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BOI increases investment target by 20% to 450 billion baht

The Board of Investment of Thailand (BOI) has expanded its 2016 investment value target to 550,000 million baht ($ 16 Bln), an increase of about 20% from the previous target of 450,000 million baht

Improved political and economic situation enhance investment climate and investors’ confidence and New opportunities explored in overseas markets while actual investment activities in Thailand to be accelerated.

BOI manpower to be expanded to support more aggressive investment promotion Driven by political and economic recovery, the Board of Investment of Thailand (BOI) has expanded its 2016 investment value target to 550,000 million baht ($ 16 Bln), an increase of about 20% from the previous target of 450,000 million baht.

The new target was announced at the annual meeting, chaired by Deputy Prime Minister Somkid Jatusripitak, with the heads of the BOI’s 14 overseas offices today. Mr Somkid updated the meeting in Bangkok about the positive signal in political and economic recovery and global investment trend that moves toward Asia.

Considering such trend, he recommended BOI to increase manpower to support the expected increase in investment inflow and to grow new and existing markets across Asia, including Japan, Korea, China, India as well as Singapore.

“Other advantages, such as the benefits of using Thailand as the hub to grow business in China, ASEAN and India can be highlighted to draw more investment”

BOI has adjusted its application target from 450,000 million baht to 550,000 million baht. The 10 target industries will remain in focus. We hope to increase the proportion of investment in these target industries to more than 50% of the total investment application.

“Considering the very positive trend in investment applications, coupled with strong investors’ confidence towards economic and political development in Thailand, we are certain to achieve the new investment goal by the end of 2016.”

In the first seven months of 2016, the number of investment incentive applications by project increased by 77% while application value soared by 218%.

The BOI received 853 applications worth 320,720 million baht, up from 483 projects with a value of 100,740 million baht in the same period of 2015.

The value of project applications in the 10 target industries accounted for 43% of the total applications or 138,871 million baht, reflecting the success of investment promotion policy and execution. An investor confidence survey done by the BOI in May 2016 also showed a positive trend.

The survey, released last week, indicated that 32.8% of companies currently investing in the country have plans to expand their investment. The majority of respondents cited good infrastructure, sufficient supplies of parts and suppliers, efficient logistics and strong investment promotion incentives as key factors behind their decisions.

Meanwhile, investors’ concerns over political and economic instability have significantly decreased from the same period last year, showing overall improved confidence in Thailand’s political and economic development.

Investors’ concern over the government sector’s transparency has significantly dropped from 30.15% in 2015 down to only 19.38%. In addition, the increase in GDP growth from 3.2% in the first quarter this year to 3.5% in the second quarter contributed to improved confidence among investors and the business sector in the Thai economy and its outlook.

“Thanks to these positive factors, the overall investment outlook is promising,” said Mrs Hirunya.

To maintain and enhance the positive investment momentum and confidence, the BOI will continue its plan to promote Thai investment opportunities in major markets through international road shows. In the remaining four months, a total of more than 40 road shows are planned in major markets, such as Japan, South Korea, China and northern Europe. The BOI will also work closely with its partners worldwide, including leading organisations in the trade, investment and banking sectors.

Honorary investment advisers will provide information about investment opportunities and government support in Thailand.

“With a concerted effort from the BOI’s 14 overseas offices worldwide, local offices and concerned government organisations, we hope to attract more investment from foreign investors, especially in the 10 target industries that are crucial to supporting the transformation of Thailand to a knowledge-based economy. Coupled with the positive development trend and political and economic stability, the country’s strength as the gateway to ASEAN and South Asia, as well as the upcoming laws that enhance investment climate, including the new BOI law, Eastern Economic Corridor (EEC) law and the competitiveness fund law, Thailand is positioned well as the desirable investment destination,” said Mrs Hirunya.

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February 15, 2019ZONEZI No commentsBusiness, News

China’s middle class is now the biggest in the world, and growing much faster than America’s, according to research by Credit Suisse.

There are 109 million Chinese with wealth of between $50,000 and $500,000. Since 2000, twice as many Chinese as Americans have joined the middle class.

Credit Suisse measured wealth rather than income to avoid temporary changes caused by unemployment, for example.

Chinese are getting richer at an astonishing rate. Wealth per adult has quadrupled to about $22,500 since 2000. The country now accounts for a fifth of the world’s population, while holding about 10% of global wealth.

“The wealth of the country’s households could well continue to leapfrog the growth rates of developed economies,” Credit Suisse said.

China should also see the number of millionaires soar 74% to 2.3 million by 2020, according to the report.

A report by UBS and PricewaterhouseCoopers found that a new billionaire was created almost every week in China in the first quarter of the year.

