Thailand is set to implement stringent new compliance regulations for customers opening bank accounts, in response to a sharp rise in the misuse of these accounts for illicit or fraudulent activities. From November last year through the present, Thai authorities have closed over 300,000 "mule" accounts.
These regulations, as promulgated by the Bank of Thailand, the Anti-Money Laundering Office (AMLO), the Securities and Exchange Commission, and the anti-online scam centre AOC 1441, are poised to take effect by June 1st, as confirmed by Prasert Jantararuangtong, Minister of Digital Economy and Society. All banks will now be required to strictly adhere to a Customer Due Diligence (CDD) approach.
Local experts from the Thai authorities estimate that accounts exploited for offences could tally up to one million. Growing compliance in the digital banking sector has been encouraged due to the sustained efforts of financial institutions and related government initiatives.
The digital banking market in Thailand is projected to grow by 8.69% between 2024 and 2028, as per Statista research. This growth trajectory is likely to be aligned with a surge in compliance-related efforts, aimed at meeting regulatory mandates and safeguarding against financial crimes.
The Thai banking sector, a historical pillar of the nation's economy, has been undergoing a significant transformation. McKinsey's findings suggest a potential regain of regional clout, with a shift towards digital banking that necessitates a robust compliance framework to ensure transactional integrity.
In closing, Thailand's digital banking sector's compliance industry is witnessing dynamic changes driven by regulatory strides, technology, and a commitment to enhancing the digital banking experience. As the sector evolves, compliance will form a foundational anchor, ensuring a secure, sustainable digital banking revolution, tuned with international best practices.
These changes offer both opportunities and challenges to compliance professionals, who shall remain at the forefront of shielding the financial ecosystem from emerging risks.
Babies and young children are often at the greatest risk of heat-related mortality
BANGKOK, 8 May 2024 –Rain has finally brought relief to Thailand, but the country is still recovering from the record-breaking heatwave that gripped Southeast Asia throughout April and early May. Three dozen districts across Thailand's 77 provinces saw record temperatures in April, with 26 provinces suffering from heat soaring over 40 degrees Celsius.
Extreme temperatures pose critical challenges to children in Thailand and elsewhere, limiting outdoor activities, increasing their reliance on cooling methods and disrupting education. Simultaneously, changing weather conditions including unexpected storms can cause damage to homes and infrastructure and prevent many children from accessing basic services.
Heatwaves – whichare made more likely by climate change – present a serious health threat to children, who struggle more than adults to regulate their body temperature. Greater exposure to heatwaves raises the risk of various health issues such as chronic respiratory conditions, asthma, and cardiovascular diseases. Babies and young children are at greatest risk of heat-related mortality.
UNICEF's recent reports underscore the gravity of the situation, revealing that millions of children worldwide are already grappling with the effects of rising temperatures, a number projected to soar in the coming decades.
In Thailand, the situation is particularly alarming, with a significant majority of children experiencing the harsh realities of frequent heatwaves. Over 75 percent of children—approximately 10.3 million—were affected by high heat factors in 2020 alone, the report said. Without intervention, it's forecast that every Thai child under 18 will face more frequent and prolonged heatwaves by 2050.
Another climate-related report conducted by the Thailand Development Research Institute and UNICEF released last year pointed out that children in Thailand are at a high risk of climate change including high temperatures, flood and drought. Children living in Ubon Ratchathani, Nakhon Rachasima, Sri Saket, Nakhon Srithammarat and Narathiwat are at highest risk.
Experts in Thailand also pointed out that severe climate change will lead to declining agriculture yields with farmers and their families among the most vulnerable victims from climate crisis.
Despite these alarming statistics, the voices of these children have often gone unheard. Children are missing out on climate discussion and action. They are being recognized as vulnerable groups rather than active citizen or agents of change.
"Heatwaves have become significant challenges lately. With temperatures exceeding 40 degrees Celsius for several weeks, being in the sun has become nearly impossible. This situation is particularly challenging for young children, as they are unable to engage in outdoor activities," said Kwanjira Jaikla, 18, a member of the UNICEF Young People Advisory Board from Roi Et Province. "While I acknowledge the current efforts being made to tackle this issue, I hope to see more urgent actions in addressing climate change impacts on children.I also hope that adults include children and young people in climate actions, given their role in our daily lives."
