Vol. XIII No. 24
Friday June 17 - june 23, 2005

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Fun City By The Sea

Updated every Friday
by Saichon Paewsoongnern

 

BUSINESS 
HEADLINES [click on headline to view story]: 

BOT unconcerned over movement of the baht

Asian countries to lead world economy

Govt to set up new task force to probe finances of state officials

BOT decides to raise repo by 0.25%

Million treasures of Rayong is finger lickin’ good

World Bank praises Thai economic growth and investment environment

Thailand committed to valuable labour

PM to open nation’s first community biodiesel plant

‘S Car’ to be materialized in one month

No need to panic over economic woes

Leading economist warns of US bubble economy

BOT unconcerned over movement of the baht

The governor of the Bank of Thailand (BOT), M.R. Pridiyathorn Devakula has expressed satisfaction with the present movement of the baht, as he considers the current value appropriate under the present economic conditions.

The central bank has intervened to support the baht and ensure its stability after the local currency weakened rapidly over the past week, he admitted to journalists on Thursday.

It has now begun to stabilise at a suitable level in the current economic conditions, the BOT governor said.

The baht has depreciated by around 2% against the dollar and 5% against the euro since the end of April.

The weakening of the baht is likely to lead to an increase in Thailand’s exports to the European Union (EU) because they are now cheaper.

But a further depreciation in the baht would severely affect exports to other destinations, except the United States, he said.

“We don’t want the baht to weaken too much but we are committed to allowing the market mechanism to establish its exchange rate. We also do not want the currency to strengthen too much because it will affect the value of imports,” said the BOT chief.

The government’s decision to float diesel prices was the right move as it is likely to help the country save on energy.

M.R. Pridiyathorn shrugged off mounting concern over higher inflation. The central bank is well prepared to cope with inflation, he said. (TNA)


Asian countries to lead world economy

Asian economies, led by China, Japan and India, are growing rapidly and will play an increasingly significant role in the world economy, visiting Singapore Senior Minister Goh Chok Tong said here on Thursday.

The growing Asian economies, especially China, Japan and India, would spearhead the world’s future economic growth, the former Singapore prime minister told a Bangkok audience.

China, Japan and India are likely to become future world economic giants.

Their rapid growth, greater competitiveness and economic self reliance would soon make them economic rivals to the United States and the European Union (EU), he said.

However, the growing competition between Asian countries could cause economic disputes, the Singapore senior minister warned.

Southeast Asian economies, including Thailand, Malaysia, Vietnam and Singapore, are also significantly expanding and attracting large-scale and modern investment projects.

The Southeast Asian economies would become a major driving force in the development and prosperity of the Asian economy as a whole, he predicted.

The former Singapore prime minister was visiting Thailand to participate in the 15th Asian Corporates Conference in Bangkok June 9-10.

Major economic issues, including prospects for regional and world economic growth and the global energy situation, were the top topics discussed at the two-day seminar.

More than 800 Thai and foreign experts attended the conference.

The impact of the last December tsunami on the regional economies was also discussed.

The visiting Singapore senior minister and Prime Minister Thaksin Shinawatra held a private meeting here last week. (TNA)


Govt to set up new task force to probe finances of state officials

Prime Minister Thaksin Shinawatra insisted that he would press ahead with the establishment of a special task force aimed at probing the finances of state officials.

The prime minister, who stressed that the new task force would not duplicate the work of the National Counter Corruption Commission (NCCC), said that the task force would, instead, relieve the commission of some of its workload.

“The NCCC has nine members. They simply can’t cope. There are over 2 million state officials, as well as state enterprise workers,” he noted.

Not all state officials will have to declare their finances to the new task force.

The new body will be specifically aimed at state officials who work directly with the public, and who might run into conflicts of interest.

Although the task force will deal with officials at all levels, it will focus on officials holding positions which could be easily open to corruption.

The prime minister said that he was currently trying to decide who should sit on the committee, and had asked Deputy Prime Minister Wissanu Krea-ngam to help oversee the issue.

Stressing that the new task force did not break constitutional law, he said that it would not violate the personal freedoms of state officials, and would only open up the files of officials who were subject to complaints. (TNA)


BOT decides to raise repo by 0.25%

The Bank of Thailand (BOT) has increased its key 14-day repurchase interest rate by 25 basis points to 2.5% — the highest rate in four years — to help curb the country’s rising inflation rate.

