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Diesel price float won’t affect Thai economy
The Thai economy will not be adversely affected if the
government decides to float diesel oil prices, according to the Bank of
Thailand (BOT). The basic inflation rate is estimated to be 3.5%, which is
still within the target set by the central bank.
BOT’s Assistant Governor Atchana Waiquamdee said the
central bank had made an economic growth estimate for the next eight
quarters so that it could be used for the bank’s decision on the
implementation of its monetary policy. According to the estimate, the
floatation of diesel oil prices will not negatively affect the actual costs
of entrepreneurs, but it would have a direct impact on transportation and
services sectors.
Atchana said the BOT believes the government will float
diesel prices in the first or second quarters of next year. To prevent
possible effects from the diesel price floatation, the central bank recently
held a meeting to assess the situation and is ready to adjust the monetary
policy every six weeks.
“If the government decides to float diesel oil prices,
the transport and services sectors will be affected because they count
mainly on diesel oil consumption. In other sectors, bunker oil will be used
as main fuel for production,” Atchana stated. She said higher costs in
various industries came from an increase in transport and fuel tariff-based
power costs. (TNA)
Chickens for jets deal
The Thai government expects to finalize a
chickens-for-jet fighter planes plan with Russia in the next few weeks,
according to Commerce Minister, Watana Muangsook.
Thailand is waiting for Moscow’s agreement to the
barter trade scheme, swapping Thai chickens for Russian planes, which was
discussed by the Russian and Thai leaders, during Prime Minister Thaksin
Shinawatra’s recent visit to Russia.
Thaksin proposed a government to government trade with
Russia – selling 250,000 tons of Thai chickens for 22 Russian jet
fighters. The value of the jets exceeds that of the chickens, so Thailand
will make up the difference in cash.
“We will export 50,000 tons of chicken to Russia every
year. So it will take five years to complete the quota in the deal before
Russia officially becomes a member of the World Trade Organization,” said
Watana.
If Russia agrees to the Thai proposal, the Royal Thai Air
Force will decide which jet fighters will be purchased from Russia. (TNA)
Consumer confidence index drops again in September
The consumer confidence index in September continued to
drop for the ninth consecutive month of this year to 94.5 points, which is
below 100 for three months in a row.
Thanawat Polvichai, director of the University of Thai
Chamber of Commerce’s Economic Forecasting Center, disclosed that the
confidence index in overall economy dropped from 92 to 91.1, the lowest in
16 months. The confidence index on job opportunities declined for the eighth
consecutive month to 87, the lowest in 13 months, and that on future incomes
the index dropped from 106.2 in August to 105.3 points.
Thanawat said the current consumer confidence index stood
at 86.8 in September, compared with 87.8 in August. As well, the future
confidence index reduced from 96.6 to 96, which is below 100 for the two
consecutives. He said that this showed consumers have lost confidence in the
future situation and it is expected the confidence index on the economy, job
opportunities and incomes will decline further.
Thanawat forecast that global crude oil prices will stay
at an average of US$40 per barrel next year. The global economy is now
expected to grow around 4%, this year compared with the anticipated 4.5%.
Should exports expand satisfactorily at around 12-14%, he said, the Thai
economy would grow 5.5-6% next year.
It is projected that oil prices will hover around US$50
per barrel in the first quarter of next year, and drop to US$40-45 per
barrel in the second quarter when the Organization of Petroleum Exporting
Countries (OPEC) increases its production capacity. Oil prices are likely to
further drop to US$35-40 per barrel in the second half of next year,
Thanawat said. (TNA)
Oil prices dent profits of listed companies
Stock Exchange of Thailand (SET) president Kittirat Na
Ranong has admitted that the global rise in oil prices was denting the
profit margins of listed companies, but insisted that the SET was doing
better than many others.
