The charismatic economist gives us his take on what to expect.
By Aiden Jewelle Gonzales
“Most people consider economics boring,” Dr. Amonthep Chawla acknowledges with a laugh when I sit down with him at the CIMB Thai Bank Head Ofﬁce. “It’s why I’m constantly looking for new ways to communicate to general audiences. At the end of the day, it’s about the people and how ﬁnancial decisions affect them – it’s not just about the numbers.” His immediate candour struck me from the beginning of our interview, and I soon discover this is a clear thread in his decisions over the years. “What I love about my career is that I have the freedom to talk about anything,” he reveals. “Here at CIMB Thai Bank, I’m given a lot of room to have my own stance. I want to differentiate myself from others in this ﬁeld. I’ve been here for seven years, but from day one, I’ve tried to challenge my boss, my colleagues, and even myself.”
Indeed, as the Executive Vice President and Head of Research Ofﬁce at CIMB Thai Bank, which entails research on Thailand and the ASEAN region’s economic outlook, Amonthep came to the ﬁnancial sector via a roundabout way – through an interest in public policy. Having formerly worked at the Thailand Development Research Institute (TDRI) and as a technical consultant to the United Nations (UN) and the International Development Research Centre (IDRC), Amonthep believes that the centre of the ﬁnancial sector should be the people they affect. “From the beginning, when I went to Thammasat University to study Economics, I wanted to research what policies were good for people, and I brought this perspective over when I joined the ﬁnancial sector. Usually Chief Economists would look at what’s going on through things like ﬁnancial ratios, but I try to look at different angles. If you talk to the people being affected themselves, and understand their diverse backgrounds, you’ll understand the impact on them and you’ll touch the heart of your audience.”
Born in Lampang in the north of Thailand, Amonthep, who turns 42 this year, brings his years of experience to the fore – from graduate school in the University of Hawaii in the U.S., to his worldwide travels conducting macroeconomic development training to government ofﬁcials – to give his perspective on COVID-19’s effects on our economic future. Throughout it all, however, he continues to bank on human interest over just interest rates; a true credit to his occupation.
How has the Thai economy and ﬁnancial sector been affected by the COVID-19 crisis?
The pandemic has hurt the Thai economy a lot, more than other countries in ASEAN, because we heavily rely on the tourism sector – from hotels, to restaurants, to people selling wares in the street. Over 10 percent of the country’s income is from abroad; from the tourism sector, and from exports.
In terms of the ﬁnancial sector, we’ve provided a lot of loans to these clients, especially small and medium-sized enterprises (SMEs), and because a lot of people have debt through the banks, we don’t know if there will be an increase in bad debt or if they will default on their loans. The banks are preparing for that – but we don’t think it will be worse than the 1998 ﬁnancial crisis. Since then, the government and central bank have implemented a lot of policies to inject liquidity, so the risk will be mitigated.
Right now it’s too soon to say that we’ve already escaped the bottom of the crisis. Although the country is opening up again, we need to wait and see the economic impact moving forward.
What are banks doing to help alleviate the stress on the most-affected industries?
I would say that the poor have been hurt more than the rich. Those who can’t ﬁnd an alternative income, SMEs in particular, have been affected the most. We as banks know those people have been hit more, so if they want to restructure a loan or extend their debt period, we would do so before they turn into bad loans, which we want to avoid.
For the most part, large corporates are ﬁne – they can ﬁnd liquidity quite easily. We support them too by giving them our ﬁnancial analyses of how long the effects of COVID-19 could last so that they can better prepare.
How would you recommend large corporations and SMEs stay aﬂoat during this time?
I think it’s a good time for businesses to ﬁnd partners in the ASEAN region. You can think of this challenging time as one of opportunity, especially for large businesses. For example, many ﬁ rms in China are moving their production to Vietnam – which may be one of the only countries in the world that’s poised to maintain a positive GDP growth rate this year – and we can follow suit.
SMEs need to think about how to adjust themselves – how to cut costs and increase productivity. The good thing about COVID-19 is we have to try something new. Even for me as an economist, I’ve had to go out into the street and talk to people to understand the full impact of this crisis, whereas in the past I would have just read, written, and talked about our situation. CIMB has introduced a new programme where we talk to people from SMEs, and we record video clips about how people have been adjusting themselves, which inspires others in similar situations. We tell them there’s a light at the end of the tunnel.
In what ways have the SMEs you’ve talked to adjusted?
For example, just across the bank is a pub that sells beer to tourists, and they had to close during the alcohol ban. But the owners knew they had to pay their staff, so they changed from selling beer to selling noodles. Kuay tiew COVID! People have to survive. The good thing about Thai people is that they adjust quite well. If they can’t do one thing, they turn to another.
A lot of people know that they have to help their staff, and very few SMEs that we’ve talked to have laid off their staff. Of course they cut down their wages, but they all know that they have to help each other, and employees are happy to sacriﬁ ce a little bit to keep their job in place.
Do you believe Thailand’s public policy actions have been effective, and what should they continue to do?
