New long-stay visa scheme will aim at the same high-net-worth individuals targeted by investment banks and wealth managers
BANGKOK – With a third wave of Covid-19 undermining the likelihood of hordes of foreign tourists and investors returning to Thailand any time soon, there are government moves afoot to make the kingdom more appealing for long-term, high-net-worth visitors in the near future.
Tourism accounted for 18-20% of Thailand's gross domestic product (GDP) in 2019, when nearly 40 million foreign tourists visited the kingdom and generated around 2 trillion baht ($64.1 billion) in local revenues. But the foreign tourist money tree has stopped giving in the time of Covid.
Last year, Thailand's GDP shrank 6.1%, with only 6.7 million tourist arrivals and 330 billion baht in revenues before a Covid lockdown and travel banned kicked off in late March 2020.
This year will be worse for the tourism industry, as the Thai government stumbles to roll out vaccines and contain a worst yet wave of Covid-19 that has resulted in record daily new infections and fast-rising fatalities.
Although exports have shown signs of recovery, the Finance Ministry now predicts the economy will grow just 2.3% in 2021, with tourism revenue expected to reach a mere 170 billion baht.
"You are not going to see 40 million tourists back any time soon, so we need to make some changes there," said Chayotid Kridakon, 54, former head of JP Morgan Securities (Thailand) and current advisor to Thai Deputy Prime Minister Supattanapong Punmeechaow, the government's chief economic policy director.
In January, Chayotid quit the private sector to head a government task force set up by Supattanapong to facilitate foreign direct investment and promote foreign exchange earning sectors in Thailand's post-Covid economy.
The team has since identified four sectors as key to Thailand's future growth, namely automobiles including electric vehicles (EVs), smart electronics again with an emphasis on EVs, medical services and products, and tourism.
The first three sectors are already heavily promoted by other agencies such as the Board of Investment (BOI), but Chayotid sees room for fast-track improvement in promoting higher-end tourism, with a new package of incentives scheduled to be rolled out in June with roadshows thereafter.
"We need to be proactive here on how we are going to be promoting Thailand after Covid, rather than just a beautiful place for you to come and visit, offering good value for your money," said Chayotid, in an exclusive interview with Asia Times.
His task force is aiming to attract high-net-worth individuals – the same kind that wealth managers and investment bankers target – including an estimated 200 million retirees worldwide living off their pensions or savings.
"We are trying to see if we can become more customer-centric, looking at each pool of customers for long-term tourists," Chayotid said. Thailand already offers year-long visas to retirees with various financial and other requirements, but the new scheme promises to be more enticing and focused, he said.
"I would group them into two groups – basically mainly retirees, pensioners getting their pensions from the government or a private company, who don't want to do anything, just find a nice place to stay in Thailand which offers good health care, nice weather, nice food.
"Another type is a retiree who may be 45-50 years old who still wants to work. These people can be a plus for the Thai economy because of their knowledge which they can transfer, or start their own business here," he said.
New categories of visas will be offered in the proposed package, with the possibility of new incentives such as relaxing the rules on foreign ownership of property.
Such pro-foreigner deregulations usually draw opposition from the Thai bureaucracy or ultra-nationalists. But Chayotid argues that he has the Covid crisis on his side, which has sparked a "global reset" in other countries' pro-FDI policies, including in Southeast Asia.
"The crisis helps us in the sense that our neighbors are all doing it (deregulating)," Chayotid said. "I think this crisis has brought about the right situation in terms of timing. Vietnam is knocking on the door, Indonesia has woken up and the Philippines is waking up. Now they have all gone beyond Thailand so what will be our response?"
In fact, according to the World Bank's latest Ease of Doing Business 2020 index, Thailand was ranked 21 worldwide, with Vietnam 70, Indonesia 73 and the Philippines 95, but those countries are rising fast in the ranking. Singapore ranked 4th and Malaysia 12th.
The main opposition to a relaxation of foreign visa regulations is likely to come from the Immigration Department, under the politically powerful Interior Ministry.
A survey conducted by Chayotid's team of businesspeople and other long-term foreign residents in Thailand revealed that the main "frustration point" was the immigration process.
Among other annoying requirements, Thailand's Immigration Department demands all foreigners on retirement visas or work visas to report to authorities every 90 days. Chayotid hopes to do away with such "incumbrances," he said.
Past governments have tried and failed to tackle such Immigration hassles, but Chayotid opines that the time may be ripe for changes. "The people in high places see the necessity for this," he noted.
The new visa package, which if all goes to plan will be announced in June, is part of the so-called "Regulatory Guillotine" program initiated by former deputy prime minister Somkid Jatusripak, who resigned in July last year. The guillotine has been picked up again by his replacement Supattanapong.
The success or failure of the new tourism visa package could be a bellwether for other guillotine deregulations in the works.
"The government has requested the guillotine but we know that it is not easy," said Tiensawang Thamwanich, a researcher at the Thailand Development Research Institute (TDRI), a private think tank that has advised the government on the guillotine program.
"Even the projects that the government would like to do, the Cabinet would like to do, everyone agrees with, the problem is the agencies themselves because this (the regulations) is where their power comes from," she said.
