Global Courant 2023-05-22 09:45:56
Move Forward Party leader Pita Limjaroenrat attends a press conference of the Thai pro-democracy parties in Bangkok.
Peerapon Boonyakiat | SOPA Images | Rocket | Getty Images
There is a lot of optimism about Thailand due to its tourism potential, but political headwinds could still be a game-changer, says Kelvin Tay of UBS Global Wealth Management.
While Thailand appears to be a “big beneficiary” of China’s reopening and an expected increase in tourism, outbound tourism from China has been “pretty meager so far,” Tay told CNBC “Squawk Box Asia” on Thursday.
China’s employment numbers need to go up first, he added.
Thailand also needs to reinvest in infrastructure and rebuild faster, Tay said. The country had plans to build infrastructure on the east coast through new ports and airports, but “that hasn’t really happened at the moment,” Tay said.
This is largely due to politics, which Thailand needs to “get… right,” he said.
Thai politics can be game-changer
Preliminary results show that Thailand’s opposition parties, Move Forward and Pheu Thai, together secured 99% of the votes counted in the general election on May 14, Reuters reported.
But for the leading Move Forward party to form a new coalition government, it will need the support of junta-appointed senate members who are allowed to vote for the next prime minister, Reuters said.
The Election Commission has 60 days to certify the election resultsafter which the prime minister is elected.
Thailand’s election is a “potential game changer,” Tay said.
After the votes that showed pro-democracy parties won a large majority, the Thai baht shot to its highest level since February this year on Monday.
While the benchmark SET index rose initially as results came through, but eventually gave up those early gains.
In fact, Thai stocks are the worst performers in Southeast Asia this year, but Tay says Thailand is his “top pick” in the region.
Thailand’s SET index is down 9.22% this year, the biggest underperformer in the wider Asia-Pacific region. By comparison, Malaysia is down about 4.5% and Indonesia’s Jakarta Stock Index is down 2.2% over the same period, according to data from FactSet.
Another concern is that monarchy-affiliated businesses could be antagonized by a change of government, Tay added.
The Move Forward party has called for reforms to the monarchy, including an amendment to the defamation law.
Labor challenges
Thailand also needs to look at its workforce to drive growth, Tay said. The country’s fertility rate and aging population are “among the worst in the world,” he said, but workers from neighboring Cambodia and Laos could be brought in to try and boost the workforce. The cultural and linguistic similarities between those countries make it “easy” for Thailand to do this, he added.
However, Thailand may need to change its immigration policy first. Even after foreign workers have been in Thailand for many years, they are “still considered migrants and not … part of the local population,” he explained.
Thailand should consider providing migrants with a clear path to residence, he added.
