Analysts predict post-poll effects
A minimum wage hike, pledged by both MFP and the Pheu Thai Party, is possible but requires further examination, he said.
If the new government raises the minimum wage, it would increase the purchasing power of the lowerincome segment and should provide an opportunity for them to access better loan sources, said Mr Amonthep. This would benefit the banking sector in the areas of personal loans, auto loans and motorcycle loans, he said.
The new government’s formation will take around two months based on the existing timeline, said Mr Amonthep, affecting budget disbursement for fiscal 2023 as well as government spending, slightly dampening GDP this year.
Thanyalak Vacharachaisurapol, deputy managing director of Kasikorn Research Center (K-Research), agreed the timeline for the new government formation would impact state spending for this year. As a result, tourism and exports are likely to drive economic expansion this year, in line with an earlier forecast.
An economic recovery should support economic activities and promote loan expansion in the banking sector, she said.
If a new government can be formed by August as planned and implement its economic policies, this could drive economic activity, said Ms Thanyalak.
In this scenario, the banking sector would benefit from loans and other financial services, according to K-Research.
“The coalition leader has prioritised the country’s competitiveness and supporting virtual banking to improve financial inclusion. Given this direction, it should benefit debt restructuring and tackling household debt,” she said.
CreditSights, a unit of Fitch Group, said pro-growth policies and the absence of protests will be helpful for banking loan growth, fee income and asset quality.
“Populist proposals and campaign pledges such as cash handouts and raising the minimum wage will also deliver a spending boost to the economy,” said the unit.
KCS stated that if any policy can actually propel the economy, it will give a boost to investor confidence as well as the profits of listed companies.
Banks, consumer products, retailers and hire-purchase companies are likely to benefit from the MFP’s policies to increase people’s purchasing power, support small and medium-sized enterprises and raise the minimum wage, said the brokerage.
SUBSIDY SOLUTION
If the new government attempts to cut electricity bills by adjusting the Ft structure, this scheme is unlikely to work and could end in further dependence on subsidies, said Gunkul Engineering Plc, a renewable energy developer and
construction firm.
In a memorandum of understanding signed on May 22 by political parties intending to form a MFP-led coalition government, the parties agreed to restructure the power tariff and the electricity production structure to ease the cost of living.
Without addressing whether such policies would affect Gunkul, chief executive Somboon Aueatchasai said he believes the government can do little to change the Ft, which is determined by factors including the price of fuel used for electricity generation, foreign exchange rates and the AP.
The government is responsible for the AP under its power purchase agreements made with power firms, though the actual usage may be lower than the amount charged during the agreed time frame.
The AP makes up 20-30% of the Ft, which is largely influenced by fuel prices and foreign exchange rates, said Mr Somboon. He said the surge in power bills is a result of the RussiaUkraine war, which drove up global energy prices last year, in addition to exchange rate fluctuations.
“It’s very difficult to make any change to the Ft calculation. The question is how much the government will be able to subsidise electricity prices,” said Mr Somboon.
A source in the energy sector who requested anonymity said it is unclear how the authorities can change the AP as they have to follow regulations and conditions stated in the purchase agreements.
Harald Link, president of B.Grimm Power Plc and chairman of B.Grimm Group, said he is not worried about the establishment of a new government because the group can work with any administration and will continue with its investment plans, according to media reports.
The Energy Regulatory Commission is ready to follow the energy policies of the new government, including a plan to cut the power tariff, said secretarygeneral Khomgrich Tantravanich.
One measure to reduce the tariff rate for households is to give them first priority to use electricity generated from power plants using gas from the Gulf of Thailand as fuel, he said. Domestic gas supply is cheaper than gas from Myanmar and imported LNG.
A surge in LNG prices last year was attributed to the impact of the RussiaUkraine war, which increased power bills in Thailand.
Currently the petrochemical sector is granted first priority to use gas from the Gulf, while other businesses and households use gas from other sources in a gas pool. A gas pool refers to gas supplied from the Gulf, Myanmar, the Malaysia-Thailand Joint Development Area and LNG imports.
Mr Khomgrich said the new government can adopt this measure to help households with bills as it can cut the power tariff by 0.3 baht per unit.