Vol. XII No. 5
Friday January 30 -February 5 , 2004

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by Saichon paewsoongnern



HEADLINES [click on headline to view story]: 

New Year doldrums for Chinese food offerings

ASEAN ministers push for economic community

Chonburi Livestock Department gives assurance the province is free from avian flu

BOT to scrutinize credit card consumerism

Auto industry growth boosts investment in eastern provinces

Repurchase rate to remain unchanged

Jewelry exports likely to grow 15% this year

Use of gasohol on the rise

Oil Fund may be used to halt price fluctuations

Prawn prices soar

Cabinet gives nod for anti-HIV drug plant

Tax measures to boost use of alternative energy

Thai energy plans may spur a Singapore tax cut

New Year doldrums for Chinese food offerings

Businesses that normally look forward to Chinese New Year as members of Thailand’s Chinese community flock to purchase items for use in religious offerings faced the doldrums this year due to soaring prices of eggs, chickens and pork.

A report published recently by the KASIKORN Research Center, formerly the Thai Farmers Research Center, had anticipated more money would be spent this year, with half of the money going towards religious offerings. However, the rising prices of eggs, chickens and pork, which together form an important component of the offerings, saw producers of these goods miss out on a golden opportunity.

However, there was better news for fruit sellers, thanks to the free trade deal on fruits and vegetables signed with China last year, which forced down prices of fruits by as much as 20 percent. (TNA)

ASEAN ministers push for economic community

The Association of Southeast Asian Nation’s (ASEAN) dream of creating a region-wide economic community edged closer to becoming realized on January 21 when ASEAN economic ministers met in the Indonesian city of Yogyakarta for an unofficial meeting and agreed on a plan to see the birth of the AEC by 2020.

According to the plan, agreed by Thailand’s Commerce Minister Watana Muangsook and his counterparts from the nine other ASEAN member states, the region will work on the coordination of operations in 11 types of goods and services with the eventual aim of creating the ASEAN Economic Community (AEC).

The 11 branches in question include agriculture, rubber, timber products, fabrics, electronic goods, automobiles, information technology (IT), health products, tourism and aviation. Thailand has been made responsible for the tourism and aviation sector, and has already joined with Singapore to announce an open sky- policy on commercial flights, starting in February of this year.

The ASEAN ministers also met with European Union trade officials, agreeing to expand cooperation in terms of trade and investment. The EU will negotiate with representatives of ASEAN’s private sector at a workshop to be held in Bangkok in March, while in May the EU will help organize a seminar on EU food safety regulations during the THAIFEX trade exhibition.

Vietnam and Laos, meanwhile, were given assurances by the other ASEAN members that they would receive full ASEAN backing in their bids for WTO membership. (TNA)

Chonburi Livestock Department gives assurance the province is free from avian flu

Culling of over 4,000 birds a precautionary measure

Veerachai Somchart

As the threat of the avian influenza virus spreads throughout Asia and with the advent of suspected cases in Thailand, government officials are being very careful not to cause panic among the community at large so that it has minimal impact on the Kingdom’s vital tourist income.

During a meeting at city hall last week, Suparp Phakdee from the Chonburi Livestock Department announced that precautionary measures have been undertaken in the province with officials culling over 4000 birds. Suparb maintains that Chonburi is free from infection despite the unexplained death of over 200 chickens and ducks at a number of farms in the region.

Pisit Ketphasook, Chonburi governor, informed the media that he had received word from the Ministry of Interior to keep a close eye on the situation and ensure that the province remains free from the disease as well as implement meticulous inspection of Chonburi’s poultry farms.

Suparp Phakdee informed the media that Thailand’s eastern region is the last to be scrutinized even though Chonburi Province exports 128 million chickens and 60 million ducks per year for consumption in the domestic and regional markets. He added that Thailand earns 50 billion baht annually from poultry exports, of which Chonburi has a 10 percent share.

The province has 837 chicken farms and 850 duck farms registered with the Livestock Department. However, there are an estimated 200 farms that serve the local markets, but are not registered with the government agency.

Suparp explained that to ensure consumer confidence, a committee has been created to closely supervise the poultry industry including farms, transport services and slaughterhouses. A team of over 120 officials are now monitoring around-the-clock for any signs of avian flu in the poultry population.

Suparp admitted that since December 2003, a total of 200 birds were reported having died under mysterious circumstances, plus 400 that were not reported but were nonetheless discovered.

