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Greenspan says (US) economy still faces significant risks despite hopeful signs
By Martin Crutsinger
AP Economics Writer
Washington (AP) Federal
Reserve Chairman Alan Greenspan said that there are scattered hopeful
signs that the recession could be ending, but he warned that the American
economy still faces “significant risks.”
Greenspan, making his first public comments on the
economy since the Fed last cut interest rates on Dec. 11, said there are
“tentative indications” that the economic slump could be drawing to a
close, but he said those signals at present are far from conclusive.
“I would emphasize that we continue to face
significant risks in the near term,” Greenspan said in a speech prepared
for delivery to a business audience in San Francisco. Copies were released
in Washington. Greenspan identified some of those threats as weak profits
and business investment and restrained household spending caused by rising
unemployment.
But Greenspan said there are tentative signs that a
recovery could soon begin. “If the recent, more favorable developments
continue and gain momentum, uncertainties will diminish,” he said. The
Fed last year drove interest rates down to a 40-year low in a series of 11
rate reductions. Greenspan’s comments appeared to leave the door open to
a further rate cut, possibly at the Fed’s next meeting on Jan. 29-30.
The current recession, which ended a record 10-year
period of U.S. prosperity, has officially been dated as starting last
March. But Greenspan noted in his comments that the economy has been
struggling with weak growth ever since the summer of 2000.
The Fed began aggressively cutting interest rates in
January 2001, reducing its target for the federal funds rate, the interest
that banks charge each other, from 6.5 percent at the start of last year
down to the current level of 1.75 percent, the lowest in 40 years.
Greenspan said that before the Sept. 11 terrorist
attacks, there were signs that the economy had begun to stabilize, but
those gains were wiped out with the severe jolt dealt to consumer and
business confidence by the attacks. He cautioned that economic forecasting
is now even more fraught with the “major uncertainty that we all must
deal with these days - the specter of further terrorist incidents on
American soil. It simply is not possible to predict whether there will be
any such incidents or to forecast their possible consequences for the
economy.”
Greenspan, as he has done in other remarks since Sept.
11, did contend that the significant rebound in the growth of American
workers’ productivity in recent years should continue. It has been this
big improvement in productivity that has allowed the Fed to be less
worried about inflation dangers.
Greenspan noted that in recent weeks there have been
signs that the economy is now stabilizing after huge job losses in the two
months immediately after the terrorist attacks.
He noted that consumer spending, which has stayed
strong through much of last year, is continuing to rise, although at a
more subdued rate. Spending, he said, will be helped by substantial
declines in energy prices.
But Greenspan said that the unemployment rate, which
hit a six-year high of 5.8 percent in December, is likely to continue
rising even after the recovery begins. He noted, however, that new claims
for unemployment benefits have tapered off recently.
BTS seeks to become information hub
If the BTS has its way this year, Bangkok will be
changing for the better. Courtesy of the BTS next month, Bangkok is to
have its first central information and transportation hub, connecting
people to places, events and each other.
The BTS envisions raising both traffic and revenue for
the BTS by introducing a never-before-attempted, all-encompassing city
information system that will benefit all Skytrain commuters and visitors
to Bangkok.
This information system will take the form of high
tech, liquid crystal display stands featuring on-going and future city
events as well as low-tech but vital maps and flyers. The Visitor
Information Booths will be staffed with hospitality personnel
knowledgeable on Bangkok’s attributes and informed on accommodation,
tours and activities, events and exhibitions, entertainment and shopping,
as well as ticketing, booking tours, and more. Advertising options start
as low as 10,000 baht per month.
The stand alone ‘Skyracks’ will offer station maps
and takeaway information such as maps and flyers which will feature the
city’s entertainment, shopping, dining and event information. In late
2002, they will be upgraded to a full multi-media unit with plasma-screen
TV and self-service ticket purchase facility.
The information systems will be installed by VGI Global
Media, under license from BTSC, and managed and operated by Groovy Map,
the current contractor of 2.8 million Official BTS Skytrain Maps. Starting
February 1st, the information systems will be introduced at eight of the
business BTS stations including Siam Square, Phrom Phong and Sala Daeng,
with plans to increase installations over the year.
“For the first time in Bangkok,” says Paul
Anderson, COO of BTSC, “‘what is going’ on can be linked with ‘how
to get there.’ And with the Skyracks, any BTS user can find the event or
place by following clear directions and maps in Thai and English.”
Elaborating further, Anderson remarked, “I’ve
worked in Sydney, Hong Kong and Singapore in mass transit projects,
spending over 15 years of my life understanding their impact on urban
environments and the benefits they bring. Bangkok is no different.”
