The kingdom’s Electricity Generating Authority is one of the country’s success stories providing power to businesses and homes at an economical cost while maintaining a strong financial position. It is currently planning a ฿300 billion investment plan to be implemented from 2022 to 2024 which will see 8 new generating plants to keep the country’s lights on.
Thailand’s Deputy Prime Minister Somkid Jatusripitak has requested Thailand’s electricity company to freeze costs in 2020 and look at ways to assist small and medium-sized businesses as well as the poorest with power bills. It comes as consumer confidence dropped for a tenth consecutive month in December and the University of the Thai Chamber of Commerce has downgraded its forecast for economic growth in 2020 to 2.8%.
Consumer confidence in Thailand dropped again for December according to the University of the Thai Chamber of Commerce. The index fell from 70.7 to 69.1. This is the 10th consecutive reduction bringing it to the lowest level since May of 2016.
The news is disappointing given that the Thai government was hoping that its stimulus efforts and end of year shopping would see a lift in the last month of the year.
Instead, however, a wave of job losses and fears of political stability weighed heavily on the minds of the public in the run-up to the end of the year.
Leading university downgrades growth projection for 2020 to 2.8% which still depends on the baht
On Friday, the university which publishes the index, had more bad news as it downgraded its economic outlook for 2020 and is now projecting the Thai economy to only grow by 2.8% in the coming year and even that is dependent on the government keeping the virulent Thai baht under control or at something like ฿30.50 to the US dollar.
Exporters talking with the central bank on the Thai baht with warnings of further contraction
Thailand’s exporters who are in the midst of discussions with the Bank of Thailand, produced a report this week which warned that another strengthening of the baht towards ฿28.50 could see a further 5% contraction of the country’s exports. Exports are 70% of the Thai economy.
The Thai baht ended the week at ฿30.25 as the dollar strengthened mid-week due to the crisis with Iran but then weakened as matters deescalated and Friday’s jobs numbers for the US economy were less than impressive.
Agriculture facing a drought and lower prices
Thailand is also opening the new year battling severe drought conditions caused by lower precipitation in the last year and significantly, the growing effects of up water dams on the Mekong River constructed by China which are having a punitive effect on Thai farmers and fishermen.
Mekong River Commission promises wetter conditions later this month which may help
However, there is some possible good news as the Mekong River Commission, a body set up by Thailand and its Southeast Asian neighbours decades ago to monitor the river, has suggested that the latter period in January may see wetter conditions while short term Chinese testing on the Mekong which has exacerbated the problem, is due to finish on January 20th.
Rice crop expected to be diminished in 2020
The government, however, is presently forecasting a drop in rice production for the main crop of rice in the coming season of between 4% and 12.5% while the second and earlier crop is more impacted by the current drought and could be down by as much as 50% with millions of rai out of production.
Overall, this means, at current projections, a lower crop for 2020 amid initial reports of lowers prices for rice, tapioca and rubber, the main staples of Thailand’s strategically important agricultural industry.
US Chinese trade deal may be just a short term test of wills between Thailand’s two biggest partners
The government will be hoping that a much-heralded and oft-delayed phase one trade deal to be signed between the US and China this week in Washington DC will at least see an improvement in trade tensions between Thailand’s biggest trading partners but most observers now see this deal as a short term one with ongoing hostility between the US and China in the longer term.
The deal will still see the US retain a 25% tariff on a huge range of Chinese products while setting a quota for Chinese imports of US farm produce over the next two years of $40 billion, a figure that was only matched once before in 2015.
Deputy PM Somkid asks for an electricity price freeze
This week, Thailand’s Deputy Prime Minister for Economic Affairs Somkid Jatusripitak urged the country’s state electricity company, the Electricity Generating Authority of Thailand, to hold off on any price rises for the coming year.
The government is also looking at ways to make power costs lower for small and medium-sized industries as well as the poorest households.
Energy Minister, Sontirat Sontijirawong, has agreed to take up this task with Thailand’s network of energy companies in the months ahead.
Deputy Prime Minister Somkid said the hold on electricity costs for Thai households was important this year to assist people in dealing with the slower economy.
One of the kingdom’s economic success stories
Thailand’s electricity company is one of the kingdom’s success stories and is currently in robust financial health.
It is planning a capital investment programme from 2022 to 2024 which will see ฿300 billion invested in a new power transmission system and eight new power plants capable of producing 5,400 megawatts a day.
฿300 billion investment programme for 2022 to 2024
Proposals for the new power plants will be considered by the Thai cabinet soon but there is a determination to push ahead with the investment while the baht is relatively strong.
Work on the new plants is expected to commence in 2022.
Thailand compares very favourably with other countries, in particular, South Africa
In this respect, Thailand compares quite favourably to other countries in the world such as South Africa where mismanagement of the country’s state electricity generator Eskom over decades of ANC (African National Congress) leadership has seen a 300% increase in staff load due to political interference.
This has resulted in load shedding in recent years as the company’s infrastructure has not been properly maintained and financial problems have slowed down its investment programme.
This has resulted in a chronic problem this year with regular and long power outages throughout the country and its big cities.
Further reading:
Battle against the bully baht to save the Thai economy from further economic slowdown in 2020
Economy continues to spiral downwards as the baht breaks the ฿30 barrier in the other direction
Thai economy remains sound says Fitch the ratings agency as the baht’s surge may be over for now