The Repo rate has been raised because the Thai economy has grown more slowly than projected because of hefty oil prices, the tsunami disaster and the violent unrest in the country’s southern border provinces, BOT’s deputy governor, Bandid Nijathaworn, told TNA on Thursday.

Rising fuel prices pushed up Thailand’s basic inflation rate to 1.2% in May, from 0.8% in April.

Inflation is likely to continue to rise because of high oil prices and increased production costs, he said.

“Inflationary pressure has mounted considerably. So monetary policy is being used to control the inflation rate and ensure it won’t affect the economy,” he said.

The Thai economy should continue to expand satisfactorily despite the negative factors, Bandid said.

Private spending will still play a key role in stimulating the Thai economy.

The BOT’s increase in the Repo rate is a signal to commercial banks that they can now increase their interest rates.

How quickly these rates rise will be depend on the individual banks’ liquidity, he said.

The BOT was particularly concerned about the current trade deficit of US$3 billion in the first four months of the year.

Thailand’s current account deficit is expected to continue this year because of high imports of fuel and capital goods.

Government agencies have been instructed to supervise the deficit and the economy should continue to grow by 4.5-5.5%, Bandid said. (TNA)


Million treasures of Rayong is finger lickin’ good

Chatchanan Chaisree

Suan Yason (Khon Khoey Ma), a village style restaurant in Rayong where customers eat with their fingers instead of using a spoon and fork, opened five years ago said owner Uthaiwan Ngernbookkhon. Members of the family and neighbours do the cooking. Customers are from the province and from as far away as Chantaburi and Trat, the latter tending to call in over the weekend for lunch.

Customers seated in a circle to enjoy khaw karb mark.

The signature dish of the house is “khaw karb mark”, or “the million treasures of Rayong”, made from rice with shrimp paste, zalacca, onions, fresh chillies and grilled fish.

To prepare, said Uthaiwan, first mix the shrimp paste, zalacca, onions and fresh chillies with the hands, then put in the cooked rice and eat with the grilled fish and cooked vegetables. Don’t use a spoon to eat it: instead, enjoy the texture of the food on your fingers. Khaw karb mark is a rural convenience food often taken when going out into the countryside to work, or when travelling, as it stays fresh for a long time.


World Bank praises Thai economic growth and investment environment

The head of the World Bank in Thailand has praised Thailand’s economic growth. He said the country had developed a more promising investment atmosphere than either India or Brazil.

Thailand’s economic growth has been impressive and the country’s investment environment internationally renowned, the World Bank’s director for Thailand, Ian Potter, told a seminar in Bangkok.

Thailand ranked after Malaysia but ahead of India and Brazil, according to the World Bank’s two-year economic survey of 50 countries.

But the World Bank director warned Thailand that government red tape and the country’s bureaucratic culture could hinder investment growth.

Thailand should improve its workforce’s foreign language and computer skills, he suggested.

It is difficult to maintain an impressive economic growth rate in the face of competition from other countries, especially the emerging East European nations, where the costs of investment are relatively low, he warned.

Meanwhile, a senior economist at the World Bank said Thailand still lacked enough professional workers and basic infrastructure.

Thailand needs to improve its capacity to compete with other nations by relaxing its tough government regulations, which have proved a significant obstacle to foreign investment, he said.

Bangkok’s investment environment is far more encouraging to foreign investors than other parts of the country, he said.

Half of Bangkok’s businesses use the Internet and information technology (IT), compared to only 30 percent of Thai companies in the South and the Northeast, he said.

Thailand must improve the ability of its workforce even though it is likely to push up capital costs by 15 percent.

The country needs to improve in several areas to stay competitive in the view of foreign investors, the deputy secretary general of the National Economic and Social Development Board (NESDB), Arkhom Termpittayapaisith said.

‘’We need to do more to increase the country’s production capacity, improve the workforce’s skills, and reduce the customs process, to allow imports and exports to flow more quickly,” he said. (TNA)


Thailand committed to valuable labour

Thailand is fully committed to promoting basic labour rights, Labour Minister Sora-at Klinpratoom has told the International Labour Organization (ILO).

Addressing delegates at an ILO meeting in the Swiss city of Geneva, Sora-at spoke of Thailand’s recognition of the importance of the value of labour through the promotion of basic labour rights, support for social arbitration, the upgrading of educational achievements and the expansion of employment opportunities for women and young people.

He also noted that the Thai government was working to create new entrepreneurs among small-scale industries within the framework of the government’s overarching policy of poverty elimination.

