• In 12-13 Jun, we embarked on a 3-day road trip covering Bangkok and theEastern Economic Corridor (EEC). This was done to provide investors withfresh insights and updates on Thailand's economic outlook, and furtheridentify opportunities for foreign direct investment (FDI) in the EEC. Our tripincluded meetings with the management teams of some key companies wecover (please refer to the table of stocks below), visits to industrial estates, EVbus and battery production plants, and on-the-ground checks of retail mallsand tourist destinations.

• Bank of Thailand (BoT). Our meeting with the BoT was held a day after itsMonetary Policy Committee (MPC) voted 6-to-1 to keep the policy rate at2.5%. The central bank expects economic growth to continue strengthening,due to sturdy levels of consumption and tourism. However, the recovery ofthe export and manufacturing sectors is to be closely monitored.

• Fiscal Policy Office (FPO). The FPO expects GDP to grow by 1.9-2.9% YoYthis year (mid-point: +2.4% YoY). Note that these estimates do not include theTHB10K digital wallet scheme (DWS). However, if the scheme becomesavailable for spending in 4Q24, it could boost 2024 GDP growth to 3.3% YoY.From our discussions with the BoT and FPO, we think that the Governmentmay still be determining whether the scheme will take effect in 4Q24.

• The EEC. The EEC is a region-focused development project that aims topromote and enhance the economy of the eastern seaboard of Thailand. TheEEC is centred on three eastern provinces: Chachoengsao, Chonburi, andRayong. In 2019, these areas accounted for 14.7% of Thailand's GDP.

• Phase 1 of the EEC project (2018-2022) included infrastructure projectsvalued at USD19bn. These encompassed high-speed rail links for threeairports and U-Tapao International Airport, as well as approximatelyUSD50bn invested in Laem Chabang Port Phase 3, and Map Ta Phut IndustrialPort Phase 3. The Board of Investment (BOI) granted investment promotioncertificates worth about USD28bn for the EEC area, covering investments inelectric vehicles (EVs), intelligent electronics, agriculture and biotech, food forthe future, and high-value & medical tourism.

• Phase 2 (2022-2026) (investment target: USD65bn) is ongoing, and is focusedon five emerging clusters: Automation and robotics, health and wellbeing,smart logistics, 5G (digital) and the bio-circular-green (BCG) economy. In1Q24, the value of certificates issued related to the EEC dropped by 12.2%YoY, but the requested value for investment surged by 135% YoY (44.8% ofthe total already accounted into the EEC).

• FDI in Thailand has been consistently growing. In 2022, FDI amounted toTHB592bn (USD16.43bn), before rising by 43% YoY to THB848bn(USD23.6bn) in 2023 – investments in the EEC accounted for 52% and 45% ofthe total FDI in the country for those years. The Government believes the EECoffers a unique positioning for investors vs regional counterparts. Anexecutive from the EEC Office of Thailand (EECO) said that FDI into Thailand– especially for the EEC – should continue to grow, especially for the areas ofthe BCG economy, the EV supply chain, and the relocation of E&E companies.

Source: RHB Securities Research - 12 Jul 2024