This year has been packed with events that highlighted both progress and setbacks — unavoidable realities in the world of business. The year posed challenges for the government and businesses seeking new opportunities post-pandemic, sparked hope among car makers that are anticipating growth of the electric vehicle industry in Thailand, as well as unsuccessful attempts by some companies to further grow their businesses.
True-DTAC merger saga
The telecom sector this year has been dominated by movements surrounding the planned merger of True Corporation and Total Access Communication (DTAC), the second and third biggest mobile operators in the country by subscriber base, respectively.
Despite being announced in November 2021, the amalgamation of the two carriers has yet to be completed this year, amid intense debates surrounding the merit of the deal.
The mega deal attracted heavy opposition from consumer advocates and academics who suggested the merger would potentially reduce market competition while pointing out that consumers could face a hike in service fees.
As of the end of the third quarter, True had 33.6 million subscribers while DTAC had 21 million. Their arch rival Advanced Info Service Plc (AIS) had 45.6 million subscribers.
The deal's opponents also pressured the National Broadcasting and Telecommunications Commission (NBTC) into rejecting the deal.
Attempts by True and DTAC to wrap up the deal quickly were set back by an NBTC reshuffle in April 2022, which saw five new commissioners come into office.
To thoroughly scrutinise the deal, the NBTC set up five subcommittees to vet the planned merger and held focus group hearings to gauge the impact of the deal. Independent advisors were also assigned to examine the deal.
On Oct 20, the NBTC decided in a vote of 3-2 that it had no authority to consider approving or rejecting the planned merger, which technically paves the way for the amalgamation to proceed.
However, the regulator issued a raft of measures meant to regulate the merger in order to protect the interests of the consumer, including an obligation that True Move H Universal Communication (TUC), a mobile business arm of True, and dtac TriNet (DTN), a mobile service unit of DTAC, must have separate service brands for a period of three years.
Following the NBTC's decision, the Thailand Consumers Council (TCC) and AIS subsidiary Advanced Wireless Network (AWN) petitioned the Central Administrative Court to revoke the decision.
In November, True and DTAC announced the abolition of a tender offer by their two affiliates previously set in order to acquire their shares to create a path for the merger.
Despite this, True and DTAC said they are still committed to completing their amalgamation by the first quarter of 2023.
It remains to be seen how the merger deal would fare next year as it is surrounded by legal challenges and the tough remedy measures issued by the NBTC.
Full reopening, faster movement
Thai tourism in the first half of the year was like riding a rollercoaster as the "Test & Go" programme -- the country's reopening initiative -- was suspended in January in the wake of the Omicron variant which spread rapidly since the end of last year.
The tourism industry was able to take a deep breath again once the scheme was allowed to resume in February. However, since the high season was set to come to an end and many of the requirements of the programme remained in place, the response was not as impressive as anticipated with only 152,954 visitors recorded during that month.
The Test & Go programme initially required travellers to register in the Thailand Pass system and pre-book a room for Covid-19 testing upon arrival. Each visitor was required to have insurance coverage of US$50,000 and a vaccination record.
Although the scheme removed restrictions pertaining to nationality, allowing all vaccinated tourists to enter the country, the process still proved to be inconvenient. Technical flaws in the system, along with a costly RT-PCR test tied to a hotel room booking were considered to be obstacles by holidaymakers, preventing the country from reaping the utmost benefit from the country's reopening.
The situation rapidly changed once the Centre for Covid-19 Situation Administration (CCSA) -- the special administrative body operating during the pandemic -- decided to fully reopen the country in July by lifting all the requirements except for a certificate of Covid-19 vaccination.
This move was able to create positive momentum in the second half of the year as the total number of visitors in July soared to 1.12 million, led by tourists from Southeast Asia, Europe and South Asia. The majority of visitors from South Asia were Indian nationals.
The number reached 1.47 million in October, which is when visitors to the country were no longer required to present a proof of vaccination, as the country announced the end to its nationwide Covid-19 emergency and downgraded Covid-19 to the status of a "communicable disease under surveillance" as of Oct 1.
Once the cabinet approved an extension to the period of stay to 45 days from 30 for tourists from countries eligible for visa exemption as well an extension to 30 days from 15 for those applying for a visa on arrival, the flow of foreign visitors steadily picked up. Celebrations ensued once the 10-million mark was reached on Dec 10 -- the highest level reached since the onset of the pandemic.
