Bangkok: The strengthening of the baht and the ongoing Thai-Cambodian conflict have significantly impacted the Industrial Confidence Index for December, as reported by the Federation of Thai Industries (FTI). Industrialists have called on the government to manage the baht's value, highlighting that every 1 baht appreciation could result in a loss of over 300 billion baht in export and tourism revenue. They have also suggested addressing the Common Economic Development Assets (CBAM) issue and proposed a double tax deduction for private companies purchasing MIT products.

According to Thai News Agency, Mr. Kriengkrai Thianukul, President of the FTI, disclosed the Industrial Sentiment Index survey results for December 2025, recording a decrease to 88.2 from 89.1 in November 2025. This decline is attributed to several factors, including clashes along the Thai-Cambodian border, which disrupted economic activity in provinces such as Ubon Ratchathani and Surin. Concerns about government policy continuity following the dissolution of parliament, particularly regarding the "Half-Price Plus" co-payment scheme, and ongoing Thai-US trade negotiations were also contributing factors.

Exports are anticipated to slow due to the economic conditions of trading partners like China, Japan, and ASEAN, along with the PM2.5 air pollution issue in various areas. The baht's strength, following US interest rate cuts, has led to reduced revenues for exporters. Increased spending by foreign tourists has also impacted the tourism sector, with estimates suggesting a 1 baht appreciation against the US dollar could lead to a revenue loss of over 300 billion baht.

Positive factors supporting the economy in December included increased spending during the year-end holiday season and the government's co-payment scheme, which boosted consumption. The Monetary Policy Committee's decision to reduce the policy interest rate by 0.25% per year helped alleviate financial burdens on businesses and households. Additionally, the Fuel Fund Management Committee's reduction of the diesel fuel fund rate and subsequent fuel price cuts have eased living and business costs.

Government measures, such as flood relief payments and assistance for farmers and vulnerable groups, have helped maintain purchasing power in the short term. A survey of 1,330 entrepreneurs across 47 industry groups by the FTI highlighted concerns about the domestic economy, global economy, exchange rates, and energy prices. The forward-looking index for the next three months stands at 95.7, up from 94.9 in November 2025, due to positive developments, including import tax implementation on online platform goods starting January 1, 2026, and the formation of a new government expected to drive economic recovery.

However, negative factors such as the risk of renewed tensions on the Thai-Cambodian border and the European Union's Cross-Border Carbon Price Adjustment measures, effective January 1, 2026, need close monitoring. These measures could increase compliance costs before formal carbon tax collection begins in 2027.

Suggestions to the government include managing exchange rates to mitigate the baht's appreciation, promoting CBAM measures with funding and technical consulting, and increasing procurement from SMEs through the e-GP system to expand market opportunities.