Tractus Asia’s Executive Director Presents “Thailand – State of the Kingdom 2019: Politics, Economics and the State of Manufacturing” to the Manufacturing Focus Group
Pattaya, Thailand 22 February 2019 – Tractus Asia Limited’s Executive Director Dennis Meseroll presented Tractus’ perspective on Thailand’s economy, politics and the state of business at the Manufacturing Focus Group’s (MFG) monthly meeting. The MFG is an association of manufacturing industry-linked companies based in Thailand’s Eastern Seaboard. It recently changed its name from the Automotive Focus Group to MFG to better represent the diverse base of manufacturing companies in the Eastern Seaboard Region.
Since 2014, Tractus has been providing members of the MFG with an annual outlook on politics, economics and business in Thailand and its impact on the manufacturing industry. Last year Mr. Meseroll noted how political stability in recent years has allowed Thailand to regain its reputation as a low-risk investment destination. During his 2019 presentation he shed some light on the upcoming March 24 election in Thailand and gave Tractus’ update on the state of manufacturing and of the economy.
The 24 March 2019 election culminates Thailand’s long-awaited return to democracy. Mr. Meseroll noted that in addition to the usual suspect political parties that have been positioning themselves for more than a year, there are over 15 others that are either aligned with the major parties or independent. These independent parties would play a significant role in the formation of a coalition government should no one party emerge with the plurality of votes needed to form a new government.
The current constitution’s provisions provide disproportionate power to the 250 military appointed Senators who are likely to unanimously support the military aligned Palang Pracharat party. That party would only need 126 candidates to win to secure enough votes to appoint the prime minister. However, Mr. Meseroll highlighted that enough independent parties exist to allow Pheua Thai to form a coalition should less than 126 Palang Pracharat candidates or their own affiliated parties be elected. While it appears that the military-aligned Palang Pracharat party has the advantage, Mr. Meseroll reminded the audience of how hard it is to predict the outcome of Thai politics and that in Thailand nothing is ever as it appears. One should always expect some surprises.
In 2018, services, manufacturing and agricultural industries expanded. The services industry grew at a 3.7% rate compared to 15% in the previous year. The major reason was the decline in revenue from tourism in 2018 as the number of Chinese tourists declined. The agriculture industry grew at a rate of 4.3% in contrast to the previous year as commodity prices strengthened. Manufacturing grew at a rate of 1.6%, which was only about half of 2017.
Mr. Meseroll pointed out that over the last almost all other ASEAN countries have received more FDI than did Thailand. However, Mr. Meseroll expects that there will be an uptick in FDI in 2019, particularly in higher value-added manufactured goods like automotive, electronics and others, because of the U.S.-China Trade War, which will require more value to be added to qualify as originating in Thailand. This expectation was confirmed by a lot of the participants in the audience who confirmed that they have received more requests for proposals and quotations than usual since the U.S.-China trade row began in early 2018.
Thailand’s manufacturing industry remains globally competitive for higher value manufactured goods. Thailand ranks among the top 20 countries in the world with the highest manufacturing output as a percentage of GDP, similar to countries like Taiwan and China. Additionally, Mr. Meseroll shared some success stories about recent growth and investments in manufacturing in Thailand in the rubber products, electrics and electronics, aerospace and maintenance, repair and overhaul (MRO), and auto parts sectors.
Tractus Asia Limited (www.tractus-asia.com) is an Asia-based foreign direct investment strategy and execution advisory firm with offices in Shanghai, China; Chennai, India; Jakarta, Indonesia; Yangon, Myanmar; Singapore; Bangkok, Thailand and Ho Chi Minh City, Vietnam. Tractus advises and assists corporations develop effective market entry strategies and assists them throughout the execution process, including site selection, real estate transactions and investment incentives negotiations to corporate establishment and start-up management. For global economic development organizations, Tractus provides export promotion and investment attraction representation services throughout Asia.