On plans for tourism Anderson remarks, “Feedback from
hotel general managers tells us that the BTS is already eliminating one of
the biggest complaints about travel in Bangkok - the traffic. Now with
this information system, I believe Bangkok can expect to see visitors stay
longer and enjoy Bangkok more.”
The information distribution concept has four parts:
Skytrain Skyracks with their multi-media capability, Official Skytrain
Guide, Official Skytrain Map, and Official Skytrain Flyer. Each part leads
one from the macro to the micro; from a desire for fine food, special
events or accommodation right to the door. Event organizers, stores,
hotels, dining outlets and entertainment venues make up the ‘fifth
part’, which is the destination.
“This will turn Bangkok into one of the easiest and
most visitor friendly cities in Asia, if not the world,” says Aaron
Frankel, director of Groovy Map, which has also been chosen to produce the
affiliated guides, maps and flyers for the new system.
The aim is to turn Bangkok into a visitor friendly city
by utilizing the city’s fastest and most reliable transportation, the
Skytrain. By introducing this all-inclusive information system on the
Skytrain stations, the Skytrain itself will prove to be the main hub
connecting everything going on in the city.
Banks projected to enjoy sharp increase in net profits
Combined net profits earned by commercial banks in the
entire system in 2001 are expected to increase sharply from those of the
previous year as a result of a significant drop in loan provisioning
costs, according to a leading securities brokerage house.
Capital Nomura Securities Plc said in a report on the
expected operational results of the banking sector last year that combined
net profits are likely to reach 2.92 billion baht, an increase of 60.12%
from the previous year. The sharp fall in loan provisioning costs is a
main reason behind the surge in the profits.
Loan provisioning by commercial banks as a whole has
dramatically dropped to 30.70 billion baht last year from 104.88 billion
the year before. The decline in interest rates in the first quarter is
another reason. It caused interest spread in the banking sector to widen
from 1.58% in 2000 to 1.75% last year.
Bangkok Bank is projected to be the top performing
commercial bank with total profits of 6.34 billion baht in 2001, compared
with losses of 18.7 billion the previous year. The significant increase in
profits is attributed to the sharp drop in loan provisioning from 37.99
billion baht to 5.95 billion, according to a report.
BankThai is another bank expected to enjoy good
performance results, as it would have profits of 1.33 billion baht,
compared with losses of 4.78 billion. The bank received compensation for
the shortfall in income from the Financial Institution Development Fund
under the bad debt management scheme profits in 2001, but in a smaller
amount than those of the previous year because both had to increase the
loan provisioning in preparation for possible rise in loan losses.
Krung Thai Bank and Bank of Asia are the only two banks
likely to experience net losses in 2001 because both raised their loan
provisioning significantly. Non-interest incomes earned by commercial
banks increased by 8.8% from the previous year since the banks turned to
stress seeking the incomes in 2001 and private companies issued a lot of
debt instruments. (TNA)
GPF set to increase investment portion in securities
The Government Pension Fund plans to seek the Finance
Ministry’s approval for an increase of securities investment in its
portfolio from 10% to 25%, the same portion as that held by the Provident
Fund.
Secretary-general Visit Tantisunthorn said GPF had
currently invested 80% of its total funds in debt instruments and 10% in
securities. Due to the improvement in stock market sentiment, it planned
to increase the portion of the securities investment to 25%.
It is expected the plan will be finalized by the
ministry and forwarded to the cabinet for consideration and approval
within the next two months.
He said returns from investment by GPF this year was
projected to decline from those of last year since interest rates in the
banking sector had dropped sharply. The investment returns from the
secondary market were expected to stay at only 3% despite the fact that
GPF has the main portion of its investment in debt instruments.
Because of this, GPF needed to seek new investment
channels to increase the returns. Securities investment was considered one
of the target channels as the sentiment of the stock market was expected
to improve this year.
Speaking on the progress in the establishment of
Thailand Opportunity Fund, Visit said TOF was expected to initially
complete fund-raising of 10 billion baht and begin investment by next
month. TOF is jointly set up by GPF, Krung Thai Bank, the Stock Exchange
of Thailand, and local funds.
GPF was set to invest two billion baht in the fund and
play a role as a financial advisor.
The investment policy was to divide the fund into three
portions. The first would focus the investment on securities in the stock
market, the second on listed companies which have growth potential but
lack capital, and the third on newly-issued stocks from state enterprises
being privatized. He said GPF expected at least 20% in returns from the
investment in the fund. (TNA)
TAMC to seek investment cooperation from Matching Fund
Thai Asset Management Corporation (TMAC) is set to
accelerate coordinating efforts with the Fiscal Policy Office to encourage
the Matching Fund to invest in companies whose debts were transferred to
the corporation.
