Thread: Thailand and the new coalition government

Trump’s tariff hits Thai businesses hard: Industrial zones and exports face major setback

Thailand faces a 36% tariff from the US starting August 1, impacting industries and exports. The move raises concerns about economic instability and foreign investment shifts.

Thailand’s businesses are bracing for the impact of the US’s 36% tariff, which will come into effect on August 1, 2025. This move is part of the US’s efforts to address the trade imbalance with Thailand and will apply to all products imported from Thailand.

In addition to political instability, Thailand’s economy has been slowing down, with escalating tensions at the Thai-Cambodian border. This development is compounded by the global situation, as US President Donald Trump posted an open letter on July 7 to Thailand's acting Prime Minister, Suriya Jungrungreangkit, addressing trade negotiations between the US and Thailand. Despite a significant trade deficit with Thailand, the US will continue its trade relationship, confirming that the 36% tariff will be imposed, starting August 1, 2025.

“The 36% number is far less than what is needed to eliminate the trade deficit disparity we have with your country,” the letter stated. This announcement has shaken Thailand’s export sector, which feels disadvantaged compared to trade competitors like Vietnam, where tariffs remain lower.

The high tariff rate is expected to impact Thailand's production and export costs, especially with competitors such as Vietnam having a lower tariff. There are growing concerns that foreign investors, particularly from China and Japan, may relocate their production bases to countries with lower tariffs, further weakening Thailand’s manufacturing sector. This poses a particular threat to industrial parks, where foreign investment, notably from China, has been significant, especially in the Eastern Economic Corridor (EEC).

Pornarit Chounchaisit, President of the Thai Real Estate Association, expressed concern that the 36% tariff will severely affect the Thai export sector, which is a key driver of the economy. The higher costs compared to competitors like Vietnam will likely reduce Thailand’s competitiveness.

The situation also raises alarm about the future of foreign investment in Thailand, particularly from China. Many Chinese companies have been purchasing land in Thailand, especially in industrial zones within the EEC. With higher production costs in Thailand, these companies might consider relocating their manufacturing bases elsewhere.

“Thailand has been open to Chinese investment, especially those in grey businesses, as seen in the steel factories with substandard products and cheap goods being mislabelled as Thai exports to the US,” Pornarit said. “This, combined with the situation in Thailand, makes the 36% tariff a crucial factor that could significantly impact the country.”

Paetongtarn vows to fight Hun Sen clip case, insists on reclaiming justice

Suspended Prime Minister Paetongtarn Shinawatra has vowed to fight the case involving an audio clip of her conversation with former Cambodian Prime Minister Hun Sen, Pheu Thai Party’s deputy spokesman Chanin Rungthanakiat said on Tuesday.

He made this statement after a Pheu Thai Party meeting at its headquarters in Bangkok, which Paetongtarn also attended. During the meeting, party members presented her with a bouquet of flowers as a gesture of support.

Chanin explained that Paetongtarn assured the MPs that she remained focused on her work. She reassured them that she was in good spirits and committed to acting with integrity in all matters.

She also pledged to fight the case with full determination to reclaim justice, enabling her to carry out her duties to the fullest extent.

Paetongtarn also reassured her fellow MPs, stating that there was no need for concern during this period, as Phumtham Wechayachai was serving as acting prime minister and would continue to implement policies.

She further pledged to the MPs that this was the time to deliver the party's policies to the public, as they had already secured the ability to form a new Cabinet. This presented an excellent opportunity to use the executive mechanisms to push forward Pheu Thai's remaining policies to the public.

Chanin added that Pheu Thai MPs remained confident that Paetongtarn would overcome these challenges and return to her full duties as soon as possible.

He denied claims that criticism of the current Cabinet's formation was preventing the government from implementing policies, stating that both the executive and legislative branches of the new government were working swiftly and efficiently, with no obstacles or interference between them.

Chanin also addressed concerns about the government's ability to move forward due to the tight majority in the House of Representatives, confirming that they had coordinated with all coalition parties through the government whip mechanism since Monday (July 7).

On July 9, the party would intensify efforts to maintain quorum in the House, as both the executive and legislative branches were crucial to driving forward government policies, he said.

He revealed that on July 9, Pheu Thai would propose a motion to fast-track the bill on referendums, hoping for smooth progress without opposition. If successfully passed, it would lead to the consideration of the referendum bill in the following week, with four draft bills under review. He added that an additional draft proposal from the Bhumjaithai Party may also be presented, which will be included in the discussions.

Chanin concluded that the debate in Parliament would focus on the principles of the bill, leading to the formation of a committee to detail aspects of the amnesty law and its coverage.

Thailand still has opportunity in US tariff talks, Paetongtarn says

Thailand still has the opportunity to achieve success in the US tariff negotiations, suspended Prime Minister Paetongtarn Shinawatra said on Wednesday.

