EIC conference:

Is investment our silver bullet?

Sutapa Amornvivat, Ph.D.

Chief Economist & First Executive Vice President

Economic Intelligence Center (EIC)

8 June 2016

2

What in the world (economy) is going on?

World’s Economic Leader Timeline

1980s

?

1990s Early 2000s

Mid 2000s Today 2016

What is holding back the global recovery?

3

Gig economy

Aging population

Debt overhang

Technologies replacing labor

What is holding back the global recovery?

4

Gig economy

Aging population

Debt overhang

Technologies replacing labor

What is holding back the global recovery?

5

Gig economy

Aging population

Debt overhang

Technologies replacing labor

What is holding back the global recovery?

6

Gig economy

Aging population

Debt overhang

Technologies replacing labor

Great Depression

World War

II

0%

3%

6%

9%

12%

15%

19

25

19

30

19

35

19

40

19

45

19

50

19

55

19

60

19

65

19

70

19

75

19

80

19

85

19

90

19

95

20

00

20

05

20

10

20

15

Has this worldwide struggle happened before?

Source: EIC analysis based on data from FRED, Federal Reserve Bank of St. Louis; Summers (2016)

U.S. Long-term interest rates

7

Fiscal expansion Monetary easing Currency intervention

What are the policy options to jump start demand?

8

Option 1: Monetary easing

What do we get from trillions of dollars put in by central banks?

Note: 1. Central banks’ asset size pre-crisis (at the beginning of 2007) and post-crisis (at the end of 2015) 2. Pre-crisis period is 2000-2007 and post crisis, 2008-2015 3. Total QE size of US Fed, BOJ, ECB and BOE as of end of 2015 Source: EIC analysis based on data from Bloomberg

9

GDP Growth average2

Central banks’ asset size (% of GDP)1

Japan US Eurozone

2.7 1.2 2.2 0.1

13 27 22

1.5 0.2

77 25 6

$7.1 Trillion3

Combined size of QE

Option 2: Currency intervention

Can we make our currency cheap and export our way to growth?

Source: EIC analysis based on data from IMF; Eichengreen and Irwin (2009)

10

1928 1931 1934 1936 1938

% Tariff on imports

10 14 8 7

US UK DE FR

16 24 33

17

US UK DE FR

% Tariff on imports

Option 2: Currency intervention

Can we make our currency cheap and export our way to growth?

Source: EIC analysis based on data from IMF; Eichengreen and Irwin (2009)

11

US currency watch list

2015 2016

Interest rate cut

12

Source: EIC analysis based on data from Bloomberg

Option 2: Currency intervention

Can we make our currency cheap and export our way to growth?

Flattened FX appreciation path

0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.13%

Option 3: Fiscal expansion

Can governments step up to fill in the missing demand?

*Suspended by Congress from Oct 2015 – Mar 2017 Source: EIC analysis based on data from IMF and U.S. Department of Treasury

13

Asia

Debt ceiling: 60%

56%

48%

44% 25%

248%

Japan US

$19.1tn

Debt ceiling: $18.1tn (Currently suspended*)

132%

99%

93%

75%

Debt ceiling: 60%

Eurozone

Option 3: Fiscal expansion

Can governments step up to fill in the missing demand?

Source: EIC analysis based on data from World Bank

14

130 141

186

172

90

0

50

100

150

200

250

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Thailand’s real investment is still below its pre-Asian-Financial-Crisis level Real investment (Index: 1996=100)

Manufacturing Services

What kind of public investment would yield best returns for us?

Source: EIC analysis based on data from World Bank

15

Changes in share of GDP (2000-2013)

-2.7 +2.4

-3.5 +4.2

-4.9 +5.2

-1.8 +7.1

+0.1 -2.9

-2.8 +3.6

What are our top picks for service businesses in Thailand?

16

CLMV-linked Tourism ICT

How do we ensure a healthy growth in tourism?

* As of 2013 Source: EIC analysis based on data from AOT, Phuket Municipality, WHO, TAT and UNWTO

17

Number of tourists visited in Thailand vs world Unit: million tourists

2005 2015 2025F

809 1,184

1,645

13

30

How do we ensure a healthy growth in tourism?

* As of 2013 Source: EIC analysis based on data from AOT, Phuket Municipality, WHO, TAT and UNWTO

18

Number of tourists visited in Thailand vs world Unit: million tourists

2005 2015 2025F

809 1,184

1,645

13

30

Road traffic death rate* Unit: deaths per 100,000 population

World 17.4

36.2

18.8

16.6

How could we capture new growth segments?

Source: EIC analysis based on data from TAT and UN

19

2005 2015 2025

16% 19% ?

Thailand’s tourist structure Unit: % of the total number of tourists

>55+

15%

2005 2025F

29%

27% 35%

23% 31%

% of elderly population

What are our top picks for service businesses in Thailand?

20

CLMV-linked Tourism ICT

21

Source: EIC analysis based on data from Euromonitor and NBTC

Can we reap the full benefits from digital disruption?

17

Unit: Petabyte Unit: THB Bn

47

Thailand’s e-commerce value Thailand’s mobile data usage

<1

360 2,700 105

2010 2015 2020F 2010 2015 2020F

AI IoT Big Data Analytics

How much does it cost to lag behind other countries?

22

* As of 2015 ** Unicorn is a start-up company valued at over $1 billion Source: EIC analysis based on data from WEF, CB Insights, NESDB, MDEC Malaysia, MTI Singapore and spectrummonitoring.com

Capacity for

innovation ranking*

Unicorn mobile apps**

ICT contribution

to GDP 2% 8% 7%

70 13 18

-

Mobile bandwidth

(MHz)

ICT law ranking*

Broadband internet coverage

53% >90% >99%

180 240 230

98 8 3

Will the national e-payment elevate us as a digital nation?

23

Any ID

e-government

Building awareness

e-Tax

Card distribution

Efficient transfer

Tax collection

Anti corruption

Source: Ministry of Finance

What are our top picks for service businesses in Thailand?

24

CLMV-linked Tourism ICT

HQ

25

Source: EIC analysis based on data from Open Development Initiative (ODI), Ministry of Commerce, BOT and IMF

Are we poised to become the service hub of CLMV?

FDI from Thailand

+44%

Tourist arrivals into CLMV

Border trade

+17%

+19%

B

Annual growth (2010-2015)

CLMV GDP Growth

6-8%

What are other benefits beyond transport connectivity?

26

Source: EIC analysis based on data from Kansas Department of Transportation, Community of European Railway and Infrastructure Companies (CER), and Schiphol Group

I-70 and 110th St. interchange in Kansas

State tax revenue

$51 mn

$34 mn

2005 2006

(Completed in 2006)

Urbanization along the Paris – Lyon TGV

Office space investment

€80 mn

€120 mn

1980 1981

(Completed in 1981)

Schiphol’s Aerotropolis

2,000 60,000

Total employees

Airport-only Aerotropolis

(Completed in 1995)

27

So, what’s the catch?

Source: EIC analysis based on data from World Bank and CEIC

37%

54%

35%

12%

Proportion of employment in S.Korea

End of transport development, Phase 1

1980 1995

26 USD Mn

Proportion of FDI in China

16%

65%

Rural road investment

High-speed rail investment

2000 2015

83 USD Mn

7 USD Mn 40 USD Mn

63%

31%

EIC conference:

Is investment our silver bullet?

Sutapa Amornvivat, Ph.D.

Chief Economist & First Executive Vice President

Economic Intelligence Center (EIC)

8 June 2016