2023 should be the first time in three years Thailand can fully return to normal practices after Covid-19 was downgraded to endemic in October 2022. Yet busineses still need to stay alert to several obstacles on the horizon.
Higher rates
Borrowers face higher financial costs in 2023 under the Bank of Thailand's policy normalisation approach and the trend of rising interest rates in the market.
In 2023, both deposit and loan rates will continue to increase in accordance with the policy rate hike.
The banks will have to resume contributing the full fee to the central bank's Financial Institution Development Fund at the normal rate of 0.46% of their deposits from Jan 1, 2023, up from the existing contribution of 0.23% under the Bank of Thailand's relaxed measures because of the impact of Covid-19.
The overall banking industry would see costs rise by 0.4-0.6% on average and the banks would pass on the higher cost to customers as a normal market mechanism, said Payong Srivanich, chairman of the Thai Bankers' Association.
Commercial banks began to increase the deposit and loan interest rates across the board from early December 2022 after the Bank of Thailand's third rate hike of the year in November by another 0.25 percentage points.
Banks have raised the minimum retail rate at a lower level, compared with the minimum loan rate and minimum overdraft rate.
Local research houses assess that the central bank would further increase its policy rate to 2% around the middle of 2023 from the current 1.25%, then the rate is expected to stabilise.
Higher wages
The cabinet's resolution to raise daily minimum wages by 5.02% in October is not good news to all businesses though the rise is aimed to relieve workers' financial burden.
The new wages, ranging from 328 to 354 baht, took effect sooner than the original schedule of Jan 1, 2023.
The decision was believed to stem from a political ploy to win "big groups of voters" in the upcoming general election, but the increase is acceptable as it corresponds with inflation, said Tanit Sorat, vice-chairman of the Employers' Confederation of Thai Trade and Industry.
The Commerce Ministry expects inflation to range from 5.5-6.5% in 2022.
Around 10 million workers should benefit from the wage hike, said Sanan Angubolkul, chairman of the Thai Chamber of Commerce, adding it is the right time to increase the wages after a three-year freeze.
Maybank Securities expects the retail and financial sectors to benefit from higher purchasing power and lower credit risk outlook among lower-income customers.
Asia Plus Securities (ASPS) research said industries negatively affected are those with a high labour cost structure including construction, agro-food, developers, auto parts and retail businesses.
In the construction sector, every 1% increase in the minimum wage will affect the cost of construction by 0.10-0.15%, according to ASPS research.
Labour shortage
The labour shortage remains a challenge for the tourism industry in 2023 as tourism recovery has gathered pace since the full reopening in 2022.
The number of workers coming back to their positions was less than 70-80% of the pre-pandemic level, said Yuthasak Supasorn, governor of the Tourism Authority of Thailand (TAT).
A study by the National Institute of Development Administration also showed that more than 60% of tourism operators could not achieve their employment target.
Inbound tour operators lost their experienced staff, while the number of new generation workers alone won't be able to cope with growing tourist demand next year.
Hotels cannot operate to their maximum capacity due to the discrepancy between the number of staff and guests, especially positions like housekeepers, gardeners and technicians.
The Thai Hotels Association believes that employing foreign labour will be the new normal, while hotels will have to outsource manpower to fill positions in F&B and reservations as well as technicians.
Meanwhile, airports will face congestion if flights continue to increase. This problem was seen at Suvarnabhumi airport last year when there were over 4,000 arrivals per hour.
In December, Thai Airways recruited more employees for ground handling to solve baggage delays at the airport.
Inflation and recession
Central banks across the world have simultaneously hiked interest rates to tame runaway inflation in 2022. Yet the trajectory of interest-rate increases and other policy actions may not be sufficient to bring global inflation back down to levels seen before the pandemic.
The global high inflation trend is expected to persist in 2023, albeit at slower rates.
The cost-of-living crisis, tightening financial conditions in most regions, Russia's invasion of Ukraine and the lingering Covid-19 pandemic all weigh heavily on the outlook.
