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.
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