The Phuket Periodical - 0119 - 01.06.2025
The 'Wheels are falling off' Issue
Sawadee Khrub Dear Reader,
Thailand and Phuket navigated a week of stark contrasts, as the heavens opened with a ferocious early monsoon, even as economic storm clouds gathered with greater intensity. While communities across the nation, particularly in the south, braced for or battled against widespread flooding, the government’s economic planners in Bangkok were confronted with sharply downgraded growth forecasts that painted a grim picture for 2025. This bleak outlook stood in jarring juxtaposition to the more optimistic projections underpinning the newly tabled 2026 fiscal budget. Amidst these overarching concerns, significant regulatory shifts impacting daily life – from road safety to banking for foreigners and air passenger rights – came into force or were hotly debated.5 Political undercurrents, never far from the surface, also made their presence felt, with familiar figures and persistent rumours of power plays adding another layer of complexity to a week defined by the challenging interplay of natural forces, economic anxieties, and political manoeuvres.
... On with the news.
Monsoon Unleashes Widespread Disruption Across Thailand and Phuket
The week commenced under an ominous sky as Thailand’s Meteorological Department issued stark warnings from Sunday, 25 May, heralding the arrival of an intensified southwest monsoon. The populace nationwide was urged to prepare for heavy to very heavy rainfall, the consequent threat of flash floods, and substantial runoff, particularly in vulnerable low-lying areas and foothills adjacent to waterways.Meteorologists attributed the severe conditions to a strengthened monsoon trough sweeping across upper Thailand and the upper southern region, compounding the effects of the active southwest monsoon over the Andaman Sea and the Gulf of Thailand. The impact was anticipated to be widespread, with the North, Northeast, Central, and Eastern regions, alongside the critical western coast of the South, all flagged for significant weather events.
Phuket, the southern tourist jewel, found itself directly in the path of the deluge. Warnings for the island projected 70-80% thunderstorm coverage accompanied by heavy to very heavy rainfall, especially concentrated between 25 and 26 May. By Monday, 26 May, the Department of Disaster Prevention and Mitigation had placed all districts of Phuket under a flash flood warning. The tangible effects of the downpour were vividly illustrated on Sunday, 25 May, when muddy water from the reservoir of the Red Mountain Golf Club in Kathu district breached its confines and inundated a local road. The severe weather immediately impacted travel and maritime activities; advisories strongly recommended opting for ferry services over speedboats for inter-island travel around Phuket due to the high risk of last-minute cancellations and significant delays for smaller vessels. Echoing this caution, authorities advised small boats operating in the upper Andaman Sea to remain ashore until at least 27 May. Sea conditions were turbulent, with wave heights in the upper Andaman, northwards from Phuket, predicted to reach up to 2 metres, and even higher in storm-affected zones.
The deluge was not confined to Phuket. Even before the main warning period, reports on 24 May indicated that heavy rainfall had already impacted over 600 individuals across three provinces, causing damage to 124 homes and at least one road. While a general improvement in conditions was forecast nationally for the period of 28 to 31 May, the threat of flash floods was expected to persist in areas that continued to receive heavy rainfall, with the North and Northeast remaining particularly vulnerable. The broad-ranging impact of the monsoon was further underscored by advice issued to farmers to enhance drainage systems to protect crops and livestock, and repeated warnings about the potential for landslides in hilly and water-logged terrains.
The intensity and early arrival of this year's monsoon activity resonate with a growing public disquiet regarding shifting weather patterns, a sentiment captured in online discussions where comments such as "Every year the same story. Heavy rains and floods!" and "Climate change is the real culprit here" were noted. Such perceptions, whether scientifically validated in this specific instance or not, reflect an increasing awareness of environmental instability. These severe weather events carry immediate economic consequences, crippling local tourism-dependent businesses like boat operators in Phuket and threatening agricultural yields. In the longer term, they raise profound questions about Thailand's infrastructure resilience and its disaster preparedness strategies in an era of climatic uncertainty. The repeated official warnings for "low-lying areas and foothills near waterways" and areas with "accumulated rainfall" point to known, persistent vulnerabilities within the country's geography. Incidents such as the overflow at the Kathu golf course reservoir, despite timely warnings, suggest that while alerts are disseminated, the existing physical infrastructure or community preparedness in these vulnerable zones may be increasingly insufficient to cope with the scale of rainfall now being experienced. This situation could fuel calls for more substantial, long-term investments in flood defence mechanisms and more sophisticated early warning systems. Beyond the immediate damage and disruption, the persistent threat of severe flooding, especially in key international tourist destinations like Phuket, has the potential to erode visitor confidence and escalate insurance costs for businesses, creating ripple effects throughout the economy. The direct impact on livelihoods in coastal communities, exemplified by the directive for small boats to remain ashore , highlights the human cost of these increasingly formidable natural events.
