The Reasons for Thai Resilience

Diplomatic acumen and economic choices will determine Thailand's ability to continue its development story

Even in an exceptionally diverse context such as Southeast Asia, Thailand still stands out for several reasons. First, "the Land of the Free" - the actual meaning of Thai Land - is the only ASEAN country which never fell under the colonial yoke of the West. Second, the extraordinary complexity of Thai culture is held in high regard by Western tourists and Asian powers alike. Finally, thanks to a favorable geography and a shared history, Thailand can make a great contribution to bridging the gap between China and India and finding a common ground among the often-squabbling ASEAN countries.

The figures of the economy have certainly contributed to creating the myth of Thai exceptionalism: GDP grew on average by 7.5% per year through the period 1960-1996, making Thailand one of the greatest success stories of international development. A smart policy mix of incentives and investments have persuaded numerous car manufacturers to move their production plants to the country, transforming Bangkok into the "Detroit of Asia". The rapid growth of the average income enabled Thailand to join the middle-high income country club in 2011. A few years later, the government drafted the Thailand 4.0 masterplan, betting on smart cities and the Internet of Things to avoid the "middle income trap".

In fact, over the last two decades, Thailand's GDP slowed down, following the ups and downs of global trade, while the country was facing the return of poverty and a threatening growth of inequalities. The Covid-19 pandemic has exposed the structural weaknesses of the Thai economy and its excessive dependence on external demand. The unexpected yet inevitable shutdowns of national borders, for instance, caused the collapse of the tourism industry, worth about 15% of Thai GDP, putting 2.5 million jobs at risk. The Bank of Thailand has projected an 8.1% decrease of the GDP in 2020: the lowest point after the 1997-1998 Asian financial crisis.

The compounded economic and health crisis found the cabinet of Prayuth Chan-o-cha already confronted with the thousands of Thai students who have taken to the streets since February to protest against the government of the former-general-who-became-Prime-Minister. The protests have been characterized by an explicit criticism of the King Maha Vajiralongkorn, a rather unusual occurrence in a country where those who breach the strict lese-majesty law face up to 15 years of prison. In general, however, the protests are a dramatic manifestation of the enduring tension between the progressive quest of the working classes and the youth and the more conservative stances of the military and political elites.

Thailand enjoys a relatively young population (about 1/3 is under 25 years old), fairly good infrastructure (constantly expanding), and a rather beneficial geographical position, right in the centre of the Beijing-Delhi-Jakarta triangle. Such "Optimal general features,” together with the traditional resilience of the main economic indicators and a few significant socio-economic trends, as the presence of a robust urban middle class, help explain the renewed interest of investors in the Thai market. The recent economic choices of the government, which seems to reflect a changing attitude towards internal consumption and expansionary fiscal policies, may open a new window of opportunity for Italian companies exporting industrial machinery and consumer goods to Thailand.

As a matter of fact, the full recovery of the Thai economy will depend on the ability of the government to leverage the distinctive strengths of the country which Kishore Mahbubani, former Singaporean top diplomat and keen observer of regional affairs, singles out in 'The ASEAN Miracle.' Its unique national sentiment, a mindful use of soft power and well-demonstrated mediation skills will prove essential for Thailand to overcome the difficult economic and social contingency and enable the country to carry on its history of growth and development.

By Francesco Brusaporco

Thailand's response to the Covid-19 crisis

Thailand's response to the Covid-19 crisis Thailand has effectively addressed the economic and health consequences of the coronavirus pandemic standing out as a model for all.

On July 9th, the Italy-ASEAN Association organized a webinar on Thailand and its response to the crisis caused by Covid-19 with the President of the Italy-ASEAN Association, Enrico Letta, the Ambassador of Thailand in Italy, Chirdchu Raktabutr, the Ambassador of Italy to Thailand, Lorenzo Galanti, the President of the Foreign Affairs Commission of the Thai Senate, Pikulkaew Krairiksh, the Thai Minister for Social Development and Human Security, Chuti Krairiksh and Ducati's CEO, Claudio Domenicali. The meeting was moderated by the Vice-President of the Italy-ASEAN Association and former Ambassador of Italy to Thailand Michelangelo Pipan.

Although Thailand was the first country after China to confirm a Covid-19 case on its territory in early January, the management of the coronavirus pandemic by Thai authorities has since then emerged as one of the greatest success stories in South-East Asia and beyond. At the moment, in fact, Thailand is only the 99th most hard-hit country in the world, with an extremely low total number of cases, at about 3200 units as opposed to a population of over 70 million inhabitants, and a proportion of deaths in relation to the overall population among the lowest in the world. These enviable epidemiological outcomes are the result of effective governmental action, which imposed restrictive measures in a timely fashion, but are also a by-product of the incredible social discipline of Thai citizens.

On the economic front, Thailand has greatly suffered from the collapse of international trade and international tourism, both of which are key sectors for the economy of the Kingdom. The most recent estimates from the Thai Central Bank and from the World Bank project a GDP contraction between 5 and 8 percentage points in 2020 and a partial recovery between 4% and 5% in 2021. The Thai government has thus responded to the grave economic crisis by launching a 64 billion US dollars stimulus package, amounting to 16% of the country's GDP, designed to assist families, businesses and local development projects in the area. In spite of the inevitable economic devastation caused by the coronavirus pandemic, thanks to the financial solidity of the Kingdom, which can count on a 44% debt-to-GDP ratio, the Thai government is confident it can control the damage and get the economy back on its feet in a relatively short time. 

