Economy

Thailand loses US free trade benefits worth billions of baht

Published

12 months ago

Sunday, April 26, 2020

Thailand loses US free trade benefits worth billions of baht | Thaiger

Thailand loses duty free access for 42.2 billion baht in exports to the US market from today, 6 months after Washington warned it would pull back on trade privileges unless the kingdom committed to labour rights reforms. Once trade preferences for Thai products are removed they are subject to tax of between 4% and 5%, making them more expensive in the lucrative US market.

Analysts say they expect the new duties to do little direct damage. The US has said it would restore duties on just under one third of the 1.43 trillion baht worth of Thai imports eligible for duty free treatment under the US Generalised System of Preferences.

The US Trade Representative’s office said in October that Thailand had “yet to take steps to provide internationally recognised worker rights in a number of important areas,” particularly its fishing industry, notorious for slave-labour conditions and human trafficking, 6 years after US unions raised the issue.

The US Embassy in Bangkok told VOA News last week the cuts to Thailand’s trade privileges would go ahead as planned.

Human Rights Watch and other groups have long accused Thailand of “profiting from widespread human trafficking and debt bondage among its millions of migrant workers, who help drive the country’s economy, especially its multibillion dollar seafood industry. In a report on the industry last month, the International Labor Organisation said working conditions are improving, but not by much.

“Serious abuses persist for a significant number of workers surveyed. Injuries are still common, employers still use debt to control employees, and migrants are still barred by law from forming unions.”

The deputy director for Human Rights Watch in Asia says Thailand’s government had done pretty much nothing to address the USTR’s outstanding concerns in the past 6 months and welcomes Washington’s decision to follow through on the benefit cuts.

“These are trade benefits that were voluntarily extended to Thailand based on certain conditions. Those conditions are that Thailand respect labour rights, including freedom of association and right to collectively bargain, and there is plenty of evidence to show Bangkok has not reformed its highly deficient labour law or improved implementation of various laws to protect labour rights.”

Thai government spokeswoman Ratchada Thanadirek say labour law reforms are still in the works but conceded that the results might not satisfy the USTR.

“It’s not that we cannot do it… but there are things that we cannot do at the moment. And when we are going to draft a new law, we have to listen to all of the stakeholders.”

Some Thai labour groups oppose letting migrant workers form their own unions, claiming it might give them an advantage over locals. Ratchada says giving migrant workers their own unions is no panacea, and not the only way to help them.

“Having the migrant labour union doesn’t mean you can guarantee the labour rights. But we are guaranteeing and protecting migrant workers’ rights, so I think that is more important than having a union itself.”

As for the lost trade privileges, Ratchada says the volume of Thai exports losing duty-free status is relatively modest and will not trouble the economy much. Analysts and economists agree.

US Commerce Secretary Wilbur Ross himself downplayed the coming cuts as “trivial” after a meeting with Thai PM Prayut Chan-o-cha in November.

“The GSP issue has been blown way out of proportion. It’s no big deal.”

SOURCE: VOA

📱 Download our app on Android or iOS for instant updates on your mobile
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates

News Categories: Economy Thailand

Click to comment

Up Next

Thailand turns to China to revive post-Covid tourist economy

Don't Miss

Curfew subjects Thailand’s many homeless to arrest

Jack Burton

Jack Burton is an American writer, broadcaster, linguist and journalist who has lived in Asia since 1987. A native of the state of Georgia, he attended the The University of Georgia's Henry Grady School of Journalism, which hands out journalism's prestigious Peabody Awards. His works have appeared in The China Post, The South China Morning Post, The International Herald Tribune and many magazines throughout Asia and the world. He is fluent in Mandarin and has appeared on television and radio for decades in Taiwan, Mainland China, Hong Kong and Macau.

Economy

China grows 18.3%, the only major economy to grow in 2020

Published

16 hours ago

Friday, April 16, 2021

Neill Fronde

China grows 18.3%, the only major economy to grow in 2020 | Thaiger

PHOTO: China - the second largest economy, and only major economy to grow last year.

China’s economy set a record for growth in Q1, 2021, marking an 18.3% jump in year-on-year figures, the biggest quarterly growth in almost 30 years. China only started publishing growth statistics in 1992, and this drastic increase is the fastest growth recorded since then.

The figures, however impressive, are mainly due to what is called a “low base effect” where the change from a low starting point translates into big percentage statistics. Because of the devastating economic effects of the Covid-19 pandemic, the Q1 2020 figures were dismal, allowing the big gain over the last year.

