BUSINESS NEWS
HEADLINES [click on headline to view story]: 

Thailand’s fiscal standing showing positive results

PM hints of more borrowing to finance oil price intervention

Tough regulations for fruit and vegetable exports will prevent trade barriers

IRS taxpayer specialist to visit Bangkok

Energy efficiency in industrial sector necessary in order to peg oil price

Dividend tax may be abolished

Commerce Ministry pushes for fabric export drive

Swedish-Thai governments urged to promote bilateral trade and investment

New assistant director of sales appointed at Hard Rock Hotel Pattaya

EXIM Bank issues 10 billion baht in 5-year bonds

New General Motors sedan to be made in Rayong Province

Canned food exports ready to take off as war begins

Thailand’s fiscal standing showing positive results

Thailand’s focus on increasing domestic demand, strengthening the country’s fiscal standing and reducing foreign debt is starting to produce results according to leading international economists. Top analysts from leading investment banks recently discussed economic trends at a seminar titled “Thailand 2003: International Analyst Assessment”, sponsored by the Capital Market Development Fund.

Steve Taran, managing director for Salomon Smith Barney said that export driven growth had become less effective, therefore focusing on domestic demand is the way to go. “Thailand’s declining external debt and improved debt-servicing ability has strengthened the economy’s overall stability,” Taran said. “Generally, Thailand’s situation is much better than three years ago. We think the new strategy is right and the resources are in place to support growth,” he added.

Analysts agreed that Thailand’s sustainable economic growth would depend very much on strengthening its educational system and labor skills to increase competitiveness. They also suggested that the nation build an efficient debt market to serve as a source of capital for the private sector.

Michael Spencer, chief economist for Deutsche Bank, said Thai exports were likely to pick up in the second half as the European and US economies recovered. Spencer said, “The Thai economy is now more dependent on domestic consumption and private investment. But more investment will be required for stronger growth since recovery is still slow.”

Spencer sad the Bank of Thailand (BOT) is likely to keep interest rates low through the fourth quarter, but if the European Central Bank and the US Federal Reserve raise rates in the fourth quarter that could put upward pressure on domestic rates.

Thailand’s strong current account has helped the BOT to keep interest rates low to support growth. In order to compete with China, the government has formed a strategy in promoting potential small and medium enterprises (SMEs).

Thailand remains among the most promising countries in the region for investors according to Chia -Liang Lian, an economist with JP Morgan Chase Bank. “Thailand is the only country in the region to be well-placed for an upgrade in sovereign ratings from all three major credit rating agencies,’’ he said.


PM hints of more borrowing to finance oil price intervention

The prime minister continues to brush off concerns that the government’s intervention in the price of oil could require more cash than originally planned, saying that the government was prepared to borrow more money if necessary to ensure that oil price increases did not affect the economy.

Thaksin Shinawatra shrugged aside suggestions that the oil price cap could cost up to 8 billion baht more than previously budgeted, saying that the oil price situation was ‘unusual’ as the price was dependent on factors other than supply and demand.

The PM said that if the amount of money originally planned to intervene in the price of oil was not sufficient, the government would find other sources of borrowing to use, pointing to Thailand’s liquidity of 500 billion baht which he said would facilitate any extra borrowing.(TNA)


Tough regulations for fruit and vegetable exports will prevent trade barriers

The Ministry of Commerce is preparing regulations governing the export of fruit and vegetables to seven major export markets to help prevent the imposition of trade barriers.

The deputy agriculture minister announced the measures in the wake of a recent ban on the import of Thai longans imposed by China, which claims to have found insecticide and toxin residue in them.

Newin Chidchob said that China’s stance showed that the world was becoming increasingly conscious of health issues, and in particular chemical residue in agricultural products. He said the Ministry of Agriculture and Cooperatives had called on the Ministry of Commerce to issue regulations governing the export of fruit and vegetables to seven major markets - the European Union, the United States, Singapore, China, Hong Kong, Canada and Japan.

Any fruit and vegetables exported to these countries will first have to receive certification from the Ministry of Agriculture to prove that they had been inspected for crop pests and chemical residue. Thailand is anxious to protect its lucrative fruit and vegetable markets, which earn it around 20 billion baht each year.

Newin conceded that Thailand had to modify its goods in the light of the increasing pressure to upgrade its export products to boost its export competitiveness. He promised that the new regulations would not delay exports, as the ministry had already laid down mechanisms to ensure that exporters will not meet with any obstacles. (TNA)


IRS taxpayer specialist to visit Bangkok

A tax assistor from the U.S. Internal Revenue Service will be in Bangkok through Friday, April 4.

