Interest Rates: The Key to Recovery
• How will the Monetary Policy Committee meeting turn out? Amid the global geopolitical turmoil and the impacts of climate change, governments worldwide are making significant efforts to stimulate and support their economies. Major countries like the United States, the United Kingdom, China, and South Korea have clearly moved on policy fronts. The U.S. has reduced interest rates by 0.5%, the UK previously cut rates by 0.25%, and South Korea has recently announced another 0.25% reduction. Meanwhile, China has introduced three major measures to stimulate its economy: providing cash to low-income earners similar to our own, reducing interest rates by 0.20%, and lowering home loan rates by 0.50%, while allowing local governments to purchase or support real estate projects in oversupply situations, potentially buying projects at discounted prices and leasing them to low-income individuals to prevent assets or debts from becoming non-performing loans (NPLs). Looking at the measures from these major powers, we should also reflect on our own economy and how the Monetary Policy Committee meeting tomorrow (October 16) will unfold.

Strengthening Baht: The Double-Edged Sword of the Thai Economy
• Although exports have improved, the strengthening baht from 37 baht/dollar to 33.50 baht/dollar significantly impacts the value of exports and tourism. According to the latest World Bank estimates, Thailand's GDP stands at 2.4%. GDP reflects the average growth of the country and comprises several components, but today we will focus on three sectors: exports, tourism, and real estate, which account for 65%, 20%, and 5% of GDP, respectively. It is unfortunate that while Thailand's overall export picture has improved, the value of exports has not increased significantly due to the appreciating baht, which has risen from its weakest point this year at around 37 baht/dollar to 32.50 baht/dollar briefly. Subsequently, the Bank of Thailand intervened, causing the baht to slightly weaken to 33.50 baht/dollar, yet it remains stronger compared to the beginning of the year at 34.50 baht/dollar. This situation means exporters are not benefiting as much from increased export volumes, which also affects domestic purchasing power. In terms of tourism, although the number of tourists has increased, the strengthening baht has led to a slowdown in spending. Nevertheless, if we disregard the currency issue, the situation for exports and tourism appears to be improving, but it could have adjusted better if the baht were at a more suitable level.


Public Debt vs. Household Debt: The Double-Edged Sword of the Thai Economy
• Thailand's public debt: 62% of GDP (below the global average)
• Thailand's household debt: 92% of GDP (higher than many developed countries)

Before discussing the real estate market situation in the final quarter of the year, we should first address the current economic overview. Positive factors include the 10,000 baht assistance to help alleviate short-term issues for low-income earners and the stock market's recovery due to renewed foreign investment, which accounts for 50% of the trading value on the Stock Exchange of Thailand. The main reason for this is likely the stability of the government, along with positive news regarding investments from large foreign companies, which will benefit the industrial sector, contributing 35% to GDP. Beneficiaries of this positive news are likely to be business owners, stock market investors, and factory employees, which will help drive GDP growth in the future. However, daily wage earners and grassroots individuals have not seen much improvement, as most are engaged in trade or agriculture, facing rising costs due to higher oil and electricity prices. Additionally, Thailand still has a high level of household debt, raising the question of how we can address this issue.

When discussing debt, there are two key figures to consider: public debt and household debt relative to GDP. In comparison to major powers or countries in the Asia-Pacific region, Thailand's public debt is significantly lower. The public debt of the U.S., U.K., China, and the Asia-Pacific average stands at 122%, 89%, 84%, and 68%, respectively, while Thailand is at 62%. This indicates that the government still has room to incur debt for mega projects to boost the domestic economy. In contrast, Singapore, our neighbor with a more developed economy, has a public debt of 174%, suggesting that their public debt can enhance the well-being of their citizens. However, when we look at household debt, the U.S., U.K., China, and Singapore have household debt to GDP ratios of 72%, 80%, 63%, and 46%, respectively, while Thailand's stands at 92%. This may imply that if the government incurs more debt to support the economy, citizens might incur less debt. Nevertheless, many countries with higher household debt than us are all developed nations, including Switzerland, Australia, Canada, the Netherlands, and South Korea.

Thai Real Estate: What’s Next?
• High household debt makes borrowing more difficult; interest rates remain unchanged, affecting both buyers and sellers.
• The strengthening baht has led foreign investors to slow down their purchases.
• Multinational companies are beginning to invest more; tax collection is becoming more efficient due to foreign investments.

In the real estate sector, the high level of household debt makes borrowing challenging, as income is insufficient to cover expenses. The unchanged interest rates further impact both domestic purchasing power and foreign demand, as prices have risen due to the appreciating baht. Interest rates are a sensitive issue; from different perspectives, wealthy individuals with little debt may oppose interest rate cuts because they have savings or investments and seek higher returns. Conversely, low-income earners who struggle to make ends meet and need to borrow money would prefer lower interest rates to alleviate their expenses. The real estate situation this year shows that overall demand has not yet recovered, but large operators who can adapt are still performing well due to their longer financial runway, focusing on developing higher-priced products targeting markets with purchasing power. However, if this situation continues, it may not bode well for the overall picture, as real estate is a sector that drives the country's economy. The importance of this sector can be seen in why China, a country that has experienced continuous economic growth recently, places great emphasis on it.

Currently, we have an increasing number of multinational companies investing, and naturally, the demand for housing from foreigners will rise. Adjusting regulations to align with current circumstances could help stimulate the economy. While I won’t specify what changes should be made, enhancing tax collection from foreigners and foreign companies is something that needs to be closely examined to ensure the country develops and does not miss opportunities. With significant investments expected in Thailand, we must not forget that a crucial mechanism is taxation. Many people demand rights regarding tax expenditures, but when looking at the actual numbers, Thailand has about 70 million people, with 40 million in the workforce, 10 million filing taxes, but only 4 million actually paying taxes. If this situation persists, we will remain a country with a broad pyramid base. It would be a great opportunity if we could make it easier for foreigners to invest in real estate and collect more taxes from them to develop the country. This way, while domestic demand has not yet recovered, foreign demand can help drive the real estate sector's growth.

Conclusion: Despite the challenging situation, Thai real estate still has growth opportunities.

1. Adjust policies to facilitate foreign investment.
2. Develop a more efficient tax system.
3. Create a balance between development and income distribution.

Real estate is not just a business; it is a crucial part of the Thai economy. The recovery of this sector will be key to sustainable growth for the country.