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BOT claims progress in debt-restructuring process
The Bank of Thailand (BOT) feels progress has been made
in the debt-restructuring process with state agencies concerned working
together more efficiently to solve the non-performing loan problem.
BOT’s governor, M.R. Pridiyathorn Devakula said the
central bank has gathered the latest NPL figures so they can be brought up
for discussion at a workshop. More important, all parties concerned can use
the latest figures as official data to work out a common solution to the
problem, particularly as a way to jointly manage NPLs with the Thai Asset
Management Corporation.
The Bank of Thailand governor said progress can be
confirmed by the significant decrease from 2.7 trillion baht in 1999 to 800
billion held by commercial banks at present.
M.R. Pridiyathorn said the BOT has already facilitated
the debt-restructuring process in the banking sector by all means available.
In his view, the central bank has no further suggestions to provide at the
workshop where representatives of commercial banks and TAMC will meet to
discuss the problem.
Chatsiri Sophonpanich, president of Bangkok Bank, said
the NPLs situation has been fluctuating for a long time but the situation
remains controllable and the problem will take time to solve. With state
assistance, the private sector might be in a better position to cope with
the NPL problem.
Chatsiri, who is also president of Thai Bankers’
Association, brushed aside concern over re-entry NPLs, saying it was a
common phenomenon during debt-restructuring. He believes the problem will
ease when the country’s economy improves.
The leading banker said the National Economic and Social
Development Board’s revelation that the economy grew 5.1% in the second
quarter meant that the business sector will enjoy more revenue, which will
contribute to growth in the real sector and the overall economy. (TNA)
Auto sales continue to show growth
The local auto market continues to grow this year with
total sales in August soaring 52.2% over the same month the year before.
Paiboon Vaikwamdee, senior executive vice president of
Toyota Motor Co. (Thailand), said the sales of vehicles in August totaled
35,758 units, which is the highest growth rate since early this year, even
though it is the low season.
Total sales in the first eight months of this year were
251,752 units, an increase of 34.9% over the same period the previous year.
Paiboon said vehicles for commercial use still enjoyed the highest sales
growth, at 66.9%, with sales of one-ton pickups expanding by 58.9%.
This reflects the country’s economic growth and
consumer confidence. The introduction of new auto series developed to cater
to local demands also improved sales figures.
In particular, the sales promotion of one-ton pick-up
trucks through hire purchase with special terms and conditions was the main
factor behind consumers’ decisions to purchase the vehicles.
However, the ongoing flooding in the northern,
northeastern and upper-central regions of the country is likely to affect
the total sales of vehicles this month. (TNA)
BOI relaxes zoning regulations to promote cluster development
In order to encourage the development of clusters, and
hence improve industrial competitiveness, the Board of Investment (BOI),
chaired by Deputy Prime Minister and Minister of Finance Somkid Jatusripitak
has approved a relaxation of conditions governing location of projects
eligible for investment promotion.
By lifting restrictions on where projects could locate,
the Board felt that industry-specific clusters would develop according to a
variety of factors (e.g. manpower, utilities, and infrastructure) that will
vary from industry to industry. The development of clusters is part of the
government’s overall economic development program, as clusters have
historically led to new product development and development of niche
markets.
The Board further announced that new and expansion
projects will be covered by this relaxation, so projects that previously
were required to locate in Zone 2 or 3 will now be free to expand wherever
they deemed appropriate.
The announcement covered all but six activities. Four of
the activities (tanneries, bleaching and dying, heat treatment using
cyanide, and recycling and the reuse of unwanted materials) exempted from
the provisions of the announcement must still be located in industrial
estates or promoted industrial zones for environmental protection reasons.
Projects involved in the repair of vehicle parts and
electrical or electronic equipment must be located in Export Processing
Zones (EPZ) or bonded warehouses and industrial zones and bonded warehouses
for free trade zones must not be located in Bangkok or Samut Prakan
Province, in order to receive BOI promotion.
BOI Secretary General Somphong Wanapha noted this
announcement will not affect the government’s decentralization policy.
Incentives will still be awarded according to the zone in which the project
is located, with the greatest incentives being offered in the
least-developed provinces in Zone 3. He also pointed out that similar
actions, designed to help export industries, were undertaken on a temporary
basis during the 1997 financial crisis.
“Rice and Omelet Stand” project provides free omelet carts for the jobless
One hundred candidates will be given equipment to set up
rice and omelet stands in Bangkok and nearby areas as part of measures being
taken to uplift the price of the eggs and help the poor.
Sanchai Chuanchairat, the president of the association of
egg producers, sellers and exporters announced that the association is
promoting egg consumption in the country, as eggs have high nutritional
value and are cheap.
"Rice and Omelet Stand" is a campaign to create
jobs for low income and jobless people by providing them with free equipment
worth 10,000 baht each to start their own small business selling rice and
omelets - one of the favorite dishes in Thailand.
He said the offer requires no fee at all. However,
would-be vendors must report their information to the association monthly
and they must use Khao Hom Mali (jasmine fragrant rice) and eggs rated
number four or better. Training to make delicious omelets will also be
arranged for them free of charge. "I want the omelet carts to be tools
to aid the poor to earn their living," the president said.
