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Thailand slashes 2019 exports estimates as trade war escalates

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Thailand slashes 2019 exports estimates as trade war escalates | The Thaiger
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by Phuwit Limviphuwat

Thai exporters are expected to pay a heavy price as the ramping up of the US-China trade war continues.

The US has now launched a new round of tariffs on Chinese imports. Last Friday US President Donald Trump tweeted:

“Talks with China continue in a very congenial manner, there is absolutely no need to rush, as Tariffs are NOW being paid to the United States by China of 25 per cent on US$250 billion worth of goods and products. These massive payments go directly to the Treasury of the US.”

The US tariffs target technological goods such as machinery parts, electrical circuits and auto parts that are manufactured in Thailand. These goods are then shipped to China, from where they are exported to the US after ‘value addition’, according to the National Economic and Social Development Council.

The implementation of more tariffs could be a part of the US strategy to gain leverage in negotiations with China, Thai acting Commerce Minister Chutima Bunyapraphasara said.

“The increase in tariffs is a demonstration by the US that President Trump is willing to act on his threats,” said Chatree Rojana-Arpa, executive vice president for strategy and product development at KTB Securities Thailand.

“President Trump wants to use this move to negotiate with China from a favourable position. If there is progress in the negotiations, the tariff rates will likely be brought down.”

This sentiment is reflected in Thailand’s capital market, which has not taken a significant hit from the trade war escalation until now. This is because investors are still expecting the tariffs to come down in the near future as US-China trade negotiations make progress, Chatree said.

On the other hand, a drawn-out escalation of the trade war would further hamper Thailand’s exports, which have been performing poorly in 2019. In the first quarter of this year, Thai exports were valued at US$61 billion, a 1.64% contraction compared to the same period last year.

In 2018, Thai exports grew by 6.7% year on year. As a result of the trade war escalation, various financial institutions have cut their export forecasts for 2019 to less than half of last year’s growth.

“If US-China trade tensions continue to escalate, Thai export growth for 2019 is likely to be lower than our recent forecast of 2.7%,” said Yunyong Thaicharoen, first executive vice president and head of Siam Commercial Bank’s Economic Intelligence Centre.

“In particular, goods in the supply chain affected by the trade war, such as computers and parts, integrated circuits and rubber, have already shown a year-on-year contraction of between 18 and 25% in the first quarter of this year.”

The Commerce Minister said Thailand would gear its trade negotiations to open up more tariff-free opportunities for Thai exporters.

SOUECE: The Nation

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Government is to allow people to use “legal” parts of cannabis in business

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Government is to allow people to use “legal” parts of cannabis in business | The Thaiger
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With intentions to promote cannabis as the country’s potential new cash crop, the government is preparing guideline to allow people to produce, sell or own cannabis and hemp. The permitted businesses, including textile, pharmaceutical, and cosmetics will be able to register to receive FDA permissions from January 29.

According to the FDA secretary-general, leaves, stalks, stems, roots, flowers, and seeds are not in a list of legal parts as they have high drug content (is there anything left?). Individuals are still not allowed to grow both cannabis and hemp without authorisation. Import and export of hemp must seek permission from the FDA Office as well.

Interested applicants in Bangkok can register at the FDA Office, while those in upcountry can contact the provincial public health offices. Courses and training about how to start a business using marijuana plants will be provided under the collaboration of the Education Ministry and Public Health Ministry.

However, a traditional medicine expert with Chaopraya Abhaiphubejhr Hospital, suggests that 6 groups of people should avoid food and drink with marijuana, including those with liver and kidney problems, heart disease patients, people aged below 25, pregnant women, breastfeeding mothers, and those taking stimulant medications.

SOURCE: Bangkok Post

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Myanmar cancels Thai investment in the Dawei Special Economic Zone

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Myanmar cancels Thai investment in the Dawei Special Economic Zone | The Thaiger
PHOTO: Environment Justice Atlas

The Dawei Special Economic Zone Management Committee has announced the cancellation on the deep seaport project contract with Italian-Thai Development (ITD), one of Thailand’s leading industrial firms, by saying that they “lost confidence” in the company after long, controversial issues.