The Fund was jointly established by Krung Thai Bank,
Finance Industry Corporation of Thailand and the United States-based
Ceberus Fund with an initial investment set at US$500 million.
Capt. Yodchai Chusri, president of TAMC, said the two
state agencies were discussing ways to cooperate with the Fund in
investing in the companies with debts being restructured by the
corporations. The cooperation agreement was expected to be signed by
February. He said the investment would focus on increasing the capital and
restructuring debts of the companies. A minimum investment of $5 million
would be made with each firm.
The TAMC chief said the Fund had expressed interest in
companies in the industrial, consumer, property, financial and banking,
export, service, construction and wholesale and retail sectors. He said
the Ceberus Fund had already informed the Fiscal Policy Department of a
list of companies in which it had interest in investment.
The department had sought TAMC’s cooperation to
negotiate with debtors in the sectors which want to secure capital from
the fund and select three suitable companies from each sector. The
corporation would be also asked to gather and provide information on the
companies to the department, which would then forward it to the Fund for
consideration, he said. (TNA)
Unemployment unlikely to change significantly this year
The Federation of Thai Industries expects the
unemployment rate will not change significantly this year as the situation
on lay-offs in the industrial sector is unlikely to be worse than the
previous year.
Saengchai Ekpattanapanich, chairman of the FTI’s
Labor Management Committee, said he believed entrepreneurs would not opt
to cut the workforce in large numbers during the first half of this year,
although their utilization of the production capacity limits to 50-60%.
A main reason was that many entrepreneurs remained
optimistic the country’s economy is on the path of recovery. Some had
tried to count on other approaches to cut production costs to ease the
layoffs. As well, there were mass layoffs in 1997 as the situation did not
improve last year as a result of the tragic terrorist attacks in the
United States. Given these factors, it is expected the unemployment would
not change significantly this year.
Each year, he said, entrepreneurs would plan production
capacity and employment in accordance with order placements. So, the
situation on unemployment would depend on the economic recovery of major
purchasers, including the US and Japan.
According to the Labor and Social Welfare
Department’s unemployment report in 2001, the top five businesses that
shut themselves temporarily and permanently are construction (10,297 made
jobless), repair of radio, television and parts (7,238), electrical
appliance and vehicle (4,640), miscellaneous trade (4,523) and food, hotel
and rented rooms (3,236).
The latest data, gathered in November last year, showed
the number of employees made redundant totaled 116,198, compared with
157,850 the previous year. (TNA)
FedEx appoints new VP to spearhead Supply Chain Solutions in Asia Pacific
Federal Express (FedEx), the world’s largest express
transportation company, has appointed Dennice Wilson as the vice president
of FedEx Supply Chain Solutions, Asia Pacific. In her new role, effective
immediately, Wilson will implement FedEx’s overall strategy in providing
total supply chain solutions to enhance the business processes of
multinational corporations.
 Dennice
Wilson
With 18 years of experience at Federal Express, Wilson
brings to the position a strong planning and operations background and an
extensive knowledge of Asia. Previously, she has served in several
managing director positions in the areas of operations and planning and
engineering for FedEx’s South Pacific region.
“FedEx is committed to helping companies maximize
overall supply chain efficiencies by providing value-added integrated
supply chain solutions. It is FedEx’s combination of supply chain
applications and its ability to ensure reliable and time-definite
fulfillment of orders through its extensive air and information network
that differentiates FedEx from other supply chain service providers,”
Wilson said.
FedEx Express, a US$15 billion subsidiary of FedEx
Corp., connects areas that generate 90% of the world’s gross domestic
product in 24-48 hours with door-to-door, customs-cleared service. The
company’s air route authorities and infrastructure make it the world’s
largest express transportation company, providing fast, reliable and
time-definite transportation of more than 3.3 million items to 211
countries each working day.
Thai-Malaysia attempt new discussion over gas pipe
Thai and Malaysian foreign ministers recently held a
bilateral meeting in Thailand’s southern province of Songkhla to see how
the two countries could push for more business cooperation, the Pacific
News Agency reported. Surakiart Sathirathai of Thailand and Said Hamid
Alba of Malaysia met in Songkhla’s Sadao District.
Security matters, a boundary set and the Thai-Malaysian
natural gas pipe were also discussed; the Pacific quoted Malaysian’s
News Agency, the Bernama. (TNA)
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