Economic Storm Clouds Gather as Growth Forecasts Tumble Amid Budget Debate
A chill wind blew through Thailand's economic corridors this week as the National Economic and Social Development Council (NESDC), the state's primary planning agency, delivered a sobering assessment of the country's fiscal health. The NESDC significantly downgraded its 2025 gross domestic product (GDP) growth forecast to a median of just 1.8%, with a potential range of 1.3% to 2.3%. This represents a stark full percentage point reduction from its previous projection of 2.8% and brings the agency's outlook more in line with the cautious stances of international bodies such as the International Monetary Fund (IMF), which also revised its forecast to 1.8%, and the World Bank, which anticipates growth of only 1.6%. Local analysts, Krungsri Research, presented scenarios contingent on US trade policy, predicting 2.0-2.2% growth if current tariffs persist, but a more alarming 1.3-1.6% should Washington impose high reciprocal tariffs.15 Offering a slightly less pessimistic view, the Thai Chamber of Commerce (TCC) projected a growth range of 2.4-2.9% , while its academic arm, the University of the Thai Chamber of Commerce (UTCC), foresaw growth hovering around the 2% mark.
The primary catalyst for this widespread pessimism is the "disappointing tourism performance" observed since February 2025, which saw an unexpected and sharp contraction in international arrivals – a sector previously hailed as the economy's saviour. In a starkly worded opinion piece, economic commentator Chartchai Parasuk declared, "Thailand has lost its last engine of growth". Compounding this domestic woe are escalating fears surrounding global trade tensions, particularly the looming impact of potential US tariffs , persistently high levels of household and corporate debt , and the shadow of a broader global economic slowdown. While the Bank of Thailand reported some improvement in April's economic figures, driven by manufacturing and investment, it conceded that tourism remained contracted year-on-year.
Against this turbulent economic backdrop, Prime Minister Paetongtarn Shinawatra took to parliament on Wednesday, 28 May, to propose a 3.78 trillion THB budget for the 2026 fiscal year. The budget, which underwent parliamentary debate concluding on 31 May, projects a 0.7% increase in government spending and is explicitly aimed, in the Prime Minister's words, to "revive and drive the economy toward sustainable growth". Critically, however, this budget plan appears to be predicated on significantly more optimistic GDP growth forecasts of 2.3% to 3.3% for both 2025 and 2026.
The human and fiscal cost of the downgraded growth is substantial. The seemingly modest 1% cut in the GDP growth outlook (from 2.8% to 1.8%) translates into a staggering loss of 186 billion baht in national economic value. This is anticipated to trigger a minimum government revenue shortfall of 50 billion baht for the 2025 fiscal year, a budget originally drafted on the assumption of 3.3% GDP growth. The chill in tourist spending has already seen private consumption growth plummet from 2.5% in 2024 to a mere 1.5% in the first quarter of 2025, raising the spectre of a technical recession. Further evidence of economic strain comes from the Federation of Thai Industries (FTI), which reported a decline in vehicle production and domestic sales in Q1 2025, attributing this to stricter loan approval criteria from financial institutions and the generally sluggish economic climate, with vehicle exports also contracting.
The divergence between the pessimistic projections issued by economic agencies and the more sanguine assumptions underpinning the 2026 budget is striking. This raises pressing questions about the budget's fundamental realism and the potential for substantial revenue shortfalls, which could, in turn, impact the government's capacity to deliver on its spending promises and its overall economic credibility. The Prime Minister's budget presentation, based on growth figures significantly higher than those now publicly forecast by her own government's principal planning agency, the NESDC , suggests either a considerable lag in the budget preparation cycle – indeed, it was noted that the 2025 fiscal year budget was drafted based on older, more optimistic figures – or a deliberate political choice to project confidence despite clear warning signals. Should the lower GDP growth scenarios materialise, the budget's projected 0.7% drop in the deficit to 4.3% of GDP would become exceedingly difficult to achieve without resorting to significant spending cuts or increased borrowing, potentially undermining the Prime Minister’s stated objective to "revive and drive the economy".