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Thailand Foreign Direct Investment

Foreign Direct Investment in Thailand is expected to be -5480.00 THB Million by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Foreign Direct Investment in Thailand to stand at 20000.00 in 12 months time. In the long-term, the Thailand Foreign Direct Investment is projected to trend around 24000.00 THB Million in 2020, according to our econometric models.

Forecast	Actual	Q4/16	Q1/17	Q2/17	Q3/17	2020	Unit
Foreign Direct Investment	-31178	-5480	-25100	24000	20000	24000	THB Million

Thailand Foreign Direct Investment Forecasts are projected using an autoregressive integrated moving average (ARIMA) model calibrated using our analysts expectations. We model the past behaviour of Thailand Foreign Direct Investment using vast amounts of historical data and we adjust the coefficients of the econometric model by taking into account our analysts assessments and future expectations. The forecast for – Thailand Foreign Direct Investment – was last predicted on Sunday, October 23, 2016.

Thailand Trade	Last	Q4/16	Q1/17	Q2/17	Q3/17	2020
Balance of Trade	2130	351	2614	2442	1575	135
Exports	18830	16658	17729	18480	16965	19045
Imports	16700	16308	15115	16038	15390	18910
Current Account	3810	5200	4700	4000	1400	5000
Current Account to GDP	3.8	2.66	2.89	3.12	3.35	2.37
External Debt	143135	149251	150779	152133	135538	139000
Terms of Trade	114	113	113	113	113	113
Tourist Arrivals	2874420	2690763	2702194	2700646	2700806	3010000
Gold Reserves	152	152	152	152	152	152
Terrorism Index	7.28	7.35	7.25	7.25	7.25	6.8
Remittances	9545	8452	8299	8230	8193	8149
Crude Oil Production	245	230	220	255	220	250
Foreign Direct Investment	-31178	-5480	-25100	24000	20000	24000

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February 15, 2019ZONEZI No commentsBusiness, News

A stronger-than-expected performance in the first quarter has prompted analysts to revise their year-end growth forecasts for the Thai economy, though some remained cautious in the face of ongoing challenges both at home and abroad.

Data issued in May by Thailand’s National Economic and Social Development Board (NESDB) put year-on-year (y-o-y) growth for the first quarter of 2016 at 3.2%, the country’s highest in three years.

The positive results were attributed to high levels of state spending and a strong showing in Thailand’s tourism industry; however, weak export figures have sounded a note of concern.

State spending proves pivotal

Thailand’s economy expanded by 0.9% during the first three months of 2016, up from 0.8% in the previous quarter.

The results prompted the NESDB to revise its year-end forecast to between 3% and 3.5%, up from its previous estimate of between 2.8% and 3.8% in February. The Bank of Thailand (BoT), the country’s central bank, meanwhile, said it expects the Thai economy to expand by 3.1% in 2016. This comes on 2.5% growth in 2015.

Although the country’s economy has outperformed initial forecasts, growth remained uneven across sectors.

The government pumped BT654bn ($18.5bn) into the economy through direct expenditure and soft loans in a bid to stimulate growth and aid recovery.

Thailand recorded an 8% y-o-y increase in public consumption in the first quarter, while public investment was up 12.4%. The injection of capital helped boost activity and offset more sluggish growth in the private sector, where consumption rose by just 2.3%. Private investment, meanwhile, inched up a more muted 2.1%, according to the NESDB.

Double-digit growth in the construction and tourism sectors contributed significantly to the first-quarter results.

Thailand’s construction sector was up 11.2% y-o-y, supported by strong public investment flows. Increased spending on infrastructure and project development is likely to continue, pointing to a bright outlook for the construction sector and its related industries through 2016 and beyond.

The number of incoming tourists, meanwhile, surged by 15.5% to reach 9m, putting Thailand on track to meet its target of 33m arrivals for the year. The NESDB expects the tourism industry to generate revenues of BT1.68trn ($47.6bn) this year, accounting for 12% of GDP, up from 10% last year.

Hotels and the hospitality industry also benefitted from higher tourist volumes, with the broader services sector recording 15.8% growth.

Setbacks and slowdowns

The first quarter results were more muted for other industries, including manufacturing, agriculture and exports.

Thailand’s manufacturing industry, which accounts for around 30% of GDP, contracted by 0.3% y-o-y, weighed down by declining vehicle output and a slower growth in related industries.

Capacity utilisation in the manufacturing sector remained stagnant at 64% in May, below the historical average of 68%, and could remain at this level due to weak export growth.

