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Investors spooked after Trump’s Toyota tweet about new plant in Mexico

US President-elect Donald Trump condemned Toyota’s plans to build a new assembly plant in Mexico on 5 January 2017 via Twitter

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Investors spooked after Trump039s Toyota tweet

US President-elect Donald Trump condemned Toyota’s plans to build a new assembly plant in Mexico on 5 January 2017 via Twitter. Instead, the plant should be built in the US or get the increased border tax. 

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  • US President-elect Donald Trump condemned Toyota’s plans to build a new assembly plant in Mexico on 5 January 2017 via Twitter. Instead, the plant should be built in the US or get the increased border tax.
  • This was the first-time Trump tweeted to the foreign investor after having made similar threats against American companies such as Ford and GM.
  • So Ford had canceled its plans for a new project in Mexico and promised to build a new factory in the US in the day after. The Japanese newspaper Nikkei’s December survey also reveals that more than 40% of investors in China, South Korea, and Japan are worried about Trump’s trade policy. The latest twitter tirade is likely to add to their concern.
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  • Car production planning around the world may be impacted if auto makers relocate their manufacturing bases to the US. In planning a car production, most auto makers prefer to rely on factories in a few countries for exporting the cars worldwide, also using the common auto parts in many different models, to gain economy of scales.
  • As a result there’s only a small number of key producers of auto parts who manufacture their products in great quantities. But the Trump’s policy is likely to curb cars and auto parts imports.
  • If giant automakers such as Toyota comply with the policy, a slowdown and change in investment strategies can be expected.
  • Thailand, an important manufacturing base, will certainly be affected. Take the country’s export-led eco cars initiative, for instance.
  • Currently Thailand ships approximately 300,000 eco cars per year, three times more than domestic sales. Among these, 32,000 are dispatched directly to the US.
  • Auto parts manufacturers may benefit in the short term, but should also be ready for change.
  • The US is currently Thailand’s no.1 exports market for auto parts and accessories up to 13% of exports value with strong sales in the internal combustion engine and wire categories, excluding tires. Including the latter, the figure rises to 18%.
  • An import tax levied on Mexico may help boost Thai exports, similar to how Thailand gained benefit from the US anti-dumping measure against Chinese tires. But if manufacturing bases shift to the US, eventually the demand will dry up, so will the number of cars manufactured for export to the US.

 

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  • With the potential loss of an export market in mind, EIC recommends Thai auto parts manufacturers to speed up the development of original design manufacturing (ODM) and replacement equipment manufacturing (REM) or expand related service businesses.
  • Parts makers should invest in the research and development of ODM in order to boost their global competitiveness. Despite plant relocations, these original parts would still be in demand. Smaller manufacturers may focus on the development of aftermarket parts and accessories (REM) for the domestic or regional market, as well as providing repair and maintenance service.

Author: Nantapong Pantaweesak , Konjanart Thueanmunsaen

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Economics

Thailand’s Ministry of Finance expects 3.5 to 4.5% economic growth in 2022

For next year, the Ministry of Finance is projecting an economic growth of 3.5-4.5% from effective pandemic control measures, incentives, domestic spending, the export sector, private investment support, global economic recovery, and government expenditures.

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The Minister of Finance says Thailand’s economy this year would see only a 1.1-1.2% growth

BANGKOK (NNT) – The Ministry of Finance is now projecting an economic rebound to 4.5% growth next year, with government investments serving as key drivers. The Minister of Finance says the government will focus more on inclusive growth next year, with no sectors left behind.

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Ecommerce

Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

What measures has SET taken to support listed companies’ compliance with ESG standards?
PAKORN PEETATHAWATCHAI:

PAKORN: When we first began promoting ESG-compliant investments, we were met with little interest. We attributed this to a lack of clear data to showcase the economic benefits of ESG investment, and perhaps limited clarity as to what constitutes a sustainable or ESG-compliant investment. The launch of the THSI list and, subsequently, the SETTHSI Index, was designed to address this. Our most recent data, comparing returns for the SETTHSI Index with the broader SET and SET100 indices from April 2020 to April 2021, underscores the economic benefits of these investments: the group compliant with ESG standards outperformed the other two indices on every data point. 

As of May 2021 Thailand was home to CG and ESG assets under management totalling BT54.8bn ($1.7bn) across 50 funds – up from 23 funds in 2019. Meanwhile, of the BT187.1bn ($5.9bn) raised in green, social and sustainability bonds since 2018, BT136.4bn ($4.3bn) was raised in 2020 – 83% from the government and the remainder from development banks and private players. This rising demand, in a move to manage risk and generate returns, has been complemented by growing supply and promotion: supply from ESG-compliant businesses aiming for resiliency and sustainable growth, as well as promotion from regulators highlighting investment opportunities with good CG and SD practices. Indeed, the pandemic has been a catalyst in shifting the view of ESG compliance from a luxury to a requirement in the new normal.

In what ways can enhanced standard-setting and regulatory mechanisms overcome the remaining barriers to improved ESG performance?

PAKORN: A multi-stakeholder approach is crucial for enhanced ESG performance – not only in Thailand, but around much of the globe. This can also help to address the standout incumbent challenge: access to reliable, wide-ranging ESG data. For example, the 2020 update to the 56-1 One Report established clear ESG standards and triggered online and offline capacity-building programmes to support listed firms’ compliance. SET is developing an ESG data platform with a structured template to promote the availability of comparable data, maximise value added from corporate sustainability disclosures, and foster collaboration between the business value chain and stakeholders. This is expected to support Thai companies along their ESG journey in an economically sustainable way, result in a greater number of sustainability-focused products and services, drive sustainable investing in the Thai investment community and ultimately “make the capital market work for everyone”, as outlined in the SET’s vision.
 

 

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