Business registrations set for recovery
The University of the Thai Chamber of Commerce has noted a significant rise in consumer confidence and concomitantly the Business Development Department now believes that the number of new business registrations will recover in the second half of this year.
While the latter is not guaranteed, the Business Development Department notes that 29,466 juristic persons sought registration in the first half of 2014, which represented a 19 percent drop on the same period in 2013. This equated to a substantial 46 percent drop in registered capital to 102 billion baht.
While that percentage drop is significant, the fact that overall consumer confidence has now reached a 14-month high of 75.1 points on the University of the Thai Chamber of Commerce index points to a strong chance that business registrations will indeed bounce back strongly in the remaining months of 2014 and top the projected 65,000 target set at the start of the year. Most of these new registrations are expected to be in the construction and real estate sectors.
In 2013 the number of business registrations reached 67,302. This equated to a combined registered capital of 379 billion baht. One factor leading to the drop in registrations, according to the director-general of the Business Development Department, is the tighter controls on lottery businesses. Whereas in the first half of 2013 there had been 5,000 registrations, this year that number was down to just seven. This makes up a significant part of the percentage drop into this year.
As with so much of the recent jump in consumer and business confidence, the end to the long-running political crisis which had effectively stifled the economy has been viewed as the catalyst. The military intervention on 22 May might not be seen in many parts of the world as having been the ideal solution, but within most sectors of the local economy it appears to have been taken in stride with a general perception of better times to come.
The junta has committed itself to speeding up the disbursement of the fiscal 2014 budget and public servants are busily planning for the 2015 budget. Among the military’s first fiscal acts was to accelerate the payment of the 92 billion baht owed to rice farmers under the flawed rice pledging scheme.
The Bank of Thailand has also been making positive noises, upgrading its outlook for the remainder of the year and suggesting a GDP growth rate of 5.5 percent in 2015, up from a previous forecast of just 4.8 percent.