Kittirat said that it was the responsibility of everyone
to accept the burden of higher oil prices, and conceded that the higher
domestic retail prices for fuel were having an impact on company
performance. However, he stressed that companies were still recording net
profits and that the oil price rise had merely cut the rate of profit
growth, adding that the SET compared favorably to other stock markets, where
companies were struggling to make profits.
Insisting that Thailand’s stock market remains a good
one to invest in, the SET chief also said that while rising oil prices could
push up inflation, this was likely to be a short term phenomenon which would
not affect interest rates.
“The price of goods in Thailand has not risen since
1999, while public income has moved steadily upwards. Even if the price of
goods goes up, the impact will be marginal. If you look at the past five
years, the price of goods has risen across the world, but people have been
able to adjust to this”, Kittirat said. (TNA)
Government wants entrepreneurs to establish employee pension funds
The government plans to promote private pension funds and
employees of private firms are being encouraged to save money for their
retirement through these funds. The scheme is expected to start in 2006.
The government wants entrepreneurs to establish pension
fund programs for their employees. Under the scheme employees would
contribute between 3-5% out of their monthly salaries and the employers
would match their contribution. The money contributed to the program could
be used as a deduction in the employees’ personal income tax returns.
The scheme, expected to be implemented in 2006, will be
on a voluntarily basis. The government believes more than ten 10 billion
baht will be saved in the first year, and should increase by another 70-80
billion baht within the first five years.
The pension funds are part of Finance Minister Somkid
Jatusripitak’s plans to boost domestic savings in line with the
government’s investment program which will require more than a trillion
baht in investment in building infrastructures over the next five years. (TNA)
More taxes loom on the horizon
The government plans to take action against shops selling
contraband liquor and cigarettes and selling cigarettes to under age
teenagers, and to tax shops offering on-line games.
Finance Minister Somkid Jatusripitak, has given the
Excise Department a month to implement a clear-cut strategy to stop shops
selling illegal liquor and cigarettes and selling cigarettes to people under
18 years old, including revoking their business licenses and arresting those
who break the law. Somkind said action would be taken against government
officials who collaborated with unlicensed shops.
Meanwhile, Uthit Thammavatin, the director- general of
the Excise Department, told a workshop that the government’s target for
excise tax collection in the fiscal 2005 was 313 billion baht – an
increase of more than 10 percent from the last financial year.
“There are also plans to increase prices of cigarettes
and liquor, which is likely to help reduce consumption since cigarettes are
around 150 baht per packet overseas, compared to less than 40 baht a packet
in Thailand,” Uthit said.
The Excise Department also plans to collect taxes on
disposable electronic goods or industrial waste, similar to that levied in
many foreign countries. (TNA)
Exports surge in first
eight months of this year
Thailand’s exports in the first eight months of this
year increased 22.9% and imports surged 30.4%, particularly in August, which
saw a record high of shipments, according to the Ministry of Commerce.
In a report on international trade to the cabinet, the
ministry’s officials disclosed that exports in August totaled US$8.29
billion in value, up 27.7% from the same month last year. It was the fourth
consecutive month the export value exceeded US$8 billion. It brought the
total export value in the first eight months of this year up to US$62.75
billion, an increase of 22.9% from the corresponding period the year before.
Imports in August stood at US$8.5 billion in value, a
recorded rise of 35.4% from the same month of the previous year. It brought
the total import value in the first eight months up to US$62.26 billion, up
30.4% from the same period last year.
Imports increased in all categories of products in tandem
with the country’s economic and export growth, as well as the increase in
global fuel prices. It resulted in a trade deficit of US$216 million in
August following three months of surplus. However, the trade balance in the
first eight months remained in surplus of US$493.
Major destinations with high export growth include the
Association of Southeast Asian Nations (31.3%), Africa (57.3%), the Middle
East (33.5%), Indochina and Myanmar (30%), Latin America (29.2%), India
(40.8%), China (24.4%) and Australia (15.7%).