The Dawei Special Economic Zone Management Committee said that the Thai company has caused them “repeated delays, continuing breaches of financial obligations under the contracts and the concessionaires’ failure to confirm their financial capacity to proceed with development”.

They say they will look for new development partners to continue the projects. Currently, there are still no comments from ITD.

The Dawei Special Economic Zone is Myanmar’s initiative to encourage international investments into the country, but the project has been delayed because of funding problems and local opposition.

SOURCE: Thai PBS World

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Future of Thai department stores is being redefined

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Future of Thai department stores is being redefined | The Thaiger

While department stores have been a familiar destination for Thai people for many decades, CBRE, an international property consultant, is witnessing a decline in popularity and stunted growth, particularly in 2020 when Covid-19 adversely impacted the sector. CBRE believes that to adapt to e-commerce disruption and the changing consumer behaviour, department stores in 2021 (and beyond) will have to fine-tune their business model in terms of customer shopping experience, inventive activities and value-added programmes to continue their status as the second home for Thai shoppers.

Jariya Thumtrongkitkul, Head of Advisory and Transaction Services – Retail, CBRE Thailand explained… “While department stores offer shoppers convenience, saving them time with many varieties of goods grouped in different departments and allowing the shoppers to find and compare products and choose what they want, the traditional department store model does not fit the needs, lifestyle and behaviour of its shoppers anymore, especially the new generations.”

According to CBRE Research, the total retail supply in Bangkok as of Q4 2020 increased to 7.8 million square metres, a 1.16% increase year-on-year. Out of this, only approximately 3% was reported within the department store format. The department store market in Thailand is mainly dominated by two domestic retail giants, with Central Group and The Mall Group holding the largest market shares. They do not only concentrate in Bangkok, but have also opened department stores in many major cities throughout the country which allowed them to build bigger networks and grow their customer base.

In the past few decades, Japanese investors had also shown interest in entering the Thai market and offered local features that are well-known in Japanese department stores: simplicity, premium quality and services. However, with strong competition many Japanese department store operators have ceased their expansion plans. Some have exited the country due to the fierce competition against the local players, their performance in Thailand and the shrinking Japanese department store business, especially in overseas countries.

“The department store concept as a one stop shopping place is still in demand for certain groups of customers. However, with the e-commerce disruption and changing consumer behaviour, department store operators need to adapt their models, offerings and value-added services to their customers to cope with the challenging economic and market conditions.”

Adaptability of department stores can be highlighted into 3 main parts: customer shopping experience, inventive sales and marketing activities, and value-added programmes. While more and more younger generations prefer to shop online to save time and money, the brick-and-mortar store is still believed to be the second home for Thai shoppers. Department stores should be more agile in the era of e-commerce and adopt some technological innovations such as in-store automation and mobile payment solutions to reach the younger crowds.

Design is another aspect that plays an important part in customer shopping experience. Department stores can be more creative in remodelling traditional department store space into some ingenious and interactive space with a great design and right product portfolio mix for their customers.

The Mall Group, for example, has launched its first “Lifestore” concept at The Mall Ngamwongwan at the end of 2020 by redesigning and renovating its traditional department store space to enhance customer shopping experience and enjoyment.

The second part to be considered for the adaptability comprises inventive activities related to sales and marketing. The prices of products being sold in a department store are normally set high to cover the higher establishment and operating costs by operators, narrowing their target to only upper- to high-income customers.

Brand offerings may also no longer meet fast-changing customer needs since today’s shoppers have more choices in buying products online, not to mention the declining footfall due to the growth of e-commerce. CBRE Research has seen domestic players pushing hard to drive sales growth via numerous promotions, marketing campaigns and activities and collaboration with credit card companies during seasonal sales.

The third part consists of value-added programmes such as personal shopper, customer loyalty programme, on-demand solution and service personalisation, which have become a new trend as customers, including the aging population, are now more sophisticated and demanding.

The retail landscape has changed drastically in the past few years from various factors like technological advancement, consumer behaviour and preference as well as Covid-19. Cookie-cutter strategy will be a thing of the past, especially for department stores where the format and offerings have remained the same for decades.

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