We have to look at this in two parts – monetary policy, that is, what the central bank is doing, and ﬁscal policy, that is, government policies.
In terms of monetary policy, the Bank of Thailand has done very well. They lowered their interest rates, one of the earliest central banks in the region that cut their rates to lower the burden for corporates or retail businesses. But they need to do more in terms of helping banks to provide loans to SMEs or even retail businesses. They need to cut a lot of regulation going forward, and we have to wait and see how they’re going to do it without affecting the risk appetite of the banks.
Fiscal policy-wise, the government has of course helped by providing an income support scheme, in the form of cash transfers. But they could only do that for three months as we have a limited amount of tax payments. Moving forward they need to do a lot more, but I don’t think they’re going to give cash. It’s another opportunity for the government to create more reform.
What kind of reform?
Creating more projects in different parts of Thailand. For example, we always have issues with drought and ﬂood – last year we had a drought, this year, we may ﬂood again. We’ll need more infrastructure projects in Thai villages, which will provide villagers an income instead of just cash handouts, and will solve issues like Thailand’s water management at the same time. We’re not going to have 40 million tourists like we were predicted to have this year, and we don’t know how long it’ll take us to get back to that number again – maybe the next three years. One way to help income distribution is for the government to increase domestic tourism like they’re doing, but another is to ask people in tourist hotspots to ﬁnd other jobs to increase their production, and for the government to increase the marketing of these products.
In your professional opinion, how long will the global ﬁnancial crisis last?
At least two or three years. We are in a recession now that’s worse than the 2008 ﬁnancial crisis; for Thailand it’s worse than the 1998 crisis. Economists always talk about the shape of recovery – whether it’s a U-shape, an L-shape or a V-shape. Some say we’re in a U-shape, where after a recession it’ll take a while to recover, and we’re in the bottom of that U now. We saw this in the 1998 crisis when we had to reform the banking and real estate sectors and had to allow the baht to depreciate against the U.S. dollar.
However, this time around, it might not be the same. I’ve always thought a bit different from others, and I’ve come up with a reverse-J shape – basically, when we recover, the economy might not go back to the same level before its fall. Why is that? Because while we’re encouraging domestic tourism and increasing the demand for local production, our trading partners, such as China, are doing the same. That’s going to hurt our producers and our tourism sector.
What is your outlook for GDP growth in 2020 and 2021, in both Thailand and the ASEAN region?
We know that Thailand’s been hit the hardest in the region, with a forecast of -8.9 percent GDP growth this year. It could be lower than the 1998 crisis, which had GDP growth at around -7.5 percent.
Next year, we could recover at the lowest pace in the region. The IMF forecast for the region – Malaysia, etc. – have gone down to -2 or -3 percent this year, but next year they could rebound to 8 or 9 percent. Thailand could rebound to only 3 to 5 percent, which is not close to compensating for the loss this year.
The stock market has faced a lot of volatility this year. Based on your research, which sectors in the Stock Exchange of Thailand remain attractive, and which ones should be avoided this year?
It’s all about the price. The middle class still has a lot of purchasing power. Saving in the ﬁnancial sector has actually increased during this period because while income has dropped, consumption has dropped even further. Where are people going with their savings? Not to the banks, as the interest rate is currently very low, and that will last for a while. People are moving money into the stock market.
At a certain price, even sectors whose prices have dropped will be attractive, especially with higher dividend pay. The hospitality and automobile sector, any tourism-related sector, will take a while to recover, so those are best to avoid. However, retail businesses, consumer markets, even hospitals, are worth investing in.
Over the years, what accomplishment are you most proud of?
I received the Rising Star Economist Award from the Thammasat Economics Association in 2016, and it was nice to be appreciated for what I did, even within a small bank in Thailand. It shows that we could successfully communicate our economic knowledge to general audiences.
What’s a challenge that you’ve had to face and overcome recently?
I’m a strong believer in change. For example, in the past, our research papers were very dense and I knew this needed to change. People won’t read a 10-page report – these days people barely even read as they’re all on their smartphones. In my ﬁrst year here, I asked my staff to publish reports limited to a single page, which I did too. It’s a lot harder to write brieﬂ y as you must think hard about what you want to communicate. But it’s been a lot more effective.
I’ve also encouraged our team to put our research into everyone’s smartphones, through videos on YouTube and Facebook, or even through podcasts. We came up with this idea of ‘research in three minutes’ where you can get caught up with the market research that day if you have three minutes to spare.
What helps you cope with such a demanding career?
Exercise! I’m a morning person, so I usually wake up at 5am, go for a run, then come back and prepare for work. It’s quite refreshing, and it helps me sleep well at night, despite all the stresses during the day.
Where do you see yourself in the future?
Still as an economist, but I want to explore more avenues in the way I do things; in the ways I communicate and the areas I research. I also want to extend my economic knowledge, especially on the different ways businesses have
adjusted during the COVID-19 pandemic. I don’t want to just see the crisis, but how we can learn from it, and through that, transfer my knowledge to others.