Agricultural output, meanwhile, was down for a sixth consecutive quarter, slipping by 1.5% y-o-y on lower demand and adverse weather conditions caused by the El Niño climate pattern, which brought drought to much of Thailand in early 2016.

According to the BoT, exports contracted 1.4% in the first quarter, with the government citing lower commodity and oil prices as well as weak global demand. Among the key segments in decline were industrial goods (7.8%), electronics (5.3%) and agricultural products (2.8%).

A stronger Thai baht, which is up by nearly 2% against the dollar year-to-date, is also expected to curb demand for Thai exports, according to the BoT, which expects exports to decline by 2% over the year – a downward revision from the previous forecast of zero growth.

Fluctuating forecasts

Despite broadly positive early indicators for the year, some experts remain cautious. DBS Bank, for example, warned that weak private sector demand, combined with poor showings in manufacturing and agriculture, could weigh on the country’s full-year growth prospects.

Commenting in a report issued in May, the bank cautioned that ongoing sluggish growth in Thailand’s manufacturing sector could put jobs at risk. The industry currently provides employment for around 16% of Thailand’s workforce.

DBS Bank said full-year growth looked likely to fall short of 3.5%, while also noting that first-quarter growth would have eased to 1.5% if not been for the public sector’s contributions.

The bank’s prediction followed a move in March by the Asian Development Bank to lower its forecast for Thailand’s GDP growth this year from 3.5% to 3%, citing slower growth in key global economies.

Amid continued economic uncertainty, the BoT chose to hold its key one-day repo rate at 1.5% in May. Senior officials at the BoT cited concerns over financial stability, along with the weakened debt service ability of agricultural households and small businesses.

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An initiative driven by Thailand to develop closer financial integration and cooperation among Greater Mekong Sub-region (GMS) countries could bolster Bangkok’s position as a capital markets and banking centre.

Thailand’s campaign to strengthen fiscal and economic ties with its near neighbours reached a new level in June, with the hosting of a two-day summit for Cambodia, Laos, Myanmar, Vietnam and Thailand (CLMVT). Entitled “CLMVT: Prosper Together”, the event focused on developing a platform to reinforce sub-regional integration and connectivity in matters of trade, investment and tourism.

While much of the media coverage of the event centred around joint tourism promotions and proposals for visa-free travel between CLMVT countries, the seminar’s main focus was on financial connectivity.

Investing in infrastructure

One of the planks in this platform will be developing financial infrastructure to support the greater flow of capital and information. Veerathai Santiprabhob, governor of the Bank of Thailand (BOT) and a keynote speaker at the conference, emphasised that investing in infrastructure will be crucial to allowing CLMVT countries to work together and meet the demands of the changing financial landscape.

“Having adequate infrastructure, including a backbone payment system, a digital network and a credit bureau, will provide a sound basis to develop domestic financial systems and facilitate closer financial connectivity,” he said, noting that the development of regional ties will help reduce costs within the sector and across CLMVT economies, boosting cross-border trade and the broader use of e-payment systems.

Financial integration to mobilise funds

Another key message to come out of the conference was that further integration of CLMVT financial markets would support growth in each of the five countries, as well as cross-border expansion.

Speaking during a session on the roles of banking and finance in regional development, Chartsiri Sophonpanich, president of Bangkok Bank, stressed that while growth in the CLMVT region is set to remain strong in the coming years, in line with the 6.5-8.5% range posted in 2015, this could be increased further through tighter financial cooperation, thereby boosting the appeal of CLMVT countries to foreign investors.

Such a move, Sophonpanich said, would mobilise funding and put in place mutually agreed-upon mechanisms to minimise and more evenly distribute risk.

Strengthening the bond market

As the largest economy among the CLMVT bloc, and with the most developed capital markets and banking system, Thailand is well placed to take the lead on the financial connectivity initiative.

Thailand’s bond market is already gaining traction among CLMVT countries, bringing the region closer to financial integration.

In 2013 Laos issued the first in a series of baht-denominated bonds, with the latest coming out last year. At a total face value of BT28bn ($804m), the funds helped finance the Laotian government’s infrastructure development programme.

At the corporate level, Laotian utilities firm EDL Generation has also tapped the Thai capital markets, raising BT6.5bn ($187.8m) in late 2014 to fund the acquisition of power stations from its parent company, Electricité du Laos.

While Laos has been Thailand’s main customer for bond sales, there is strong interest from other countries launching offerings in Thailand.

In 2014 the Cambodian government indicated it could follow the Laotian example by issuing a baht-denominated sovereign bond in 2018. Consultants advising the Cambodian government said at the time that Thailand represented the best opportunity for a sovereign bond launch, as Thai authorities had put in place mechanisms to support such cross-border issues.

