Mekong Monitor: Thai government offers tax waiver on cash-back scheme “Eat, Shop, Spend” stimulus package
Photo credit: Channel News Asia
TRADE, ECONOMY, AND INVESTMENT
Thai government offers tax waiver on cash-back scheme “Eat, Shop, Spend” stimulus package
(4 March 2020) The Thai government agreed to waive personal income tax on financial privileges provided to registered consumers under the government’s economic stimulus package “Eat, Shop, Spend” in phase 2 and 3. The campaign ran from the third quarter of 2019 to early 2020, and was designed to promote domestic tourism and consumption to boost the country’s economy due to the global economic slowdown caused by the international trade war. The maximum amount returned to each person under the scheme is US$270 if they spend at least US$1,590 on domestic travel, products or services during the campaign period. According to government spokeswoman Narumon Pinyosinwat, the waiver will cost the government US$242 million in lost revenue but it would leave the Thai people with more disposable income which should help promote further domestic consumption in 2020.
Factories in Cambodia face disruption due to COVID-19
(2 March 2020) Cambodia’s Labour Ministry warned that as many as 200 factories and enterprises in the country could run out of raw materials due to supply disruptions from China owing to the COVID-19 outbreak. The ministry warned that in a “worst-case scenario” some 160,000 workers may be affected. As of 2 March, 10 factories have filed for temporary suspension. Labour Ministry spokesman Heng Sour said the government was making all efforts to restore relations with buyers, factories and other governments, including negotiating with China for Cambodia to be given priority over their supply of raw materials.
Vietnam to purchase US$3 billion in farm products from the US to allay trade tensions
(4 March 2020) Vietnamese companies signed 18 agreements with American producers to purchase some US$3 billion worth of farm products in the next two to three years. The deal included the purchases of 100,000 cows and US$800 million worth of wheat and barley. This comes amidst attempts by Vietnam to address complaints by the US over Vietnam’s trade surplus and difficulties by US companies in accessing Vietnamese markets. In 2019, Vietnam Prime Minister Nguyen Xuan Phuc promised to buy more US products including Boeing aircraft, while Vietnam National Coal-Mineral Industries announced in August 2019 that it was negotiating to purchase US coal.
Vietnamese business sectors including aviation and tourism hit by virus outbreak
(3 March 2020) Certain business sectors in Vietnam including aviation, services, and tourism have been affected by the COVID-19 outbreak in China. The tourist city of Danang is expected to experience a loss of US$ 30.4 million over the last two months. Danang’s city tourism association said the epidemic would cause a 31.0% drop in the number of tourists visiting the city in the first quarter of 2020 and a 20.7% decrease in revenue. Vietnamese airlines also saw a 13.7% drop year-on-year in airline passengers. Vietnamese airports also saw an 11.6% drop in the number of arrivals and departures at airports in February 2020.
Thai economy may contract in 2020 due to COVID-19
(4 March 2020) A group of leading Thai business associations have warned that Thailand’s economy may not grow in the first half of 2020, and could potentially contract over the full year should the COVID-19 outbreak last longer than a few months. The associations have cut their 2020 economic forecast to 1.5%-2.0%, a downgrade from their initial projections of a 2.0%-2.5% growth. The new projection is based on estimates that the impact of the virus will end by June 2020, causing no economic growth in the first half of the year. Thailand’s economy grew by 2.4% in 2019, its weakest in five years.
About Greater Mekong Subregion (GMS)
The Greater Mekong Subregion (GMS) Economic Programme was launched by the Asian Development Bank in 1992 connecting five developing ASEAN countries, namely Cambodia, Laos, Myanmar, Vietnam and Thailand, and Chinese provinces of Yunnan and Guangxi Zhuang Autonomous region. The region has some of the most robust economies sharing the Mekong River Basin thanks to its reform and liberalisation. The subregion is growing at a faster pace than the whole of East Asia and the Asia Pacific as the GDP growth rate for 2017 was at 6.4 percent, according to the World Bank. The population at the subregion as of 2016 is at 340 million while the GDP at PPP is at US$3.1 trillion in 2016. In 2015, trading within the region was at US$444 billion.