Foreign Business Confidence Plunges Due To Handling Of COVID-19 Situation

Thanavath Phonvichai, UTCC president
Thanavath Phonvichai, UTCC President

The overall sentiment of foreign businesses operating in Thailand has plunged, as foreign investors are growing concerned about the severe COVID-19 infections and a delay in Thailand’s vaccine allocations.

The new foreign business confidence index (FBCI), which gauges foreign business sentiment in Thailand, stood at only 27.7 in the second quarter of this year on a scale of 100 points, down from 33.2 in the first quarter of this year and 29.8 in the fourth quarter of 2020 when the index was posted for the first time.

The index conducted by the University of the Thai Chamber of Commerce (UTCC) sampled 70 presidents, vice-presidents and secretaries-general of the Foreign Chamber of Commerce in Thailand whose members are from 35 countries.

It questions them mainly on two areas: Thailand’s economic prospects and their own business confidence.

There are 40 foreign chambers of commerce in Thailand, covering 7,000 companies.

Thanavath Phonvichai, UTCC president, said foreign business confidence in the country’s overall economy and their business outlook remains low, standing at 28.5 points and 26.8 points, respectively.

Lower than 50 points mean less foreign business confidence.

“Tepid foreign business confidence in Thailand was largely due to prolonged COVID-19 outbreaks, weak consumer purchasing power, low overall investment, and battered tourism and employment,” said Mr Phonvichai. “Such factors lowered their revenue and profit.”

In their view, according to Mr Phonvichai, the topmost concern is the delay in the government’s vaccine distribution followed by insufficient vaccine supplies and the impact of the third wave of the outbreak nationwide.

Foreign businesses also do not have much confidence in the government’s measures aimed to contain severe infections.

According to Mr Phonvichai, foreign businesses also forecast Thailand’s economic prospects to contract for another year after a 6.1% fall in 2020 and most respondents said they were not sure when the economy would recover.

Stanley Kang, chairman of the Joint Foreign Chamber of Commerce in Thailand, said foreign businesses expect Thai exports will fare better in the third and fourth quarters boosted by the weak baht and belief that the government succeeds in controlling the contagion.

Now, there are plenty of purchase orders from the US and Europe and other markets, he said.

“Vaccine rollout is the only best solution to the COVID-19 outbreak,” he said. “Foreign investors remain confident that Thailand is a good location for their investments and would like to see better control of the Covid-19 outbreak by the government,” said Mr Kang.

Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the government should speed up vaccine allocations and inoculations as fast as possible together with the acceleration of spending to rehabilitate the economy.

“If the government can control the COVID-19 outbreak and better manage the vaccine allocations, export growth could reach more than 12% this year,” he said.