Reordering The Landscape
Technology, transport, property, legislation and finance are only the beginning when considering the facets of Bangkok that will be entirely transformed in a mere two years. By Post reporters
SCB has invested in fintech startups to offer financial products and services.
The year 2020 will see a confluence of transformations for Bangkok. From its roots as a small trading post to a modern capital full of business opportunities, culture and vices, the face of Bangkok will be altered again over the next two years, hopefully for the better.
While some academics view Bangkok’s urban development as a distorted doughnut, with a jelly centre packed with commercial buildings and the businesses that inhabit them, this imbalance could come to an end if technology and infrastructure are adopted in a meaningful, inclusive manner.
Rapid innovation is chipping away at monopolistic barriers in a variety of spheres. The technical barriers that once prevented non-bank firms from encroaching on the boundaries of the banking business are being ripped away, resulting in a seismic shift in the industry’s landscape.
As digital disruption permeates the financial sector, bank branches and the ATM network will certainly look a lot different in 2020.
Predee Daochai, chairman of the Thai Bankers’ Association, said commercial banks’ physical platform, particularly brick-and-mortar branches and ATMs, will be downsized further in the coming years as more and more fund transfers and payment transactions are migrated to digital channels.
A net 327 traditional branches were shuttered over the past two and a half years. The number of bank branches nationwide fell to 6,734 at the end of June from 6,784 at year-end 2017 and 7,016 in 2016.
The national e-payment scheme has been a key catalyst for growing digital transactions, particularly the implementation of PromptPay in January 2017. The Bank of Thailand reported that PromptPay has 43.6 million registrants, with a cumulative 450 million transactions valued at 2.2 trillion baht.
In essence, changes in the banking industry have been moving steadily from offline to online services as digitisation has become the rule of thumb, Mr Predee said.
But it’s not easy to forecast changes occurring in the industry over the next two years, as the impacts of technology adoption and changes in consumer lifestyle are unpredictable, he said.
For instance, the banking industry has been adopting blockchain technology, which covers several business areas. But it can’t be said with any precision which businesses will see success or receive positive responses from customers, as innovations need to be tested and market awareness has to be built, Mr Predee said.
Within two years, QR code payment will be available pretty well everywhere. And you will hardly ever go to the actual premises of a bank, as you handle all your finance online. (File photo by Pornprom Satrabhaya)
Siam Commercial Bank (SCB) is ahead of the local banking industry’s curve in implementing digital systems. The bank has invested in fintech startups to offer financial products and services that serve customer demand and adopted a 2018 business strategy, “Going Upside Down”, to focus on five areas: trimming the bank’s size, high lending margins, digital acquisitions, data capabilities and embarking on a new business model.
SCB has been adopting data analytics in preparation for high-yield loan offerings, particularly unsecured and small enterprise lending, while last year Kasikornbank began using big data analytics and artificial intelligence when assessing loan applications made by small and medium-sized enterprises (SMEs).
For Airports of Thailand Plc (AoT), 2020 could be a remarkable year with the conclusion of investments in airport expansion to accommodate growing passengers from around the world.
As the operator of six major airports across Thailand, AoT is carrying out numerous development projects, including the expansion of phase two of Phuket airport, which is set to add a new passenger terminal building to increase passenger capacity to 30 million passengers from today’s 16.23 million. The new terminal will be ready for service some time in 2020.
In the same year, the new concourse under Suvarnabhumi airport’s phase-two expansion plan will be completed. The expansion is aimed at increasing passenger capacity to 60 million a year.
The year 2020 could be an extraordinary time for any company that wins a concession to manage dutyfree shops at these six airports; the existing contract, held by King Power International Group exclusively, is due to end that year.
The bidding process to search for a concession winner or winners to operate duty-free shops inside AoT’s vast compounds is scheduled for the end of this year, with the public closely watching whether there will be any “new kids on the block” during the bidding process.
If new faces don’t appear or fail to compete with a proper bidding price, it’s likely that King Power will continue its duty-free dominance at Thailand’s airports.
The completion of four mass transit lines developed by Metropolitan Rapid Transit, Bangkok Mass Transit System and the State Railway of Thailand is also slated for 2020. These include the Blue Line extension (Bang Sue-Tha Phra); the Light Red Line (Bang Sue-Taling Chan); the Dark Red Line (Bang Sue-Rangsit); and the Light Green Line extension (from Mor Chit to Khu Khot in Pathum Thani and from Samrong into Samut Prakan).
