiale a Bangkok, chiedendo però che fosse consentito alla Thai Farmers Bank di aprire una sede ad Amburgo. Il 3 luglio 1978 l’allora Eurasbank ottenne la licenza e poche settimane dopo iniziò ad operare in un ufficio nel centro della Capitale. Dall’epoca la Deutsche Bank non ha smesso di crescere, aumentando costantemente il numero di filiali e di dipendenti nel Paese e in generale in tutta la regione ASEAN, consapevole delle potenzialità e delle possibilità di espansione in una delle aree economicamente più vivaci del pianeta. Non a caso il 21 ottobre 2019 Pimolpa Suntichok, da poco Chief Country Officer della Deutsche Bank per la Thailandia, dichiarava al Bangkok Post la forte volontà del gruppo bancario di aumentare la quota di clienti locali, considerando la Thailandia tra le economie più importanti dell’area ASEAN.

La strategia dell’Istituto bancario nel Paese, infatti, si sviluppa secondo due direttrici principali: supportare i clienti europei interessati a sfruttare le catene locali di produzione, soprattutto nel settore automobilistico, e agevolare il commercio verso l’estero delle società thailandesi. Nel 2019 la politica di sviluppo delineata dalla Deutsche Bank ha generato in Thailandia una crescita a due cifre del suo volume d’affari e i suoi profitti sono cresciuti del 50% rispetto al 2018.

 

Articolo a Cura di Alessio Piazza.

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