Furthermore, the downturn in tourism appears to be more than a temporary blip. Reports citing "behavioural changes among Chinese tourists and a loss of tourism competitiveness" point towards deeper, structural challenges that require more than short-term promotional campaigns. While initiatives like the "Sawasdee Nihao" event to attract Chinese travel agents are understandable reactive measures, they may not address the underlying competitiveness issues. A comprehensive understanding of why key markets, such as Chinese tourists, are exhibiting "behavioural changes" is crucial. This may necessitate a diversification of tourism offerings, concerted efforts to improve safety perceptions , or tackling concerns about overtourism that could be deterring potential visitors. The economy's heavy reliance on tourism as its "last growth engine" makes these structural vulnerabilities particularly acute.
The consistent emphasis across multiple economic reports on US trade tariffs as a major risk also starkly underscores Thailand's economic susceptibility to external geopolitical and trade policy fluctuations. The FTI's observation that vehicle export targets are contingent on tariff negotiations , and Krungsri Research's explicit linking of growth scenarios to tariff levels, vividly illustrate this dependency. Thailand's export-oriented economy is clearly exposed. The threat of US tariffs is not an abstract concern; it is already compelling businesses to "front-load shipments" and fostering an atmosphere of uncertainty that inevitably dampens investment This highlights an urgent need for proactive market diversification and a strengthening of domestic demand, which currently remains weak. The potential influx of Chinese goods due to trade diversion adds a further layer of complexity, posing a threat to local manufacturers.
Navigating New Rules: Helmet Law, Bank Policies, and Air Passenger Rights Shift Landscape
A raft of new regulations and stricter enforcement policies came to the fore this week, set to significantly alter the daily landscape for residents and travellers in Thailand, touching upon road safety, banking practices for foreign nationals, and air passenger rights.
Firstly, authorities confirmed the launch of a new nationwide "Safe Roads Project" effective from 1 June. This initiative will see intensified enforcement of helmet-wearing for both motorcyclists and their passengers. In a bid to drive compliance, fines for failing to wear a helmet have been quadrupled, now reaching up to 2,000 baht. Police efforts will particularly target high-risk areas, with a focus on roads near schools and educational institutions. The new stringency has prompted questions from foreign residents, notably concerning the law's application to motorcycles fitted with sidecars, commonly known as salengs. Current legislation, however, makes no explicit distinction for such vehicles, implying they fall under the same requirements. The success of this law, aimed at improving Thailand's troubling road safety record , will inevitably hinge on consistent, widespread enforcement and genuine public buy-in. The saleng query highlights potential ambiguities and areas where cultural practice may meet regulatory friction. While the significantly increased fine serves as a strong deterrent, it could also be perceived as overly punitive if not accompanied by public education campaigns and measures to ensure access to affordable, quality helmets, a concern echoed in some public commentary.
Secondly, Bangkok Bank, the country's largest by assets, confirmed it has adopted stricter requirements for foreign customers seeking to open new accounts. The bank cited ongoing national efforts to combat financial fraud and bolster cybersecurity as the rationale behind the move. Under the new policy, tourists are generally no longer eligible to open accounts unless they possess long-term visas (such as retirement or non-immigrant visas), are married to Thai nationals, or own property in Thailand. These changes also extend to accessing credit card services and mobile banking facilities for individuals who do not meet the updated eligibility criteria. Worryingly for some, reports have begun to surface of existing foreign account holders, with Russian nationals specifically mentioned, experiencing frozen accounts or blocked bank cards. This tightening of financial regulations reflects a broader global trend. However, for a nation as heavily reliant on tourism and foreign investment as Thailand, such measures, while addressing legitimate security concerns, risk creating significant barriers and frustrations for bona fide expatriates and visitors. This could inadvertently tarnish Thailand's image as a welcoming destination and potentially conflict with initiatives aimed at attracting long-term residents or digital nomads. If other financial institutions follow Bangkok Bank's lead, as hinted , it could complicate basic financial integration for new arrivals and those on certain visa categories.
Thirdly, a significant legislative update, Regulation No. 101, concerning flight delay and cancellation compensation, as reported last week, came into effect on 20 May. Announced by Transport Minister Suriya Juangroongruangkit, this new law is designed to substantially enhance passenger rights during air travel disruptions, bringing Thailand's aviation regulations more closely in line with international standards and aiming to rebuild trust in the nation's aviation system. The new provisions are a clear victory for consumers, offering greater transparency and recourse. This development is particularly timely, following the US Federal Aviation Administration's restoration of Thailand's top safety category rating , suggesting a concerted effort to improve the overall image and operational standards of the Thai aviation sector.
