On October 2, 2024, Sanan Angubolkul, President of the Thai Chamber of Commerce and Chairman of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), held a press conference alongside Payong Srivanich, President of the Thai Bankers’ Association, and Kriengkrai Thiennukul, President of the Federation of Thai Industries (FTI). The key points of the conference are as follows:
The global economic slowdown has become more apparent. The manufacturing PMI for September has contracted further in the US, Europe, China, and Japan, prompting many countries to stimulate their economies.
The US Federal Reserve has already cut its policy rate by 0.5%, with further cuts likely this year. Similarly, China’s central bank has reduced interest rates and introduced new economic stimulus measures to support production and consumer spending, which are showing signs of weakening.
The rapid appreciation of the Thai baht is putting pressure on the export sector. The baht strengthened from 36.8 to 32.3 against the US dollar over the past three months, an increase of approximately 12%, which is more significant than other currencies in the region.
This has negatively impacted competitiveness, particularly for agricultural and food products that primarily use domestic raw materials. If the baht continues to strengthen, export revenues in baht could drop by 180-250 billion baht.
Flooding is also a concern, with further storms expected to hit Thailand in the fourth quarter of 2024. The current floods are projected to cause damage amounting to 30-50 billion baht, or about 0.2% of GDP, with the agricultural sector being the hardest hit. Despite this, Thailand’s economy is still expected to grow between 2.2% and 2.7% in 2024, supported by government stimulus measures and investments, as well as assistance to those affected by the floods, as approved by the Cabinet on October 1.
The JSCCIB has expressed concern over the rapid appreciation of the baht, which has surpassed the 34.0-34.5 baht per dollar range, where businesses can remain competitive.
They emphasized the need for currency management to prevent excessive appreciation or volatility and urged proactive communication to allow businesses to adjust. The Bank of Thailand is also urged to pass on the benefits of a stronger baht, such as reduced energy and raw material import costs, to producers and consumers. Additionally, the JSCCIB suggested the central bank should consider lowering interest rates, with the market currently anticipating a rate cut of at least 0.25% this year and another 0.25%-0.5% next year, to mitigate the impact on the real economy.
The JSCCIB also discussed proposals for the 2024 Power Development Plan (PDP) to maintain Thailand’s energy competitiveness and stability, including six key recommendations:
- Increasing the share of renewable energy production to align with Thailand’s long-term Low-Emission Development Strategy (LT-LEDS) and achieve the country’s Carbon Neutrality and Net Zero goals.
- Expanding the use of solar and wind power with battery energy storage systems (BESS), while reducing energy imports by accelerating the development of energy sources from the Thai-Cambodian Overlapping Claims Area (OCA).
- Promoting public-private collaboration to explore alternative energy sources, such as hydrogen and small modular reactors (SMR), and integrating renewable energy with energy storage systems.
- Accelerating the liberalization of the electricity sector, particularly by enabling Third Party Access (TPA) to power grids by 2026 and establishing clear guidelines and timelines in the PDP 2024.
- Evaluating the economic feasibility and necessity of building new power plants, considering alternatives like repowering or overhauling existing ones, and providing transparency on reserve margins and loss of load expectation (LOLE) indices.
- Proposing the establishment of a joint public-private energy committee to address energy issues, allowing the private sector to contribute recommendations to the National Energy Policy Committee (NEPC).
