Thailand among three Asean economies featured in Standard Chartered’s new Trade20 Index
Three Asean economies have substantial growth potential in trade, according to a report by Standard Chartered Bank.
Thailand, Indonesia, and Vietnam featured in Standard Chartered’s new Trade20 Index, which identifies the 20 economies with the greatest potential for trade growth.
Thailand has been ranked eighth in the bank’s new Trade20 Index which identifies economies with strong trade growth potential, thanks to its improving trade readiness and substantial progress in e-commerce.
The Trade20 study by Standard Chartered examined 66 economies across the globe, determined each market’s potential for trade growth by analysing changes across 12 equally-weighted metrics under three pillars: economic dynamism, trade readiness and export diversity.
The Asean accelerators
Our index points to accelerated Asian trade growth potential, particularly in Thailand, Indonesia and Vietnam, which performed well in the trade readiness pillar – defined as a market’s foundation for future trade growth.
These three economies are being propelled forward by export-oriented manufacturing, growing intra-Asean trade, strong domestic demand, close trading ties with China and healthy job markets. While they all face challenges from heightened global uncertainty, they are well placed to benefit if multinationals consider moving their supply chains due to trade tensions elsewhere. Regional trade deals, infrastructure improvements, and legislative reforms are also promoting increased openness.
According to Thailand’s Board of Investment (BOI), the number of project applications for Foreign Direct Investment (FDI) increased by 7 per cent to 758 projects worth Bt232.61 billion during the first half of 2019. The FDI value in BOI’s five targeted industries, including the biotechnology industry and robotics and automation, jumped 58 per cent to Bt23.84 billion during the January-June period from a year earlier.
Thailand's trade readiness
Thailand has also been focusing on digitising processes and increasing efficiency across industries and activities, particularly international trade and exports. Working together with its regional neighbours, Thailand should be able to adopt trade digitisation relatively quickly, helping to accelerate Asian trade growth.
Export diversity
Thailand is ranked outside of the top 20 for export diversity as the index weighs on a market’s progress in its breadth of exports. Export diversity is measured by the variety of products exported and how export revenue is spread across that product range. The markets that rank highly in this category have made the most progress in terms of diversifying their exports, which should open new prospects for trade growth and make them less vulnerable to market pressures.
Plakorn Wanglee, President & CEO of Standard Chartered Bank (Thai) said, “the Trade20 Index maps the rising stars of trade, identifying the markets where the trade environment – and trade growth potential – has been improving most rapidly over the past decade”.
“Thailand is not only a trade and investment destination for foreign countries, but also a growing number of Thai companies have strongly expanded overseas,” added Plakorn.
According to the Stock Exchange of Thailand, net outflow of foreign direct investment in 2018 by Thai firms listed on the Thai bourse hit an 8-year high at Bt199 billion. This excluded their domestic investment in 2018, which increased by 15 per cent to Bt818 billion from 2017.
“There is a huge opportunity in cross border trading. Standard Chartered Bank (Thai) has leveraged our global network and innovation and has been increasingly applying automation systems to better serve our clients,” said Plakorn. “Apart from joining the Bank of Thailand in its Project Inthanon and running the issuance of a bank guarantee on blockchain (eGuarantee), we recently succeeded in executing the first cross-border Letter of Credit issued over the Voltron blockchain platform in the oil industry.”
“In the face of rising protectionism and slow global growth, the markets that are demonstrating this impressive pace of progress may represent interesting opportunities for corporates seeking new investments, imports and supply chain partners”.