Fuelled by pent-up demand and the high season for travel, the average number of arrivals per day in November and December also surged to reach 60,000, thanks to the momentum gained from the country's full reopening in July.
Thai-Saudi relations restored
After 32 years of strained relations, Thailand and Saudi Arabia agreed in January this year to fully restore diplomatic relations, opening a new chapter in their relations and creating opportunities for bilateral cooperation and development between the two kingdoms.
The historic breakthrough was reached during an official visit of Prime Minister Prayuth Chan-o-cha to Riyadh on Jan 25 this year, at the invitation of His Royal Highness Prince Mohammad bin Salman, who is also Saudi Arabia's deputy prime minister and minister of defence. Gen Prayut's visit represented the first leader-level talks between the two governments in more than 30 years.
Gen Prayut's visit was hailed as a tremendous success, as it marked the end of three decades of frosty relations and the beginning of cooperation for mutual benefit between the two countries.
Saudi Arabia downgraded diplomatic ties with Thailand and adopted a number of measures following the murder of Saudi diplomats and the disappearance of a Saudi businessman in Bangkok following the theft of gems belonging to the Saudi state in 1989.
These included replacing the head of its diplomatic mission with a charge d'affaires, prohibiting Saudi Arabian nationals from travelling to Thailand, and stopping Thai workers from being employed in the Middle Eastern nation.
These measures consequently hit travel between Thailand and Saudi Arabia and bilateral cooperation on labour, trade and investment.
There have been a number of attempts to repair relations between the countries over the years.
Following the restoration of diplomatic relations between the two countries, these negative measures are expected to be lifted so that both nations can once again benefit from renewed cooperation.
The Thai government expects the restoration of diplomatic relations to benefit nine key areas, namely: tourism, energy, labour, food, healthcare, security, education and religion, trade and investment, and sports.
Tourism will promote more contact between the two nations and is expected to generate at least 5 billion baht in income for Thailand.
Meanwhile, a study by the Trade Policy and Strategy Office (TPSO) under the Commerce Ministry revealed that after the two countries recently agreed to restore full diplomatic relations for the first time in over three decades, bilateral trade between Thailand and Saudi Arabia is forecast to surge by 20% this year.
Saudi Arabia is Thailand's second-largest market in the Middle East after Turkey.
The TPSO study forecasts that bilateral trade between Thailand and Saudi Arabia would reach 280 billion baht in 2022, up by 20.3% from a year before. Of the total, exports are expected to represent 54.6 billion baht, up by 6.2%, with imports valued at 226 billion baht, up by 24.3%.
Key export products which have high growth potential include automobiles and components, rubber products, gems and jewellery, machinery and mechanical components, canned and processed seafood, chilled and frozen fresh fruit and dried fruits.
Imports comprise crude oil, chemicals, refined oil, metal ores and scrap products, mineral products, appliances, home furnishings, and automotive components and equipment.
In 2021, trade between the two countries reached about 241 billion baht ($7.3 billion). Of the total, exports accounted for 53.8 billion baht, while imports accounted for 187 billion baht.
Thailand hosts Apec summit 2022
The Asia-Pacific Economic Cooperation (Apec) 2022 summit held last month was the first global event Thailand had held since the outbreak of the pandemic.
The gathering of the regional economic forum with 21 member economies across the Asia-Pacific region, also returned to an in-person format for the first time since 2018. The 2019 event in Chile was cancelled due to protests being held in that country during that period and the last two editions were held virtually due to the pandemic.
Established in 1989, the Apec grouping is bigger than Asean, the Regional Comprehensive Economic Partnership (RCEP), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The Apec bloc makes up about 60% of global GDP and accounts for 47% of the volume of world trade.
The Apec forum is a gathering where the world's leaders and CEOs exchange their perspectives and participate in driving the bloc's trade and economic development, aiming to find a consensus in tackling key trade and business challenges that Asia-Pacific and the world are confronting.
Following the two-day summit, all 21 leaders from Apec member states and economic zones agreed to push the Free Trade Area of the Asia-Pacific (FTAAP), a regional economic integration.
The resolution was one of 23 items agreed upon in the 2022 Apec Leaders' Declaration, when the 29th Apec summit in Bangkok came to a close on Nov 19.
Thailand passes the baton to the United States as the host of next year's Apec summit.