Just 2.4 per cent of major global climate funds are allocated towards initiatives that address children's needs, according to a 2023 study — Falling short: addressing the climate finance gapfor children conducted by members of the Children's Environmental Rights Initiative (CERI) coalition; Plan International, Save the Children, and UNICEF.
This neglect not only perpetuates their vulnerability but also silences their voices in critical climate discussions.
"As we confront the reality of a boiling world, it is imperative that governments, communities, and individuals alike work together to ensure the world we all live in is a livable one," said Kyungsun Kim, UNICEF Representative for Thailand. "By prioritizing investments in climate-resilient infrastructure and climate-smart basic services, promoting sustainable practices, and amplifying the voices of children in decision-making processes, we can create a future where they can thrive in safety and security."
The challenges posed by heatwaves are just one facet of the broader climate crisis facing our planet, said Kim. "As we navigate this uncertain terrain, let us not forget our responsibility to safeguard the well-being of future generations. We must work towards a sustainable future for every child, ensuring that they inherit a world that is resilient to the challenges of a changing climate."Kim said.
The preceding is a press release published with full permission and authorization by the organization(s) listed in the PR material and TPN media. The statements, thoughts, and opinions of the organization involved in the press release are entirely their own and may not necessarily represent those of TPN media and its staff.
Thai government to reclassify cannabis as narcotic
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In a reversal of the previous administration's policy to decriminalise cannabis and hemp, the Pheu Thai-led government has decided to reclassify cannabis as a Category 5 narcotic, with the exception of medical and health uses.
Public Health ministry was instructed by Prime Minister Srettha Thavisin to amend its ministerial regulations to include cannabis on the list of Category 5 narcotics, to be completed for enforcement within this year.
There is an exception for the controlled use of cannabis for medical and health purposes, but not for recreational use.
This reversal of policy is a slap in the face for the Bhumjaithai party, one of the government's coalition partners, which promoted decriminalisation of cannabis and hemp as its flagship policy during the Prayut administration, leading to widespread cultivation of cannabis and the emergence of many cannabis retail outlets.
The prime minister held a meeting today with agencies involved in illegal narcotic suppression and control, including the Public Health, Justice and Interior ministries, as well as national security agencies.
Another key issue raised by the prime minister is the law concerning methamphetamine, or "yaa baa". He said that the current law does not specify the number of pills that can be considered possession for personal consumption or for trafficking, making it difficult for law enforcement to know whether to treat a suspect as a drug user or a drug dealer.
To clear up the confusion, the prime minister said that the law must be rewritten to make clear that possessing one meth pill will be considered for personal consumption and two or more pills will be regarded as possession for trafficking purposes.
Despite escalating efforts to crack down on illegal narcotics and the government's decision to add the problem to the national agenda, the prime minister said that more illegal narcotics, meth pills in particular, continue to be smuggled into the country and remain readily available.
Srettha said that one issue behind the failure to stem the inflow and widespread availability of meth pills is that authorities are still unable to crack down on major dealers, as he urged authorities concerned to intensify their efforts to close down the "big fish" and to seize their assets.
Address reporting for expats every three months is sometimes easier said than done.
Dear Editor, It's a chaotic situation, folks, which varies person to person! 10 reasons why your online 90 days reporting fails 1. You have been abroad since your last report. 2. You haven't completed a TM30 form for two years or so (even if you haven't left Thailand). 3. You have recently changed, or even renewed, your visa or permission. 4. It's your first time reporting 90 days. 5. You haven't put your room or apartment number on the form. 6. You were one day early or one day late. 7. You have changed your passport. 8. Your browser is not Google Chrome or Mozilla Firefox. 9. You haven't updated your permission to stay date. 10. You give up after your fourth attempt. Yours faithfully, Ken Thomas
Thailand's capital city of Bangkok remains the most popular tourist destination in March, 2024, followed by Chonburi, Kanchanaburi, Phuket, and Prachuap Khiri Khan.
According to the data from the Ministry of Tourism and Sports, Bangkokretained its top spot with 4,459,579 visitors, of which 49.60% were international tourists. The occupancy rate for Bangkok hotels was 76.32%.
Chonburi, the home province of the resort city of PattayaPattaya, came in second with 1,892,712 visitors, of which 49.88% were international tourists. The hotel occupancy rate was 76.69%.
Kanchanaburi came in third, welcoming 1,185,695 visitors. The tourists, however, mostly consisted of Thai people with only 3.04% being foreigners. The hotel occupancy rate was 65.19%.