Phuket Focus: Justice in 'Beach Bully' Case, Dining Fest Kicks Off Amid Tourism Drive
Phuket found itself in the spotlight for several distinct reasons this week, ranging from a significant legal judgment to a new culinary festival, all set against the backdrop of ongoing efforts to rejuvenate its vital tourism sector.
A long-running and highly publicised legal saga reached a conclusion on Friday, 23 May, when the Court of Appeal, in a judgment read in absentia, sentenced Swiss national Urs "David" Fehr to one month in prison without suspension for the assault of Dr Thandao Chandam in February 2024. This ruling decisively overturned an earlier acquittal by the Phuket Provincial Court. The case, which involved Fehr kicking the doctor while she was seated on steps near his rented villa at Yamu Beach, had ignited widespread public debate concerning interactions between locals and some foreign residents, as well as the contentious issue of encroachment on public land. Dr Thandao expressed profound relief at the verdict, stating she felt justice had finally been restored. Fehr is widely believed to have already departed Thailand. The Appeal Court's decision is significant beyond the individuals involved, carrying weight for public perception regarding the application of justice and equality before the law, particularly in incidents that touch upon sensitive local-foreigner dynamics. The initial acquittal had reportedly caused considerable discouragement; the reversal, therefore, even in Fehr's absence, can be interpreted as an affirmation of Thai law and a step towards addressing local grievances – an important signal for social cohesion in a premier tourist destination that had been rocked by controversial statements allegedly made during the incident and the subsequent discovery of illegally built structures.
On a more festive note, the inaugural Phuket Dining Festival, a collaboration between Tatler Asia (Thailand) and the Tourism Authority of Thailand (TAT), commenced on 30 May and continued through 31 May. Themed "Green Gastronomy," the festival aimed to champion sustainable dining practices by prominently featuring locally sourced ingredients, while simultaneously seeking to elevate Phuket's status as a premier global culinary destination. A host of leading fine dining establishments across the island, including notable names such as Su Va Na, BaBa Lee, Royd, Samut, Jaras, and hom, participated by presenting exclusive menus designed to reflect sustainability and culinary innovation. The event also served as a platform to advocate for zero-waste restaurant practices, a growing concern within the hospitality industry.
These initiatives unfold within a complex tourism environment for the island. While Phuket recorded the highest tourism revenue among southern provinces in the early months of 2025, amassing 188.99 billion baht between January and April , it concurrently grapples with the increasingly pressing challenges of "overtourism." Local reports suggest that residents are feeling the strain as unchecked visitor numbers place a burden on the island's resources, cultural fabric, and safety. In an effort to bolster arrival numbers, particularly from a key market, the "Sawasdee Nihao" event was held from 29-31 May. This initiative brought approximately 500 Chinese travel agents and media representatives to Thailand, with tour routes including Phuket, aiming to revive the flagging Chinese market which had experienced a significant 32% year-on-year plunge.
The "Green Gastronomy" theme of the Phuket Dining Festival and the broader emphasis from the Public Relations Office on "sustainable tourism promotion" reflect a growing official narrative around sustainability. This, however, exists in tension with the on-the-ground realities of "overtourism" and strained resources that are increasingly voiced by Phuket's local population. There is an inherent challenge in reconciling the promotion of high-end, sustainable experiences like the Dining Festival with the drive for sheer volume that initiatives such as "Sawasdee Nihao" represent. Achieving genuine sustainability in Phuket will necessitate more than curated festivals; it demands robust infrastructure development, effective and equitable resource management, and policies that proactively address the adverse impacts of mass tourism.
Looking ahead, news also emerged that the Phuket Peranakan Festival 2025 is scheduled for 20-22 June. This event aims to achieve international carnival status, featuring extensive parade processions and an ambitious attempt to secure a Guinness World Record for its signature Hokkien noodle dish. Events like the Dining Festival and the upcoming Peranakan Festival signal a strategic effort to diversify Phuket's tourism appeal beyond its traditional sun-and-sand image, cultivating a reputation for rich cultural and culinary experiences. This could be a deliberate strategy to attract higher-spending, perhaps more discerning tourists, and thereby mitigate some of the negative externalities associated with mass tourism by offering more varied and higher-quality experiences.