Initially, the project will give 100 candidates in
Bangkok and nearby vicinities equipment comprised of an electric rice
cooker, a pan, a spatula, a sieve, a gas stove, spoons, crockery, a booth
and an umbrella. The president said the association is planning to expand
the project into the provinces in the near future. (TNA)
BOT chief says Thailand not ready to pay off IMF
Some have suggested that Thailand pay off its debts
incurred to the International Monetary Fund ahead of schedule. However, Bank
of Thailand’s governor, M.R. Pridiyathorn Devakula recently stated that
Thailand is not yet ready to do that.
The BOT chief said the recent weakening of the baht is
attributed to the depreciation of the Japanese yen and euro, which is line
with the market mechanism. Therefore the central back sees no need to
intervene for the moment since a stronger baht could impact the country’s
exports.
Pridiyathorn said the baht value has not changed
significantly and its volatility remains within acceptable margins. The BOT
wants to monitor the currency a little longer and keep a close watch on
tensions mounting between the USA and Iraq.
Last week Deputy Prime Minister Somkid Jatusripitak made
a report to the IMF on Thailand’s improved economic conditions. Somkid
said, "I have also had discussions with central bank governors of ASEAN
nations regarding cooperation to prepare for the global situation if the
Middle East situation worsens. However, an early repayment of debts to the
IMF needs to be more carefully considered." (TNA)
Thailand ranks 5th in Asia in foreign investment
Deputy Prime Minister Somkid Jatusripitak is still
confident that Thailand remains attractive to foreign investment due to
stepped up efforts by the Board of Investment. Dr Somkid, who is also
Finance Minister, said he firmly believes Thailand has great potential to
grow in this sector in the next few years.
Speaking after chairing the latest meeting of the BOI
committee, he said applications for promotional privileges in the past eight
months of this year totaled 170 billion baht in total investment value, an
increase of 84% from that of the same period the previous year.
The huge increase in the applications is supported by the
United Nations’ report that Thailand is one of the world’s 10 most
attractive developing countries among foreign investors and ranks 5th in
Asia after China, Hong Kong, Singapore and Taiwan.
Industry Minister Suriya Juengrungreongkit said,
"Surveys show sentiment by foreign investors is positive towards the
country because it is a peaceful nation with no legacy of terrorism. This is
one very good reason investors are paying more attention to Thailand."
(TNA)
Stress economic stability rather than growth, says government opposition leader
Deputy opposition leader Apisit Vetchachiva recently
called on the government to place more emphasis on the stability and
sustainability of economy rather than inflating its growth.
Commenting on the projection by Prime Minister Thaksin
Shinawatra that the country’s economy will grow 4% this year, he said the
reliability of this forecast will need to be monitored quarter by quarter.
However, he wants the government not to overlook the stability and
sustainability of the economy.
Figures released in the first half of this year showed
economic growth stemmed mostly from an increase in spending for consumption,
not investment or exports. Apisit said many have expressed concern that the
spending will mount existing debts in the system.
Apisit stressed that the government needs to supervise
the situation to make sure that spending helps stimulate production or real
investment otherwise economic growth is not sustainable. He said he
personally does not think economic growth of 4% was high because it had
expanded more than that rate during 1999-2000.
He warned that the government must give the public
factual information on the economic condition so all parties in the economic
and social system can perceive it more realistically. (TNA)
Survey concludes investor confidence on the rise
The Board of Investment (BOI), chaired by Deputy Prime
Minister and Minister of Finance Somkid Jatusripitak, has released the
results of their 6th annual Foreign Investor Confidence Survey.
The survey, which is conducted in cooperation with the
foreign chambers of commerce in Thailand, was undertaken in June and July of
this year. Two thousand questionnaires were sent to foreign companies doing
business in Thailand, and the BOI received 1,210 responses, with more than
50 percent of the responses coming from Japanese companies, with significant
responses from investors from Taiwan, Singapore, and the United States.
BOI Secretary General Somphong Wanapha revealed that 60
percent of re
tment environment in Thailand improved from last year, and noted that 74
percent indicated they have plans to expand their investment within 2-3
years (58 percent within 2002 alone). Companies planning to expand
investment see Thailand as a high-potential site that offers real
opportunities to improve global competitiveness of their manufactured
products.
The current administration of Prime Minister Thaksin
Shinawatra received high marks from investors, with 61 percent confident
that the Thai economy would post growth of between two and four percent this
year, and 77 percent expressed confidence in the administration’s
capability to solve economic problems.
The survey also revealed that 65 percent of respondents
expected to post higher sales this year, with 50 percent expecting higher
profits than last year. Only 6.6 percent of respondents indicated that their
company would be unlikely to show a profit this year.
Investors cited three areas in which they felt
improvement was needed. In addition to concerns about too much paperwork
associated with the administration of investment promotion incentives, the
respondents indicated customs procedures and delays remained a concern, as
did the perceived inflexibility of relevant agencies.
BOI Secretary General Somphong Wanapha said, "The
BOI is greatly heartened by the results of the 2002 survey. The feedback
from the international investment community provides us with valuable input
regarding global investment trends, investor concerns, problems, and needs,
and is part of our commitment to improve the overall investment environment
in Thailand."
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