Meanwhile, in the fourth place was Phuket, which saw only 1,171,189 visitors. 78.75% of these were international tourists. The province's hotels saw an occupancy rate of 86.37%.
Lastly, Prachuap Khiri Khan rounded out the top five with 979,818 visitors, including 6.08% international tourists and an occupancy rate of 72.83%.
The least visited province was Amnat Charoen with 23,207 visitors, followed by Nong Bua Lamphu, Mahasarakham, Pattani, and Yasothon.
Overall, Thailand welcomed 29,151,310 visitors in March 2024, representing a 12.15% growth compared to the previous year. International tourists generated approximately 583.902 billion baht in revenue.
The top five nationalities visiting Thailand in the first four months of 2024 were Chinese (2,351,909), Malaysian (1,569,856), Russian (767,210), South Korean (679,481), and Indian (643,587).
The Ministry of Tourism and Sports noted that Chinese tourists surpassed Malaysians as the top nationality. In 2023, the top five nationalities were Malaysian (4,563,020), Chinese (3,519,735), South Korean (1,658,688), Indian (1,626,720), and Russian (1,481,878).
Prime Minister Srettha Thavisin has outlined the Thai government's strategy to transform Thailand into a high-income economy, focusing on attracting foreign investment and implementing projects that enhance the quality of life for its citizens. Speaking at a Pheu Thai Party event, Srettha highlighted the government's proactive approach to addressing national issues since assuming office.
At the event themed "10 Months Without Waiting, Moving Forward to Achieve 10 out of 10," Srettha discussed the improvement of water resource management to mitigate flooding, new strategies for addressing unrest in the deep South, measures to boost tourism by opening borders, and ways to regulate agricultural product prices to combat haze pollution.
The premier also addressed the government's ongoing efforts to alleviate people's debt burdens, noting recent successes such as the agreement by commercial banks to reduce the minimum retail rate (MRR) for loans by 25 basis points for six months.
Pheu Thai leader Paetongtarn Shinawatra, who also spoke at the event, defended the decision to form a coalition government and criticized the Bank of Thailand's independence, which she described as an obstacle to solving economic challenges. However, she expressed optimism that the current government could improve the nation's fortunes before the next election.
Paetongtarn has also praised the recent cabinet reshuffle, viewing it as a positive step forward. She also reaffirmed the party's commitment to pursuing its policy goals, expressing determination to achieve significant progress in various areas to bolster Thailand's economic standing on the global stage.
The Bank of Thailand has stalled the proposed introduction of an additional 1% fee on local credit cardholders, necessitating card issuers to consider other alternatives. This decision was taken after several credit card issuers declared that they would be waiving the 1% fee for payments made in baht to overseas registered merchants and online shopping platforms.
Earlier in March, these issuers had announced their intention to impose a 1% fee on Thai credit cardholders for foreign currency conversion on payments made at overseas merchants with Visa and Mastercard. Known as dynamic currency conversion (DCC), this fee was expected to take effect on May 1. This fee would also be applicable to the withdrawal of baht banknotes from ATMs overseas.
However, the announcement was met with considerable dissatisfaction from local credit cardholders, which led the Bank of Thailand to encourage all parties to create a better understanding and ensure fair and reasonable banking fees.
The decision to impose the fee was a result of the significant costs credit card issuers had to bear due to the increase in overseas payments and online payments on foreign platforms by local cardholders. At present, local credit card providers impose a foreign currency conversion fee of up to 2.5% of total spending on Thai-issued Visa and Mastercard for overseas spending and on foreign-registered online platforms.
Given the central bank's directive, an anonymous banking industry source has revealed that credit card issuers are likely to indefinitely waive this fee. The regulator is urging credit card providers to understand the grievances of cardholders about the fee and encouraging them to look for alternative payment methods that would be beneficial to cardholders.
Kulthirath Pakawachkrilers, president of the Thai E-commerce Association, had earlier voiced concerns about the impact of DCC on consumers using Visa and Mastercard for high-purchase spending. She suggested that consumers might prefer other payment options, such as e-wallets.
Kulthirath also mentioned that several platforms, including Spotify, VIU, Agoda, Booking.com, Expedia, Klook, Airbnb, Trip.com, Facebook, Google, TikTok, Paypal, Alipay, eBay, Amazon, Alibaba, and Taobao, are likely to be affected by the DCC. However, platforms such as Shopee (Thailand), Lazada (Thailand), and Grab Taxi (Thailand) should remain unaffected, reported Bangkok Post.