More recently, however, Cambodian officials indicated that any baht-denominated bond would require regulatory reforms, similar to what has been suggested by Thailand in its call to lower financial barriers and boost connectivity.

Thailand’s bond market is also attracting interest from further afield. Year-to-date, four foreign lenders – ANZ Bank of Australia, Central American Bank for Economic Integration, National Bank of Abu Dhabi and Malaysia-based Maybank – were given regulatory approval to tap Thai markets through a baht bond issue.

The Ministry of Finance has also taken steps to boost the bond market’s appeal, announcing that, as of January, it would review applications to issue bonds by foreign issuers on a monthly basis, rather than every quarter, citing increased appetite for baht-denominated issues.

BOT opening doors

The BOT is similarly working to boost CLMVT financial connectivity, including by easing regulations to allow firms operating in the GMS to obtain loans from Thai banks for direct sub-regional investment, without setting a lending cap.

According to Santiprabhob, the BOT is encouraging Thai banks to extend their operations into the GMS to promote trade and investment. As of May, Thailand had at least 30 branches and subsidiaries open in the region. Cross-border money transfers have also been facilitated through the establishing of ATM connectivity between Thailand and both Myanmar and Laos, expanding the reach of Thai banks.

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February 15, 2019ZONEZI No commentsBusiness, News

An expanded product range aimed at broadening the client base alongside plans to target new markets are part of Thailand’s campaign to shore up its medical tourism industry, which is coming under pressure from increased competition and weaker economic performance in key source countries.

In early September the Ministry of Public Health unveiled a new series of packages as part of the “Visit Thailand Enhance Your Healthy Life” programme aimed at increasing medical and wellness tourism arrivals.

Under the new initiative – developed in conjunction with state agencies and private health care providers – overseas visitors will be able to undergo standard health checks at up to 70 internationally certified hospitals and clinics, combining a regular medical assessment with their vacation. Additionally, the ministry is introducing a wider range of dental and reproductive health services for foreign visitors.

The government is also looking at shifting its promotional efforts towards newer markets, such as China, Myanmar, Laos, Cambodia and Vietnam, to take advantage of the growing affluence in those countries and the rising demand for professional health care.

To encourage health tourism from these nations, the government has tripled the period visitors undergoing medical treatments can stay in Thailand to 90 days. This would allow for overseas visitors to undergo extensive procedures and to potentially combine treatment with leisure travel.

Uncertain prognosis

Efforts to broaden the base of Thailand’s health and wellness tourism sector are timely, as the market is coming under pressure from a range of external factors.

Last year the medical tourism segment maintained its record of strong growth, with local media reporting foreign patient numbers up 10.2% year-on-year (y-o-y) to 1.8m in in early September, representing 6% of total arrivals in 2015. It is estimated that receipts from medical tourism account for 0.4% of national GDP.

This strong performance, however, could come under threat this year. Local financial services firm Kasikorn Securities has warned that weaker economic growth in key visitor markets such as the Middle East and Russia, a result of lower energy prices, could erode the numbers of foreign visitors making use of Thailand’s medical facilities.

Furthermore, improved service provision offered by clinics in the UAE, a significant market for Thailand’s medical tourism segment, is also draining off client numbers, the Kasikorn report said.

This external pressure has seen a retreat of the health care services index on the Stock Exchange of Thailand (SET), with a number of primary medical services providers posting sharp falls in their share prices this year. However, despite having fallen from highs recorded in late April and still trending downwards as of mid-September, the index is performing better than other industrial groups on the SET.

Though many health services providers are coming under pressure as a result of economic downturn in key markets, most are continuing to post solid earnings results.

Of the 17 health service companies listed on the SET, only one posted a y-o-y loss in the first six months of the year, according to data issued by the market. The SET’s health care service index saw listed firms report a combined 7.4% increase in sales y-o-y, though overall gross profit margins against expenses dipped marginally, down to 33.6% compared to 34.2% in the first half of last year.

While in the short term the weaker performance of Middle Eastern economies will affect the operations of those Thai health care providers that serve the medical tourism industry, the new products and the opening up of new markets should help to sustain growth.

The expansion of economies in countries such as Vietnam and Myanmar, which do not yet have health systems to match that of Thailand, should see the development of a new client base, according to Jintana Mekintharanggur, director of equity investment in Bangkok for Manulife Asset Management.

“In the short term the economic slowdown in the Middle East will weaken some investor’s confidence on earnings growth for domestic hospital operators,” she told international media at the end of May. However, due to Thailand’s ability to compete regionally, the company is still reportedly bullish on the sector.

