Pita Limjaroenrat, leader of the Moving Forward party, attends a press conference of Thai pro-democracy parties in Bangkok.
Peerapon Boonyakiat | SOPA Pictures | Light flare | Getty Images
There’s a lot of optimism about Thailand because of its tourism potential, but political headwinds could still be a game-changer, says UBS Global Wealth Management’s Kelvin Tay.
While Thailand is a “big beneficiary” of China’s reopening and expected increase in tourism, so far outbound tourism from China has been “pretty meager”. Tay told CNBC “Squawk Box Asia” on Thursday.
China’s employment figures need to rise first, he added.
Thailand also needs to reinvest in infrastructure and rebuild at a faster pace, Tay said. The country had planned to build infrastructure on its east coast via new ports and airports, but “that hasn’t really happened at this stage,” according to Tay.
Much of that is down to politics, which Thailand has to “do…well”, he said.
Thai politics could be a game-changer
Preliminary results show that the Thai opposition parties, Move Forward and Pheu Thai, together secured 99% of the votes counted in the May 14 general election, Reuters reported.
But for the leading party Move Forward to form a new coalition government, it will need to win the support of junta-appointed Senate members who can vote for the next prime minister, Reuters said.
The electoral commission has 60 days to certify election resultsafter which the Prime Minister will be chosen.
Elections in Thailand are a “potential game-changer”, Tay said.
Following votes that showed pro-democracy parties winning a strong majority, the Thai baht rose to its highest level since February this year on Monday.
While the SET benchmark initially rose when the results came in, it eventually gave up those early gains.
In fact, Thai stocks are the worst performers in Southeast Asia this year, but Tay says Thailand is his “top pick” in the region.
Thailand’s SET index is down 9.22% this year, the biggest laggard in the broader Asia-Pacific region. By comparison, Malaysia is about 4.5% lower and the Jakarta stock index in Indonesia fell 2.2% over the same period, according to FactSet data.
Another concern is that businesses linked to the monarchy could be held back by a change in government, Tay added.
The Move Forward party has called for reforms to the monarchy, including changing its defamation law.
Social challenges
Thailand must also look to its workforce to drive growth, Tay said. The country’s fertility rate and aging population are “one of the worst in the world”, he said, but workers in neighboring Cambodia and Laos may be trying to boost the workforce. ‘work. The cultural and linguistic similarities between these countries allow Thailand to do this “easily”, he added.
However, Thailand may need to change its immigration policy first. Even after the foreign workers have been in Thailand for many years, they are “still considered migrants and not… part of the local population”, he explained.
Thailand should consider providing migrants with a clear pathway to residency, he added.
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