Farm and agro-industrial products enjoyed export growth
of 13.5% and 24.9% respectively during the January-August period. They
include rice, cassavas, natural rubber, processed chickens, electrical
appliances, electronics, vehicles and parts, textiles, plastics,
construction materials, rubber products, jewelry, furniture, and cosmetics.
(TNA)
Foreign investors keen on Thai economy
Finance Minister Somkid Jatusripitak announced that
foreign investors are paying greater attention to the overall picture of the
Thai economy, following the success of the ‘Thailand Focus 2004’
conference recently held in Bangkok.
Speaking about a road show on the economy of the
Association of Southeast Asian Nations (ASEAN) in the United States by a
group of finance ministers, Somkid said many foreign fund managers were
invited to get information on economies of individual members of ASEAN. In
particular, Thailand was in a center of attraction, as around 70-80 fund
managers participated in a separate meeting where they were briefed on the
overall picture of the Thai economy.
Somkid revealed that separate meetings held by Singapore
and Indonesia to give information on the overall economies of the two
countries drew only around 20 and 8 fund managers respectively.
Somkid pointed out more foreign investors knew about
Thailand partly because the country had recently organized the ‘Thailand
Focus 2004’ forum. He also noted that foreign buying on the Stock Exchange
of Thailand had regained momentum after the conference ended. (TNA)
Pearl awards new Gulf
of Thailand oil discovery
platform contract to CUEL
Pearl Oil (Thailand ) Limited, a subsidiary of Singapore
based oil and gas exploration and production company Pearl Energy Pte. Ltd.,
has announced the award of an engineering, procurement, installation and
commissioning contract to Thailand based CUEL Limited for a new US$10
million platform for its Jasmine oil field project in the Gulf of Thailand.
This is the first such contract awarded by Pearl Energy Pte. Ltd. for an oil
production project in Thailand.
(L to
R) Narong Boonyasaquan, managing director of CUEL Limited; Sivavong
Changkasiri, chairman of CUEL Limited; Richard Lorentz business director of
Pearl Energy Pte., Ltd. and Nopadon Mantajit director general of the
Department of Mineral Fuels.
Pearl Energy, incorporated in 2002, is an exploration and
production company with operations in Indonesia, the Philippines, and
Thailand. The company acquired block B5/27, 150 kilometers south of Rayong,
in approximately 200 feet of water in January 2004. Production is expected
in the range of 8-10,000 barrels of oil per day from 8 wells to be drilled
from the platform.
CUEL, established in Thailand in June 2000, is a joint
venture between Unithai Shipyard & Engineering Company Limited (67%) and
Asia Construction Limited (33%). The company is headquartered in Bangkok and
delivers integrated services including project management, engineering,
procurement, installation, construction, and commissioning through personnel
in the areas of oil, gas and offshore construction businesses worldwide.
CUEL operates its impressive 260,000 sq. m fabrication
facility at Laem Chabang and has thus far completed 27 offshore platforms
for oil and gas development sites including 2 oil central processing
platforms, the first ever designed and built in Thailand.
Making the announcement, Pearl Energy executive director,
Richard Lorentz said, “The contract award is a significant step forward
for both Pearl and Thailand. For Thailand, with the current escalation in
crude oil prices weighing heavily on the economic growth of the country, the
ability to access domestic crude oil reserves could not be more timely.
“This contract will also contribute substantially to
the corporate strength of Pearl Energy and add to the success we have
already achieved in Indonesia,” Lorentz said.
CUEL managing director, Narong Boonyasaquan said, “In relation to
Thailand’s energy policies, CUEL not only directly supports the national
energy strategy regarding energy security, but it encourages other national
policies as well, for example utilization of local contents, both materials
and human resources, including hundreds of SME businesses. CUEL has been an
impressive Thai business success story and the contribution we have been
able to make in the development of Thailand’s oil and gas reserves has
been a wonderful achievement.”
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