According to a Bank of Thailand report on e-payments last year, their value reached 28.8 trillion baht (US$ 783 billion), marking a 10.4% increase from 2022. Card payments accounted for 5.9 trillion baht (US$ 160 billion), up by 8.2% from 2022.
A viral OnlyFans video showing a man and woman involved sexually on Bangsean Beach, Chonburi, has sparked public anger.
The couple was seen performing indecent acts against a coconut tree along the Bangsean beachside path, somewhere known as a family-friendly spot. The video's circulation online has resulted in widespread condemnations, with residents terming the act as inappropriate.
Local traders expressed their disbelief and questioned why the couple did not consider filming in a more private location, like hotels or resorts. They further called on authorities to address the issue, primarily due to the potential negative influence on youth.
As it stands, local law enforcement is reportedly investigating the incident, with a possible prosecution for the couple under Thai obscenity laws. The viral video has emphasized the negative impact, not only on the ethical standards of the community but also on Bangsean's reputation as a family-friendly locality.
Priserna på resor, särskilt utrikesflyg, har visat sig vara starkt säsongsbetonade och under de senaste tolv månaderna har priserna fluktuerat betydligt. En jämförelse av medelpriserna under årets första kvartal visar en markant ökning jämfört med tidigare år, enligt statistik från SCB.
Caroline Neander, prisstatistiker på SCB, förklarar att priserna för utrikesflyg under januari till mars 2023 var nästan 12 procent högre än under samma period året innan, och hela 43 procent högre jämfört med 2022. Detsamma gäller för flygcharter, där priserna har stigit med 16 procent jämfört med året innan och 40 procent jämfört med 2022.
Neander poängterar att även om höga priser på enskilda produkter i Konsumentprisindex är normalt över tid, har prisutvecklingen för utrikesflyg historiskt sett inte följt samma mönster som KPI. Under de senaste 30 åren har priserna på utrikesflyg ökat med 51 procent, jämfört med KPI:s 68 procent. Dock har de senaste tio åren sett en accelererad ökning, där utrikesflygpriserna har ökat nästan dubbelt så mycket som KPI. Utrikesflyg har blivit nästan 63 procent dyrare samtidigt som KPI stigit med drygt 32 procent.
According to Mr Theeraj, e-commerce trade expanded significantly during the pandemic compared with the period before the emergence of Covid-19, especially for low-priced imported goods from China transported overland to Thailand.
Thailand has embraced the digital economy, with trade on foreign online platforms increasing rapidly, disrupting domestic entrepreneurs.
Local businesses are struggling to compete on price, resulting in some fading away. The government was pushed to act by domestic entrepreneurs as cheap Chinese products flooded the market.
Imported goods sold for less than 1,500 baht per package were previously exempt from value-added tax (VAT) and import duties.
Online platforms selling goods from China import a large quantity of low-priced goods in containers, each containing tens of thousands of items.
This poses a significant challenge and it would require a considerable amount of time if each box had to be opened in order to assess the correct rates of tax, as proposed by the Finance Ministry.
This unfair competition prompted the Finance Ministry to recently rule to cancel the value-added tax exemption for low-priced goods.
Starting in May, the Customs Department is collecting VAT for imported goods sent via postal services, regardless of the value of the goods.
Q: Is the practice of exempting tax levies for low-priced goods accepted globally?
According to Theeraj Athanavanich, director-general of the Customs Department, exempting taxes for low-priced goods is a principle adopted by many countries, as they perceive that the importation of low-priced goods from other countries by individuals in the country is unlikely to be carried out for commercial purposes. Therefore, taxes are exempted for low-priced goods, with each country setting different thresholds concerning the value of the goods.
In the case of the US, the country set its threshold for imported low-priced goods at no more than 20,000 baht per item, while Thailand has deemed that low-priced goods are those valued at no more than 1,500 baht per item. The exemption threshold depends on the economic conditions of each country.
E-commerce now plays a significant role in both domestic and international trade. Purchasing a single item such as a shirt from overseas has become increasingly accessible. In the past, such a purchase was difficult due to the high costs involved or a lack of economy of scale.
This type of trade is now impacting domestic businesses, creating unfair competition or a lack of a level playing field because these exempted goods face no tax burden.
Consequently, many countries are starting to impose taxes on low-priced goods, such as Australia, while the US is also considering implementing similar taxes.
Q: How will the VAT collection operate?
