Investment from Hong Kong also doubled from USD 8 billion to USD 16 billion during the same time period, making the growth of investment from the region more impressive.
SOURCE: South China Morning Post
“Thailand’s push for regional energy trading could be a step to increasing security of supply and system resiliency, particularly as falling costs and higher government targets increase the volume of variable renewable energy generation in the ASEAN region.” – Caroline Chua, Bloomberg Finance analyst covering Southeast Asian power markets.
Thailand aims to be the power-trading hub as it jump-starts plans to create a south east Asian electricity “super-grid”.
According to Bloomberg, Thailand is set to triple the amount of electricity from Laos that it then resells to Malaysia, while encouraging infrastructure upgrades stretching from Cambodia to Myanmar necessary for cross-border power trading. Laos has been building new hydro-electric dams in the past decade and branding itself as the ‘battery of south east asia’.
The director general of Thailand’s energy policy and planning office, Wattanapong Kurovat, says the moves are part of Energy Minister’s efforts to simplify Thailand’s power system, making it cheaper and more efficient.
The plans would involve Thailand buying more electricity for the national grid from neighbouring Laos, which is generating more than it needs from dams along the Mekong River and its tributaries. Thailand would then surplus power in its own grid to sell on to Malaysia, Myanmar and Cambodia.
Thailand already has existing grid interconnection with Laos and Malaysia. Since 2018, Malaysia has been buying 100 megawatts from Laos, passing through Thailand, and is looking to increase the volume to 300 megawatts. Border towns in Cambodia and Myanmar have also been buying small amounts of electricity from Thailand. Read the rest of the story at Bloomberg.
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The next negotiating round for the formation of RCEP will be held in Da Nang, Viet Nam on September 19-28 . RCEP is the Regional Comprehensive Economic Partnership, and when negotiated and signed, will become the world’s largest and most powerful trading bloc.
RCEP includes all ASEAN economies, plus Australia, China, India, Japan, New Zealand and South Korea.
Economic ministers from countries involved last gathered in Bangkok on September 8 determined to conclude the world’s largest trading bloc by the end of the year.
After seven years, negotiations have reached a critical milestone as the ministers are resolved to address the outstanding issues and conclude the pact.
“Negotiators should exercise maximum flexibility to close the negotiations,” said Secretary-General of ASEAN Dato Lim Jock Hoi.
Given today’s developments, concluding RCEP negotiations this year would provide the much-needed stability and certainty to benefit regional supply chains as well as the global markets for trade and investment. Dato Lim said that failure to do so will undermine the region’s trade and investment potential, putting market integration at risk.
Once concluded, RCEP would create a market including 3.5 billion people accounting for about 30% of all global trade.
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Amongst all the bad economic news, Thailand’s industrial property sector is profiting from the protracted US-China trade war, as mainland Chinese manufacturers shift production to ASEAN countries in an attempt to avoid escalating tariffs.
Chinese foreign direct investment into the south east Asia sector rose last year by 31.7% to USD 233 million, after declining by 15.7% in 2016-17, according to Bank of Thailand data. In the same period, total FDI into Thailand skyrocketed by 130.5% year on year. Chinese investment accounted for 4.3% of total FDI last year and 7.6% in 2016-17, according to CBRE.
FDI into Thailand’s manufacturing sector was increasing before the trade war too, and is now seeing increased participation from China.
Last year, sales of serviced industrial land plots – privately owned industrial estates – by major developers in Thailand increased by 50% year on year. One park, specifically developed for Chinese manufacturers by Thai industrial estates provider Amata, accounted for 15% of the total sales in 2018.
CBRE also says China could be in line to take over from Japan, which has been the largest source of investment into Thailand since the late 1980s. Total FDI into Thailand last year amounted to USD 235 billion, with Japan contributing USD 86.6 billion and China US D4.9 billion, so there’s still a long way to go before Chinese investment outstrips Japan.
Thai PM Prayut Chan-o-cha is inviting South Korean investors to increase their investment and trade with Thailand. The PM says Cabinet will consider offering incentives for South Korean businesses to invest in the country. South Korean President Moon Jae-in capped off an official two day visit to the Kingdom yesterday.
The Thailand-Korea Business Forum was held yesterday in Bangkok with President Moon in attendance along with economic teams from Thailand and South Korea and representatives of 500 private companies.
Speaking at the forum the Thai PM spoke about Thailand 4.0 – the transformation of the country’s economic structure from an agriculture-based economy into a value or digital-based economy. Also about the Eastern Economic Corridor (EEC) project that was attracting investment from around the world.
According to the Bangkok Post, 400 South Korean companies have invested in Thailand with the trade value between Thailand and South Korea of USD 14-15 billion (428-459 billion baht).
Prayut also spoke about how Thailand could continue to learn from South Korea as they had been able to turn their country from agricultural economy into a manufacturing superpower over a number of decades.
Speaking at the forum President Moon said Thailand is one of the most important trading partners for his government’s New Southern Policy which has been successful in broadening partnerships with south east Asian nations and India. President Moon mentioned specific industries where he saw greater economic partnerships and trade in the future – automation, smart automotive technologies, energy, digital technology – that would assist Thailand to achieve its 4.0 goals.
PM Prayut met with President Moon Jae-in at Government House yesterday morning with the two leaders pledging to strengthen the strategic partnership between the two Asian economies.Keep in contact with The Thaiger by following our Facebook page.
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