Support Measures

for Economic Recovery

3 August 2020

Charl Kengchon

Kasikorn Research

It may not be until 2022 that economic activity can return to pre-covid19 levels

2

-8.1%

5%

5%

5%

3%

3%

3%

3% The gap between Old and New Normal GDP in 2023 might be as large as 0.7-1.4 trillion baht (in real terms)

-10% 1.4%

5.1%

3.7%

#1.

% of Total Loans

Debts under relief measures, because of their size, could have material impact on Thai banks’ capital

3

People Businesses

Not in the tax system In the tax system Nano/ SMEs Exports

Construction Sector

Property Tourism/Retail

- Assistance to the low-income group

- Subsidies for public utilities

- Income tax deduction to stimulate domestic spending

- Temporary reduction in VAT for items in the basket of consumer goods and services

- Low interest rate loans for working capital and job retention

- FX policy realignment to make the Baht more competitive

- Jump start in the public sector’s investment and spending via provincial administrative bodies

- Transfer and mortgage fee reductions covering residential property with value up to 5 mil Baht, up from 3 mil at present

- Reduction in the specific business tax from the current rate of 3.3%

- Extension of domestic tourism measures set to expire in October

- Temporary reduction in VAT for restaurants, hotels, shopping malls

The authorities may have to make tough decisions on stimulus measures

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#2.

5

41.2%

52.1%

58.7%

62.9%

66.5%

69.5%

72.4%

40%

45%

50%

55%

60%

65%

70%

75%

80%

2562 2563 2564 2565 2566 2567 2568

Thai Public Debt to GDP (%)

There will always be a price to pay for stimulus measures

Current Fiscal Sustainability Framework

2019 2020 2021 2022 2023 2024 2025

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Deglobalization

Pandemic and Fear

Technology Changes

Labor and Demographics

Other Competitiveness Issues

Thailand must prepare for a new global trade landscape

#3.

7

Source: UNCTAD

Before the pandemic, Thailand was already trailing key competitors in attracting FDI

USD has fallen against THB but gained against VND, IDR, CNY

8

Business consolidation, M&A

Industries with local supply chains, addressing public health or environmental issues, such as foods & agro, healthcare & medical, bio-circular-green economy

Investment Opportunities #4.

Thank You

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