According to Mr Theeraj, the department will allow platforms to declare the price of the imported product and deduct the VAT from that price, then send the tax payment to the Customs Department.
The department already collects VAT for goods valued at more than 1,500 baht apiece.
For individuals who import such goods from abroad and have them sent via a postal service, the Customs Department already has a tax collection system in place.
A tax notification is sent to the recipient's address, stating the tax obligation. The recipient must then make the tax payment to the department before collecting the goods from the post office.
According to Mr Theeraj, during the Covid-19 pandemic, e-commerce trade expanded significantly compared to the years before the pandemic, especially for low-priced imported goods from China transported by trucks.
The statistics for express imported goods (parcel express) -- exempted from tax since 2021 -- imported through Suvarnabhumi Airport Customs Office and Mukdahan and Nakhon Phanom Customs Offices combined, amounted to 40.8 million packages worth 9.84 billion baht.
In 2022, the number increased to 47.1 million packages worth 11.6 billion baht, and the latest data for 2023 reveals an increase to 56.8 million packages worth 17.9 billion baht.
Regarding imports via postal services (all dispatched via Laksi mail centre), there were 4.09 million packages worth 1.14 billion baht in 2021, with the number decreasing to 2.91 million packages worth 895 billion baht in 2022, and further decreasing to 2.11 million packages worth 676 billion baht in 2023.
Mr Theeraj insisted the purpose of the VAT collection is not to increase tax revenue for the government, but rather to promote fairness between domestic and foreign businesses.
Q: Will collecting VAT from cheap imports sent via the postal system level the playing field?
Paul Srivorakul, group chief executive of aCommerce, a leading e-commerce enabler, said the VAT collection ensures that all goods, regardless of origin, are subject to the same tax standards, thus levelling the playing field for local products and domestic businesses. This should also increase government revenue through both import duties and VAT.
However, enforcing the new duties on lower-value goods might introduce complexity in customs processes, potentially slowing down the importation of goods and impacting businesses reliant on imported products, he added.
The e-commerce sector, especially the marketplaces, which benefits significantly from the sales of imported low-value goods may face an impact from the VAT collection on cheap imported goods.
However, the benefits to local SMEs and the Thai economy far outweigh the impact on Chinese e-commerce platforms.
Mr Paul added that Thailand also needs a simplified tax structure, possibly a flat-rate tax model for low-value imports to ease the administrative burden on customs and businesses.
Alessandro Piscini, the founder of CREA, a leading e-commerce enabler, said the tax collection would reduce the gap between local SMEs and Chinese players regarding cross-border products, but he noted that the large China-based factories would most likely continue to have a cost advantage.
Kulthirath Pakawachkrilers, president of the Thai e-Commerce Association, said Thai entrepreneurs who do not import from China should feel better about the issuance of this tax measure. From the perspective of Thai entrepreneurs who trade with China, they should see the tax as an increase in costs.
Ms Kulthirath said that by implementing this VAT policy, related ministries and state agencies should examine the related agreements between Thailand and China as the policy could have some impacts that might affect their bilateral relations.
Q: Is the measure likely to be effective?
Aat Pisanwanich, an independent analyst on international trade, said imposing the 7% VAT on cheap imported goods, mostly from China, might not deter the influx of products because their production costs are significantly lower.
Even with the additional 7% tax, Chinese goods remain cheaper than similar goods produced in Thailand.
According to Mr Aat, relying solely on tax measures is not the ultimate solution to protect domestic producers. It is necessary to complement tax measures with other actions, such as controlling the standards of imported goods to ensure they meet domestic standards or have good agricultural practices (GAP) standards, among others.
He cited Indonesia as a good example of using measures to protect domestic businesses. For instance, if goods are imported at a lower price than domestically produced goods of the same type, a tax must be levied on those imported goods to ensure their selling price is equivalent to domestically produced goods.
At the same time, measures have been taken to prohibit the sale of low-priced goods worth less than 3,500 baht on online platforms. The steps taken in Indonesia have helped reduce the trade deficit with China, whereas Thailand faces the largest trade deficit with China, amounting to 1 trillion baht a year.
He noted that Thailand's significant consideration towards China may be due to various factors, including the country's heavy reliance on China, be it exports, investment inflows, or tourists.
Q: What is the outlook for industries affected by the flood of cheap Chinese goods?
Mr Aat said many industries are being affected by the influx of Chinese goods, particularly the steel industry. Instead of importing steel from China for sale in Thailand, Chinese entrepreneurs are now establishing steel production plants within Thailand by importing raw materials and machinery from China.
