Top banker warns populist policies must be implemented with care

Kosit Panpiemras, Bangkok Bank executive chairman.

Thailand’s Board of Investment (BoI) admits that foreign investment is declining, and a top banker warns that the government’s economic stimulus policies will fail if its populist policies cause a rise in household debt.
Kosit Panpiemras, Bangkok Bank executive chairman, said the government’s economic stimulation efforts through monetary and fiscal policies would not bear fruit if it continued to implement populist policies in the way that prevents household debt from falling.
He suggested that the government cooperate with the private sector to catch up with the changes of global markets.
Thai exports are declining despite the global economic expansion.
Kosit urged the government to closely supervise production. Thailand’s economic growth rate is predicted at 3-4 percent next year due to its low base this year, he said, noting that previous populist policies and household debt continue to heavily affect the Thai economy and prevent its growth from reflecting the real potential of the country.
Chokedee Kaewsang, BoI deputy secretary-general said foreign investment in the first 10 months of this year dropped by 10 percent compared with the same period last year because Thailand could not support the investment projects that turned to use higher technologies.
He estimated the overall value of projects seeking BoI promotional privileges at Bt700 billion this year, lower than the corresponding figure last year.
The projects center on the automotive, electrical, electronic and machinery industries. (MCOT)

FPO projects 4 percent GDP growth next year

Thailand’s Fiscal Policy Office (FPO) projects that the Thai economy will expand by 4 percent next year due to rising consumption in the private sector, and government spending.
FPO Deputy Director-General Ekniti Nitithanprapas said in a seminar on the Thai economic and industrial outlook in the year ahead, that the growth rate would result from increasing consumption in the private sector that should likely continue in the first quarter of next year, starting from the very low growth rate basis this year.
Additionally, he said, oil prices were declining partly because of Thailand’s domestic energy price restructuring.
This will strengthen the public’s purchasing power, which is also strengthened by the low unemployment rate of only 0.8 percent.
Ekniti warned that household debt caused installment burdens and that lower prices of farm products including natural rubber were negatively affecting the Thai economy.
What he thinks is driving the economy is government spending. He said that only 89 percent of the 2014 budget had been disbursed due to past political problems.
The disbursement of the remaining budget in the present fiscal year and the spending of state enterprises would create considerable economic activity, Ekniti said.
Energy expert Manoon Siriwan said the energy price restructuring would limit price reduction in only gasoline and gasohol. (MCOT)

Thailand eyes becoming regional trade centre

Deputy Prime Minister Pridiyathorn Devakula.

The Thai government is amending laws aimed at persuading foreign businesses to set up their regional operating headquarters in Thailand, a move which would enable the kingdom to become a regional trading centre like Singapore, Deputy Prime Minister Pridiyathorn Devakula said on Friday.
He told participants attending a seminar that the amended law would be forwarded to the cabinet for its approval early next year.
It would help boost Thailand’s gross domestic product to between 5-6 percent in the next two years and would not cause a bubble economy in the country, he said.
The law would also help increase the role of Thailand’s economy with neighboring countries and is also designed to encourage Thai businesses to invest internationally, said Pridiyathorn.
Development in Thailand in the past resulted from private investment which has now reached its saturation point due to the shortage of labor and land for investment, causing an investment slowdown since 2010 and eventually affecting the country’s GDP which only grew between 3-4 percent, he said.
Therefore, there is a need for amending the tax system to facilitate foreign businesses to set up regional operating headquarters in Thailand and to also encourage Thai businesses to invest in abroad, Pridiyathorn said.
The government will invest in major infrastructure projects to cater to the “digital economy,” such as establishing a massive broadband to assist businesses, he added. (MCOT)