Thai Retailers Sound Alarm as Confidence Plummets

 

Thai retailers are ringing alarm bells after a key confidence index plunged to its lowest level in over three-and-a-half years. 

 

The Thai Retailers Association (TRA) revealed today that its Retail Sentiment Index (RSI) for June 2025 has hit a "new all-time low in 42 months," signalling a deeply worrying trend in domestic purchasing power and nationwide consumer spending. 

 

Businesses and investors are reportedly holding back, awaiting clear and concrete policy direction from the government.

 

The retail sector has faced immense pressure in the first half of the year. Domestic political uncertainty, persistent sluggish consumption, and a slowdown in investment across all business sizes have taken their toll. 

 

 

 

External factors aren't helping either. 

The recovery of international tourism, particularly from the crucial Chinese market, remains incomplete. 

 

Added to this are unpredictable US import tariffs and ongoing conflicts in the Middle East, along with the situation on the Thai-Cambodian border, all directly impacting consumer confidence and the wider economy.

 

 

Spending Slump: A Critical Warning

The sharp drop in the June RSI directly reflects a significant decline in both spending per receipt and shopping frequency across all regions of Thailand. 

 

The TRA anticipates this downward trend will continue into the third quarter of the year unless tangible and timely economic stimulus measures are effectively rolled out.

 

While the formation of a new cabinet offers a glimmer of hope, many investors and entrepreneurs are opting to delay new ventures. 

 

They are eager for clearer, proactive economic policies that can genuinely revitalise the long-stagnant economy.

 

 

 

Two-Pronged Strategy for Recovery

In response to these challenges, the TRA has proposed two urgent strategies, focusing on boosting domestic purchasing power and creating new appeal for the tourism sector. Their goal is to inject new life into the economy during the second half of the year.

 

1. Targeted Financial Boost and Investment Distribution:
The association believes that a well-targeted injection of funds into the economic system could significantly reverse the stagnation of the first half. 

They specifically point to the first economic stimulus package of 115 billion baht (part of a larger 157 billion baht framework), which should be used to invigorate local economies, promote tourism, and upgrade infrastructure, with careful distribution across all regions.

Furthermore, the government should swiftly allocate the remaining 40-50 billion baht to boost grassroots purchasing power, particularly among workers and SMEs. 

This group represents over 90% of all businesses and accounts for 50-70% of national employment. Providing low-interest loans or supporting local economic activities could directly boost incomes and restore consumer confidence.

A key proposal is to fast-track "Easy e-Receipt Phase 2," or the "Shop Dee Mee Khuen" (Shop and Get a Refund) scheme, from September to December. This aims to capitalise on the high season and year-end holidays. 

The TRA suggests simplifying participation, for instance, by including OTOP (local products) and eco-friendly goods within a 100,000 baht spending limit. This could generate over 100 billion baht in circulation, up from a previous 70 billion baht.

 

The TRA also urges accelerated disbursement of the 2025 budget before the fiscal year ends on 30th September, ensuring swift money flow into the economy. They also recommend timely preparation of the 2026 budget draft to prevent policy disruptions.

 

 

 

2. Attracting Quality Tourists via “Thailand Shopping Paradise”:

To stimulate tourism, the TRA proposes the "Thailand Shopping Paradise" campaign, designed to attract high-spending international visitors with additional incentives:

• Instant VAT Refund Pilot: Trial a 7% immediate VAT refund for tourists with a minimum purchase of 3,000 baht, starting in key Bangkok shopping areas, to effectively boost spending.

 

• Reduced Import Tax: Lower import taxes (currently 20-30%) on fashion and beauty products (clothing, perfumes, cosmetics) to compete with neighbouring countries and curb grey market purchases.

 

• Free Tax Zones: Establish duty-free zones in popular tourist provinces like Phuket to further incentivise spending and encourage repeat visits long-term.

 

• Nationwide Sales Events: Organise major discount festivals across the country, similar to Singapore's "Great Singapore Sale," fostering collaboration between department stores, restaurants, hotels, and small businesses to create a nationwide shopping buzz.

 

• Extended Russian Visas: Extend visas for Russian tourists from 30 to 45 days after the current scheme expires, as this group has high spending potential and tends to stay longer.

 

 

 

Sustainable Practices and Fair Trade

Beyond economic measures, the TRA is also committed to sustainable development. They are advancing the "Hug The Earth" project with network members, promoting eco-friendly consumption by dedicating sales areas for over 20,000 eco-labelled products nationwide.

 

The association reiterated the critical need to crack down on "nominee" businesses – where foreigners illegally operate in sectors like restaurants, hotels, and supermarkets under Thai names – and to control "cheap, substandard imported goods" that distort market fairness. 

 

They acknowledge the government's current efforts but stress the importance of consistent and rigorous enforcement.

 

Ultimately, the TRA insists that these proposed measures will only bear fruit through strong collaboration between the public and private sectors. 

 

All stakeholders must play a role in shaping appropriate policies and implementing proactive strategies vigorously and continuously, to build a robust Thai economy from the ground up and ensure long-term sustainable growth.