Thailand urged to address rising zero-dollar exports from China
Thailand’s economy is being short-changed by a flood of so-called “zero-dollar” investments and exports from China, with experts warning the government must clamp down, or risk a new wave of growth that benefits everyone but the Thais.
Amonthep Chawla, chief economist at CIMB Thai Bank’s Economic Centre, said America’s latest tariff moves, both those aimed broadly and those specifically targeting Thailand, will accelerate the global decoupling between the US and China.
“This will fuel fiercer global competition in trade and investment,” Amonthep said, citing the growing geopolitical tensions that are shifting manufacturing bases across Asia.
With American tariffs forcing companies to rethink where they make and move goods, Southeast Asia, and Thailand in particular, is becoming a hot destination for foreign direct investment (FDI). Amonthep said Thailand has solid potential to serve as a manufacturing hub for both domestic and export markets.
But there’s a catch: not all foreign investment is as beneficial as it seems, said Amonthep.
“Thailand still faces problems from zero-dollar investments and exports, especially those from Chinese investors. This issue, which has long existed, is set to worsen under current geopolitical risks.”
Zero-dollar exports refer to trade flows that offer little to no real economic value to the country, such as goods made in Thailand by foreign firms that contribute little to local jobs or profits.
Despite a record-breaking year for FDI in 2024, Thailand’s Purchasing Managers’ Index (PMI) showed only a modest uptick, and jobs growth remained sluggish. Even with exports climbing by double digits, the net benefit to the economy was underwhelming, said Amonthep.
“Export growth hasn’t translated into economic gains because the actual contribution to employment and local industry has been minimal.”
He called on the government to tackle zero-dollar schemes with the same gusto it once used to shut down exploitative zero-dollar tours, which saw Chinese tour operators pocket profits while locals gained next to nothing, Bangkok Post reported.
Meanwhile, global uncertainty continues to cloud Thailand’s economic outlook. Although former US President Donald Trump temporarily shelved a punitive 36% tariff on Thai goods for 90 days, a universal 10% tariff remains in place, creating ongoing unease.
CIMBT has now downgraded Thailand’s GDP growth forecast for 2025 from 2.7% to just 1.8%. Exports are expected to rise by a meagre 1.4%.
Still, Amonthep stopped short of predicting a full-blown recession.
“There’s only a 20% chance of a technical recession in the second half,” he said, though he warned of possible slowdowns in both the third and fourth quarters.
To cushion the blow, the Bank of Thailand is tipped to slash its policy rate three more times this year, bringing it down from 2% to just 1.25% by December. A further cut is expected at the next Monetary Policy Committee meeting on April 30, following February’s reduction.
As for the baht? Don’t expect stability any time soon.
CIMBT expects the currency to weaken further against the dollar in the second quarter, as capital flows out of Thailand and tourism revenue slows. Dividend repatriation by foreign investors will also weigh on the baht, which could hit 35.20 to the dollar by year-end amid rising volatility.
With global headwinds and dodgy investment deals blowing hard, Thailand’s economic future looks anything but settled.
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