Quarter to quarter, the last 3 months saw only a 0.6% growth, but in the last quarter of 2020 China recorded an economic boom of 6.5% according to the Chinese government. Still, the figures are admirable, as China was the only major economy in the world to achieve growth in 2020. Most of the planet struggled to contain global Covid-19 outbreaks, crippling economies across the globe. But China, now the second-largest economy in the world, managed a 2.3% overall expansion. Even Chinese officials called the impressive statistics “better than we had expected.”

China has been growing in terms of imports and exports as well, with exports expanding nearly 31% and imports up 38% by price over last years.

SOURCE: CNN

Economy

Thai household debt expected to keep rising- Kasikorn Research

Published

17 hours ago

Friday, April 16, 2021

Ann Carter

Thai household debt expected to keep rising- Kasikorn Research | Thaiger

Despite rolling out Covid-19 vaccines, in which could see a faster return to pre-Covid times, Thailand’s household debt is expected to keep rising. Kasikorn Research analysts say it could, in fact, reach 89-91% by the end of the year.

In a recent survey, KResearch says 10.8% of respondents could be stuck in a financial crisis. Of those who may be stuck, they indicated a drop in income, an inability to reduce expenses, and a high debt service burden per month that is exceeding 50% of their monthly incomes. This group of survey respondents is also concerned that it may not be able to provide for its basic needs in the near future.

In the 3rd quarter of 2020 and the year end, the figures were lower, at 86.6%, and 89.2% respectively. The upward trend isn’t unique as loans have increased while the economy has slowed. Almost 20% of household debts now are receiving financial-aid measures from financial institutions. The Bank of Thailand says the end of 2020 say 2.79 trillion baht tied up in financial relief programmes, which is equivalent to the 20%.

Despite government handouts and stimulus measures, the third wave of the pandemic is expected to increase outstanding debt under financial-aid programmes through the end of this month, but analysts say they are likely to not be any higher than the 3rd quarter of 2020. The amount of borrowers who may need further assistance after the relief programmes end in June 2021, is expected to be high.

The Covid vaccination rollout may give more flexibility in ending lockdowns in Thailand, funneling future financial assistance to those who are in serious need. The rollout may signal a switch from the standardized measures that were previously in place for determining who qualifies for financial aid, to a more individualised debt handling policy by financial institutions.

When asked what types of assistance are needed, survey participants ranked liquidity support at the top, followed by job creation that could help them maintain a stable revenue stream. Extension of financial-aid measures ranked 3rd. The rankings, indeed, point towards respondents needing to stabilize their platform of revenue first, before needing financial help.

SOURCE: Thai Enquirer

Economy

2 emergency decrees provide businesses financial help

Published

5 days ago

Monday, April 12, 2021

Neill Fronde

2 emergency decrees provide businesses financial help | Thaiger

PHOTO: 2 Decrees aim for financial relief for struggling businesses

Thailand enacted 2 new emergency decrees today aimed at providing assistance to businesses and reducing default interest rates to help people affected by Covid-19. A deputy government spokeswoman confirmed the needed action was critical to protect and aid entrepreneurs and small and medium-sized enterprises during the time of pandemic-driven economic crisis.

The goal was to combat unfair interest rates on debt many are suffering, and to provide loans to help keep businesses afloat as the end of the Coronavirus is nowhere in sight.

The Emergency Decree on the Provision of Financial Assistance for Entrepreneurs Affected By the Covid-19 Pandemic allocates 250 billion baht in loans for businesses to recover from the devastating economic effects of the global pandemic. 100 billion baht of this is specifically set aside for those businesses in debt to participate in asset warehousing or debt repurchasing plans.

Asset warehousing allows businesses, like hotels, to essentially store their property in the care of a creditor for a fee until the economy recovers enough to take over the property again and start making money with it again. Debt repurchasing is a process for a business to buy back its own debt with better terms or a lower rate with the purchase price considered a payment to the principal debt not the interest, similar to refinancing a home.

The second of the emergency decrees, an amendment to the Civil and Commercial Code, looks to close loopholes caused by ambiguity in the law that allowed predatory creditors to charge unreasonable interest rates.

If someone missed a loan payment, the original law did not set a default rate, so lenders could charge additional interest. Debtors can now base default rate calculations on the unpaid principal in the updated law. The new decree sets a 3% yearly interest rate and lowers the default rate to 5% a year from the originally 7.5%. The Finance Ministry declared interest rates would be revised every 3 years.

SOURCE: Bangkok Post