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EGAT privatization
‘necessary for energy hub vision’
A senior Energy Ministry official has touted the proposed
privatization of the Electricity Generating Authority of Thailand (EGAT) as
the only mean to strengthen the organization, and enable it to participate
in the government’s plan of transforming Thailand into a regional energy
hub.
Speaking at a recent public hearing on the EGAT
privatization, Viset Choopiban, assistant to the energy minister, said that
the privatization would allow EGAT to mobilize its own capital for
investment projects, while reducing the state’s burden as a guarantor of
loans.
Nonetheless, he stressed that the privatized EGAT would
continue to work in accordance with government policies, in particular the
government’s strategy of transforming Thailand into a regional centre for
the energy trade. At the same time, he said, the privatized EGAT would serve
to promote the government’s strategy of boosting economies and societies
of neighboring countries, including the Association of Southeast Asian
Nations (ASEAN) Power Grid Project for regional resource and energy pooling.
As part of the ASEAN project, countries in the 10-member
regional grouping will promote ‘national champions’ in electricity
operations, which will act as regional players in the electricity industry.
The government also hopes to encourage Thai electricity
companies to invest in neighboring countries, which, in turn, is hoped to
lead to greater economic development, a reduction in social problems, and
the elimination of economic migration to Thailand.
Viset said, “It is vital that Thailand revamp its
electricity operations in order to maintain costs at a low level and to
ensure that the system remained stable. The new system would operate on an
enhanced single buyer model (ESB), with agencies to supervise and maintain
the rules for electricity providers; thus, creating a clear separation
between providers and supervisors. This would serve to enhance competition
in the electricity production system, as well as encourage companies to
boost their efficiency and develop their operations.”
Wiset added that a privatized EGAT would also lead to development and
transparency in accordance with international standards, while ensuring that
the electricity sector remained flexible in line with the prevailing
business climate. (TNA)
Construction industry value soars
The Ministry of Industry (MOI) recently stated that the
country’s overall construction value this year is expected to rise to as
high as 700 billion baht as continued growth in the Thai economy will lead
to strong investment in large-scale construction projects.
MOI minister Pinit Charusombat said, “There will be
strong investment in the construction sector especially on large-scale
projects, not only at the new Suvarnabhumi international airport but also
the planned expansion to Bangkok’s existing sky-train networks and public
low-cost housing projects.”
“In the past, we saw lots of stalled construction
projects around town but now construction machines are up and running again,
which clearly indicates that the country’s economy has much improved and
investment in the construction sector is strong,” said Pinit.
However, the expansion of the construction industry has led to a shortage
in supply of several building materials including cement and steel, forcing
up prices. Pinit stressed that the government is keeping a close eye on the
situation to ensure consumers will not be adversely affected by a shortage
of building materials on the market. (TNA)
BOT sees no sign of bubble growth in property business
A sign of bubble growth remains unseen in the property
business although loans extended in the sector have increased, according to
the Bank of Thailand. Speaking at a seminar on “Property Business and
Economic Growth of 8%,” Atchana Waiquamdee, senior director of BOT’s
Domestic Economic Policy Department, said that the property sector had a
significant influence on the country’s economic growth. The whole sector
accounts for around 6-7% of the country’s gross domestic product (GDP),
but its sales had indirect effects on other businesses, including building
materials, furniture, and electrical appliances, she stated.
As well, the employment in the sector is the largest; so,
the recovery or contraction of the sector could have more or less impacts on
the economy, she noted.
She said that the property business had markedly picked
up since 2001, and there was no sign for the bubble growth for now.
She conceded, however, that loans extended in the sector
had increased, but not to the same worrying rate as that of 1990 when
housing loans grew 130 percent.
She said the BOT did not want to see the repetition of
the bubble growth in the sector because it could have an effect on the
economic stability and noted that the bubble, if occurred in the sector,
would have a direct impact on commercial banks’ financial positions and a
domino effect on the real business sector.
“What we can do to prevent it is to slow down the rapid
economic growth, and to boost the stability of the financial institutions
sector,” Atchana said. (TNA)
Leading bankers see interest rates staying low
The Thai Bankers Association projects that the
country’s current low interest rate environment will remain unchanged in
the near future, even with increased lending from the country’s financial
institutions, particularly from commercial banks.
The country’s largest commercial bank, Bangkok Bank
Plc’s president Chartsiri Sophonpanich, who also is the association’s
chairman, said interest rates will not be increased in the foreseeable
future. “The low interest rate environment aids the country’s economic
growth and helps boost investment in the private sector,” he said.
However, he noted that the association would have to
closely monitor interest trends in foreign countries and the interest rate
policies of the Bank of Thailand (BOT) and the Ministry of Finance.
The maintaining of the country’s low interest rate
policy is being witnessed in all types of commercial bank deposit accounts.
Currently, the interest rates on savings accounts are the lowest at 0.75
percent, while the lowest lending rate is 5.50 percent, amidst flooding
liquidity in the country’s financial system.
Chartsiri also projected that lending in Thailand will
expand by 10 percent, in line with economic growth, which is on a rising
trend. More industrial manufacturers are acquiring loans for their business
expansion.
“The country’s economy is growing, particularly this year, and I see
financial institution lending increasing by 10 percent,” Chartsiri said.
(TNA)
Strategic oil reserve
plan needs more study
Thailand has suspended plans to build a strategic oil
reserve on top of the 36-day supply it is legally bound to keep. Energy
Minister Prommin Lertsuridej recently told reporters that Thailand’s
strategic oil reserve plans have been shelved because the program needs more
time to study.
In September of 3003, Metta Banturngsuk, head of the ministry’s
planning and policy office, said it would take two months to finalize the
plan and a year to set up the strategic reserve of around two months of
crude oil supply. It was estimated that the reserve plan would cost the
government 20 billion baht ($510 million) to add to the 40-50 days of
reserves of crude and oil products, 36 days of which were required by law.
(TNA)
January consumer confidence index down
Thailand’s consumer confidence index on the economy in
January 2004 fell to 107.5 from 110.9 record high level reported in December
2003 because people were worried about the bird flu crisis in Thailand and
in some Asian countries.
The Economic and Business Forecasting Center at Thai
Chamber of Commerce University said in its report that all index items were
down for the first time in the last 6 months.
The report stated that confidence index on job
opportunity also dropped to 100.0 in January from 102.9 of a previous month,
while confidence index on future income went down to 121.0 in January from
123.3 in December last year.
However the report noted that the consumer confidence
index was still higher than the 100 level which was an indication that Thais
still believe the nation’s economy will continue to expand.
Apart from the bird flu epidemic, other negative factors
included the fluctuation in the stock market, which brought down the Stock
Exchange of Thailand (SET) composite index to a lower level than that of the
end of last year, the violence in the south, the worry about bubble economy,
the rising in baht value and the slow progress in financial institutions’
non-performing loans (NPLs) problem solving.
Encouraging factors included expansion in exports, oil
price control measure of the government and the government’s policy on low
interest rates to stimulate economy. (TNA)
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