The participation of international business leaders was also said to have brought about an increase in money circulating in the Thai economy, helping to propel the country's economic recovery.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) estimated that the Apec Summit 2022 would generate 500-600 billion baht in benefits for the Thai economy over the next 3-5 years. This economic value would stem from tourism, cross-border trade and foreign direct investment (FDI).
The tourism sector, which includes soft power, Thai food and culture, is expected to attract an additional 100,000-200,000 foreign tourist arrivals in the short term after they had been inspired by news and information regarding Apec.
Moreover, the positive image generated by Thailand during the meeting would make investors clearly see the country as an investment destination for the bio-, circular, and green (BCG) economy, energy, electric vehicles (EVs), the digital economy, tourism and healthcare, particularly in the Eastern Economic Corridor (EEC).
Against this backdrop, the JSCCIB forecasts that it would attract 600 billion baht worth of FDI over the next 3-5 years.
The JSCCIB also expects the Apec Summit 2022 to increase trade and investment between Thailand and China, especially with regard to fruit and other agricultural products.
Rise of Chinese electric vehicles
While sales of electric vehicles (EVs) have been good this year, manufacturers -- most notably Chinese automakers -- have also marked a new chapter for Thailand's auto industry through significant investment projects.
Great Wall Motor (GWM), MG, BYD and Neta are all building their brands in Thailand, together with plans to secure market share, develop production facilities and use the country as their export base, according to Surapong Paisitpatanapong, vice-chairman and spokesman for the Federation of Thai Industries' Automotive Industry Club.
The Neta brand has the ability to make its competitors stand in awe in terms of the business direction of its manufacturer, Hozon New Energy Automobile, said Mr Surapong.
The Zhejiang-based maker, which launched the Neta V city car in August, announced it would cooperate with national oil and gas conglomerate PTT Plc to assemble electric autos in Thailand.
Arun Plus Co, wholly owned by PTT, and the Taiwan-based Hon Hai Precision Industry Co, a multinational electronics manufacturer, co-established Horizon Plus in order to oversee their EV assembly business.
Auttapol Rerkpiboon, president and chief executive of PTT, said PTT would initially help car companies with EV production, rather than spend a huge amount setting up a full-fledged facility to make EVs under a new brand.
A car assembly plant, valued at $1-2 billion, has been designed to have a production capacity of 50,000 units annually.
Other Chinese companies have also come up with multi-billion baht projects.
Chinese automaker BYD announced a 17.8-billion-baht investment to build an EV manufacturing facility in Rayong, with annual production capacity of 150,000 vehicles.
The company has also boasted about its blade battery technology which it claims ensures greater safety while driving.
MG Sales said the company has invested more than 2.5 billion baht to build an EV battery manufacturing plant in Thailand.
GWM earlier announced it would spend 22.6 billion baht to turn Thailand into its regional base for EVs.
Collapse of the SCB-Bitkub deal
Siam Commercial Bank (SCB), Thailand's oldest lender, announced on Aug 25 the collapse of its acquisition offer for 51% of the shares of Bitkub Online Co (Bitkub) from Bitkub Capital for 17.8 billion baht, citing regulatory issues.
The deal was announced in Nov 2021 with SCB Securities Co (SCBS), a subsidiary of SCB X, to be responsible for the transaction, which was part of the group's major digital strategy. SCB X, which holds 99.06% of SCB, emerged in Nov 2021 after the bank transformed its business from a commercial bank to a more flexible holding company.
Bitkub, founded by Jirayut Srupsrisopa in 2018, achieved unicorn status following the initial announcement of SCB X's acquisition, which valued its 51% stake at over $500 million.
In addition, the price of Bitkub's KUB coin reached 580 baht when the proposed takeover was announced as the market believed the deal would help Bitkub significantly expand its related digital asset business, such as the development of blockchain technology in partnership with others.
BO, a subsidiary of Bitkub Capital Group Holdings, remains the largest player in the market with a share of more than 90%, followed by Zipmex Thailand. Other players are smaller digital exchange platforms such as Satang Pro, Upbit, and Z.ComEX.
The cancellation of the deal followed months of uncertainty surrounding the proposed takeover while the Securities and Exchange Commission (SEC) stepped up regulatory efforts over digital currencies which are considered to be high-risk assets. Meanwhile, the prices of digital assets continued to slide amid unfavourable global market conditions such as the collapse of several exchanges.
