Kelvin Tay of UBS Global Wealth Management said there was optimism about Thailand’s tourism potential, but political headwinds could still be game-changing.
While Thailand is poised to be a “big beneficiary” of China’s reopening and expected tourism growth, outbound travel from China has so far been “pretty meager”, Tay told CNBC’s “Squawk Box Asia” on Thursday.
Employment numbers in China need to rise first, he added.
Thailand also needs to reinvest and rebuild its infrastructure at a faster pace, Tay said. The country plans to build infrastructure along its eastern seaboard with new ports and airports, but “it’s not really happening yet,” Tay said.
This was largely due to politics, he said, and Thailand had to “do the right thing …”.
Thai politics ‘changing the rules of the game’
Preliminary results show that Thai opposition parties Move Forward and Pheu Thai, Together, they received 99 percent of the vote in the May 14 general election, according to Reuters.
But Reuters said that if the leading Kadima Party wants to form a new coalition government, it needs the support of members of the Senate appointed by the military government, who can vote for the next prime minister.
Election Committee has 60 days to certify election resultsafter which the Prime Minister will be elected.
Thailand’s election is a “potential game changer,” Tay said.
The baht rose to its highest level since February on Monday after a vote showed a pro-Democrat majority.
While the benchmark SET index initially rose when the results were announced, it eventually gave up early gains.
In fact, Thai stocks have been the worst performers in Southeast Asia this year, but Tay said Thailand was his “top choice” in the region.
Thailand’s SET index fell 9.22% this year, the largest index decline in the entire Asia-Pacific region. That compares with a drop of around 4.5 percent in Malaysia and a 2.2 percent drop in Indonesia’s Jakarta stock index over the same period, according to FactSet data.
Another concern, Tay added, is that companies linked to the monarchy could be setback by a change of government.
The Kadima Party has called for reforms to the monarchy, including changes to its defamation laws.
labor challenge
Thailand must also rely on its workforce to drive growth, Tay said. The country’s fertility rate and aging population are “one of the worst in the world,” but workers from neighboring Cambodia and Laos could be brought in to augment the workforce, he said. He added that the cultural and linguistic similarities between the countries made it “very easy” for Thailand to do so.
However, Thailand may have to change its immigration policy first. He explained that even though foreign workers have been in Thailand for years, they are “still considered immigrants rather than part of … the local population”.
He added that Thailand should consider providing migrants with a clear pathway to residency.