Headwinds push growth below 2.5%, says chamber

Widespread drought, a strong baht, disarray over the annual budget, toxic dust and the latest deadly virus outbreak may bludgeon Thailand’s economic growth to below 2.5% this year, says the Thai Chamber of Commerce.

Kalin Sarasin, chairman of the chamber, said the Joint Standing Committee on Commerce, Industry and Banking is revising this year’s economic growth forecast from a projected 2.5-3% range now that the deadly virus outbreak has pressured Thai economic prospects on top of the other obstacles.

The University of the Thai Chamber of Commerce (UTCC) estimates Thailand will lose 80-100 billion baht in income, mainly from tourism, because of the deadly virus outbreak.

This downgrade should shave economic growth by 0.5-0.7 percentage points this year, said the UTCC.

“The greatest risk factor to Thailand’s economic growth for the private sector is a delay in fiscal 2020 budget disbursement,” said Mr Kalin.

“The budget should be disbursed by February this year to improve the liquidity of the private sector now that more than 200 projects worth as much as 40 billion baht for which the private sector won bids for construction since last year’s flood remain unpaid.”

He said the business sector also called on the government speed up allocating budget to local administrations to develop reservoirs and dredge shallow canals to tackle the drought problem.

Mr Kalin also suggested the government lower the corporate income tax and land and building tax to private owners that grow high-value trees to help tackle the dust and drought problems.

“The private sector owns vast plots of land that could be planted with high-value trees,” he said.

“It will be more enticing if there are additional tax incentives from the government.”

The Revenue Department is studying the possibility of letting individual and corporate taxpayers deduct expenses incurred from planting highvalue trees from their income tax to comply with the government’s push to raise the number of such trees to 1 billion in the next decade.

The government also aims to have 2,000 communities focus on planting high-value trees within a year, increasing to 20,000 in the next 10 years.