The IRS representative will not prepare your tax return, but will give information to help make that task easier for you. She will specifically address some of the unusual issues that taxpayers living overseas may encounter.

The assistor will be available for individual consultation at the American Citizen Services (ACS) unit of the U.S. Embassy’s Consular Section at 95 Wireless Road in Bangkok from Monday, March 31, through Friday, April 4. Consultation hours will be from 8 a.m.-noon and from 1 p.m. - 4 p.m.

Please call ACS at 02-205-4049 if you would like to schedule an appointment with the assistor. As with the seminar, the individual consultations are available to all persons subject to U.S. income tax, regardless of nationality. Any taxpayer who does not speak English should bring a translator.


Energy efficiency in industrial sector necessary in order to peg oil price

The government is likely to use money earmarked for boosting national competitiveness to peg the price of petrol, as it scrambles to find ways to combat soaring oil prices. One way to do this is to promote energy saving campaigns in factories.

Energy Minister Dr. Prommin Lertsuridej says that the Energy Conservation Promotion Fund committee was ordered to do studies on energy consumption in the industrial sector. Some sectors recorded increased energy use in line with economic expansion while in others sectors the energy consumption remained stable. This is an indication there is room for greater efficiency. “Promoting energy efficiency in factories should lead to a reduction in peak electricity consumption”, Dr. Prommin said.

The construction of a single new electricity generating station would require investment of around US$1 billion. The committee has worked out numbers that show if the peak rate could be reduced by 1,000 megawatts per year not only would the government save this money in investment, it would also save the money otherwise spent on the interest on borrowing this sum.

Industry Minister Somsak Thepsuthin said that he had ordered factories under the ministry’s jurisdiction to focus on saving energy, and that the National Productivity Institute in particular had worked hard to modify its equipment to cut down on fuel use.

Despite government efforts to campaign for the efficient use of energy, Thailand’s oil consumption in January actually rose by 8% on the previous year’s figures. Critics have suggested that the government’s decision to peg the price of oil has led to complacency among the general public.


Dividend tax may be abolished

The Ministry of Finance is considering the feasibility of abolishing taxes on dividends to avoid duplication with corporate tax. Suchart Chaowisit said that abolishing dividend taxes would benefit investors, but that the Finance Ministry also had to ensure that abolition would not affect the national budget.

The Thai stock market’s recovery has been slow and the Middle East conflict will not improve matters. Suhcart expressed hope that the effects would only be short term, saying that the Thai economy is now based on strong fundamentals.

The finance minister said that the government is developing the role of the debenture market because investors are looking for low-risk investments.

The issuing of new government bonds, developing the debenture trading system and pushing for the establishment of a repayment center for the private and public sectors are all measures being taken to improve the investment climate.

Meanwhile, Kittirat Na Ranong, marketing manager of the Stock Exchange of Thailand (SET) said that the SET had no plans to close the SET or put a temporary stop to trading during the war between the US and Iraq, but promised that the SET would provide investors with up to date information on the latest situations.


Commerce Ministry pushes for fabric export drive

Commerce Minister Adisai Bodharamik is appealing to owners of fabric and clothing businesses to build up brand names, amid concern in the fabric industry that a number of obstacles must still be overcome.

Adisai said that conversations with entrepreneurs in the woven goods sector showed that it still had enormous potential and that Thai woven goods remained in global demand. But industry executives complained about a lack of coordination between the private and the public sectors.

To help solve the problems facing the woven goods industry Adisai had called on the Thai Clothing Industry Association to come up with a working plan to suggest how the government might best step in to help. The value of the clothing and fabric industries in three years time could be worth over 500 billion baht in three years if its potential is developed. But Thailand must upgrade the quality of its products and build up greater bargaining power in global markets.

The commerce minister said “The private sector must lay down a framework for the development of quality goods so as to create bargaining power. Thailand unfortunately also lacks development of its own brand names.” (TNA)


Swedish-Thai governments urged to promote bilateral trade and investment

The Federation of Thai Industries (FTI) and the Board of Trade (BOT) see a need for the Swedish and Thai governments to promote bilateral trade and investment of the two countries.

Speaking at a seminar on export to Sweden, BOT board member Piyabutr Cholvijarn said the trade value between Sweden and Thailand remained low. Figures showed that Sweden has annually imported around 66.4% from the European Union but bought only 9.8% from Asian countries.

At the same time, Thailand’s imports from Sweden had declined in value to US$228.3 million last year from $330.3 million and $241.6 million in 2001 and 2000 respectively. Piyabutr said the two governments should find effective ways to increase trade between the two nations.