The International Monetary Fund forecasts global inflation to rise from 4.7% in 2021 to 8.8% in 2022 but to decline to 6.5% in 2023 and to 4.1% by 2024.
Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy.
To cut global inflation to a rate consistent with their targets, the World Bank's study has found central banks may need to raise interest rates by an additional 2 percentage points. This may lead many countries to fall into recession in 2023.
Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office under the Commerce Ministry, said the ministry forecasts headline inflation in 2023 will be between 2.0-3.0%. It will be at a slower rate from 2022, which had an average of 6.1% over the 11 months.
Fixing the loopholes
Among the cases that have shaken public confidence in investments in the Stock Exchange of Thailand (SET) in recent years, More Return Plc (MORE)'s suspicious share trading would certainly top the list.
Trust in the Thai bourse's system of monitoring unusual transactions and sending warnings to investors has been one casualty of this event.
MAI-listed More Return opened at 2.90 baht apiece on Nov 10, up 4.3% from the previous session, as there were buy orders for 1.5 billion shares at such a price.
Several investors placed sell orders at the same price, representing a combined transaction value of 7.14 billion baht. However, the price quickly fell to a floor price of 1.95 baht.
The price of MORE shares continued to fall the next day, to 1.37 baht apiece. The SET then suspended trading of MORE shares from Nov 14-18, before resuming trade on Nov 21.
The SET, together with its members and related agencies, carried out an investigation regarding the suspicious transactions.
More than 10 brokers filed complaints with the Economic Crime Suppression Division against Apimuk Bumrongwong, MORE's fourth-largest shareholder, who reportedly placed buy orders for 1.5 billion MORE shares.
In a related case, the Securities and Exchange Commission (SEC) on Nov 17 announced the temporary suspension of the business operations of Asia Wealth Securities (AWS) for using 158 million baht of clients' money to purchase shares without their consent.
The money was reportedly used to purchase MORE shares.
Both cases have shaken investors' confidence, particularly in small-cap stocks, and prompted brokers to exercise more caution while trading.
The incidents have also raised questions about the securities industry and the role of regulators in preventing fraud.
To fix the loopholes, the SET and SEC have vowed to work together and better coordinate to improve the criteria for listing securities, requiring them to have a good track record of performance and profitability over several consecutive years.
A credit bureau concept could be applied to allow brokers to determine whether a client has opened an account, as well as the amount of credit provided by brokers to the client.
Analysts asked the SET to have an immediate warning system to identify irregular trading orders in a timely manner.
Rampant cyber-attacks
As organisations increasingly embrace remote work and cloud usage to streamline their operations in the new normal, they are likely to leave the door open for hackers to exploit.
According to cybersecurity firm Palo Alto Networks, between March 1 and June 27, 2022, Thailand registered 44,144 cases of cyber-attacks linked to remote work, causing damage worth 3 billion baht.
AVM Amorn Chomchoey, secretary-general of the National Cyber Security Agency, said businesses and organisations are facing cybersecurity threats, particularly ransomware targeting victims with sensitive data, demanding them to pay a ransom, or else have their important data erased or their systems disrupted.
Organisations leveraging cloud services may need to understand cloud security. Security loopholes or a lack of understanding could leave the door open for hackers, he noted.
Juan Huat Koo, director for cybersecurity in Asean at US tech giant Cisco Systems, said as hybrid work becomes the norm among companies that empower their employees to work from anywhere, this would pose new challenges, particularly on the cybersecurity front, as hackers can now target employees beyond corporate network perimeters.
A recent Cisco report shows 92% of respondents surveyed in Thailand say their employees are using unregistered devices to log into work platforms. The report surveyed 6,700 security professionals from 27 countries, including 150 people from Thailand.
Security leaders have been aware of the risks associated with such a practice with 94% of respondents in Thailand saying logging in remotely for hybrid work has increased the likelihood of occurrence of cybersecurity incidents.
