We stayed in Bangkok, Thailand, from July 23rd to 27th, where we visited local recycling companies and attended the international conference of MRAI, an Indian metal recycling organization. During this time, we met many people.

Including those we met at MRAI/IBS, we would like to share as much local information as possible. In this first report, we will begin with an overall summary.

 

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インド最大のスクラップリサイクル業界団体MRAI　第2回国際会議を7月にタイで開催　MIRUもメディアパートナーとして参加

MRAI第2回国際会議　バンコクで開幕！圧倒的多数のインド系企業が集結

MRAI/IBS（Bangkok）インドのステンレス鋼市場の分析と展望

 

Thailand, officially known as the Kingdom of Thailand, is a constitutional monarchy ruled by King Rama X, who ascended to the throne in 2016. Located in Southeast Asia, it shares borders with four countries: Myanmar, Laos, Cambodia, and Malaysia. The geography of Thailand is diverse, with mountains extending across the northern region, beautiful beaches and tropical islands in the south, and in the central region, important rivers such as the Mekong River and the Chao Phraya River flow through fertile plains, including the area around Bangkok.

 

Thailand has a population of approximately 66 million, with a diverse range of ethnic groups, including Chinese and Malay, in addition to the Thai people. The main language is Thai, but in central Bangkok, English and even some Japanese are commonly understood in hotels, shopping malls, train stations, and restaurants in busy areas.

 

This widespread use of Japanese is a testament to the significant presence of Japanese companies in Thailand in the past. This influence is particularly evident in the “nightlife” areas, where many colorful signs are clearly designed with Japanese customers in mind.

 

However, when it comes to corporate advertising, Chinese companies are more prominent. For instance, large billboards near Suvarnabhumi Airport are dominated by Chinese EV manufacturers like BYD. Chinese companies also stand out in building signage and other forms of corporate advertising.

 

 

 

「Basic Data of Thailand」

★$513.5 billion (Thailand National Economic and Social Development Board)

★Manufacturing is the dominant industry, accounting for about 30% of Thailand’s GDP. In contrast, agriculture employs about 30% of the workforce but contributes less than 10% to GDP.

Tourism is a pillar of Thailand’s economy. For example, in 2019, before the COVID-19 pandemic, Thailand earned $60.5 billion in tourism revenue from overseas, ranking fourth in the world.

★The categories of major trading products:

​•​(1) Exports: machinery, automobiles and parts, electrical equipment and components (2023, Thailand Ministry of Commerce)

​•​(2) Imports: crude oil, electrical equipment and components, machinery and parts, and chemicals (2023, Thailand Ministry of Commerce)

 Major trading partners:

​•​(1) Exports: 1. U.S.A (17.2%), 2. China (12.0%), 3. Japan (8.7%)

​•​(2) Imports: 1. China (24.4%), 2. Japan (10.8%), 3. U.S.A (6.7%)

 

However, Thailand's economy in the first quarter of 2024 has slowed down.

 

The National Economic and Social Development Council (NESDC) of Thailand announced on May 20th that the real GDP growth rate for the first quarter of 2024 (January to March) was 1.5% year-on-year. The expansion of service exports, private consumption, and private investment drove this growth, although it was offset by a decline in financial exports, public investment, and government consumption, slowing from 1.7% in the fourth quarter of 2023 (October to December). On a seasonally adjusted quarter-on-quarter basis, GDP grew by 1.1%, accelerating from a contraction of 0.4% in the fourth quarter of 2023.

 

Looking at the real GDP growth rate for the first quarter of 2024 by demand category, private consumption expenditure increased by 6.9% year-on-year, slightly slowing from 7.4% in the previous quarter, but it remained strong. Accommodation and food services saw a 42.7% increase, further accelerating from a 35.4% increase in the previous quarter. However, a decline in household car purchases significantly impacted durable goods spending, which fell by 6.8% (compared to a 3.7% increase in the previous quarter), making it the only negative component within the breakdown of private consumption expenditure.

 

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Last year, it was reported that many Chinese EVs had entered Thailand, but when you actually see the roads, that doesn’t seem to be the case. Toyota cars still dominate. When I asked a representative of a tungsten recycling company living in Thailand about this, they said, “Indeed, a considerable number of Chinese EVs, including those from BYD, entered the market last year, but due to frequent breakdowns and the scarcity of charging stations, the boom has ended, and Toyota cars are once again predominant.” However, there are also many cars with the MG emblem—a British sports car brand acquired by a Chinese company—on the roads, indicating that Chinese automakers are likely to continue their push into the Thai market.

 

　

 

On the other hand, Japanese automakers Suzuki and Subaru have already announced their withdrawal. According to Bangkok Weekly News, “Suzuki and Subaru recently announced the closure of their four-wheel vehicle factories in Thailand, and the Federation of Thai Industries (FTI) is concerned about the impact this will have on Thailand’s automotive industry. Suzuki plans to close its plant in Thailand by the end of 2025, and Subaru has also announced the closure of its local production facility. Subaru, which has been running at a loss in Thailand for five consecutive years, plans to shut down its factory by the end of this year and switch to importing vehicles from Japan starting in 2025, while continuing sales.”

