Thai businesses bullish on future trade prospects: HSBC study

Economy March 26, 2018 14:00

By The Nation

Businesses in Thailand are highly optimistic about the future trade prospect, according to a new report from HSBC bank.



The survey of 200 Thai firms found them optimistic about the growth in demand for trade finance and its accessibility.

Yet they say their largest concern is exchange rate volatility and its impact on meeting their trade finance needs, according to the report, entitled “Navigator: Now, Next and How for Business”.

The large majority (92 per cent) of the 200 businesses surveyed in Thailand are optimistic about their international business prospects and project an increase in the volume of trade over the next 12 months. This is above the global average (77 per cent) with Thailand noted as one of the top three markets with the most positive outlook among those surveyed, after Bangladesh and India.

The survey, conducted on behalf of HSBC by Kantar TNS, is compiled from responses by decision-makers at over 6,000 businesses – from small and mid-market to large corporations – across a broad range of industry sectors in 26 markets including Thailand.

Economic analysis by Oxford Economics on behalf of HSBC supported the strength of business confidence, pointing to a 7 per cent growth for global trade values in 2018 for goods and services combined.

Reasons cited for this confidence included an increase in consumer demand for their products (33 per cent), a favourable economic environment (31%) and availability of skilled labour (25 per cent) in driving growth.

China is now Thailand’s top trading partner (at 39 per cent of foreign trade), followed by Japan (25 per cent) and USA (16 per cent). Thai firms continue looking to Japanese and Chinese partners to develop trade opportunities, but there is also an interest to expand more to Myanmar and Singapore.

Consistent with the projected volume of trade, over three-quarters (86 per cent) of Thai businesses project a growing need for trade finance and a similar number (88 per cent) expect the accessibility of trade finance to increase. Yet, exchange rate volatility (34 per cent) ranks as the biggest challenge to meeting their trade finance needs, while the high transaction costs (24 per cent) seems to be a less severe challenge in Thailand compared to other markets in Asia Pacific, which average 37 per cent.

Focusing on the impact of government policies, those designed to strengthen regional ties such as China’s Belt and Road Initiative and the Asean 2025 strategy were most often cited as having a positive impact on international business. Additionally, both Asean and SAFTA trade agreements are also considered to be helpful.

Krisda Phatcharoen, head of commercial banking for HSBC Thailand said: “We see a robust trade prospect in 2018 and Thai firms can reap benefits from an upturn in consumer demand and improved economic conditions for their international business. As the leading international trade bank, HSBC is fully capable of providing them supply chain financing and facilitating their cross-border business.”