Bang Sue, Riverside, Rama IV and Sathon areas will drastically redraw the Bangkok skyline in 2020 as new property developments and infrastructure projects alter the capital’s glitzy real estate market, according to property developers and consultants.
Prasert Taedullayasatit, chief executive for premium business at property developer Pruksa Real Estate Plc, said Bang Sue Grand Station will impact Bangkok’s mass transit structure in the same manner as King’s Cross station in London.
“Bang Sue Grand Station will be a massive change to Bangkok’s landscape, as it will be connect all major transport networks and be home to many new property projects surrounding the station,” Mr Prasert said.
Aliwassa Pathnadabutr, managing director of property consultant CBRE Thailand, said there will be three key locations that will change Bangkok’s layout by 2020.
One is the riverside area, which is being revived by many property projects, all in the luxury segment.
They are all on Charoen Nakhon Road in the Khlong San area.
Near them is Iconsiam, an upscale shopping complex on a 50-rai plot with an investment of 50 billion baht, the first phase of which will open commercially this year.
The project is a joint investment by Siam Piwat, the operator of Siam Paragon; top agribusiness conglomerate Charoen Pokphand Group; and Magnolia Quality Development Corporation, a residential developer owned by the Chearavanont family.
“On the other side of the river the Four Seasons Private Residences Bangkok on Charoen Krung Road will be built, which will be another step in the transformation of the riverside from an old warehouse and dock area to a prime hotel, retail and residential location,” Ms Aliwassa said.
Rama IV Road is also poised to see many new property developments completed over the next few years.
Among them is The Parq, a mixed-use development near Klong Toey intersection, with an investment of 20 billion baht and developed by TCC Assets and Frasers Property Holdings Thailand, both owned by the Sirivadhanabhakdi family.
In Sam Yan area, there is Samyan Mitrtown, a mixed-use project developed by SET-listed Golden Land Property Development Plc, owned by Panot Sirivadhanabhakdi, the youngest son of the family.
The family is also developing One Bangkok, the largest-ever property project with an investment of 120 billion baht, at the intersection of Rama IV and Wireless roads.
There will also be a redevelopment of the Dusit Thani hotel on Rama IV and Silom roads, which will fill in another gap in Bangkok’s central business district, making the CBD a far more clearly defined, densely built-up and populated area with a mixture of uses, Ms Aliwassa said.
More land will be acquired on Silom, especially where older buildings are located. More old buildings will be demolished.
“This is what we know will happen by 2020, along with completion of the Blue and Green Line extensions and Light and Dark Red mass transit lines, providing greater connectivity for Bangkok’s city centre to midtown and suburban locations,” Ms Aliwassa said.
In 2020, Thai motorists’ habits will change completely as the government’s automotive policy takes another step towards newgeneration vehicles.
In the past six decades, the country has never stopped strengthening automotive competitiveness. Thailand ranked ninth among the world’s top car-producing countries in 2012 and 2013, and by 2017 was in 12th place.
The government’s electric vehicle (EV) scheme, launched in March 2017, marked a new era for the industry, with a bid to maintain position as a leading auto producer in Southeast Asia and globally, and high expectations that each EV car and parts manufacturer would hasten to complete their projects before 2020.
Moreover, the scheme is aimed at upgrading and developing the local industry’s manufacturing and labour standards. The automotive sector employs more than 800,000 people, with the industry’s value expected to reach 1 trillion baht this year.
The EV scheme is set to support three EV types – hybrid, plug-in hybrid and battery – as well as promote support industries such as electric motors and batteries, which are vital EV parts. As a result of the scheme, the local EV population is expected to expand further from 2020 onwards.
The government expects 1.2 million EVs to be on the road after the scheme is completed in 2036. In 2017, the country had 102,500 EVs being driven.
Some Japanese and German carmakers began to localise their hybrid EVs in 2010.
Japan’s Toyota was the first manufacturer to apply for the scheme and started production for hybrid EVs despite doubts about whether the new hybrid models would be a fruitful endeavour for the company.
Last year, hybrid EVs represented just 1% of the total car market.
Once Toyota added the CH-R to the EV scheme in March, the hybrid platform received a warm response from Thai buyers, the carmaker said.
“Roughly 70-80% of CH-R sales are of the hybrid version, while the remainder is for conventional cars,” said Vudhigorn Suriyachantananont, Toyota Motor Thailand’s executive vice-president.
