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

Corporate tax rate to remain unchanged

Government joins with private sector in creating Science City

SET ready to end minimum collateral for small accounts

Thailand invites Philippines to help produce environmental friendly fuel

Thai chickens for Russian missiles?

Oil Fund set to run a 55 billion baht deficit

Property business still on the rise

Corporate tax rate to remain unchanged

Deputy Prime Minister Suchart Jaovisidha has reaffirmed that the tax collection policy of the Revenue Department should remain unchanged. But he admitted that rising oil prices would have a slight impact on profits of private businesses.

Suchart said rising oil prices had affected the costs of businesses in the private sector, and tax collection could decline. However, the corporate tax would not be affected due to the country’s economic expansion in which several research agencies had forecast that Thailand’s economy would grow between 6.5-7.1% this year.

The government’s efforts in maintaining the diesel oil price would also help reduce the impact, as inflation would rise no more than 3% which is appropriate for the country’s current economic situation, Suchart said. “The tax collection structure of the Revenue Department and Excise Department should not be changed. Although there are requests that the government lower the corporate tax, citing that the tax in Thailand is around 5-7% higher than that of Singapore. But you see, the cost of living in the island state is about 10% higher than Thailand, and this has persuaded foreign investors to prefer to invest in the Thai economy”, he pointed out.

Suchart said the tax collection policy should stay as it is because global crude oil prices had started declining, and the tax collection for fiscal 2004 should meet the target. (TNA)


Government joins with private sector in creating Science City

Thailand’s public and private sectors are joining together in an ambitious project to create a tax-free ‘Science City’ in a bid to encourage technological innovation and pull in foreign investment. The move was discussed during recent talks held between Science and Technology Minister Korn Dabbaransi and senior executives from over 400 production plants from the country’s eastern provinces.

Describing the tax-free ‘Science City’ as a means of accommodating future technological advancements, Vikrom Kromdit, chief executive of Amata Corporation Ltd. noted that the new science park is in accord with the government’s policy of encouraging innovation and boosting the technological capability of Thai industry.

It is hoped that the Science City will both encourage technological advancements among companies already based at Amata Nakorn, and also attract more investment from abroad.

Vikrom said that an increasing number of companies based at the industrial estate were engaging in research and development, with an eye to cutting production costs. The ‘cyber free zone’ of the industrial estate has already been prepared for the creation of the Science City, which will benefit by its relative proximity to Bangkok’s new Suvarnabhumi Airport. (TNA)


SET ready to end minimum collateral for small accounts

The Stock Exchange of Thailand (SET)’s president Kittirat Na Ranong voiced support for a proposal by some securities brokers to scrap a minimum 10% collateral requirement for stock investment portfolios with credit facility of less than one million baht. He said the decision on the proposal depended on the Securities Brokers’ Association, but in his personal view, the matter deserves support. However, he agreed to back any resolution made by the association. Kittirat said members of the association must first discuss the matter internally for a final conclusion.

Should the association agree to abide by the proposal, Kittirat said he was willing to lend support, and would raise the matter for discussion with the Securities and Exchange Commission (SEC).

The SET chief said he did not think the proposed cancellation of the minimum 10% collateral requirement would affect investment or increase risk exposure by securities brokers since the number of investment portfolios with credit facility of less than one million baht remains small. (TNA)


Thailand invites Philippines to help produce environmental friendly fuel

Prime Minister Thaksin Shinawatra recently invited sugar cane and palm growers in the Philippines to join his plans to produce environmental friendly fuel to substitute for imported energy.

Thaksin sought the cooperation through Philippines President Gloria Macapagal Arroyo whom he met during their bilateral talks as the two leaders took part in the Third International Conference of Asian Political Parties (ICAPP), held in the Chinese capital city of Beijing from September 3-5. The conference aimed at promoting the role of political parties in development and peace.

The Thai prime minister told President Arroyo that Thailand wanted to promote palm and sugar plantations in her country in order to produce raw materials for Thailand’s ethanol industry. Thailand wants to develop ethanol production in the region in order to reduce its dependency on imported oil which has become more expensive in recent months. (TNA)


Thai chickens for Russian missiles?

Prime Minister Thaksin Shinawatra has admitted that the government was considering trading Thai chicken products for Russian military equipment, especially missiles. He said the government was considering trading agriculture goods, especially chicken products for Russian hi-tech weapons.

Russia imports more than a million tons of chicken products every year from other countries. Thailand is one of the world’s top chicken exporters. “The needs of both countries might be matched,” Thaksin said. The Thai ambassador in Moscow has been instructed to propose the scheme to the Russian government. (TNA)


Oil Fund set to run a 55 billion baht deficit

The government’s Oil Fund could run into the red to the tune of over 55 billion baht by the end of this year as a result of government measures to subsidize the price of diesel, according to a report published recently by a leading economic research center.

The Kasikorn Research Center said that its calculations indicated that the Oil Fund was likely to record a deficit of 55.3 billion baht by the end of 2004. Previous forecasts had put the deficit between 31.8 billion baht and 35.8 billion baht. The report attributed the higher than expected deficit to the continual rise of world oil prices.

At the same time, the research center warned of the inevitability of consumers having to shoulder some of the burden of the massive deficit.

Making predictions for oil prices over the coming month, the report said that the retail price of oil was likely to rise by 10.7 percent to stand at 17.59 baht per liter by the end of the year. This in turn was likely to push up the rate of inflation to 3.5 percent next year, compared to 2.7 percent in 2004. This indicated that the government’s subsidization of oil prices did little more than delay the impact of rising oil costs on inflation and on the economic situation as a whole. (TNA)


Property business still on the rise

Thailand’s property business continued to grow in the first half of this year, given a higher register of residences in greater Bangkok and an increase in total cement sales, according to the Bank of Thailand (BOT). Nitaya Pibulratanagit, the BOT’s senior director of Internal Audit Group, disclosed that the central bank’s decision to raise the 14-day repurchase rate by 25 basis points would not affect the property business.

The BOT believes the property sector will continue to grow, as could be witnessed by an increase by 12.2% in cement sales to 13.73 million tons in the first half from that of the same period of the year before. As well, total land purchase and sale value in the July-August period increased by 40 billion baht per month, which is close to that of 1996 when the economy enjoyed the highest growth. The BOT said growth in housing purchases stemmed from real demand by the public, not from speculation. (TNA)