 

The head of the FTI Automotive Parts Division’s Spot Committee pointed out, “The closure of Suzuki and Subaru’s factories in Thailand is unlikely to have a significant impact on Thailand’s automotive parts industry, given that the production scale of these two companies in Thailand is not very large. 

 

However, the impact on companies considering investing in Thailand’s automotive industry is not negligible.” In Thailand, the government’s policy to promote the growth of the electric vehicle (EV) industry has led to an increase in the presence of Chinese EV manufacturers. According to the FTI, other Japanese automakers, aside from Suzuki and Subaru, are likely to continue their operations in Thailand, as they use Thailand as an export base and benefit from the superior supply of parts and skilled labor compared to other countries.

 

Following this, Honda also announced a reduction in local production. In contrast, Chinese and Korean companies are increasing their presence in the market.

 

Next, let’s discuss the situation in the capital city, Bangkok.

 

The population of Bangkok is approximately 5.5 million. Bangkok is the political, economic, and cultural center of Thailand, attracting many tourists and businesspeople from both within the country and abroad. As previously mentioned, the cityscape features a unique blend of modern skyscrapers and shopping malls alongside ancient temples and palaces, giving it a distinctive charm.

 

The Thai national flag consists of five horizontal stripes in red, white, and blue. The red symbolizes the nation and its people, the white represents the white elephant from the founding mythology and signifies faith in Buddhism, and the central blue stripe, which is twice the width of the red and white stripes, represents the Thai monarchy.

 

One thing that becomes clear when visiting Thailand is the absolute power of the royal family. Portraits of the king and his family are displayed in every company and building, as it seems to be a requirement. Additionally, it is said that the royal family owns a substantial amount of land.

 

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As of 2024, Thailand’s economic situation has reportedly worsened significantly. According to the Federation of Thai Industries (FTI), the Thai Industrial Sentiment Index (TISI) in June of this year was 87.2 points, the lowest in the past 24 months. The ongoing economic downturn is attributed to factors such as the rising production costs that are squeezing small and medium-sized enterprises. This index is based on a survey conducted by the FTI, covering 1,341 member companies across 46 industries. A score above 100 points indicates favorable business sentiment.

 

Kriensak, the president of the FTI, explained that “The index in June is the lowest since July 2022. The main reasons are the sluggish recovery of the economy, the lack of improvement in consumer purchasing power, and the resulting decline in sales, which has led to a drop in both orders and production.”

 

According to local sources, Thailand’s economic downturn is largely due to the stagnation of exports, particularly to China. “Exports have dropped by 30% to 40% compared to the previous year. The recession has also led to an increase in the number of people who cannot obtain loans, and this trend is likely to continue growing,” said a local izakaya owner. On the other hand, in Thailand, where marijuana has been legalized, it is said that there are now around 7,000 marijuana shops, outnumbering convenience stores. For reference, 7-Eleven is by far the most common convenience store brand. The legalization of marijuana was initially intended as a measure to attract tourists, but its widespread proliferation has led to discussions about the need for regulation.

 

 

Young people are also quite noticeable in Bangkok. Many gather in the central food court towers, and there are also a significant number of international tourists. While the economy might seem better than in Japan, the reality is different. The production of automobiles has plateaued at around 1.7 million units per year, with 800,000 of those being exported. Additionally, the electronics components industry has been shifting to Vietnam, indicating that Thailand is also experiencing some degree of “hollowing out.”

 

However, the situation is the opposite in the recycling industry, where more companies are withdrawing from Malaysia and relocating to Thailand. This trend has been noticed even in Japan. In fact, it is said that many “Chinese-owned” yards in and around Thailand’s bonded yards have formed a Chinese sphere of influence. According to a local recycler, “The stricter import regulations in Malaysia and the lower market prices led to the decision to expand into Thailand.” Additionally, the fact that Chinese EV manufacturers like BYD are conducting local production in Thailand is also one of the reasons for the relocation from Malaysia to Thailand.

 

In bonded yards, companies do not need to undergo audits by the BOI (Board of Investment), and taxes are only imposed when entering the Thai market. As a result, many recycling companies are effectively utilizing bonded yards. Of course, some companies own both bonded yards and local yards.

 

Although not to the extent seen in Indonesia, it seems that Thailand’s recycling industry also has some involvement from mafia-related companies. There were even rumors that a certain company was being targeted by such organizations, leading to their company vehicles being equipped with bulletproof features, and the president and executives wearing bulletproof vests. Given this backdrop, we interviewed several companies in Bangkok, and we plan to report on them sequentially in the future.

 

 

（IRUNIVERSE　YUJI　TANAMACHI）

 

 

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