Health threat to medical tourism

Another challenge Thailand’s medical sector and the broader tourism industry faces in attracting overseas clientele is the recent spike in cases of the Zika virus in the country and, in particular, in the capital. At least 100 cases of the mosquito-borne disease had been confirmed by mid-September.

Thai authorities have said there is no need for alarm as every measure was being taken to combat the spread of the virus. However, Anuttarasakdi Ratchatatat, epidemiologist at the Ministry of Health, acknowledged in mid-September that Zika could deter overseas visitors, when explaining why only broad information about infection rates was being released.

“The information on Zika is quite sensitive because if we say which province has infections then attention will turn on that province, and if that province is popular with tourists it will have an impact on tourism,” he said.

Any downturn in medical tourism arrivals could allow rivals in the sector, such as Malaysia, Turkey and India, to increase their market share at Thailand’s expense.

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February 15, 2019ZONEZI No commentsNews

Thailand takes steps to boost FDI

Tax exemptions and other incentives are set to spearhead Thailand’s efforts to boost foreign direct investment (FDI) in targeted areas of the economy.

The initiatives form part of a broader range of incentives and reforms aimed at increasing capital inflows into Thailand, with a particular focus on tapping investment for planned industrial clusters in the eastern economic corridor (EEC) project, an initiative of the public-private Pracha Rath scheme.

However, while efforts to stabilise the Thai economy are beginning to yield results, challenges, such as lower external demand and political uncertainty, remain a concern.

Tapping key markets

Speaking during a visit to China at the end of June, Somkid Jatusripitak, Thailand’s deputy prime minister, said the government’s new incentives and support package would be implemented in the third quarter of 2016.

Somkid was in China to highlight the opportunities for investors in the special industrial zones located throughout the EEC, which encompasses the provinces of Chon Buri, Rayong and Chachoengsao.

“The government is transforming the economy to a higher level,” Somkid told investors. “During this period of change, we need more investment from outside – and China is one of the targets.”

Planned incentives include corporate and personal income tax privileges beyond those already provided by Thailand’s Board of Investment (BoI), Somkid said. The raft of incentives will be bolstered by regulatory and legislative reforms aimed at improving the laws governing industrial management, financial services and investment.

The government has also said it would provide approximately 4160 ha of land as well as key infrastructure, such as the East-West ferry development project, to develop and support dedicated industrial estates – biotech, biofuel, aviation, IT and digital, medicine and medical equipment – throughout the EEC, with an expected total investment of between $55bn and $58bn, according to local media reports.

Thailand is also keen to boost capital inflows from India. During a visit to the country in mid-June, Thailand’s Prime Minister Prayut Chan-o-cha said the government planned to introduce measures aimed at facilitating the flow of investment from India. He also highlighted the importance of speeding up negotiations on a free trade agreement between the two countries.

Targeted investment

While Thailand’s government is still finalising its incentive package, the government has already announced several measures aimed at attracting businesses.

In late June the revenue department announced plans to offer foreign experts operating in key fields tax exemptions for terms of between 10 to 15 years. The proposed waiver is scheduled to come into force in 2017, although details have yet to be made public.

The BoI, meanwhile, approved a personal income tax cut for foreign researchers and experts working in targeted industry clusters. The sectors, which are viewed by the government as key drivers of growth include: next-generation cars, smart electronics, logistics and aviation, biofuels and biochemical, and industrial robotics, among others.

In a similar move, the Cabinet signed off on a proposal at the end of May to double tax breaks for investors who launch or break ground on a new project in 2016.

Tackling shortfalls

Thailand has struggled to attract international investment in recent years, with political unrest and ensuing military intervention dampening overseas interest. Data issued by the BoI showed that applications from foreign investors for new projects fell from 3469 in 2014 to 1038 in 2015.

Local investors also appear to be adopting a cautious approach, according to a statement issued on June 30 by the Bank of Thailand (BoT). The central bank noted that although private investment had increased, the spread across the sectors of the economy was far from even.

While investment in alternative energy and telecommunications in May was up, the BoT noted that inflows “in other sectors stayed at a low level in line with remaining gaps of capacity utilisation in the manufacturing sector”.

“This was consistent with a slower growth in total financing of businesses for real investment,” the BoT concluded.

Stability will be key

In late May, the ratings agency Moody’s noted government efforts to stabilise the economic situation and encourage growth and investment, but warned that ongoing political uncertainty remained a major concern.

“Such risk still weighs on FDI in the kingdom as well as Thai economic performance,” Christian de Guzman, vice-president and senior credit officer for sovereign risk at Moody’s in Singapore, said.

