The Federation of Thai Industries is concerned that the rapidly appreciating baht is putting pressure on the export sector. It pointed out that the baht should not exceed the competitive level of 34.0-34.50 baht per US dollar. It is preparing to discuss with the Governor of the Bank of Thailand on how to control the currency so that it does not appreciate or fluctuate too quickly, including reducing the policy interest rate. As for sending a letter to the Prime Minister to express economic opinions, it is currently in the process of preparing details. The main points are about economic stimulus measures, increasing the capabilities of SMEs, preventing floods, and creating energy stability.
Mr. Sanan Angubolkul, Chairman of the Thai Chamber of Commerce, gave a press conference after chairing the meeting of the Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB), with Mr. Kriangkrai Thienukul, Chairman of the Federation of Thai Industries (FTI), and Mr. Phayon Srivanich, Chairman of the Thai
Bankers Association, also attending the press conference.
Mr. Sanan said that the meeting of the NESDB saw clearer signs of a slowdown in the global economy, with the US, Europe, China and Japan’s September PMI Manufacturing indicators contracting further, causing many countries to stimulate their economies. The US Federal Reserve has already cut its policy interest rate by 0.5% and it is possible to cut interest rates further in the rest of the year, as well as the People’s Bank of China, which has cut interest rates and the government is issuing new economic stimulus measures to support production and public spending, which are likely to weaken.
In addition, there are concerns about the rapidly strengthening baht, which has put pressure on the export sector. The baht has appreciated from 36.8 to 32.3 baht per US dollar in the past three months, or about 12%, which is more than other regional currencies. This has become a negative factor for competitiveness, especially for agricultural and food products th
at mainly use domestic raw materials. If the baht continues to appreciate for the rest of the year, it could affect exporters’ baht income by about 180-250 billion baht.
It is possible that the baht will strengthen beyond 34.0-34.50 baht per US dollar, which is a level where businesses can compete. Therefore, we are preparing to discuss with the Governor of the Bank of Thailand to give his opinion that it is necessary to focus on taking care of the currency so that it does not strengthen or fluctuate too quickly, and to communicate proactively so that the business sector can be aware and adjust in a timely manner. In addition, it is necessary to systematically pass on the benefits of a strong baht, such as reduced import costs of energy products and raw materials, especially in the agricultural sector, to the production sector and the public sector. We also propose that the Bank of Thailand urgently consider adjusting the interest rate that is already reflected in the forward financial market. Currently, the
market expects the policy interest rate to decrease by at least 0.25% this year and another 0.25% – 0.5% next year, which will help reduce the impact on the real sector quickly. We also consider reviewing the inflation target framework that is currently under discussion with the Ministry of Finance to be at a level appropriate for the context of the country’s current and future economic potential and structure.
The FTI is monitoring the impact of the floods on economic activities, and there is a tendency for the new storm to hit Thailand again in the fourth quarter of 2024. It is expected that this round of flooding will cause damages of around 30,000-50,000 million baht, or around 0.2% of GDP, with the agricultural sector being the most affected due to the flood situation that may expand more widely. It is estimated that the Thai economy in 2024 will still be able to expand within the range of 2.2% to 2.7%, with support from the government in stimulating the economy and accelerating the disbursement of inve
stment budgets, including assistance for those affected, both in terms of compensation and measures to help increase liquidity for business rehabilitation, which the Cabinet approved on October 1st. In addition, the government has integrated the development of a system to warn people and entrepreneurs about water levels and flood risk areas in real time via mobile phones, and has cooperated with neighboring countries to urgently resolve the problem of forest encroachment for agriculture, both in Thailand and neighboring countries, which will help increase the upstream area to prevent flash floods and forest runoff.
For the energy stability approach, the FTCC considered the national power development plan (PDP2024) to maintain the country’s competitiveness, with 6 proposals as follows:
1) Increasing the proportion of electricity generation from renewable energy to be in line with the country’s long-term strategy for low-emission development (LT-LEDS) to achieve Thailand’s Carbon Neutrality and Net Zero goals
.
2) Increasing the proportion of solar and wind power combined with batteries (BESS).
During the transition period, the dependence on imported energy should be reduced by accelerating the development of energy sources from the Thai-Cambodian OCA.
3) Public-private sector cooperation to consider procuring new alternative energy in appropriate proportions, such as hydrogen, nuclear (SMR), the use of renewable energy combined with energy storage systems, etc.
4) Accelerating the importance of electricity liberalization. In the immediate term, the opening of the electricity grid system to third parties (Third Party Access, TPA) should be accelerated by 2026, and a concrete liberalization approach and a clear time frame must be specified in the PDP 2024. The development of the Smart Grid system and promotion of energy storage technology, as well as a comprehensive management system for used batteries, should be implemented.
5) Consideration of the economic value and necessity of building new power plants com
pared to the options for repowering or overhauling existing power plants, and the use of Loss of Load Expectation (LOLE) criteria, which should include Reserve Margin data.
6) Proposing the establishment of a Joint Public and Private Sector Committee to Solve Energy Problems (JPC), which allows the private sector to participate in providing opinions and suggestions to the government in proposing policies, management plans, and developing energy measures for the country to the National Energy Policy Committee (NEPC).
Source: Thai News Agency
