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IMF suggestion on
inflation brushed aside
The Bank of Thailand (BOT) and the National Economic and
Social Development Board (NESDB) have brushed aside a suggestion by the
International Monetary Fund (IMF) that the country raise the target
inflation rate from zero to prevent possible deflation.
Previously, the IMF had projected the Thai economy would
continue to grow this year. However, it said the government should closely
supervise the economic development since the financial and business sectors
remained engulfed with non-performing loans.
The IMF also suggested that the BOT consider increasing
the target minimum inflation rate from zero to stand in positive territory
because the inflation rate, if allowed to stay very low, would put the
economy under the pressure of deflation should there be any crisis.
BOT’s Governor M.R. Pridiyathorn Devakula said still
saw no need for the country to raise the target inflation rate.
Chakramon Phasukavanich, NESDB’s Secretary-General,
said that he did not think the Thai economy was on the path to deflation,
adding that inflation would increase automatically when the economy
continued to grow. “We should not accelerate consumption in an excessive
manner. The consumption will grow naturally when the economy expands,” he
concluded. (TNA)
New incentives offered to lure oil trading giants
Minister of Energy Prommin Lertsuridej revealed at least
two major oil traders based in Southeast Asia have confirmed plans to move
their operations to Thailand in the wake of the government’s new plans to
make the country a regional oil trading hub in the next two years.
Esso subsidiary Exxon Mobil decided to move its regional
base to Thailand after the Board of Investment (BOI) granted its permission.
The Thai government is also considering slashing
corporate income taxes to 10 percent to be in line with that of Singapore in
order to lure oil traders and exporters. Ministry spokesman Metta
Banturngsuk said the new regulations allowing tax exemptions on raw
materials, reduced rental fees and the current corporate tax cut could be in
force within eight weeks. Other advantages for oil traders will be low
production costs and rental fees.
Energy Minister Prommin added that Shell may to shift its
operations base from the Philippines to Thailand, as may Singapore-based
Caltex. (TNA)
Thailand’s factory working conditions to be upgraded
The Federation of Thai Industries (FTI) is teaming up
with the Thai Health Promotion Foundation (ThaiHealth) to upgrade working
conditions in the nation’s factories in a bid to boost the quality and
quantity of production and ensure better conditions for production plant
workers.
After signing an agreement with ThaiHealth, FTI President
Praphad Phodhivorakhun said, “Both organizations realized the importance
of upgrading the quality of life for factory workers. They are aware that
good physical and mental health of workers serves to boost production in
terms of quantity and quality, as well as having a beneficial impact on
workers and their families.”
Deputy FTI President Niphon Suraphongrakcharoen added
that FTI would offer support to the Quality for Work Life program in the
form of ideas, labor, venues and funding.
Niphon said that two committees will be set up to
determine the program’s goals, with factory standards expected to be drawn
up over the next couple of years. He also stressed that factories would not
have to incur any additional expenses in order that the standards be met.
Meanwhile, ThaiHealth Manager Dr. Suphakorn Buasai
expressed confidence that the program would act as an important strategy in
the sustainable improvement of factory working conditions, having a long
term impact on Thailand’s industrial competitiveness.
Under the program, workers will be encouraged to
participate in management decisions. Pilot studies will be carried out in
20-30 selected factories, while the two organizations will promote the
establishment of a network of factories across the country aimed at
improving working conditions. (TNA)
Baht volatility worries
labor-intensive exporters
The government should attempt to closely supervise the
baht to curb its volatility; otherwise the export of labor-intensive
products, including textiles, would be adversely affected, according to an
industry executive.
Suchart Chandranakaraj, President of the Association of
Thai Garment Industry, said that the textile export grew around 8-9% in the
first seven months of this year and that it was projected that the export of
the product would enjoy 6-7% growth for the whole year since the global
economic direction had improved. He added that the competitiveness of
exporters had been enhanced since the government began assisting them in
seeking new export destinations.
“However, what should be of concern now is the
continued appreciation of the baht. The situation, if allowed to go
unchecked, will have a negative impact on the export, particularly
labor-intensive products such as textiles. It will also reduce
competitiveness of other industries with those of foreign countries,”
Suchart warned.
Suchart projected that if the situation persists for six
months to one year, some textile operators might have to close business or
halt business expansion plans.
“Right now, the effect of the stronger baht may not be
clear. But if the baht strengthens and stays at 39 to the US dollar for a
while, some operators will suffer losses and have to close their
business”, he said. (TNA)
MOF prepares to launch new investment thrust
The Ministry of Finance is preparing a raft of new
measures to boost the growth of private sector investment, with tax breaks
and credit support likely to act as key investment drivers.
While speaking on future macro-economic trends, Finance
Minister Suchart Jaovisidha said that the ministry would focus on
stimulating economic growth, with the core focus on promoting private sector
investment.
Describing the revival of private sector investment as a
means to achieve sustainable economic growth, Suchart explained that the
ministry was currently working on a number of approaches to encourage this.
He hinted that the government might use tax measures to stimulate
investment, but admitted that at present the ministry had not drawn up any
clear taxation policies for this purpose. In addition, he said, the
government might use financial policies to boost the capital potential of
private companies, with state-run and commercial banks encouraged to free up
more loans.
“The government wants to see greater expansion in
private sector investment, in order to bring about a clear and stable
economic revival. However, I am confident that if the government is able to
continue to stimulate the economy to such levels of growth, then growth in
private sector investment will follow naturally”, Suchart said.