Precautionary measures were implemented and the slaughter of 4,000 birds was undertaken as a result despite the insistence that there was no bird flu in the province or in Pattaya City. A large number of birds were also culled in the nearby province of Chacherngsao where an even greater risk of the disease is present.

BOT to scrutinize credit card consumerism

The Bank of Thailand (BOT) has stated it will closely monitor the credit card market and may also review the current requirement regarding the minimum monthly salary of card holders in response to worries over Thais’ spending habits.

BOT Governor Pridiyathorn Devakula said, “The BOT needs to evaluate whether the minimum monthly salary of 15,000 baht set for card applicants is appropriate for current economic conditions. There is concern over the social issue of encouraging the public to spend too much through credit and becoming burdened by debt.”

Pridiyathorn conceded credit cards have become an important tool in modern economic systems. However, the central bank will seek precautionary measures to avoid social problems that may arise from the credit card business. He stressed that too much spending could eventually destroy what has traditionally been a culture of saving, especially among low income earners.

The central bank currently requires card issuers to charge clients a combined interest rate and service fee of not more than 18 percent a year, which enables banks to gain a 10 percent spread - the difference between the interest rate and the cost of card issuance.

Pridiyathorn said, “This rule has encouraged credit card issuers to exercise more caution when it comes to expanding the card holder base.”

According to BOT figures, as of end-September, 2003, domestic commercial banks issued a total of 2.86 million credit cards, while non-bank firms issued a total of 3.57 million credit cards. (TNA)

Auto industry growth boosts investment in eastern provinces

An increase in investment in the automobile and parts industries has fuelled the growth of overall investment in eastern provinces by 17.73% last year, according to the Board of Investment (BOI).

Varaporn Chersa-art, Director of BOI’s Eastern Region Investment and Economic Center, said that 332 investment projects in the region were granted promotional privileges in 2003 with an investment value increasing by 78.98 percent from the previous year and employment rising by 29.78 percent. She said the investment projects that were granted most privileges involve automobile and parts, metal products and parts, and mould manufacture. (TNA)

Repurchase rate to remain unchanged

The Bank of Thailand (BOT)’s Monetary Policy Committee has decided to keep the repurchase (RP) rate unchanged, as internal and external economic environments still remain sound, according to BOT Assistant Governor Bandid Nijathaworn.

After a meeting of the central bank’s Monetary Policy Committee, Bandid said, “The committee considered the current monetary policy and interest rates to be appropriate and in accordance with the country’s economic conditions, and resolved that the RP rate be maintained at 1.25% annually.”

Bandid explained, “A thorough review of the country’s latest economic data and indicators showed that expanding consumption, investment and exports, as well as a surplus current account, high-level foreign reserves, and lower foreign debts confirm Thailand’s economic stability. The inflation rate is also being maintained at around 0.2 percent. These factors make the current interest rate suitable.” (TNA)

Jewelry exports likely to grow 15% this year

The country’s jewelry exports are likely to grow 15% this year, with total value of US$2.5 billion, as a result of tax incentives and efforts to seek new markets, according to an industry executive. Preeda Tiewsuwan, Chairman of Pranda Jewelry Plc. projected that the jewelry business would grow on par with the government’s intention to promote Bangkok as a fashion hub.

Jewelry exports totaled $2.31 billion in the first 11 months of last year, and were expected to reach $2.5 billion next year. Biggest gains are predicted in the major destinations of the US, Germany and United Kingdom. (TNA)

Use of gasohol on the rise

The government, through the Ministry of Energy, is launching a campaign, encouraging motorists to turn to use ‘gasohol’, which is the mixture of gasoline and alcohol in the 9:1 proportion on the average, following a recent oil price hike in the domestic market, caused by rising oil prices in the world market.

An initial survey found that sales of ‘gasohol’ at petrol stations have been increasing, reflecting that more motorists were turning to use the alternative fuel, which is about 0.50 baht cheaper than benzene.

Energy Minister Prommin Lertsuridej said earlier this week that he had turned to use ‘gasohol’, and had faced no problems. (TNA)

Oil Fund may be used to halt price fluctuations

The Energy Policy and Planning Office (EPPO) is studying the possibility of using money from the Oil Fund in order to accumulate oil reserves, and to prevent future price fluctuations.

EPPO Director-General Metta Bangturngsuk revealed that despite the fact that the government was set to float the price of cooking gas in April, it would continue to collect money from oil users to go into the Oil Fund in order to pay off old debts incurred by government efforts to cap cooking gas prices.

