New businesses and construction sector forecast to rise
The important economic indicators of new business registrations, construction and exports were all forecast by separate agencies last week to rise this year on economic with moderate but healthy growth, as confidence in the Thai economy continues to build.
This year “will be a vigorous year for the construction industry, considered as the beginning of an uptrend in the industry. But we have no idea how long the rising cycle will be,” said Nattaphorn Bhromsuthi, vice president of the Thai Contractors Association.
The Association is forecasting that the construction market will expand by more than 15 percent in 2017 to roughly $40 billion, the fastest growth since the boom year of 1993. Industry analysts said the government’s launch of several infrastructure projects is expected to provide the solid foundation for growth. Nattaphorn, who is also chairman of the ASEAN (Association of Southeast Asian Nations) Construction Federation, said that Thailand’s construction market would be the largest in the region this year.
By contrast, the markets in Malaysia and Singapore are predicted to be worth at the most $30 billion and $25 billion, respectively, while neighboring Myanmar and Cambodia’s markets will be worth $6 billion and $8 billion respectively.
Domestic construction this year would mainly concentrated on horizontal infrastructure projects such as roads, railways and bridges, as opposed to vertical projects such as buildings, he said.
Infrastructure projects are also expected to support a rise in new business registrations this year of about 3 percent to over 66,000 new companies with investment totaling $6.8 billion, according to Banjongjitt Angsusingh, director–general of the Business Development Department.
In addition, tax incentives to promote individual business owners registering as juristic persons, tourism growth, the Secured Transactions Act, and a new policy that allows the incorporation of juristic persons registered by only one person should all help to spur a rise in new business formations, Banjongjitt said.
Construction starts and new business formations are solid indicators of private sector confidence in the direction of the economy, as investors and entrepreneurs often hold back commitments if the are uncertain about economic prospects in their markets.
Meanwhile, exports, the biggest driver of the Thai economy, registered a modest increase in value in 2016, the first increase in four years, according to the Minister of Commerce.
Exports rose in value by 0.45 percent to $215 billion on higher oil prices and strong growth in some of Thailand’s trading partners. At the same time, the value of imports contracted by 3.9 percent to $194 billion. The difference produced Thailand’s highest trade surplus ever at $20.6 billion.
“Exports last year finally returned to growth. This year, Thai exports should continue to grow along with higher oil prices and stronger economic and trade growth globally,” said Pimchanok Vonkorpon, director-general of the Commerce Ministry’s Trade Policy and Strategy Office.
The ministry is forecasting export value to grow by 2.5-3.5 percent to between $220.7 billion and $222.8 billion in 2017.