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Bangkok Post
a day ago
- Business
- Bangkok Post
The value of a financial plan
In recent months, Thais have faced a series of unsettling events. While the country awaits the impact of US tariffs, rising tensions along the Thai-Cambodian border add to the growing sense of unease. Amid heightened uncertainty, the Thai economy is expected to remain sluggish until the end of next year. This prolonged downturn will inevitably affect household finances and savings. Data indicates the majority of Thais lack savings and are unable to retire and maintain their quality of life. Nearly 30% of the Thai workforce has zero retirement savings. Tuition fees at universities are rising at a rate that outpaces the cost of living, while up to 20% of small and medium-sized enterprises (SMEs) are forced to shut down within the first five years. Hence, common suggestions such as save more, cut expenses or seek extra income may be insufficient. Instead, a comprehensive financial plan is necessary to safeguard people's financial future. COMMON MISTAKES A survey by Kiatnakin Phatra Financial Group (KKP) identified seven common financial mistakes many Thais make. 1. Not having a financial plan or realising its importance: Some 66% of Thais say they think about financial planning -- not a small number -- but only 16% actually follow through and develop a plan. Among Baby Boomers, either retired or near retirement, only 20% have crafted a financial plan. Furthermore, only 30% of Thais have enough money saved for retirement. 2. Planning for retirement too late: Starting early provides a significant advantage, as it allows more time to earn and save. If you start retirement planning too close to retirement age, you'll need to save a much larger sum within a shorter period, all while having a reduced ability to take financial risks. For example, if you save 5,000 baht per month and earn a 7% annual return on your assets, over 30 years this would grow to 5.89 million baht. Yet with only 10 years, it would amount to just 870,000 baht. 3. Not accounting for income uncertainty: In times of economic instability, many still expect their income to stay the same or increase. However, unforeseen events could cause income to drop, so it's important to factor in uncertainty. 4. Insufficient financial security: Insurance is often overlooked. Health problems can drain savings or derail financial plans, forcing people to use up their savings or investments. Insurance helps mitigate risks that are unlikely, but can be very costly if they occur. Fewer than 40% of Thais have life insurance. 5. Ignoring inflation: This inflation refers to not only the quarterly figure announced by the Bank of Thailand, but also the inflation that reflects each individual's lifestyle. How does inflation affect our savings? Suppose you plan to spend 30,000 baht per month for 25 years after retiring at age 60. You would need savings of 9 million baht without inflation. With 3% annual inflation included, you'd need 18.8 million baht. 6. Not investing anything: Many think avoiding investment means avoiding risk, but that's not true. Over time, the cost of living rises and reduces your purchasing power. You need to manage your money to outpace inflation. 7. Not diversifying risk: Some people concentrate their investments too heavily in one place or take excessive risks. This can undermine long-term plans when the market doesn't go as expected. CONCERNS FOR GEN Z According to Nasha Ananchotikul, head of deposit product development at KKP, the survey found Gen Z, aged 13 to 28, had the highest proportion of individuals with no intention to engage in financial planning, compared with older generations. In fact, 53.5% of Gen Z respondents said they have no intention to plan their finances -- significantly higher than the overall average of 18.5%, and much higher than Baby Boomers (17.5%), Gen X (15.9%) and Gen Y (21.1%). This reluctance among Gen Z is partly driven by beliefs such as "retirement is far away" or "bad things won't happen to me", which reflect some of the seven common planning mistakes, said Ms Nasha. She said failing to consider income instability is another key reason why the younger generation shows little interest in financial planning. This failure may partly stem from the perception that unemployment is not a major problem in Thailand, as the country has maintained a relatively strong employment rate for a long time, said Ms Nasha. The National Economic and Social Development Council (NESDC) reported Thailand's unemployment rate in the first quarter of 2025 was only 0.88%, about 360,000 people, down from 1.01% year-on-year. However, the number of quasi-unemployed surged by 14.6%, reaching more than 4.3 million. Many of these job losses stemmed from the economic downturn, which severely affected SMEs. Last year roughly 24,000 SMEs shuttered, according to government data. The quasi-unemployed are defined as people working fewer than 20 hours per week in the agricultural sector, or fewer than 24 hours per week in the non-agricultural sector. The NESDC also warned of rising unemployment among new graduates, with 89% of surveyed employers indicating reluctance to hire fresh graduates due to their lack of experience, skills and workplace readiness. According to Ms Nasha, given the increasing uncertainty surrounding individual and household income, personal financial planning -- whether for retirement or long-term goals -- has become more important than ever. "Starting to save early allows you to harness the power of compound interest. Those who save early build more wealth," she said. "The weaker the economy, the more essential it becomes to manage income wisely and plan ahead."