Nonetheless, another Japanese player, Honda, has greater confidence about manufacturing more hybrid cars in the country after being granted promotional privileges, with the expectation that buyers will enjoy attractive retail prices from reduced auto excise tax.
“Honda expects gradual penetration of hybrid versions to account for 50% of local sales over the next few years,” said Pitak Pruittisarikorn, chief operating officer of Honda Automobile Thailand. Sales of Honda’s hybrid Accord sedan represent 20-25% of all Accord sales.
BMW is one of the existing plug-in hybrid EVs (PHEVs) in Thailand, and the German carmaker also won EV promotional privileges for this type.
Christian Wiedmann, president of BMW Group Thailand, said local buyers are interested PHEVs. The group has set a target for PHEVs to account for 20% of total sales in 2018, up from 13% last year.
On a global scale, BMW aims to have 25 new car models within the PHEV and EV battery platforms by 2025.
Global innovative technological adoptions are reaching a critical point, and Thailand is not exempt from the push.
The development of 5G wireless broadband service is poised to be in place by 2020.
You’re going to need a new phone. The 5G speeds that are coming will blow your mind.
Preparations for 5G technology adoption and use-case development have been monitored for years, with this groundbreaking technology anticipated to be a major catalyst driving change across larger infrastructure, inevitably percolating into people’s daily lives.
With data speeds of up to 100 times faster than the current 4G, 5G will create new opportunities for use cases in Internet of Things (IoT), augmented reality and virtual reality applications, smart vehicles, remote healthcare, and robotics.
In terms of the overall economy, 5G will create added value for vertical industries by transforming traditional agriculture, health, manufacturing, automotive, and city and utility metering (water and gas), all of which will be embedded with smart technology.
Globally, major 5G deployments will start in 2020. North America is expected to lead the 5G uptake, with all major US operators planning to roll out 5G between late 2018 and mid-2019.
By the end of 2023, close to 50% of all mobile subscriptions in North America are forecast to be for 5G, followed by Northeast Asia at 34% and Western Europe at 21%, according to the Ericsson Mobility Report.
For Thailand, 5G is part of the national agenda, with the government working to transform the domestic economy from industry-driven into innovation-driven while creating value for vertical industries, in line with the much-touted Thailand 4.0 policy.
The government mustn’t miss the 5G train, as 5G and IoT are fundamental to realising the “Digital Thailand” vision.
Some global vendors believe that 5G ecosystem adoption in Thailand will begin between 2020 and 2022, under which enhanced mobile broadband will be the first use case, followed by new evolved IoT.
The government is accelerating 5G development by establishing test bases for 5G wireless broadband technology at the Digital Park in Chon Buri province this year.
The 5G panel is also considering which spectrum ranges are best suited for 5G development in the country, particularly two spectrum ranges, 3.3-4.2 gigahertz and 24-29 GHz, in compliance with the 5G spectrum standard of the International Telecommunication Union.
According to the latest report of the National Broadcasting and Telecommunications Commission, Thailand could face 2.3 trillion baht in lost opportunities, or 20% of the country’s GDP, if adoption of 5G isn’t prevalent by 2030.
The International Financial Reporting Standard 9 (IFRS 9) has been making waves across the financial realm, especially for SMEs. The magnitude of the impact has seen Thailand postpone full IFRS 9 adoption to 2020 in an attempt to better prepare SMEs for the tougher accounting standard.
Many large corporations, SET-listed companies and financial institutions are ready for early adoption of IFRS 9.
It’s a different story for SMEs, however, as the accounting standard could significantly affect their business operations, said a financial source who requested anonymity.
“We have been working hard to prepare for IFRS 9 over the past two years, hiring consulting companies who are experts in accounting and IT along with developing our own programme to deal with the new standard,” the source said. “Banks like us have been making these great efforts [for IFRS 9 adoption]. What about SMEs? How will this turn out for them?”
Many companies don’t favour the new accounting standard, since it’s based on the concept of a fair value price, which can be measured by many methods, all of which require financial models such as discounted cash flow and net present value for calculation.
“Companies’ accountants must not only have accounting knowledge, but also in-depth financial modelling knowledge to prepare for the fair value of assets when they make financial statements,” the source said.
The more complex calculation method could compel banks to become stricter when considering SME loan applications to avoid increases in expected loan losses, which are calculated under the IFRS 9 framework.
Bang Sue Grand Station will be a massive change to Bangkok’s landscape, as it will be connect all major transport networks and be home to many new property projects surrounding the station.
Source: Bangkok Post – 13 August 2018