Moody’s caution over the impact of Thailand’s political climate on FDI was echoed in a report issued by the World Bank at the end of June.

“Foreign direct investments are likely to remain subdued, reflecting soft external demand and continuing political uncertainty,” the report said.

The World Bank added, however, that Thailand’s central location in East Asia meant it was well placed to leverage planned reforms in education, competitiveness and skills into trade and investment opportunities.

While acknowledging the concerns raised by analysts, the government remains upbeat about Thailand’s prospects for boosting incoming investment levels next year.

Officials expect political tensions to ease once general elections scheduled for the middle of 2017 have taken place, while the full implementation of incentives and FDI support, which is also targeted for next year, should further enhance the investment climate.

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February 15, 2019ZONEZI No commentsBusiness, News

Panupong Kritchanarat, originally from Bangkok, is currently the CEO of Boat Pattana, Phuket and has been working with its management for eight years. He also has several years of experience in real estate management. He holds a Masters of Business Administration from the Sasin Graduate Institute of Business Administration at Chulalongkorn University.

Here, he talks about business options in Phuket and why it is a good place to invest.

Prime Minister Gen Prayuth Chan-o-cha officially visited Phuket last month in order to chair the grand opening ceremony of the new airport terminal, as well as Startup Thailand and Digital Thailand 2016. His visit was interesting to both Thais and foreigners, as many wondered why he was paying this much attention to Phuket, and especially why he flew down here himself.

The answer is simple. Startup Thailand is one of the country’s most important strategic ventures. It is a mega-trend that people worldwide are interested in. The Thai government has shown great vision by investing in this field. Gen Prayuth even flew to China to meet and discuss the future prospects of Startup Thailand with Jack Ma, the Chairman of Alibaba Group.

Most people I interact with say they want a house in a tourist province such as Phuket, whether they are investors, businessmen or otherwise. While others ask me what is so special about living in Phuket or owning property for investment purposes. Here is what I have to say to them.

What makes Phuket outstanding as compared to other cities, both in Thailand and abroad, are the beautiful beaches. This is why Hollywood celebrities regularly fly to Phuket for their holidays.

In addition, local people are very kind and people in Phuket speak in English, more than most people in the rest of Thailand. Besides the beautiful beaches, Phuket has also been named as a City of Gastronomy by UNESCO. Additionally, the cost of living is not high when compared to other tourist destinations in the world. Moreover, there are two other neighboring provinces that are also beautiful, which makes it an ideal location to travel to.

Phuket is located in the hottest region at the moment. While other countries are trying to keep their economies from falling apart, Asian countries are prospering, particularly those in the Asean Economic Community. There are many foreigners living in Phuket for that very reason. Many families have settled here, or their kids study here while one or both parents work in China, Hong Kong, Singapore, Vietnam or Indonesia.

Phuket has an international airport that is able to support thousands of passengers. Because of the close proximity to Phang Nga, it is easy to deliver supplies to the island, either by land or boat. Phuket is one of the marina hubs in Asia and has caught the attention of millionaires around the world. This is our strongest selling point. We also have experts in yacht maintenance as well as luxury hotels, spas and good food.

Phuket is also on its way to becoming a medical and healthcare hub. We have affordable aesthetic and beauty treatments, and excellent service during and after treatment.

Phuket has several Thai and international schools providing a high standard of education. The culture of these schools is becoming increasingly global, which helps students think outside of the box. So it is an ideal place to start a family.

Phuket is expanding, but one of the problems we face is limited land supply. The only way to expand further is into the sea, Therefore land prices in Phuket are going up rapidly.

Phuket people are capable of moving the island forward. They don’t sit around waiting for the government or anybody else to step in. There are many young and enterprising investors in Phuket, who have a great vision for improving the island and helping it keep up with the rest of the country and the world.

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February 15, 2019ZONEZI No commentsNewsApartment|Business Development|Houzez|Luxury|Real Estate

2014 started off on a very somber note, with the Thai army seizing power over governance in a coup to right a constitution that had gone horribly wrong. The political turmoil gave rise to an economic slowdown, with the Thai Baht falling and foreign investment reaching an all time low. According to reports, Bangkok and Phuket saw a 32% and 22% rise in room numbers respectively, constituting 54% of a total 18000 rooms in 101 hotels (approx.) that had entered the market by September 2014. The capital (Bangkok) seemed to have come off worse as compared to resort destinations that have direct access to charter flights.Come 2015 and Thailand’s foreign capital investments started to grow once again, with its hotel industry posting occupancy increases of +22.1% to 74.5% & RevPar (revenue per available room) increases of +18.8% to 2,767.99 THB – both were double digit increases. Showing a slight decline on the market however, was ADR (American Depositary Receipt) that had slumped by -2.7% to 715.83 THB in June, 2015 YTD (Year To Date). The city of Bangkok was a major attributer to this massive occupancy increase (+50.4% in hotel occupancies) following the military coup that had ended in May 2014.