For example, the SEC fined Samret Wajanasathian, chief technology officer at Bitkub Blockchain Technology, for allegedly using inside information to buy KUB coins in relation to SCB's attempted acquisition of BO. The regulator also fined Singapore-based Zipmex for two breaches of the Digital Asset Act by suspending all or parts of its digital asset trading service in July without complying with the rules, conditions and methods of trading.
Before the cancellation of the deal was announced on Aug 25, news emerged about an indefinite postponement of the deal in July, which was announced amid the due diligence process. That marked another blow to Bitkub, as local firm Proen Corporation had also announced that it would be pulling out of its planned investment in the crypto exchange.
And shortly after the cancellation of the deal was announced, the price of KUB coin dipped by 22% from $75 to $43 each. In contrast, SCB's share price rose 5.74% or by 6 baht from a day earlier to 110.50 baht apiece as investors' concerns eased over the bank's investment in a risky asset. Trading in SCB shares reached 6.5 billion baht, the largest volume traded on the Stock Exchange of Thailand on that day.
Investors earlier expressed their concern that SCB's profit would have to be spared in light of potential losses made by Bitkub, which has been plagued by the digital asset industry's downtrend this year. This trend would likely continue through 2023.
Mr Jirayut, Bitkub Group's chief executive, is still hoping to list the company on a stock exchange, with Hong Kong mentioned as the most likely destination.
The crypto exchange is also in talks with potential local partners to expand to other Southeast Asian markets.
Insurance upheaval
A huge number of Covid-19 insurance lump-sum claims, spurred by the peak of the pandemic in 2021 and early this year, caused the closure of four insurance companies -- Asia Insurance, The One Insurance, Southeast Insurance and Thai Insurance -- as they did not have sufficient capital reserves to pay out on the claims.
At the same time, Syn Mun Kong Insurance (SMK) is planning to raise capital and find new partners to stay afloat as it navigates a court-supervised rehabilitation.
Southeast Insurance and Thai Insurance filed an application to the Office of Insurance Commission (OIC) to dissolve their businesses on Jan 31, offering a full refund to Covid policy holders with 1.8 million policies in total. Around 880,000 customers have requested a refund, with more than 1 million policies still to be taken care of.
Both insurers were part of the non-life insurance business of Thai Group Holdings Public Co (TGH) insurance and financial group in the TCC Group of billionaire Charoen Sirivadhanabhakdi.
Both companies' liquidation came about due to the impact of Covid-19 insurance claims. As of 2021, both companies sold 1.8 million Covid policies with total claims of 10.9 billion baht, with some 10 billion baht supported by major shareholders to pay out on the claims, according to the OIC, while daily infections continued to rise further early this year.
As well as the financial support from the TCC Group, other alternatives, such as securing loans from financial institutions or by raising capital, could not be carried out amid the substantial increase in daily infections. The final option at that point was closing the businesses.
The two companies had outstanding claims for Covid insurance claims of 18.1 billion baht, of which 13.4 billion belonged to Southeast Insurance with the remaining 4.6 billion belonging to Thai Insurance. Southeast Insurance's assets totalled 16.9 billion baht, while its liabilities amounted to 18.1 billion. Thai Insurance's assets stood at 2.5 billion baht, while its liabilities stood at 15 billion.
OIC secretary-general Suthiphon Thawichaikan announced on April 1 that the Minister of Finance issued an order to revoke the licences for the insurance businesses of Southeast Insurance Plc and Thai Insurance Plc with immediate effect.
While Covid-19 policies were cancelled, other (non-Covid) insurance policies such as auto, accident, health and property insurance policies, amounting to 8.6 million policies in total, were transferred to other insurance firms as Southeast Insurance and Thai Insurance filed to dissolve their businesses.
As a liquidator, the non-life Insurance Fund has been cooperating with other non-life insurance companies and life insurance companies to take on the policy holders affected by the closure of the two companies.
Covid-19 lump-sum insurance has no longer been available since the middle of this year, while the insurance business has started to improve and stabilise. According to the OIC, non-life insurance premiums are expected to grow by up to 2.5% with estimated premiums of 271 million baht, while life insurance premiums are set to increase by 2.25% to 4.25%, compared with growth of 3.5% to 4.50% according to a forecast made by the Thai General Insurance Association.
