HEADLINES [click on headline to view story]: 

Economy not on path to deflation, says BOT chief

Lower interest rates expected to boost investment

Exporters urged to penetrate energy drink market in Brazil

8th ASEAN summit brings fruitful results

Toyoda Gosei (Thailand) opens 2nd plant in Chonburi’s Amata Nakorn Industrial Estate

Economy not on path to deflation, says BOT chief

Bank of Thailand’s Governor M.R. Pridiyathorn Devakula has reiterated the country’s economy is not on the path to deflation, which contradicts a recent report by the Economic and Social Development Board which said the country was experiencing deflation.

M.R. Pridiyathorn Devakula said the national think tank has its own definition and meaning of deflation, which can differ from that of the central bank.

In the BOT’s view, deflation begins to take hold only when inflation rates contract. In the past several years, the country’s inflation rates have not been in negative territory. They have only increased at a slower pace since the nation’s economy has been struggling.

Thanawat Polvichai, director of the Thai Chamber of Commerce’s Economic Forecasting Center, said inflation rates for this year would be definitely lower than 1 percent and the country’s economy is running the risk of experiencing deflation.

Some have expressed concern that inflation rates of many countries around the world were low; a signal that deflation might occur here soon. Some countries including Japan and China are already experienced deflation.

Thanawat said the Thai government needs to take action quickly to prevent deflation. He said the government should accelerate the implementation of economic stimulus packages to ensure the country’s economy can enjoy a minimum growth of 4 percent. (TNA)

Lower interest rates expected to boost investment

Moves by major local commercial banks to lower their interest rates are expected to help boost domestic investment. Prime Minister Thaksin Shinawatra said last week that he expects the lower rates to spur local investors which in turn will stimulate the economy. The PM conceded, however, that lower deposit rates could discourage people from saving.

The Prime Minister’s remarks came after major commercial banks, led by Bangkok Bank Plc cut both their deposit and lending rates by 0.25%, claiming that the move was in line with current market situations, where local banks are suffering from excess liquidity.

Bangkok Bank Plc cut its deposit rate for its saving accounts to 1.50%; while reducing its prime lending rates to 6.75%. The country’s largest commercial bank also cut its 3-6 month-deposit rate to 1.75% and its 12 month-deposit rate to 2.0% annually.

Other major commercial banks, including Thai Farmers Bank, Siam Commercial Bank, Bank of Ayuthaya and Thai Military Bank then followed suit.

State-run Krung Thai Bank Plc, however, maintained both its deposit and lending rates, but announced it would suspend its 24-month and 36-month deposit services in accordance with the current market situations.

The deposit rate for saving accounts of Krung Thai Bank Plc was maintained at 1.75%; while its 3-6 month and 12-month deposit rates was pegged at 2.0% and 3.0% annually. Its lending rates were maintained at 7.0-7.25%.

U.S.-based CITIBANK cut its 12-month, 24-month, and 36-month deposit rates by 0.25% to 1.50-1.75%, 1.75-2.0% and 2.25-2.50% respectively.

Conceding that the latest rate cuts were the lowest recorded in 40 years, Decha Tulanont, senior vice president of Bangkok Bank Plc said that it was most likely to be the last interest rate cuts of Bangkok Bank Plc this year on the condition that no unexpected incidents occurred.

However, Kiartpong Noichaiboon, vice chairman of the Federation of Thai Industries (FTI) disagreed that the lowered interest rates would help boost the Thai economy through increased domestic spending as expected.

“The sector of the population who are savers, and particularly those who rely on pension retirement savings are more likely to be extremely careful in spending following this series of interest cuts,” Kiratpong pointed out.

Kiartpong cautioned, “The lowered lending rates are not likely to boost domestic investment. Local banks are still reluctant to extend loans to large-scale firms, 50% of which are still on their non-performance loans (NPLs) list. I project that these lowered interest rates will yield negative results and lead to slower economic growth. Those who rely on their savings will feel the pinch and tighten their purse strings.” (TNA)

Exporters urged to penetrate energy drink market in Brazil

The Thai energy drink industry still has growth potential in Brazil if local exporters can adjust their pricing and marketing strategy to meet consumers’ needs in the country, according to the Foreign Trade Promotion Office in Brazil.

The office reported a survey recently conducted found total sales of energy drinks in the Brazilian market are presently only about 50 million units or US$70 million a year which leavers a lot of room for expansion. Brazil and Argentina have already liberalized the market in this sector.

Although Brazil has now adopted a series of trade barriers to save its currency, exporters can be more successful if they focus their customer base on the low-end market where the products are popular. Target groups of customers in the energy drink market are teenagers and young men and women between the ages of 20 and 40 years. (TNA)

8th ASEAN summit brings fruitful results

The 8th Summit of Association of Southeast Asian Nations (ASEAN) ended in Phnom Penh with fruitful results.

After returning from Phnom Penh on November 6th, Prime Minister Thaksin announced that ASEAN and Japan signed an agreement on economic cooperation framework, aimed to forge closer economic cooperation between Tokyo and the 10-nation grouping.

Japan also expressed its interest and support for a Thai proposal on the Asian bond scheme.