Facts state that after the global economic crisis of 2009 and with the military coup of 2014, Thailand’s hotel investments though at times dipping, have predominantly shown a gradually improvement. Thailand’s current favourable hotel investment trend is a direct consequence of lesser capital worth, comparatively inflated yield coupled with the tourism industry’s long term plans, each of which whet investors’ appetites from far and wide.

In 2013 and 2014, Thailand’s hotel transaction volumes, when compared to all hotel transactions in Asia Pacific, amounted to around 4.1% & 5.7% (10.9 THB & 13.9 THB billion) respectively, with Samui, Phuket and Bangkok being the prime investment markets and Khai Lak, Krabi, Pattaya and Chiang Mai a close second.

According to reports, majority of investments made between the years 2012 and 2015 were home grown (58%) while foreign investment was considerably high as well (40%). Let’s take a closer look at the profiles of investors pumping money into this tropical paradise. They comprise of: 1. Corporates whose sole source of income is not hotel investments, 2. Serviced apartment and hotel companies controlled by owner-operators, who claim ownership of the primary assets managed by these companies, 3. Redevelopment driven purchases made by developers, 4. International investors who invest in the country via investment funds, 5. Families and individuals having a HNW (High Net Worth).

60%, 15%, 12% and 10% (approx.) of investment activities accrue to real estate companies/developers, owner operators, corporates and a combination high net worth individuals (HNWI) and investment funds respectively. On the contrary, 10%, 11%, 26% and 35% represent the total transaction amounts that accrue to sellers of hotel assets who take the shape of HNWI, corporates, developers/real estate companies and investment funds respectively.

Bangkok trumps all Thailand destinations when it comes to hotel investments. Travelers visiting this city comprise of both, vacationers as well as business men and women. Being one of the most visited cities in the world, increase in asset demands have driven up asset prices despite the noteworthy growth in hotel room supply during 2013 and 2014. Phuket comes in second, with a strong and consistent growth shown in its hotel and resort market, as a direct consequence of charter flights arriving at its famous Phuket International Airport, thereby safeguarding the market from distractions in Bangkok. Expansion of its airport dimensions, roadway infrastructure and potential to yield greater returns in comparison to the Bangkok, makes Phuket a prime spot for investment in South East Asia. However, Samuiwhen compared to Phuket has an investment market that, though smaller in volume makes up for it with adequate pizzazz. Described by many as a ‘boutique’ holiday destination, Samui’s focus on quality rather than quantity when it comes to its hotel infrastructure, as well as the arrival of the low cost Surat Thani airport, has assisted in the increase in the number of tourists to this part of Thailand.

The deciding factors when assessing opportunities to invest in Thailand’s hotel market may be many, but the foremost one is comparing the purchase price with the projected cashflow generation from the hotel in question’s workings. On the flip side however, passive investors tend to attach a particular growth expectation with the stabilized cashflows generated by the property in question, be it 6-7% or higher in Bangkok or resort markets respectively.

Repositioning, renovating, incorporating additional rooms, and/or hiring of an international manager to oversee the properties’ workings, are just some of the strategies adopted by developers/real estate companies who obtain a property to make it generate additional revenue. Once additional revenue is harnessed, passive investors or REITs (Real Estate Investment Trusts) come into play as prospective buyers once you decide to sell.

Boasting of a reputation of being one of the most sought after tourist destinations in the world, coupled with sound infrastructure and its strategic location, Thailand’s tourism industry is on the ascendency, luring investors from all corners of the globe to plough their money into the area’s hotel industry.

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Ron Paul Warns of Dollar Collapse 100%

Over the past few years, many experts have been warning of a crisis heading our way. More specifically, the concerns have centered on the inevitable collapse of the U.S. dollar. One of these individuals is former Congressman Ron Paul, who has stated that he believes the U.S. financial system is on the road to disaster. In this article, I’ll share some of his views and discuss what could happen if such a crisis materialized.

Currency Crisis

According to Congressman Paul, a U.S. currency crisis is inevitable. At one point in the 1980s, while riding on Marine One with President Reagan, the President said, “No great nation that has abandoned the gold standard has ever remained a great nation.” A few decades ago, former Fed Chairman, Alan Greenspan stated, “In the absence of the gold standard there is no way to protect savings from confiscation through inflation.” Without a gold standard, there is nothing to limit government spending. In short, as long as the government is able to overspend, the national debt will be the norm rather than the exception.