Briefly Noted
Politics & Governance:
Thaksin's Enduring Influence: Former Prime Minister Thaksin Shinawatra made a prominent public appearance at an anti-narcotics event on 27 May. This move effectively quelled swirling rumours that he had fled Thailand, signalling his continued, albeit controversial, presence in the nation's political sphere. His appearance, occurring amidst ongoing legal scrutiny, reinforces perceptions of his significant influence over the Pheu Thai-led government. During the event, he also called on the government to adopt tough measures against transboundary drug trafficking.
Cabinet Reshuffle Murmurs Intensify: Speculation regarding an imminent cabinet reshuffle, possibly following the first reading of the 2026 budget, continues to gain traction. Pheu Thai is reportedly aiming to reclaim pivotal ministries, such as the Ministry of Interior, in a bid to consolidate its power base ahead of future electoral contests and to cool current political temperatures. This underlying jockeying for position highlights the inherent tensions within the ruling coalition.
Crackdown on Nominee Businesses: Commerce Minister Pichai Naripthaphan announced a significantly intensified crackdown on foreign-controlled companies suspected of utilising Thai nationals as nominee shareholders. This crackdown is particularly focused on businesses in the tourism and real estate sectors. Over 46,000 firms are reportedly under investigation, and amendments to the Foreign Business Act are being planned to introduce stiffer penalties.
Coup Talk Persists: Defence Minister Phumtham Wechayachai, in a candid statement, acknowledged that while a future military coup currently seems unlikely, the possibility cannot be entirely dismissed. He urged all political factions to learn from Thailand's history and to work towards strengthening democratic institutions. This admission reflects an ongoing undercurrent of political instability, despite the "grand compromise" that formed the current government.
Casino Legalisation Debate Drags On: The government's push to legalise casinos, as part of broader legislation for "entertainment complexes," continues to face considerable public opposition and political headwinds. A Senate panel review is now expected, potentially delaying any legislative progress until 2026 or even beyond. This is despite government assertions that casinos would only constitute a minor component of these proposed complexes.
Tourism & Development:
PM Promotes "Thai SELECT" and F1 Ambitions Abroad: Prime Minister Paetongtarn Shinawatra undertook an official visit to the United Kingdom (21-22 May, with details reported this week) where she launched a new "Thai SELECT" logo. During the visit, she awarded certificates to 115 Thai restaurants in the UK, part of a global initiative to promote authentic Thai cuisine. Following her UK engagements, the Prime Minister travelled to Monaco (concluding 25 May) for high-level discussions with Formula One executives regarding Thailand's ambitious bid to host a Grand Prix.
Bangkok F1 Street Race Bid Progresses: Thailand is advancing its plans to bid for a Formula One street race to be held in Bangkok, with 2028 being the target year. A comprehensive feasibility study and the official bid proposal are scheduled for submission to the cabinet on 4 June.
New IndiGo Flights to Phuket & Bangkok: Indian airline IndiGo announced the launch of new double daily flights from Mumbai to both Phuket and Bangkok, commencing 1 July 2025. This expansion aims to position Thailand as a key Southeast Asian hub for the airline, facilitating onward connections to its European routes.
Social & Legal:
Paid Menstrual Leave Encouraged: Thailand's Department of Labour Protection and Welfare issued a non-binding guideline in May, encouraging employers across the country to consider offering paid leave to female employees who experience menstrual discomfort. This move, while not yet legally mandated, has been welcomed by women trade union activists as a positive step towards potential formal legislation in the future.
Foreign Income Tax Amendments Mulled: The Revenue Department is currently drafting legislation to amend the rules concerning the taxation of foreign income remitted to Thailand. The proposed changes could see income repatriated within the same year it was earned, or the following year, being exempt from Thai personal income tax. This initiative is aimed at encouraging domestic investment. These considerations follow significant changes implemented on 1 January 2024, which subjected such income to taxation.
Supreme Court Ruling on Land Lease Renewals: A recent and potentially landmark Supreme Court decision (Case No. 4655/2566) has invalidated "automatic" 30-year lease renewals for immovable property if these renewals were pre-agreed beyond the statutory 30-year limit. The ruling emphasises that lease renewals require active negotiation and formalisation by both parties as the original term nears its end. This judgment carries significant implications for long-term property arrangements in Thailand, including those involving foreign nationals. It is worth noting, however, that separate proposed amendments aim to extend land lease terms to as long as 99 years , though the Supreme Court ruling pertains to the current interpretation of existing law.
Further Reading
"Thailand Has Lost Its Last Growth Engine" by Chartchai Parasuk
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