COVID-19 Drags Industrial Confidence Index to Lowest in 21 Months

      Mr. Suphan Montakulsuth, President of the Federation of Thai Industries (FTI) stated that concerns over the slowdown in demand and purchasing power, both domestically and internationally, due to the outbreak of COVID-19, have caused operational issues in production, sales, and logistics, including delays in importing raw materials from China. Additionally, drought problems have reduced the availability of agricultural raw materials. Furthermore, delays in budget disbursement for government construction projects have also affected the confidence of operators in the construction industry.

        According to the survey results, the Industrial Confidence Index for February 2020 is at 90.2, down from 92.2 in January 2020, marking the lowest index in 21 months since May 2018, reflecting a decline in confidence compared to the previous month.

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        A survey of 1,209 operators across 45 industrial sectors nationwide in February 2020 found that 65.8% of operators are increasingly concerned about the global economic situation, particularly exporters who are worried about Thailand's exports and the economic conditions of trading partners that may be affected by the COVID-19 outbreak, leading to a decrease in foreign orders both this month and projected for the next three months.

Moreover, 48.6% of operators believe their concerns will lessen if the domestic political situation stabilizes, as most are worried about delayed budget disbursements affecting public investment. In the exporters' view, 48.2% are concerned about exchange rates (Baht to Dollar) and oil prices, while 32.1% are concerned about interest rates remaining stable at 19.8%.

The forecast index for the next three months is expected to decrease to 98.1, down from 99.4 in January 2020, marking the lowest index in 45 months since May 2016, as operators are worried about the worsening and global spread of COVID-19, which may impact the global economy and domestic economic activities, particularly due to a slowdown in foreign tourism and cautious consumer spending, resulting in reduced consumption of industrial goods.

Nevertheless, the Federation of Thai Industries urges the government to enhance measures and build confidence in controlling the COVID-19 outbreak to increase domestic spending, and to implement short-term liquidity measures for operators and long-term economic stimulus measures, such as tax incentives.

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The FTI recommends that operators plan for business continuity to cope with COVID-19.

        In light of the ongoing COVID-19 outbreak with rising infection rates, the Federation of Thai Industries (FTI) advises its members and industrial operators to prepare response plans by managing business continuity or Business Continuity Plan (BCP).

• Prepare a Business Continuity Plan (BCP) by analyzing potential business impacts and establishing operational guidelines under emergency conditions, such as working from home.
• Communicate and provide regular information to reduce panic, focusing on continuous communication with employees.
• Separate employee groups to manage risk, ideally into at least two groups to minimize direct contact, and utilize video conferencing for discussions and meetings.
• Apply technology to reduce contact, such as using facial recognition technology for clocking in and out instead of fingerprint scanning, and enabling payments via QR code scanning.
• Assess partners, plan backups, and seek alternative sources by checking production and logistics capabilities, analyzing supply chain risks from high-risk countries, and preparing domestic backup raw material sources.
• Transfer financial risks through insurance that can cover medical expenses and compensate the company in case of the death of key personnel, among other things.

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