By SGN | 14 Aug 2020
No country is spared from the COVID-19 economic fallout. For Thailand, the country is headed for its worst performance in history, with key industries manufacturing and tourism badly hit by the outbreak.
The loss of revenue from tourism is especially painful. With an estimated up to 22% of the nation’s GDP dependent on tourism and tourism-related industries, the sharp contraction in tourism has hurt the economy hard. What are the implications for businesses and investors with strategic interests in Thailand?
Eng-Lok Koh, Thailand-based Vice-President and Country Manager of research & consulting firm Frost & Sullivan (Thailand) gives us an insider’s view on on-ground business sentiments and shares his view on opportunities in Thailand.
Winners and losers: the uneven impact of COVID-19 on Thai Businesses
“COVID-19 has shaken up the industries in Thailand, exerting an uneven effect across the industries. Sectors that depend heavily on tourism, such as the hospitality sectors like health and wellness, hotels, resort islands, retail and F&B have been hit the hardest. Construction, Aerospace and manufacturing are badly hurt as well.
Even international schools are affected as expatriates lose their jobs and move home with their children.”
However, Eng Lok stresses that amidst the economic doom and gloom, certain sectors have emerged as bright spots in the Thai economy.
“Black swan events such as COVID-19 has the effect of disrupting different industries in both positive and negative ways.”
“Thailand’s transformational health, chemical, materials & food and ICT industries are benefiting from the fallout. In particular, ICT companies providing conferencing solutions, e-commerce companies and online food delivery platforms like Line MAN, Food Panda and Grab Food has seen accelerated growth in business.”
Robust response from the Thai Government reassures businesses and investors
Thailand has announced stimulus worth US$60 billion to revive its economy, forecasted by the finance ministry to contract 8.5% this year. This is the biggest-ever cash injection from the government in history.
Thailand’s Lower House of Parliament approved three emergency decrees to provide financial assistance to businesses and people affected by the pandemic:
- First decree: authorizes the finance ministry to borrow about THB 1 trillion to fund the government’s economic and social rehabilitation
- Second decree: authorizes the Bank of Thailand to provide THB 500 billion soft loans to support SMEs
- Third decree: supports bond market liquidity with THB 400 billion via the Corporate Bond Stabilization Fund (BSF), established jointly by the finance ministry and the Bank of Thailand
With these decrees, the government is hoping to mitigate the fallout from the contraction in GDP.
“The long-term view of the Thai economy is still robust and strong. Thailand will continue to grow once the pandemic is over. Investors who are already invested will likely stay put and ride out the storm, while those on the sidelines will be adopting more of a wait-and-see approach in the short-term,” Eng Lok shares.
Furthermore, the government’s swift and effective measures implemented to curb the spread of the virus has been positively received.
“The virus containment measures have been very successful in curbing the spread of the virus. With a population of 70 million and millions of foreigners working in the city, there were only 3,300+ infected cases and 58 deaths as of 12 August – a remarkable achievement.”
The future is digital: meet Thailand 4.0
The COVID-19 pandemic has made one thing abundantly clear – organizations reliant on manual labor need to go digital to avoid being rendered immobile again. This has made accelerating the realization of the Thai government’s Thailand 4.0 vision more imperative than ever.
“The Thai government has launched a Thailand 4.0 initiative in an effort to transform Thailand’s industry into one that is value and innovation-based. This includes pushing Thai public organizations and private companies towards Digital Transformation to stay competitive,” Eng Lok shares.
The aim is to create new engines of growth and transform Thailand into a knowledge-based economy by nurturing high-tech and high-value industries, including robotics, IoT & embedded technology and food agriculture & biotech.
“Companies providing solutions in Digital Transformation may find a sweet spot in Thailand at this time.”
Word to the wise: tips for breaking into the Thai market
To those looking to make inroads with the Thai market, Eng Lok would like to share hard-won experience accumulated over 7 years.
“Thailand’s business environment is quite different from Singapore’s. Thai people and businesses, whether private or public, prefer to work with people they know.”
“Having local connections is very important for getting your foot in the door of prospective customers. Clients will sometimes spend 1-2 years getting to know you before they give you any business, so patience and humility are the keys to success in Thailand.”
“Also, Thai people rarely say ‘No’ – reading between the lines is crucial when it comes to understanding their true response and sentiments.”
Join us and meet others like Eng Lok.
About Eng Lok
Eng Lok moved to Thailand 7 years ago to join Frost & Sullivan Thailand as Vice-President and Country Manager. He has over 20 years of professional services experience in Consulting & Research, Information Technology, Conference & Exhibition and Direct Marketing Industries. Eng Lok is also the President of the Singapore Club of Thailand.