Thaksin said, “Premier Junichiro Koizumi of Japan agreed in principle to the Asian bond scheme. Ministers and officials of Asian countries will then coordinate and further discuss the scheme in detail, including the most suitable way of implementing the initiative.”

The Asian bond scheme will be managed by an authorized task force of the Asian Cooperation Dialogue (ACD), with the main objective being to encourage Asian countries to allocate part of their foreign exchange reserves to invest in the regional bond scheme to boost economic growth for the whole region through development projects supported by the collective bonds. Premier Thaksin initiated the ACD initiative, aimed to promote closer ties and cooperation among Asian countries, particularly in trade and investment.

At the summit, also attended by leaders of China, Japan, South Korea, India, and South Africa, ASEAN and China signed an agreement on comprehensive economic cooperation, which paves the way for the establishment of the ASEAN-China Free Trade Area over the next 8 years.

China has planned to set up the free trade area with the 6 original ASEAN members by the year 2010, and will expand the free trade area to cover the 4 newer ASEAN members by the year 2015.

ASEAN now groups Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Cambodia, Laos, Myanmar, and Vietnam, with the latter 4 being new members.

Thaksin said that Thailand will begin the free trade area with China over the next 2 years. “Premier Zhu Rongji of China said that Beijing is ready to begin the free trade area with any ASEAN member country prepared to launch the free trade area. Thailand plans to launch the free trade area by 2004,” he stated.

ASEAN-China also issued a joint communiqu้ on a new form of security cooperation, focusing on anti-international crimes, including narcotics, human and arms trade, money laundering, and ‘on-line’ crimes.

Thaksin said South Korea told ASEAN that it is not ready to set up the proposed ASEAN-South Korea free trade area, as it needs more time to open its market for agricultural products; but is ready to cooperate closely with ASEAN in other issues, namely human resources and technological development.

Apart from their 8th Summit, ASEAN leaders also took part in the ASEAN-3 summit with leaders of China, Japan and South Korea. At the regional gathering this year, the ASEAN-India summit was also held for the first time, focusing on cooperation in trade and investment.

Regarding his bilateral talks with Cambodian counterpart Hun Sen, Premier Thaksin said that he pledged Thailand would help build 4 bridges in Cambodia to accelerate the opening of a cross-border highway between the two close neighboring countries, linking Thailand’s Chantaburi and Trat provinces with Koh Kong and Phnom Penh.

At the 8th Summit, ASEAN leaders issued a joint declaration on anti-terrorism. The joint declaration condemned all forms of terrorist acts with all motives. The joint declaration also called for the international community to support ASEAN’s efforts in anti-terrorism and in enhancement of investors’ confidence in Southeast Asia.

ASEAN endorsed an agreement on information exchange and creation of a regional communication system, which was proposed by Thailand, aimed to prevent terrorism.

ASEAN will organize international conferences on anti-terrorism and on tourism promotion in the Philippines in November.

ASEAN will also organize a conference on anti-money laundering in Bali next month, and will organize conferences on anti-terrorism in Malaysia in March 2003 and on anti-cross border crimes in Bangkok in October 2003.

ASEAN leaders agreed to set up a regional anti-terrorism center in Kuala Lumpur and also called for countries to avoid barring their citizens from traveling to ASEAN without evidence of terrorist attacks.

ASEAN leaders signed an agreement on cooperation in tourism, aimed to increase communication facilities to promote the tourism industry, as well as to enhance competitiveness of tourism sites in the 10-nation grouping and to set up a tourism service network to provide useful information for tourists and to promote visa-free traveling programs within the grouping. (TNA)

Toyoda Gosei (Thailand) opens 2nd plant in Chonburi’s Amata Nakorn Industrial Estate

Boosts region’s image as a center for international manufacturing standards

Suchada Tupchai

Toyoda Gosei (Thailand) Co. Ltd. recently opened their second manufacturing plant in Thailand. The company, which was established in Thailand in 1995, has risen from the ashes of the Asia-Pacific economic crisis of 1997 breaking all previous records with a turnover of more than 1,500 million baht in sales which enabled them to open the second plant facility.

Toshinari Tanaka (right) president of Toyoda Gosei (Thailand) Co. Ltd. and Yozo Saito (left), senior managing director for Toyoda Gosei (Japan) cut the ceremonial ribbon declaring open the company’s new plant in Chonburi’s Amata Nakorn Industrial Estate.

The company, which hails from the Japanese auto industry, manufactures steering and plastic parts for the auto industry in Thailand and for export. The new plant will specialize in producing safety systems for vehicles.

Yozo Saito, senior managing director for Toyoda Gosei (Japan) attended the opening ceremonies said in his speech to guests and dignitaries, “The Thai branch of Toyoda Gosei has waded through its economic difficulties very well and very rapidly. This is due to the close working relationship between managerial departments and the cooperation of all company employees who are the heart of the company.”

The Thailand branch also received economic support from the head office in Japan during their financial crisis and has risen above all obstacles. Toyoda Gosei (Thailand) plans to extend even further with the production of 1-ton vehicles for export beginning 2004.

Toyoda Gosei (Thailand) Co., Ltd has been rated amongst the top automotive product manufacturers in Thailand.