Mekong Monitor: Thailand’s economic activity may not return to pre-COVID-19 levels until 2022
Photo Credit: Indochina Pioneer
TRADE, ECONOMY, AND INVESTMENT
Thailand’s economic activity may not return to pre-COVID-19 levels until 2022
(14 July 2020) Thailand’s central bank, the Bank of Thailand (BOT) said the country’s economic activity is not expected to return to pre-COVID-19 levels until 2022, but the country’s interest rate of 0.5% is unlikely to reach 0%. The BOT forecasts the economy will shrink by a record 8.1% in 2020, although the economy is expected to gradually recover in the second quarter. The central bank has cut its interest policy rate three times this year to 0.5% to cushion the impact of the coronavirus. The BOT will allow more trading of gold and commodities to reduce the impact on the baht.
Thai mall operator seeking to reach 90% of Vietnam’s provinces in the next five years
(13 July 2020) Thailand’s Central Retail, an arm of Thai retail conglomerate Central Group, seeks to expand to nearly 90% of Vietnam’s provinces in the next five years. The retailer intends to have operations in 55 of Vietnam’s 63 provinces and nationally run cities, up from the current 39. It will open six new GO! Mall locations and convert four Big C supermarkets into malls in Vietnam in 2020. Central Retail currently operates 35 malls and 230 supermarkets, electronics stores and other retailers in Vietnam. Vietnam accounted for 20% of the company’s total revenue in 2019, making it the company’s second-largest market after Thailand.
Myanmar’s airports may not open to international commercial flights until October 2020
(13 July 2020) Myanmar’s airports may not open to international commercial flights until October 2020, according to the National Tourism Development Central Committee. Even when its airports reopens, however, it remains to be seen if there would be any takers, other than those who wish to be repatriated from overseas. Domestic flights are currently operating, but are restricted to only Myanmar citizens and foreign residents registered in the country. The government stated that when commercial flights are resumed, they will be restricted to routes serving neighbouring cities in the ASEAN region and later, other Asian countries. Myanmar has banned all international commercial passenger flights since 31 March, with the latest ban to last until 31 July 2020.
Myanmar’s garment manufacturing industry’s strong growth expected to continue
(16 July 2020) Fitch Solutions expect Myanmar’s garment manufacturing industry to continue displaying high growth potential, alongside other countries such as Cambodia, Vietnam, and Bangladesh. The research firm based these projections on the fact that Myanmar has relatively low costs of labour, proximity to China, special market privileges granted by the EU under the Generalised Scheme of Preference (GSP), and low logistics and transport costs. However, Fitch warned about the risks of the EU’s withdrawal of the GSP over the ongoing human rights issue in the Rakhine state. Myanmar’s apparel exports grew at a compound annual growth rate of 37% between 2010 and 2019.
An estimated 390,000 job losses projected for Cambodia in 2020
(15 July 2020) The Asian Development Bank (ADB) projected Cambodia will lose some 390,000 losses in 2020 due to the COVID-19 pandemic. On 15 July 2020, ADB approved a US$250 million loan to help the Cambodian government respond to the pandemic. The loan will incur a 1.0% per annum interest rate during an eight-year grace period, and 1.5% thereafter. Besides the loan, the ADB will provide grants as well as technical assistance for its cash transfer programme. The ADB’s financial support is targeted towards businesses, households and individuals that have been adversely affected by the crisis, with emphasis on poor and vulnerable groups.
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.