Bangkok: FETCO fears investors will relocate to Vietnam and Indonesia if Thailand is charged a 36% tax, causing negative exports, with GDP in 2025 growing less than 1.5%. It is said that if the tax is not more than 25%, it can still be managed.

According to Thai News Agency, Dr. Kobsak Pootrakool, Chairman of the Federation of Thai Capital Market Organizations (FETCO), expressed concerns over the retaliatory tariffs announced by the United States on all countries, which are becoming increasingly apparent. Most tariffs are set at 15-20%, with Indonesia recently negotiating a rate of 19%. The ASEAN group, particularly Vietnam, Malaysia, the Philippines, Singapore, and Thailand, are significantly impacted. Vietnam faces a 19% rate, Malaysia 25%, the Philippines 20%, Singapore 10%, while Thailand is still at 36%. This discrepancy could result in an 11-17% drop in Thai exports, exacerbating export challenges in the latter half of this year.

Dr. Kobsak emphasized the potential impact on Thailand’s ability to attract foreign investors. The current situation poses a challenge to Thailand’s ongoing efforts to transition its production base to a new sector. A 36% tax rate might drive investors towards Vietnam and Indonesia, raising concerns about Thailand’s long-term investment appeal.

He further noted that if Thailand can negotiate a tax rate not exceeding 25%, it would be manageable, as it remains competitive with Vietnam’s 20% and Indonesia’s 19% rates. The 5-6% difference could be a point of negotiation, potentially allowing for exemptions on certain industrial groups not currently benefiting from 0% import tax rates from the United States. This strategy could mitigate impacts on Thai industries, particularly in agriculture. Dr. Kobsak projected that a 25% tax rate would stabilize exports in 2025, with GDP growth between 1.5-2%.

Conversely, if Thailand endures the highest tax rate of 36%, the forecast for this year’s exports is negative, with GDP growth expected to fall below 1.5%.