Ukraine invasion may cost Thailand billions in lost trade, warns FTI
Thailand stands to suffer from rising fuel prices and loss in business opportunities if world leaders are unsuccessful in stopping the invasion of Ukraine, a top Federation of Thai Industries (FTI) official warned on Tuesday.
Kriengkrai Thiennukul, FTI vice president who also chairs the Thai-Russian Business Council, said if world leaders impose sanctions on Russia in response to the invasion, then global oil and gas prices are bound to soar.
More than 40 per cent of the gas used in Europe is piped in from Russia, he pointed out.
The situation hit a critical point on Monday, when President Vladimir Putin officially recognised the independence of two breakaway enclaves in eastern Ukraine called Donetsk People’s Republic and Luhansak People’s Republic.
The Russian leader also signed decrees ordering military forces into the region for so-called peacekeeping purposes, effectively violating the Minsk protocol signed in 2014. This sparked a cry of condemnation from Western leaders with some announcing sanctions against Moscow for breaking international law.
If there is indeed an invasion, global oil prices will rise above US$100 a barrel and gas prices will rise as the pipeline from Russia to Europe may be affected, Kriengkrai warned.
This, in turn, will push up the price of refined oil in Thailand because more than 80 per cent of the local oil market relies on imports.
In a bid to ease the impact of consumers, the government recently reduced the excise tax on diesel by 3 baht per litre, lowering the retail price of the fuel from 29.94 baht to 27.94 baht per litre.
If the global oil price rises from about $94 to $100 per barrel, then the government may have to raise the price of diesel back to 29.94 baht and drop the 30 baht price fixing measure, he said.
Moreover, he said, the global economy and Thailand’s trade with the two countries may come to a standstill if the battle escalates to an international level.
Bilateral trade with the two countries in 2021 was valued at 100.60 billion baht, with Thai-Russia transactions rising by 14.56 per cent from the previous year to 88.17 billon baht and with Ukraine rising by 28.67 per cent to 12.43 billion baht.
The Kingdom’s top five exports to these countries are automobiles, auto equipment and components, rubber products, machinery and machine components, canned and processed fruit and plastic pellets.