FTI’s vice president Chavalit Nimla-or said the decline in the import value was partly due to non-tariff barriers. He sited the example of the European Union’s rigid enforcement of a regulation on complete disposal of electrical appliances and electronics waste by the year 2009 and its stricter control of chemical residue in fruits, vegetables, and frozen shrimps.

Sweden relies a great deal on imports rather than local production, particularly of consumer products. Swedish people give great importance to household products such as furniture and home decorations as well as food products. Therefore, as a food producing country and a population well-skilled in crafts, Thailand will step up trade and investment cooperation with Sweden since this could become Thailand’s gateway to the EU. (TNA)


New assistant director of sales appointed at Hard Rock Hotel Pattaya

Andrew Khoo, general manager of the Hard Rock Hotel Pattaya, has recently appointed Thawee Kugasemrat as the hotel’s assistant director of sales looking after both corporate and leisure accounts.

Thawee Kugasemrat

A Thai citizen aged 37, Thawee graduated from the Institute of Technology and Vocational Educational Borpitpimuk Campus in Travel Industry Management in 1984.

Thawee started his career with the Regent Hotel Bangkok. He then moved to the Royal Cliff Beach Resort, the White House Resort in Pattaya as the opening team, the Royal Garden Hotels & Resorts, and the Pan Pacific Bangkok where he worked for more than 9 years.

Thawee’s last position before joining the Hard Rock Hotel Pattaya was senior sales manager of the Pan Pacific Bangkok where he had traveling experience attending several trade shows abroad, such as IT & CMA, ATM, AIME, and ATF’2000.


EXIM Bank issues 10 billion baht in 5-year bonds

The Export and Import Bank of Thailand (EXIM) in conjunction with Siam Commercial Bank and Standard Chartered Bank, has issued its seventh issue of 5-year baht bonds worth 10,000, baht for sale to institutional investors.

The senior unsecured bonds, worth 1,000 baht each, carry a 5-year maturity with a bonus payment redeemable in 2008, and an interest rate of 2.43 percent to be paid at six-monthly intervals.

The money from the bonds, the issue of which marks the largest one for the bank so far in the first quarter of 2003, will be used for debt refinancing and for use as circulating capital to support the EXIM Bank’s export loans.

Chatchaval Bhanapaph, senior executive vice president of Siam Commercial Bank’s corporate banking group, said that although the book-building period in the first half of March would see volatility in bond interest rates in line with events in other Asian economies, the arrangers had managed to issue the bonds successfully. (TNA)


New General Motors sedan to be made in Rayong Province

The Chevrolet Optra sedan will be made at the General Motors plant in Rayong Province. Starting in July of this year the vehicle will be sold in Thailand, Singapore, Indonesia and the Philippines, according to William Botwick, Asian Operations Director of General Motors Asia Pacific.

The Detroit-based giant is depending on the new vehicle to gain customers. Automakers in the region are increasing their line-up of compact cars to cater to buyers who want smaller cars that use less gasoline.

“With the Optra, we are going to enter a much larger segment of the car market,’’ Botwick said. “We expect our sales and market share to rise significantly with the Optra model.”

John Thomson, vice president for sales and marketing at the Thai unit of General Motors said the new 1.6-litre and 1.8-litre versions of the sedan will be priced at between 700,000 baht and 900,000 baht in Thailand.

Last year the company cut production of its Zafira mini-van by about two-fifths after demand dropped in its European market. However it now wants to boost capacity at its production plant in Thailand with more models.


Canned food exports ready to take off as war begins

Thailand’s exports of canned goods look set to soar as people across the world scramble to stockpile food, but the director of the Foreign Agricultural Division has warned that farmers cannot expect all the news to be good.

Phinich Kosriporn said that while the war was pushing up the price of agricultural goods, the farm price was likely to remain relatively stable, and it would be the middlemen able to add on transportation and insurance costs who would reap the largest benefits. However, he said, Thailand was likely to witness a surge in orders of canned food, due to its long shelf life.

Deputy Agriculture and Cooperatives Minister Newin Chidchob said that the war would send production costs for agricultural products shooting upwards due to the rising price of oil - with diesel now 14 baht per liter - and the added transportation and insurance costs.

However, on the positive side, orders for Thai chicken from the European Union (EU) were up 10 percent from two years ago, due to Thailand’s stringent enforcement of regulations concerning chemical residues, which in turn had slapped 1 baht per kilo on the price of chicken.

Newin said that the EU has signaled it would also boost orders for Thai canned tuna by 20 percent of the total amount sent to the US, worth around 4 billion baht.