Thailand a magnet for firms fleeing trade war – but who benefits?

The US has slapped tariffs on $250 billion worth of Chinese goods while China has responded with tariffs on $110 billion of US imports. The US also recently banned exports of sensitive American-made products such as components and software to some firms in China. 
The figures suggest the US measures are taking a greater toll than their Chinese counterparts.
However, the US central bank recently remarked that US firms are complaining about rising costs of raw materials such as steel, aluminium and other Chinese imports. This  will hike the price of US consumer products, leading to higher inflation and the necessity to curb it by raising interest rates. In the end, US consumers will likely be worse off.
Negative impacts are also being felt in China’s economy, with slowing export volumes to the US. The trade war is putting pressure on a weakening Chinese currency, lowering stock market values. If prolonged, the dispute will damage the average income and well-being of Chinese people.
Currently, China (No 1) and the US (No 2) are Thailand’s two largest trading partners. Their trade battle will unavoidably spill over and hurt the Thai economy. Thailand already has a trade deficit – the total export value being less than the total import value – with China. This will likely worsen if China’s economic growth slows because of the trade war.
 Another impact is the relocation of manufacturing firms. Earlier this year, Harley-Davidson moved its motorcycle assembly factory from Kansas to Thailand in response to higher US tariffs on imported components from China. Similarly, a survey in China found that reduced sales and profits as a result of the protectionist tariffs would likely see affected firms shift their production lines and supply chains out of China – with Southeast Asia the favoured destination. 
Harley-Davidson may be just the first of many firms from the US and China eyeing Thailand as a base to invest in. And the trend will almost certainly be accelerated by the advent of Thailand’s Eastern Economic Corridor (EEC), where more than Bt400 billion is being invested in an airport, seaport, rail links and other infrastructure. 
The EEC will create more than 40,000 jobs, an estimated Bt560 billion return on government spending and an added Bt820 billion boost to the Thai economy, says the government. 
The figures are impressive, but who will benefit?  
If the influx of foreign manufacturers means locals have to sacrifice land, which then generates more jobs for foreigners, while the lion’s share of the resulting profit goes to rich investors, locals might be worse off. The government should look into these issues very carefully and ensure ordinary Thais don’t become the losers.
Akearoon Auansakul
Bangkok