At the same time, he said, the Thai government attached extreme importance to the problem of human trafficking, and had already signed agreements with Cambodia, Laos and Cambodia to legalise the status of workers from these countries, giving them the same rights as Thai workers.

The Thai government had also signed agreements with Cambodia, Laos, China, Vietnam and Myanmar concerning human trafficking in the Mekong sub-region, he added. (TNA)


PM to open nation’s first community biodiesel plant

Thailand received its first community biodiesel production plant last Saturday when Prime Minister Thaksin Shinawatra officially opened the project in the northern province of Chiang Mai.

The project represents a cooperative effort involving the Department of Alternative Energy Development and Efficiency and several other bodies currently conducting research into the use of biodiesel as an alternative fuel.

A pilot scheme for the project has seen the production plant combine used oil from a potato chip factory with conventional diesel fuel at a ratio of 2:98.

Able to produce 100,000 litres of the fuel each day, the plant will cost the fuel Bt0.50 (50 satang) per litre below the price of diesel.

According to Boonthong Ungtrakul, head of Chiang Mai’s biodiesel research project, tests on over 1,000 vehicles have shown that biodiesel does not harm vehicle engines, and in fact reduces emissions.

Biodiesel is already on sale in two Chiang Mai petrol stations, and will be sold in another three stations in the province by the end of this month.

Research will now begin into formulas which use proportionately more vegetable oil – much of it derived from local cafes - and less diesel.

Glycerine, a by-product of the production process, will also be used to make soap and shampoo in the future, when the Department of Alternative Energy Development and Efficiency hopes to expand the project to other areas. (TNA)


‘S Car’ to be materialized in one month

The design for the Thai government’s new model ‘energy-saving car’ has been completed and the project to build it will be launched within a month, Industry Minister Watana Muangsook told journalists on Wednesday.

The government plans to use tax incentives to encourage motorists and government agencies to use the model car, dubbed the ‘S Car’, he said.

“The government wants government agencies and taxi drivers to be the first to use the ‘S Car’ and hopes other motorists would follow suit,” Watana said.

The government plans to raise the excise taxes on various types of pick-up trucks to offset the reduced tax revenue from the sales of the ‘model car’.

“The planned increase in excise duties on pick-up trucks will be around 2-3 percent, or about 8,000 to 10,000 baht each, depending on the models. This is expected to have a minimal effect on truck owners, as it is relatively small compared to the purchase price of the trucks,” the minister said. (TNA)


No need to panic over economic woes

Prime Minister Thaksin Shinawatra has urged the public not to panic over the economic problems currently facing the country.

The government will work even harder to deal with them, he said on Friday.

Rising fuel prices, the violent unrest in the country’s southern border provinces, the impact of the last December tsunami disaster, the current account deficit and higher inflation has eroded confidence in the country’s economy, the prime minister conceded.

“It is normal that everybody should feel upset with the current economic woes. But don’t panic and be cool, because the government will work harder to cope with them,” Thaksin said.

But people need to be prepared to contribute too.

“We will do our best. However, everyone needs to try to help themselves as well,” he said.

The prime minister said he had asked government agencies to consider any request from transport operators who have been adversely affected by the rising oil prices. (TNA)


Leading economist warns of US bubble economy

The economic bubble in the United States is likely to burst next year as a result of inflated property prices and the country’s persistent current account deficits, according to a leading economist.

The US economy is experiencing difficulties in many areas, the president of Phatra Securities Plc, Supavut Saichue, told a seminar in Bangkok on the US economist Paul Krugman’s analysis.

Apart from the chronic current account deficits, the US is facing a marked decline in direct investment and investment in stocks, he said.

Asian central banks, especially the Bank of China, have invested more than US$500 billion in US bonds.

The US property sector is in the throws of a bubble growth cycle, which could burst at any time and affect the economy, he said.

“Many analysts predict that US bubble growth will burst in 2006. Personally, I agree with this projection,” he said.

Two issues need to be closely monitored, he said.

The first is who will be the new Federal Reserve (FED) chairman and whether he can ease the country’s huge current account deficit of more than US$800 billion.

The second is China’s response to US pressure to adjust the value of the yuan.

“Despite the fact that China has huge investments in US bonds, serious problems may occur if there is change in the relative value between the renminbi and the dollar,” he said.

The US government is likely to significantly revamp the economy soon, he predicted.

In particular, it will try to reduce imports and increase exports, which, in turn, will affect countries that export goods to the US.

This would seriously affect many countries around the world, causing an economic slowdown, he said. (TNA)



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