The production capacity of a single Chinese-owned steel plant now equals that of all Thai steel producers combined.
Furthermore, they can sell their steel at a lower price. As a result, Thai-owned steel plants currently operate at only 30% capacity because they cannot compete with the prices of Chinese steel. The steel industry serves as a reflection of the broader impact of the inundation of cheap Chinese goods on Thai industries.
He proposed Thailand establish conditions for foreign investment in the way that Indonesia has, which mandates a local content requirement for foreign direct investment.
Mr Aat said if Thailand doesn't implement any additional measures to help Thai entrepreneurs, it is believed that in no more than five years from now, Thai entrepreneurs will completely vanish.
He referred to the situation in which China evidently dominates businesses in Thailand. For example, Chinese traders already control around 70% of fruit sales in Thailand.
If Chinese traders gain complete control over fruit farms in Thailand, Thai traders are unlikely to be able to survive. In fact, he noted that Thai traders are merely the Chinese traders' stooges.
Thailand continues to experience a record-breaking heat wave, with temperatures pushing power demand to unprecedented levels across the nation.
According to the Thai Meteorological Department, more than three dozen districts across the country's 77 provinces recorded their highest temperatures ever for April, traditionally the hottest month. Some records surpassed previous highs set as far back as 1958.
The intense heat has resulted in a surge in electricity consumption, with power usage reaching a new peak of 36,699 megawatts on Monday (Apr 29), setting the third record-breaking demand within a week. In response to the escalating power needs, Thailand's state-owned energy company, PTT, has acquired an emergency shipment of liquefied natural gas (LNG) and is reportedly considering additional purchases. LNG is primarily utilized for power generation within the country.
The severe temperatures have also prompted health and safety concerns. The Ministry of Public Health reported an increase in heat-related fatalities, with approximately 30 deaths attributed to the heat this year. Residents have been advised to limit outdoor activities, with forecasts predicting temperatures in most regions to exceed 40 degrees Celsius.
In Bangkok, the heat index, which accounts for humidity, reached a "very dangerous" level above 52 °C, creating extreme discomfort and potential health risks. Meanwhile, the northern province of Lampang recorded a high of 44.2 °C, nearing the country's all-time highest temperature of 44.6 °C observed in previous years.
Can Cabinet reshuffle pull Thailand out of economic quicksand?
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Weeks of speculation on the impending Cabinet reshuffle ended with the publishing of the new list of ministers in the Royal Gazette on April 28.
Within a few hours of the new Cabinet line-up becoming known, the Thai government was jolted by the resignation of Foreign Minister Parnpree Bahiddha-Nukara over his removal as the deputy prime minister, an additional designation he had held.
His departure, and a news report that he might also resign his membership of the Pheu Thai Party, shows all is not well with the leader of the multi-party coalition government.
Prime Minister Srettha Thavisin expectedly stepped down as finance minister, handing over the responsibility to Pichai Chunhavajira, 75. Although Pichai's appointment was along expected lines, there were mixed reactions among local prominent economists to his taking the portfolio.
Economics professor Praipol Koomsup believes Pichai is qualified to discharge the responsibility by virtue of his extensive experience in both leading large corporations in the past and being well-versed in finance matters.
"Pichai is up to the task at the Finance Ministry and a full-time minister would be much better than Srettha, who previously was both finance minister and prime minister," he said.
Taxation challenges before new finance minister
Praipol, who specializes in the energy sector, said that one of the challenges before Pichai is how to reform the excise tax, and whether to cut the excise tax rate on oil products.
Prof Sakon Varunyuwatana, former dean of Thammasat University's economics faculty, was cautious in his assessment, saying he had never seen any of the finance ministers in over a decade embracing tax reforms.
As public debt is on the rise and government revenue is declining, this is the biggest challenge for the new finance chief, he said.
"Governments often talk about economic growth in the short-term but the reality is that serious faults in the economic structure have resulted in slower growth," he said.
The two economists as well as others have often called for a review of the land and building tax by increasing tax rates in order to collect more tax from the wealthy rather than relying on revenue from consumption tax and income tax.
"As Thailand is now an ageing society, consumption would be slower, leading to lower value-added tax collection," said Sakon.
When the value-added tax was introduced in 1992, the Finance Ministry had intended to apply a 10 per cent rate, but it was subsequently cut to 7 per cent, which remains the rate until now.
