Transcript of the above:

As the title of this video suggests, we are discussing a Sophie's Choice for Thailand. For those who are unaware, Sophie's Choice is a choice where you are stuck between - it is from a movie by the same name, same title - where you are stuck in a situation where you have to make a choice between two really bad situations or two good situations and making the choice really it is not great for you for lack of a better term. It rebounds on you in the negative if you will, just the act of choosing.

The reason I bring this up is prior to Quarter 1 of 2020, end Quarter one of 2020 so prior to March 2020 when we saw the response, the Emergency Decree promulgated in response to COVID-19 and all the restrictions we have been having to deal with since then, tourism really has taken a huge hit, massive and we have gone through all that, I am not going to get into all that. I don't think what a lot of expats especially really get because expats, we can get into our own frame, our own bubble if you will and we fail to see the bigger picture as they say, the picture from 60,000 ft. We are right here on the ground and we see our own world. Thailand has always had this weird dilemma. To quote Stonewall Jackson, the Horns of a Dilemma. The country has had this balancing act especially roughly the last 20 years. There is an author named James Rickards, Jim Rickards who has written some books called Currency Wars, in one of them he talks about how Thailand is one of the most interesting examples of the way the economy, the global economy has moved, has shifted insofar as back in 1997, they were doing everything in their power to go ahead and get foreign exchange into the country in order to keep the Baht strengthened enough so that it didn't have essentially a currency collapse on the international markets. The Thai Government and powers to be here in the business community in Thailand in general pulled together and managed to keep that from happening. Meanwhile, if you cut to from about 2007 onwards, it started shifting and it culminated right around 2018, 2019 with Thailand actually wanting to try and weaken down the currency. We saw this a lot; this was a real problem. Then obviously we got into 2020 after Quarter 1 we saw we saw the Emergency Decree promulgated and then this collapsed the tourism sector which has resulted in, depending on what you read, I have seen 17% seems to be kind of a consensus number of GDP lost as a result of tourism being lost in Thailand. 

Long story short, and what I am trying to get at here is Thailand has always had to balance of lot of different things. One thing that I don't think folks understand that the country has to balance, or has had to balance up until COVID and even now to some extent, is this dichotomy between the tourism economy and the manufacturing economy. The manufacturing economy brings in foreign exchange in exchange for goods they exported out of the country. The tourism economy brings in foreign exchange in exchange for folks coming here to tour the country. They are both very different sectors but they have this one thing in common in that they bring in foreign exchange. This then has an impact on the value of the Thai baht, the value of the currency relative to other currencies and when the Thai Baht gets strong, it actually negatively impacts both sectors. What is interesting is this kind of back and forth that I have seen roughly the past 4 years, just my observation I am not any great economic whizz or anything, just what I have observed, the Bank of Thailand and the various folks in the Finance Ministry and things, it has been a tough tightrope to walk. They want to maintain the manufacturing sector, at the same time they want to maintain their competitive edge with respect to tourism and keep, I hesitate to say and keep the cost of travel to Thailand cheap, but keep it reasonably priced, or relatively reasonably priced and it leads to this odd Sophie's Choice. In a sense, COVID made the choice and I am not trying to be funny, COVID kind of made the choice for the country in a sense that tourism was effectively mothballed. It just froze in place and ceased to exist. Hopefully that will end sooner rather than later and we will start seeing some turnaround in the tourism sector. As we have noted in other videos, the Tourism Council of Thailand has quoted the number between 2 and 3 million people just immediately put out of work by these problems in the Tourism Industry; more a topic for other videos. For here, I have constantly seen reports in the last few months, the manufacturing sector is doing very well or at least I think there was an article in the Bangkok Post that was a bright spot in the overall economy. Well yeah because, not because, there are multiple reasons why things happen but I definitely think the currency situation factors into that. The Baht has weakened rather substantially over the course of this past year because this tourism sector just isn't there drawing in that foreign exchange; drawing in that demand. There is just not that demand for that sector.

So long story short, Thailand in my opinion especially the last 6-8 years has really had to balance these two things. In a sense COVID allowed the manufacturing sector to go ahead and not have to really worry about that whole tourism sector at least temporarily. Now where exactly this moves forward remains to be seen. I will try to do some videos hopefully on a little more analysis on this as the situation evolves.