Currently the government has to pay around 5 billion baht, or 400 baht per month, to gas and oil refineries as part of the debt repayment program.

The government is also likely to invest in energy stability measures by creating strategic oil reserves when oil prices are cheap in order to keep prices down when global prices rise.

“Approaches to oil reserves must be studied hand-in-hand with the land bridge project in the south, as the two projects are related. We need to see who will benefit from the oil storage facilities that will be constructed. It is possible that we will negotiate the borrowing of oil from traders for storage in the land bridge’s storage facilities, which can be used when oil prices are high. This could be in exchange for greater state facilitation for oil traders,” Metta said. (TNA)

Prawn prices soar

As Thailand’s chicken industry feels the brunt of the latest outbreak of chicken cholera, at least one group of farmers is celebrating. Not only has the price of prawns rocketed from 150 baht per kilogram to 200 baht, but prawn farmers are using the revived interest in prawns to penetrate new markets in Europe and Japan.

Phot Aramwattananon, deputy president of the Association of Black Tiger Prawn Farmers, Producers and Exporters, said, “Consumers are turning to prawns in preference to chicken following the outbreak of chicken flu in other parts of Asia and chicken cholera in Thailand. But the rising prices can also be attributed to the fact that many producers had lowered their production to prevent losses at a time when prices were low.”

Thailand’s black tiger prawn industry has been buffeted by US allegations of market dumping, which has seen a heavy reduction in the volume of prawns going to Thailand’s number one prawn export market. Thailand has consistently fended off the accusations, noting that costs of producing farmed prawns in Thailand are considerably lower than those of harvesting marine prawns in the US. However, Thailand’s black tiger prawn industry feels it will be able to pull itself up by a shift of focus towards the European and Japanese markets. (TNA)

Cabinet gives nod for anti-HIV drug plant

Proposed by the Government Pharmaceutical Organization (GPO), the government has approved a plan to construct an anti-HIV drug plant in Thailand to meet the World Health Organization (WHO)’s standard. The Cabinet agreed to the proposal at its latest meeting.

The move is aimed at meeting the WHO’s requirement, stating that as of the year 2005, countries which are eligible for financial assistance from the WHO’s World AIDS Fund must purchase anti-HIV medicines from only standardized plants certified by the WHO.

The Ministry of Public Health announced that construction of the new anti-HIV drug plant was scheduled to be completed by the end of this year. The new plant will be constructed by selected contractors having qualifications and experience in design and construction of drug plants in accordance with the WHO’s criteria and standard. (TNA)

Tax measures to boost use of alternative energy

The Ministry of Energy is preparing a raft of tax measures designed to encourage the use of alternative energy, including wind, water, biomass and solar power, from the current 0.5 percent to 7.5 percent by the year 2011.

Siriporn Sailasuta, Director-general of the Department of Alternative Energy Development and Efficiency, said that her department has been asked by the ministry to study measures to promote the use of alternative energy in order to reduce the country’s fuel imports. Tax measures are likely to include the carrot of tax concessions for users of alternative energy sources, in particular industries which consumed large quantities of energy.

“In addition, the Ministry of Energy will focus on the promotion of research and studies on the use of alternative energy in Thailand, with the government providing partial financial assistance,” Siriporn said, adding that more companies investing in Thailand will be using alternative energy sources which is now required by current legislation. (TNA)

Thai energy plans may spur a Singapore tax cut

Singapore and Thailand look set to become embroiled in a race to become the region’s foremost oil hub if Singapore announces new tax cuts to curb competition from Thailand.

An oil industry source recently told TNA that Singapore was desperately drawing up measures in response to Thailand’s plans to become a regional hub for the oil trade, in anticipation of the official opening of the Sriracha Hub in the eastern Chonburi Province on 29 January.

Noting that the oil trade formed one of Singapore’s main sources of revenues, the source said that the Singapore government may slash corporate income tax from 10 percent to 5 percent in order to compete with Thailand’s announcement that it would cut corporate income tax to 10 percent from its previous level of 35 percent.

“If Singapore cuts taxes, Thailand might have to make adjustments in order to boost its competitiveness again. Traders are currently working out how best to reduce costs. This comes despite the fact that Thailand has appropriate strategies for becoming a hub for the oil trade, with links to southern China, Indochina and other countries,” the source said.

The Thai government has already announced that it will cut the red tape surrounding imports and exports of oil, and is likely to reduce prices for oil tankers and storage facilities to below the levels currently charged by Singapore. (TNA)

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