major macro economic indicators
|2020||2021||2022 (e)||2023 (p)|
|GDP growth (%)||-6.2||1.6||3.2||4.0|
|Inflation (yearly average, %)||-0.8||1.2||6.1||2.8|
|Budget balance (% GDP)||-4.7||-7.8||-4.9||-3.9|
|Current account balance (% GDP)||4.2||-2.1||-3.8||1.5|
|Public debt (% GDP)||49.5||58.1||61.4||61.7|
(e): Estimate (f): Forecast *Fiscal year 2023 from 1st October 2022 to 30th September 2023
- Regional hub, long coastlines, proximity to fast-growing Asian markets
- Strong external accounts and substantial foreign exchange reserves
- Richly endowed in agricultural resources (natural rubber, rice and sugar cane)
- Diversified exports: tourism, machines, car parts, electronic components, agri-food products, fish and shellfish
- Inadequate infrastructure
- Ageing population and shortage of skilled labour
- Uncertain political situation; antagonism between rural and urban areas
- High corruption perception and large informal economy
- High household debt levels
Thailand’s economic recovery in 2021 was subdued as renewed mobility restrictions to contain fresh COVID-19 outbreaks weighed on economic activity, especially household consumption, and delayed the tourism rebound. We expect Thailand’s growth momentum to accelerate in 2022, however, with external demand, particularly for merchandise exports (48% of GDP), remaining a key driver of growth over the year. Meanwhile, services exports, mainly tourism-related services, should gradually pick up. In 2021, tourist arrivals in the January-October period were less than 1% of 2019 levels (40 million). But as global travel restrictions are likely to be loosened in 2022, the tourism sector should see a gradual recovery, contingent on the development of the Omicron variant and further emergence of concerning variants, as well as any prolonged international travel restrictions in China (28% of 2019 tourist arrivals in Thailand).
Private consumption (49% of GDP) growth was meagre in 2021. While the pace is expected to accelerate in 2022 as mobility improves, the extent of growth may be restrained by a weak labour market, tepid wage growth and high household debt (85-90% of GDP).
Meanwhile, the government announced lower fiscal spending for fiscal year 2022 (FY22) at THB 3.1 trillion, down nearly 6% from FY2021 budget, though expenditure for Finance, Public Health and Social Development have been expanded. The allocation for public investment also fell to THB 465 billion, from THB 500 billion, with slow disbursement being an implementation risk. Thailand has planned a pipeline of 77 mega-infrastructure projects worth THB 1 trillion (USD 30 billion) between 2020 and 2027 to increase connectivity and support long term economic development. Four such projects (THB 160 billions) focusing on mass rapid transit construction and highway improvements, under the public-private partnership arrangement, were announced in 2021.
Rising public debt
The large fiscal stimulus response to support the economy and public health saw Thailand’s public debt increase from 41.2% of GDP at end-2019 to 59% in October 2021, though still below the raised debt ceiling of 70%. However, most of the public debt is long term (85.7%) and domestically sourced (98.2%). Foreign currency debt is only at 1.8% (of total public debt), with all of the direct government external debt borrowed from the World Bank, Asian Development Bank and foreign governments. Off-budget expenditure was, meanwhile, supported by legislated borrowing of THB 1.9 trillion in three emergency decrees during 2020, and a new set of emergency loans (THB 500 billion) in May 2021. While the budget deficit is expected to narrow in the fiscal year 2022 (FY22), the size of the projected fiscal shortfall nevertheless suggests that additional pressure remains on Thailand’s public debt profile. Consequently, the authorities expect public debt to rise to 62.6% of GDP in FY22.
The current account balance is expected to have fallen into a slight deficit in 2021. The goods trade surplus should have shrunk as imports recovered faster, while the services trade deficit would have widened significantly, primarily due to a surge in freight payments, and severely-reduced tourism receipts. We expect the current account balance to return to a modest surplus in 2022, helped by an expected gradual recovery in tourism and a slight reduction in transport service payments. Growth in goods exports should remain solid on robust global demand. An improvement in the current account position would also support the baht, which has been one of the worst performing Asian currencies (-10% against USD in Jan-Oct 2021).
Return of protests
After fading for much of 2021, political protests returned to Bangkok later in the year after the easing of mobility restrictions, with demonstrators again calling for the PM’s resignation, and reforms to the monarchy and government. The next general election must be held by the first quarter of 2023, but there is growing speculation of the polls being brought forward to as early as 2022. The ruling coalition has held a slim majority in the parliament (55%), with the Palang Pracharath Party the largest at 24%. Meanwhile, a constitutional amendment in September 2021 to restore the pre-2017 parallel voting system, where a voter casts two ballots, one for the constituency parliamentary candidate, and one for the party of their choice, is expected to favour larger parties in winning more seats.
Last updated: February 2022
Credit transfer is the main form of payment used by large companies in Thailand. The majority of credit transfers are made electronically and the popularity of this payment method is growing as clearing systems have become more developed.
Cheques are still a popular form of cashless payment in terms of value. They are used by companies and consumers to make a wide range of payments. Post-dated cheques are a common mean of short-term credit.
Although cash remains the dominant payment method in Thailand, telegraphic transfer of money is increasing its popularity along with the cashless trend accelerated by COVID-19.
According to the 2015 debt collection Act BE 2558 (AD 2015), the debtor is an individual person or personal guarantor. The Act was created to regulate collection activities carried out by creditors, or by collection agencies in cases of consumer debt. Commercial debt collection houses are also expected to follow the practices set out within the Act. For example, during the amicable phase, creditors can only communicate with the debtor or other persons as authorised by debtor. Creditors or collection agencies are also limited to identifying themselves with the details of debt to the debtor.