However, the finance minister dismissed proposals to
attract more tourist revenue into Thailand by reducing taxes on luxury
items, saying that he was personally in disagreement with such plans.
Admitting that imports of luxury goods into Thailand were high, he said that
a reduction in taxes on luxury items would encourage the Thai public to
consume luxury imports in greater quantities without necessarily generating
more tourist revenue. (TNA)
BOI opens Shanghai office
The Board of Investment (BOI) has recently opened an
office in the Chinese city of Shanghai in a bid to boost bilateral trade and
investment between Thailand and China. The opening was witnessed by Deputy
Prime Minister Somkid Jatusripitak, Deputy Prime Minister Wissanu Krea-ngam,
Transport Minister Suriya Jungrungreangkit and Industry Minister Somsak
Thepsuthin.
The BOI chose Shanghai as the location for its new office
due to its position as one of the strategically most important cities in the
transformation of China into a center of trade, finance and investment. It
is hoped that the new office will help attract Chinese investors to Thailand
and boost bilateral trade, as well as assist the Chinese government in its
bid to encourage Chinese businesspeople to invest abroad.
The Thai government will endeavor to attract investment
in five core fields - the automobile and components industry, the processed
agricultural goods industry, the electronics industry, the service industry,
and the fashion and fabric industry. (TNA)
PM to spell out vision to Japanese businesspeople
Prime Minister Thaksin Shinawatra is to address the
Thai-Japanese Business Association this month to boost Japanese investors’
confidence in the Thai economy. The prime minister will give a special
lecture on October 29 to be attended by 600-700 of the association’s
members, all of whom are high-ranking executives in Thailand-based Japanese
companies. Japanese investors currently account for 40 percent of all
foreign investment in Thailand.
The association is presently determining which issues
will be of particular interest to Japanese businesspeople, including
business operations by foreigners and government policies on investment
promotions, however it has already shown enthusiastic support for the Thai
government’s One Tambon One Product (OTOP) scheme, with several Japanese
companies pledging to give technical assistance in production, packaging
designs and marketing.
Groups of Japanese executives will travel to observe OTOP
projects across the country, beginning in Ayuthaya Province in recognition
of the province’s historical role as the starting point for the
relationship between the two countries.
BOT downplays Moody’s ratings snub
Bank of Thailand (BOT) Governor Pridiyathorn Devakula
dismissed the failure of US-based Moody’s rating agency to upgrade
Thailand’s rating, saying that economic growth was based on the confidence
of Thai residents.
Declaring a ‘lack of interest’ in Moody’s decision
to maintain Thailand’s current rating despite upgrading its ratings for
Indonesia and the Philippines at the end of September, M.R. Pridiyathorn
said, “The Bank of Thailand is more interested in ensuring the confidence
of people within Thailand.”
Stressing that the Thai economy grew as a result of Thai
people, rather than foreign ratings agencies, he noted that the economy had
undergone a thorough revival over the past two years, thanks to the
confidence of Thai residents. Nonetheless, the central bank governor
predicted that Moody’s would eventually acknowledge Thailand’s
achievements. (TNA)
Plans to develop Thailand as ‘kitchen of the world’ moving forward
Deputy Prime Minister Somkid Jatusripitak, who chairs a
committee in charge of developing Thai recipes into world-class recognition,
told reporters after a meeting with representatives of agencies concerned
that the government was pushing ahead with the plan to develop Thailand as a
world kitchen.
“We have the comparative advantage in being one of the
world’s significant sources of abundant food with high nutrition. Our
country is also a world exporter of processed food, with the popularity of
Thai food in overseas markets being on the rise. Now the government is
brainstorming ideas and collaborative efforts from all agencies concerned to
turn our kingdom into a world kitchen”, Somkid said.
“Among other measures, the government will go ahead
with an aggressive policy to produce and develop skilled personnel,
particularly chefs and manager-level administrators to serve the anticipated
growing number of Thai restaurants worldwide”, Somkid said. He added that
recipes developed by Thai restaurants with the help of trained chefs and
managers would become favorite dishes for both Thai and foreign customers
since they would retain the authentic quality and taste of Thai food. (TNA)
BOT urges government to help
SME exporters
The government should seek urgent measures to help small
and medium-sized enterprises (SMEs) since they have been more affected by
the stronger baht than major entrepreneurs, according to the Bank of
Thailand (BOT).
Thirachai Phuvanatnaranubala, BOT’s deputy governor,
said the strengthening of the baht in the past seven months of this year had
not significantly affected the country’s exports. However, he cited that
SME exporters, particularly of consumer products, appeared to take a beating
since most are in labor-intensive businesses and are experiencing negative
growth in exports. He added that many were not good at adapting to the
strengthening of the baht as some foreign rivals are in Asian countries
where currencies are linked with the US dollar.
The central bank governor said, “The weaker the US
dollar, the more affected the SME exporters will be because they depend on
labor-intensive products for export. To ease the impact, the government
needs to come up with urgent measures to help SME exporters; otherwise, it
will affect the economy at the grass-root level, which could lead to
unemployment, missed tax collection, and an increase in non-performing
loans.”
Thirachai said the government should try to find ways to
develop the value added factor to SME products, cut production costs and
seek new markets. He also suggested that the baht movement be closely
supervised to ensure its stability. (TNA)
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