Since the gold standard was abandoned, what is backing our currency? Confidence! Without a hard asset backing up the dollar, it is supported only by the “full faith and credit of the federal government.” If the world lost confidence in the greenback, its value would plummet and life as we know it would be severely and forever altered. How will we know when the next crisis is about to emerge?

The first sign of a currency crisis, according to Paul, will be a precipitous decline in the value of the dollar. A collapse in our currency would result in a spike in inflation. It would also be accompanied by an increase in U.S. interest rates. Paul’s prediction, although rather dire, is for the collapse of the entire U.S. financial system. If this occurs, the systemic risk would be massive. If the U.S. financial system actually did collapse, it would take the entire global financial system with it. Why? Because there is over $18 trillion in U.S. debt outstanding, with China and Japan being the largest holders. A U.S. collapse would devastate the entire globe. Let’s turn our attention to the national debt, an issue which weighs heavily on the minds of millions of Americans.

U.S. National Debt

When the government spends more than it collects, the result is additional debt. From the signing of the Declaration of Independence in 1776 until 2008, the U.S. accumulated slightly over $10 trillion in federal debt. In the past seven years, the debt has nearly doubled to more than $18 trillion. By the year 2019, it is projected to exceed $20.3 trillion. When interest rates rise, the impact will be felt by the federal government as well as everyday Americans. First, it will increase the government’s cost of borrowing, which will cause the debt to rise even faster. It’s entirely possible that even a modest rise in interest rates could cause the debt to spiral out of control. This is because Washington is heavily dependent on borrowing to operate. Next, it will be much more difficult to expand or even maintain the welfare state. This fact alone will lead to mass riots as individuals who are dependent on a government check will take to the streets in protest. Also, the U.S. would have a more difficult time funding its presence (i.e. military bases) around the world. This would lead to a less stable socio-political environment and an uptick in radical behavior. Plus, a shortage in government revenue could result in a rather large tax increase and the eventual demise of the middle class. Finally, and as we’ve already seen, the federal government may decide to target 401ks and IRAs as a source of additional revenue. This could take the form of a tax or fee of some sort. Mr. Paul also mentioned the possibility of a tax on regular savings and other assets. If the government finds itself in a tight situation, as we’ve witnessed in the recent past, the potential intrusion could be severe.

Social Unrest

This discussion wouldn’t be complete without mentioning social unrest. As we’ve already seen, the match is lit and it wouldn’t take much for anarchy to manifest. In essence, there appears to be a significant amount of pent-up frustration among the electorate. For example, who expected the reaction in Ferguson, New York, or Baltimore? And this may only be the tip of the iceberg. A temporary government shutdown is also a distinct possibility. To this author, public protests seem to be on the rise and the bar of what’s reasonable appears to be quite low. Hence, I suspect this is only the beginning of more civil unrest in America.

The Clock is Ticking

Is the problem too advanced to solve? Can a crisis be avoided? These are valid questions. I believe we can still fix this, but as Paul stated, “Real monetary reform will only come after a major currency crisis hits.” Why? Is he just being pessimistic? No, I don’t believe so. What he is saying is that politics will get in the way and prevent a solution until it reaches a crisis point. This is a view I have held for quite a while. Until Congress is forced to find a solution, it’ll be business as usual. The former Congressman also said he believes the majority of those in government do not fully understand economics.

Is the U.S. Losing its Stature?

In the post WWII era, the U.S. dollar has been the global reserve currency. Prior to that, the British Pound filled this role. Recently, China has increased its trading with Germany, India, and others, excluding the dollar as the reserve currency. It seems the world is slowly transitioning away from the dollar. If this continues, the U.S. could lose its position as the world’s reserve currency. This would have numerous ramifications. A discussion on that is beyond the scope of this article. Mr. Paul also stated that 10 countries have already signed a document to begin phasing out the dollar as the basis of trade. Even the IMF has proposed a new world reserve currency system. The days of the U.S. dollar as the world’s reserve currency may well be numbered.

Some argue that the U.S. economy is on the mends and the stock market is near record highs. Therefore, things can’t be all that bad. While there is truth in this, according to Paul, stocks have risen due to Fed policy and political leaders. He also stated that printing money has never solved this type of problem….ever! He cited Germany, Russia, Argentina, Brazil, Chile, Japan, China, Ukraine, Italy, Ireland, Portugal, and Spain as examples of countries that had similar problems to the U.S. and yet none of them was able to use the printing press to escape their problem.

Will the U.S. follow the path suggested by former Congressman, Ron Paul?

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