The challenge is whether the government should revert to the original target of 10 per cent, said Sakon.
Successive Thai governments have run fiscal deficits for many years, leading to the current public debt at 62 per cent of gross domestic product (GDP), exceeding the safe threshold of 60 per cent.
Looking ahead, public debt will rise further as the government is under high pressure for welfare spending because of the increasing number of senior citizens while the numbers in the working age group are dwindling.
The expenditure bill for fiscal 2024 became a law only on April 26, many months late. The government plans to spend 3.48 trillion baht with a budget deficit of 693 billion baht, or 3.6 per cent of GDP.
The government plans to have a larger deficit of 713 billion baht for fiscal 2025, which starts on October 1, with total planned spending of 3.6 trillion baht, as it needs an additional fund to finance the 500-billion baht digital wallet scheme.
The one-time cash handouts to 50 million people aim to boost domestic consumption.
The legal hurdles before the digital wallet scheme will pose a challenge to the new finance minister.
It is not clear yet whether borrowing money from the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) to partially finance the digital wallet initiative would violate the BAAC's law.
If the borrowing proves to be against the law, it could potentially cost the new finance minister his job.
Exports take a hit after 7 months
The latest economic data will be another headache for the new Srettha Cabinet.
Thailand's exports in March dropped sharply by 10.9 per cent year on year after seven consecutive months of positive growth.
The export slump prompted the Finance Ministry's Fiscal Policy Office (FPO) to downgrade the economic forecast to 2.4 per cent growth this year from the earlier 2.8 per cent.
The FPO cited falling exports in the first quarter, particularly of manufacturing products, for the revision. Automobiles and parts production have been slowing. The farm sector has been adversely impacted by drought as a result of the El Nino phenomenon and the delay in budget disbursement has also impacted economic growth.
To speed up budget disbursement, the Comptroller-General's Department would allow state agencies to reduce the number of days for public procurement, department director-general Patricia Mongkhonvanit said.
State agencies in Bangkok have to disburse funds to regional agencies within five days. State agencies have to accelerate the handover procedure of completed projects in order to quickly disburse the budget. In the case of carry-over projects that run into the following years, commitment of a new investment project obligation must be made before May.
The FPO expressed worries over the headwinds facing the economy. That includes geopolitical risks, such as the conflict between Israel and Iran, which could inflate energy prices.
The trade tensions between China and the US could also hurt the global economy. The high volatility in the global financial markets caused by higher interest rates in the US and Europe longer than expected would also have a negative impact on the Thai economy. A slower recovery of China's economy could in turn hurt Thailand's exports to that country.
Tourism remains a glimmer of hope
There are some positive factors. For instance, major banks have agreed to cut the lending minimum retail rate by 25 basis points for six months for individuals and small and medium-sized enterprises.
It might provide some relief for those having high debt. The cut came after PM Srettha met with representatives from the Thai Bankers' Association.
The cut would not be sustainable if the central bank does not lower the policy rate which is currently 2.5 per cent per annum.
Bank of Thailand Governor Sethaput Suthiwartnarueput recently made it clear that the government could not force the central bank to lower the rate as it was an independent entity and made its judgments based on economic data, not political pressure.
The FPO was optimistic about the outlook for tourism, expecting the number of visitors to reach 35.7 million this year, up 26.7 per cent over last year. The tourism industry is expected to be the major contributor to the projected current account surplus of US$9.3 billion, or 1.8 per cent of GDP.
Titipol Phakdeewanich, a political scientist at Ubon Ratchathani University, expressed his disapproval of the Cabinet reshuffle, saying it was political. "It is just the sharing of interests within the coalition government. They do not prioritize national interest," he added.
On April 27th, 2024, the Thai Meteorological Department publicly revealed a case where Thai netizens spread rumors and warned of "Thailand's hottest weather crisis until September".
The Thai Meteorological Department explained that summer typically begins in mid-February and lasts until mid-May, two and a half months. During this time, the Earth was closer to the sun and the sun was directly overhead, especially in April, when the sun was almost directly overhead in Thailand around noon daily, resulting in full exposure to sunlight.
During summer, wind directions varied and were often accompanied by low pressure due to the prevailing heat, resulting in relatively hot and humid conditions, with average temperatures exceeding 40 degrees Celsius.
However, as the rainy season began from mid-May to mid-October, the southwest monsoon prevails, bringing moist winds to cover Thailand. These winds helped dissipate the hot air and generally led to increased rainfall, which in turn helped to lower temperatures.