She made the remark after the US submitted a letter reiterating its decision to impose a 36% tariff on Thai goods imported into the US, effective from August 1.

When asked about Thailand's next steps, Paetongtarn stated that the details of this matter should be addressed by Finance Minister Pichai Chunhavajira, who had discussed the letter.

She emphasised that the entire negotiation process must be handled by the government, which will be responsible for negotiating and responding to US President Donald Trump.

“If you ask for my personal opinion, as an ordinary citizen, I believe there is still an opportunity in this matter,” she said, adding that further details should be sought from Pichai.

Paetongtarn pledges 1 trillion baht revenue boost through Thai soft power initiatives

Suspended Prime Minister Paetongtarn Shinawatra has pledged to generate over 1 trillion baht in revenue within the next five years through the global promotion of Thai soft power.

She made this statement during her speech on the topic “Thailand Rising: Tourism, Education, and the New Soft Power Frontier” at the opening ceremony of the SPLASH-Soft Power Forum 2025, held at the Queen Sirikit National Convention Centre in Bangkok on Tuesday.

Paetongtarn, who also serves as Culture Minister, noted that we are currently living in a world that is evolving rapidly and growing more complex than ever before. She stated that we are facing a fragile, worrying, and difficult-to-understand world, one that is increasingly unpredictable.

She stressed the importance of understanding the context of change as the starting point for progress.

“We must understand that everything is subject to change, and we must be flexible enough to adapt to different circumstances. What we once relied on, such as becoming Asia's Detroit automotive hub, or the world’s kitchen, now requires us to adapt,” she said.

Paetongtarn continued, stating that today, Thailand stands at a crossroads where new investments, industries, and technologies will shape the future. She affirmed that the government has already begun laying the groundwork to ensure Thailand's preparedness for the future.

She also highlighted the growing importance of soft power, explaining that the world is no longer just purchasing goods or services, but is increasingly buying experiences and expressions of a country’s unique identity, especially in the case of Thailand, with its rich culture.

This includes Thailand’s cuisine, way of life, and the Thai people, who are globally recognised for their charm, helpfulness, and warm smiles. Paetongtarn emphasised that Thailand should focus on consolidating local cultural goals, categorising them to increase their marketability.

She added that the soft power policy is progressing in a structured manner, with collaboration between the state and private sectors to work towards a common goal, reducing overlap and enhancing global connections.

The focus starts with Thai food, a global favourite. "We are not just selling the taste, but the experience of Thailand," she said. "We aim to elevate Thai cuisine to a global brand and create destinations for travellers.”

This will include Thai Cuisina restaurants, which will encompass every stage of the Thai food supply chain, from regional Thai restaurants to supermarkets selling ready-to-eat Thai food products.

Additionally, the plan includes expanding the distribution of Thai food products internationally through wholesale centres abroad. The goal is to establish these restaurants in major cities around the world.

The tourism sector will also be enhanced to cater to food lovers, offering genuine Thai culinary tourism experiences, including cooking classes and local ingredient tours, while raising the standard of Thai Select certification to match global awards like Michelin Stars, guaranteeing authentic Thai flavours and ingredients.

Paetongtarn outlined plans for Muay Thai to evolve from a sport to a global lifestyle, with Muay Thai bootcamps becoming a new trend promoting fitness, health, detoxification, and mindfulness.

Additionally, she aims to strengthen the professional Muay Thai league and elevate its standards across all dimensions.

The Thai wellness sector is also set to expand, offering a holistic experience combining Thai massage, herbal treatments, healthy food, and meditation, all within a Thai retreat chain.

This will create a comprehensive wellness experience from physical therapy to mental relaxation, setting the standard for Thai spas and therapists.

She added that Thai herbs and massages will undergo medical research to ensure they can be marketed as export products, while promoting professional Thai health massage worldwide.

Paetongtarn also addressed the film industry, saying, "We will support Thai filmmakers to dream and create through experimental spaces like writer’s rooms and creative labs, while investing in technology to produce films that capture Thailand’s unique entertainment style."

The government will also offer cash rebates to support Thai films and attract foreign investment, while promoting the Bangkok International Film Festival as a major global event to foster international film markets.

Lastly, she spoke about the gem industry, one of Thailand's top export sectors, which is driven by the creative skills of Thai artisans.

"Twenty years ago, gemstone exports were worth approximately 50 billion baht, but last year we exported over 500 billion baht—an increase of 10 times. Just in the first five months of this year, exports have already reached 380 billion baht, and the industry employs over 1 million people," she said.

Paetongtarn concluded by outlining plans to train a large number of designers, diamond cutters, goldsmiths, and silversmiths, transforming them from craftsmen into high-value artists.

She intends to use various measures to promote this industry and aims to increase gemstone export value to 1 trillion baht within the next five years.