Bangkok Post
08-07-2025
- Business
- Bangkok Post
Bankers hope to mimic Vietnam deal
The US's proposed 36% tariff on Thai goods is likely to severely undermine Thailand's export competitiveness, warn economists in the banking sector. The best outcome Thailand can likely secure in trade negotiations with the US is a tariff rate of 20-25%, similar to the rate granted to Vietnam, said Kobsak Pootrakool, senior executive vice-president of Bangkok Bank. NEGATIVE IMPACT "If the final rate is higher, such as the proposed 36%, it would severely disadvantage Thai exporters and make it extremely difficult for them to compete in international markets," said Mr Kobsak. "The most pressing concern is Vietnam already secured a 20% tariff rate. If Thailand faces a significantly higher tariff, foreign companies planning investment here may shift their investments to Vietnam, inflicting long-term damage to the Thai economy." The US accounts for 18% of Thailand's exports. If the 36% rate is implemented, exports to the US could fall to 10% of the total, weakening bilateral trade relations over the long term, he said. The government should act swiftly by expanding into new export markets and offering export loan guarantees for small and medium-sized enterprises (SMEs) to cushion the impact, said Mr Kobsak. For some crops such as soybeans, which Thailand already imports in large quantities, tariffs may be eliminated. However, for other agricultural and livestock products, the government may need to negotiate special terms or allocate budgetary support to assist local producers, he said. Despite a slowing economy, the baht is at its strongest level in 2-3 years, due primarily to its inverse correlation with the US dollar, he said. To mitigate the effects of US tariffs, Mr Kobsak recommends exporters diversify into India, the Middle East, China, and Southeast Asia. He urged the government to guarantee export loans for SMEs through the Thai Credit Guarantee Corporation, while supporting SMEs through government procurement programmes. 'GIVE AND TAKE' STRATEGY Pipat Luengnaruemitcha, chief economist at Kiatnakin Phatra Financial Group, said the Thai government may need to adopt a give-and-take negotiation strategy, rather than aiming for a win-win outcome, following the US announcing it will maintain a 36% tariff on Thai exports. Citing the US-Vietnam negotiations, Mr Pipat said the US may expect Thailand to open its market further to American products, reduce import tariffs, remove non-tariff barriers, and address fraudulent origin labelling. He suggested Thailand gradually liberalise sensitive sectors, particularly agriculture. While agriculture is a pillar of the Thai economy and employs a large portion of the population, the government could implement measures to mitigate any short-term impact, said Mr Pipat. Thailand should also strengthen its competitiveness by attracting high-value and high-tech investments through incentives such as R&D support and tax credits to encourage electric vehicle parts manufacturing, artificial intelligence hardware production, and data centres, he said. Mr Pipat said an integrated task force is needed, comprising the Finance, Commerce and Agriculture ministries collaborating with the private sector to enable swift and strategic decision-making. Clear communication with all stakeholders is vital, including the US and international investors, about Thailand's serious commitment to economic development, he said. TOURISM A BUFFER If higher US tariffs are applied to Thai exports, the greatest impact would likely be felt in electronics and electrical components, where Thailand could face intensified global competition, said Sathit Talaengsatya, an economist at UOB Thailand. "Thailand maintains a competitive edge in tourism and hospitality, which should be developed into high-value service sectors such as wellness tourism to offset the impact on manufacturing exports," he said.