Therefore, in September, which marked the end of the rainy season, heavy rainfall was common in almost every part of Thailand. The average temperature was not particularly high due to the rain. The situation of extreme heat crisis in Thailand was therefore unlikely to occur until September, according to the Meteorological Department.
Long summer ahead as rainy season in Thailand delayed by two weeks
People in Thailand may have to brace for prolonged hot weather as the rainy season this year is forecast to start two weeks later than usual, the meteorological department has said.
Rains are expected around the fourth week of May, with overall rainfall across the country approaching normal levels. There will be a pause in the monsoon from mid-June to mid-July, the department said.
The department's website said that the rainy season would end around late October.
The total rainfall across the country is expected to be close to the normal average and similar to the previous year. Last year, during the rainy season total rainfall was around 1% above the normal average, while the total rainfall throughout the year was 6% below the normal average.
During the first half of the rainy season (from the beginning until the end of July), the total rainfall will mostly be close to the normal average. However, during the latter half of the rainy season (from August to the end of October), total rainfall is expected to be higher than the normal average by around 5%, the department has forecast.
From around mid-June to mid-July, there would be a lull in rainfall, which could cause water shortages, particularly in areas outside irrigation zones. People should use water wisely to maximise its benefits, especially for agricultural purposes, the department said.
The months of August, September and October will see the heaviest and most frequent rainfall. There is a high chance of tropical cyclones passing through Thailand during this time, resulting in heavy to very heavy rainfall in many areas and causing sudden flash floods. Rivers would overflow and landslides were also possible in several areas, the department warned in its forecast for the upcoming rainy season.
Tourists at the Suvarnabhumi airport passenger terminal on April 11 during this year's Songkran festival. Many countries today collect a tax from tourists, either via flight tickets or hotel stays. (Photo: Varuth Hirunyatheb)
With opposition to overtourism arising in many countries, Thai tourism operators are urging the government to seriously consider the nation's carrying capacity, while some have suggested collecting a 300-baht tourism tax in a bid to solve the problem.
As Prime Minister Srettha Thavisin has vowed to make 2025 a landmark year for tourism, Adith Chairattananon, secretary-general of the Federation of Thai Tourism Associations (Fetta), said a white paper that the federation will present to the government will include solutions to prevent overtourism, which was seen in Thailand before the pandemic.
Similar efforts were observed in other countries last week as Amsterdam's local government announced it was banning the construction of new hotels, while residents of Spain's Canary Islands called for limiting tourism arrivals as they have been hit by rising housing costs.
"With a projection of 40 million tourists, major destinations like Phuket, Samui and Pattaya are on the verge of facing overtourism," said Mr Adith.
He said that during the high season, Phuket had already witnessed traffic congestion and water shortages, while its international airport ran out of available slots for airlines.
Mr Adith said one of the key strategies is to attract tourists from major hubs to the country's secondary cities that offer plenty of potential attractions and space to accommodate a significant flow of tourists.
There should be incentives for airlines who are keen to operate direct flights to provincial airports such as U-tapao, and those serving Khon Kaen and Krabi. This would alleviate congestion among gateways such as Phuket Airport or Suvarnabhumi Airport, and would also help create regional business opportunities.
The related authorities should accelerate connectivity between airports to inner cities too. For instance, the lack of public bus access from U-tapao Airport to Pattaya City discourages new airlines from operating flights as the current situation is not convenient for passengers.
Surawat Akaraworamat, vice-president of the Tourism Council of Thailand (TCT), said the government should reconsider collecting the 300-baht tourism fee to help fund tourism development as the plan and all related preparations have now been finalised.
He said the essential funds would benefit infrastructure development in second-tier provinces to attract tourists away from congested locations, and improve attractions that have deteriorated due to overtourism.
Mr Surawat said the 300-baht fee would help tourism authorities receive a larger budget. Every year the Tourism Department, which is responsible for the development of supply, receives a budget of only 700 million baht, which is insufficient to sustain necessary projects.
He said a tax of only 300 baht would not discourage foreign tourists from visiting Thailand as some parties have raised as a concern, since the fee is inexpensive compared to some nations such as Bhutan which collects a tourist tax of over US$100 per night.
Many countries today are collecting taxes from tourists, either through flight tickets or hotel stays. Thailand should start a trial phase of tourism tax collection through a mobile application or kiosks, he said.
