Brian Maxey moved to Thailand from the U.K. expecting his sterling pension to afford him an easy retirement. Instead, he’s finding it harder to meet his visa’s financial stipulations because of the strong baht.
The former aircraft technician easily bought a townhouse, pickup truck and motorcycle when he arrived at the age of 55 two decades ago. Back then the pound bought about 60 baht, but now it fetches a little less than 38 baht.
“It was a cheap place to live then,” Maxey said in an interview in the coastal city of Pattaya, which is popular with European retirees. “It’s not anymore.”
The pressure on foreign pensioners is just one example of how the baht’s sharp appreciation is rippling through Thailand. The currency is the world’s top-performer against the dollar over five years, hurting export competitiveness and putting the economy on course for the weakest growth since 2014.
The Thai government issued almost 80,000 retirement visas last year, a climb of 30% from 2014. To qualify, foreigners must show a deposit of 800,000 baht ($26,261) in a Thai bank or have a monthly income of 65,000 baht. Another route is to have income and deposits totaling 800,000 baht combined.
Britons got most Thai retirement visas in 2018 but face baht strength
Source: Immigration Bureau
Britons accounted for the largest number of retirement visas in 2018, Immigration Bureau data shows. They were followed by Americans, Germans, Chinese and Swiss pensioners seeking affordable, sun-dappled golden years.
Once best known for crashing and sparking the 1997 Asian financial crisis, the baht is today seen as a haven by global investors. A trade surplus and annual foreign tourism receipts exceeding $60 billion underpin its resilience.
The currency has appreciated more than 6% against the dollar so far in 2019, the best performer in a basket of Asian economies tracked by Bloomberg.
It’s likely to stay resilient, said Masakatsu Fukaya, an emerging-market currency trader at Mizuho Bank Ltd. in Tokyo. There could be more upward pressure if firms relocate production to Thailand to skirt U.S. tariffs on China-made products, according to Fukaya.
Some pensioners are already voting with their feet, according to Niels Colov, who moved from Denmark about 40 years ago and helps to organize a club for expats in Pattaya.
Baht strengthened after 1997 crisis devaluation and recent gains sapped economy
“There’s an exodus of foreigners from this area to Vietnam, Cambodia and the Philippines,” he said. “We’re talking thousands of people.”
Up until six months ago, it was common to see overflowing queues of foreigners at Pattaya’s immigration office, but now there’s no line, according to Colov.
Some of those remaining may have to cut back spending, said Christian Foerster, an Austrian who retired to Thailand 20 years ago.
“There’s an enormous change,” he said. “Everything is more expensive. But it’s about adjusting, adapting and living modestly.”
At the same time, the cost of living in Thailand remains lower than in developed nations such as the U.S. or in Europe, and officials continue to promote it as a retirement destination.
Baht strength leaves Pattaya retiree Maxey’s 1,000-pound ($1,235) pension far short of the minimum monthly requirement. As a result, he maintains the equivalent of a 22,000-pound deposit to satisfy the bank savings rule when renewing his visa.
“That’s a lot of money to hold in a bank account that you can’t touch,” Maxey said, while adding he wants to stay on in Thailand despite the difficulties as he’s settled in the country.
First time I've seen a number for annual "retirement" visas issued and a breakdown by country.
Yet, I will have to reconsider my decision to move back to Thailand (from cheapish Vietnam), as the CA$ exchange rate keeps getting worse. This morning's Canadian dollar/Thai baht exchange rate dropped to 22.5. It's the worst in 10 years, based on a recent check of historical rates back to 2010, when I arrived in SEA full-time. And all the forecasts say the baht will get stronger for the next year or two.
Even if I move back to Pattaya where I can get a 7000 baht a month apartment on the Darkside, you're still paying a hefty Thailand premium for many things. In fact, supermarkets like Villa and Foodland in Pats charge a bit more on grocery items than the Bangkok ones. I know the Phnom Penh supermarkets charge even more than the Thai ones. The bright side is booze and cigs are considerably cheaper.
Options have dwindled to almost none in SEA.
FYI: I bring in more than the 65,000 baht/$2,200US a month but I'm fast approaching my ceiling.
On a micro-economic level I look at my local area and see a level of empty shop houses for sale/rent that I've never seen in the last decade, I go into the large home improvement stores and they are virtually empty of customers.
The government is struggling with its coalition partners to get its 2020 fiscal budget approved which could lead again to political turmoil, they are spending billions of baht on unproductive military toys for the boys, and yet the financial markets view it as a safe haven for their capital.
I definately see the impact of the strong baht/weaker foreign currencies locally and like everyone else I've tightened my belt, its now cheaper to do discretionary shopping in the UK on visits than shop here and looking around the shops in Pattaya I'm guessing I'm not the only one.
On the other hand though, there's always Vietnam and other SE Asian countries out there.
And even some other cheapo countries elsewhere in the world.lots in fact.
Well, there are only 10 countries in ASEAN. You've already eliminated 2 and Singapore and Brunei aren't real countries, so that leaves VN , which is not really a great option, and Malaysia, Laos, Philippines, Indonesia and Myanburmar. Which of those do you recommend?
Any examples? The one country that has stood out in my research is Portugal, but I' haven't had a chance to do much research yet.
And even some other cheapo countries elsewhere in the world.lots in fact.
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Like the spoilt child she is, she will not be happy till she destroys herself from within and breaks your heart.
Nothing to me. I'm a seppo. So, I still need to review the long-term visa options/requirements.
One problem though, is that it seems to be quite popular with yanks of a certain age, the kind I don’t like to listen to.
Anyway, it's just an idea at this point.
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The baht could further strengthen to Bt29 per dollar, a Kasikornbank analyst warned this week.
In an economic climate deeply affected by the US-China trade war and a global slowdown, the baht is expected to strengthen further, reaching Bt30.50 to the US dollar by the end of the year, Kobsidthi Silpachai, head of capital markets research at Kasikornbank said
It could appreciate to between Bt29.20 and Bt29.30 by the end of next year, a 5-year high, he added.
This was due to a number of factors, the first being that the US-China trade war would continue to depress the global economy. The chance of global economy entering recession next year now stands at 26 per cent, and could lead to more capital flowing in to subscribe to Thai bonds.
The second factor is the high possibility that international rating agencies Moody’s Investors Service and Fitch Ratings will upgrade Thailand’s sovereign credit rating from triple B plus to A minus (BBB+ to A-) in the next 12 months. The market has priced in coming credit upgrades as the rate of credit default swap (CDS) of Thai debts has been below the rate charged for BBB+ rating for a while, he noted.
Third, Thailand’s high current account surplus, the combined result of tourism revenue, fall in imports and low domestic investment would continue to underpin the strong baht.
http://www.samuitimes.com/baht-to-furth ... ert-warns/
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