The evolution of the Covid-19 crisis in Thailand has shown a certain resilience of the country to external shocks. On both the economic and health front, Thailand has shown great resistance and flexibility in its response to the pandemic. However, the current goal of the Thai government in the medium-term is to carry out a cautious reopening to international trade and tourism, while at the same time seeking to reduce its excessive dependence on external factors. The government has shown intention to pursue a political strategy based on the notion of "immunity", combining health security, economic resilience and preparation for external crises. The Thai government thus intends to strengthen its economic self-reliance, in an attempt to limit excessive exposure to international upheavals, while maintaining a high degree of openness of the national market to foreign trade and tourism.

Thailand has proven itself to be a resilient country in its approach to the coronavirus pandemic, doing everything possible to limit the economic and health consequences of the Covid-19 crisis. The challenge for the Kingdom in the coming years will be to further increase its resilience to external shocks in the event of new crises of analogous seriousness.  

Article edited by Andrea Dugo.

La Deutsche Bank in Thailandia

Nel 1978 la prima filiale e da allora un continuo espandersi in tutto il Paese

Il 16 aprile 2020, la Deutsche Bank, nell’ambito di un programma di modernizzazione dei pagamenti guidato dal governo della Thailandia e volto a sostenere l’inclusione finanziaria e l’introduzione dei pagamenti elettronici, ha lanciato il servizio di pagamenti istantanei “PromptPay”. Tale piattaforma, utilizzando un numero di conto o un proxy-id (numero identificativo dell’imposta sulle società), consente di ricevere pagamenti e rimborsi delle imposte sul reddito direttamente dal Dipartimento delle Entrate, senza alcun costo aggiuntivo.

Questa innovativa modalità di pagamento, già introdotta in ASEAN con le piattaforme “Fast” a Singapore e “DuitNow” in Malesia – come osservato da Burkhard Ziegenhorn, responsabile ASEAN del settore Corporate Bank di Deutsche Bank – accrescerà l’efficienza e la velocità dei pagamenti per le aziende nazionali, agevolandole nella sostituzione graduale delle tradizionali transazioni commerciali. Infatti, da un recente report di DB sull’argomento risulta che l’Asia è più propensa all’abbandono di carte di credito e contanti in favore dei pagamenti online ritenuti più sicuri ed affidabili; propensione che l’Istituto tedesco intende assecondare e valorizzare nel continente. Del resto, sin dal 1870, anno della sua fondazione, la Deutsche Bank ha sempre avuto l’ambizione di divenire una banca dal respiro internazionale. Tanto è vero che già nel 1872 vennero aperte le prime due filiali a Shangai e Yokohama e nel 1906, con il nome di Deutsche-Asiatische Bank, la prima filiale di Singapore. Alla fine degli anni’70 la Banca di Francoforte sul Meno approda anche in Thailandia; più precisamente, l’8 settembre 1978, l’Istituto tedesco inaugura la sua prima sede nella capitale Bangkok, operando sotto il nome di Banca Asiatica Europea. Solo pochi anni prima, infatti, la Deutsche-Asiatische Bank e le sue filiali erano state accorpate nella neonata Banca Asiatica Europea (Eurasbank), che diverrà nel 1986 Deutsche Bank (Asia).I primi tentativi e colloqui esplorativi per aprire filiali in Thailandia risalgono al 1960, tuttavia solo nel 1977 il ministro delle finanze thailandese concederà la licenza per l’apertura di una filiale a Bangkok, chiedendo però che fosse consentito alla Thai Farmers Bank di aprire una sede ad Amburgo. Il 3 luglio 1978 l’allora Eurasbank ottenne la licenza e poche settimane dopo iniziò ad operare in un ufficio nel centro della Capitale. Dall’epoca la Deutsche Bank non ha smesso di crescere, aumentando costantemente il numero di filiali e di dipendenti nel Paese e in generale in tutta la regione ASEAN, consapevole delle potenzialità e delle possibilità di espansione in una delle aree economicamente più vivaci del pianeta. Non a caso il 21 ottobre 2019 Pimolpa Suntichok, da poco Chief Country Officer della Deutsche Bank per la Thailandia, dichiarava al Bangkok Post la forte volontà del gruppo bancario di aumentare la quota di clienti locali, considerando la Thailandia tra le economie più importanti dell’area ASEAN.

La strategia dell’Istituto bancario nel Paese, infatti, si sviluppa secondo due direttrici principali: supportare i clienti europei interessati a sfruttare le catene locali di produzione, soprattutto nel settore automobilistico, e agevolare il commercio verso l’estero delle società thailandesi. Nel 2019 la politica di sviluppo delineata dalla Deutsche Bank ha generato in Thailandia una crescita a due cifre del suo volume d’affari e i suoi profitti sono cresciuti del 50% rispetto al 2018.


Articolo a Cura di Alessio Piazza.