Thailand’s Judicial Court System comprises three levels:
- the Supreme Court: this is the highest court authority in the country. All of its decisions are final and must be executed. It hears appeals and contests against decisions made by the Courts of Appeal, Regional Courts of Appeals and Courts of First Instance;
- Courts of Appeal: these are divided into Courts of Appeal and Regional Courts of Appeal. Both handle appeals against the decisions or orders made by the lower courts;
- Courts of First Instance: these lower courts comprise the courts in Bangkok, courts in provinces, specialised courts and juvenile and family courts.
A preliminary stage of legal action can be conducted if there is failure to reach an amicable settlement with the debtor. This phase includes communications, negotiations, meetings with debtors, letters of demand and notifying the police in cases where there is a criminal penalty.
The Civil Mediation before Litigation
Recent amendments to Thailand’s Civil Procedure Code in 2020 and already applied since November 2020 will allow parties to submit a matter for court-supervised mediation prior to the actual filing of the case. Encouraging mediation prior to filing a complaint is intended to save time and resources that would otherwise be expended on a trial. The meditation processes introduced by the new act are not subject to any court fees, exempting the postal fee in delivering the letter to the debtor.
Prior to filing a complaint, one of the parties in a dispute may petition the appropriate court to appoint a mediator to resolve the dispute. If the petition is accepted, and the opposing party consents to the mediation, the court will bring the parties together (with or without their lawyers) and appoint the mediator. If the mediation yields a successful settlement, the court will consider to:
- Arrange a compromise agreement and assuming it is fair, made in good faith, and in accordance with both the law and the parties. In case if any parties breached the agreement, they are still able to bring the case to ordinary lawsuit process.
- Or, the parties may agree and request the court to issue a judgment in accordance with the compromise agreement with mutually agreed by the parties. If the court agrees that it is necessary, it will issue the judgment accordingly. The judgment would be enforced if the debtor has failed to do so, leading to the execution process at the end.
The court’s judgment is considered final and can only be appealed if there is an allegation of fraud against any party to the case, or if the judgment is alleged to go against either the agreement or a provision of law involving public order.
If, on the other hand, the mediation is unsuccessful, any limitation period that was either barred after the submission of the petition or will be barred soon will be extended for 60 days from the end of the mediation. After that, the creditor still has a right to file the case into the lawsuit as an ordinary proceeding.
If the debtor fails to comply with demand notices, the creditor can file a claim with the Court, depending on the value of the debt:
- if the debt does not exceed THB 300,000 (Thai baht), the complaint must be lodged at the District or Provincial Court;
- if the debt exceeds THB 300,000, the complaint must be filed at the Civil or Provincial Court.
Court policy is to screen unnecessary cases from court trial. Most Civil Courts have mediation centres for parties to negotiate and compromise on an arrangement. Once a case has been decided amicably, a compromise agreement is prepared and the court passes judgment in accordance. Each of the parties is responsible for documenting evidence and the burden of proof associated with their case. A judgement is made once the court has considered and weighed the evidence presented by both parties.
The time frame for proceedings with the Court of First Instance can take between one to three years.
Enforcement of a Legal Decision
If the debtor fails to comply with a domestic judgment, the creditor is entitled to apply for the execution of the judgment. This can involve the issuance of an execution decree, delivery of an execution decree to the debtor, issuance of a writ of execution and the seizure and sale of property belonging to the debtor.
Thailand has no reciprocal recognition and enforcement agreements with other countries. Enforcing foreign judgments requires new legal proceedings, where the evidence will be considered and legal defence made available to both parties.
One exception is that Thailand is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1985). International arbitration awards by member countries of the Convention can be enforced if they are already final.
Thailand has legislation on bankruptcy and reorganisation proceedings (Bankruptcy Act BE 2483). (Latest amendment in 2018, B.E. 2561)
Limited Companies, Public Limited Companies and Financial Institutions (Large Enterprises)
A petition can be filed against an insolvent corporate debtor who owes one or more creditors a known sum of THB 10 million (USD 333,000) or more. Once the court has accepted the petition for further proceedings, it appoints a planner to prepare and submit a reorganisation plan to the official receiver within three months. The court may extend this period up to a maximum of two times, for one month from the publication date of the court order appointing the planner. Secured and unsecured creditors must then apply for payment of debts within one month from the date of publication of the order for appointment of the planner. Once the official receiver is in possession of the reorganisation plan, he will convene a meeting with the creditors to consider the proposal. If it is accepted, the court needs to approve it and confirm the appointment of the plan’s administrator. The latter is then responsible for the debtor company’s reorganisation, as set out within the plan.
SMEs registered with the Office of SME Promotions or other government agencies for conducting business
Petition can be filed against:
- insolvent individuals who owe one or more creditors a known sum of THB 1 million or more;
- insolvent limited partnerships, registered partnerships, non-registered partnerships, groups of persons or other juristic entities who owe one or more creditors a known sum of THB 3 million or more;
- insolvent private limited companies owing one or more creditors a known sum of between THB 3 million and 10 million.
In cases such as these, the petitioner should file a petition, along with a proposed plan of not more than three years in length in execution.
A creditor can file a bankruptcy petition against a debtor if the latter is insolvent and owes one or more creditors a definitive sum of over THB 1 million (if the debtor is an individual), or owes more than THB 2 million (if the debtor is a legal entity).
Once a petition for bankruptcy has been filed, the proceedings normally include hearing the witnesses, temporary receivership of the debtor’s property, the appointment of an official receiver, filing of claims for debt payments by creditors within two months from the publication date of the permanent receivership order, a bankruptcy order against the debtor (if no agreement can be reached with the creditors, issuance of a permanent receivership order, seizure of property, sale of property by public auction and pro rata distribution of the sale proceeds to creditors.