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Vol. XIII No. 45
Friday November 11 - November 17, 2005

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by Saichon Paewsoongnern


HEADLINES [click on headline to view story]: 

Finance Ministry promotes plans to boost economy at provincial level

Capital inflows and healthy economic figures behind rise in baht, says BOT

Garment industry plans big export boost in 200

Thai business cautiously upbeat about economic outlook for 2006

Trade among ACMECS members believed to grow more than 700 percent in future

Canadian private sector keen to invest in Thailand

Private sector submits economic measures to PM

Surging inflation to highest level in seven years won’t affect Thai economy

Finance Ministry promotes plans to boost economy at provincial level

Speaking during a meeting of ministry officials, provincial governors and private business leaders based in Thailand’s upper northeastern region, Thanong said provincial CFOs should prepare indicative data on GDP, investment, consumption, exports, and other related information in their own provinces so that a clearer view on the local economy could be seen and development could be carried out correctly.

Local participants at all levels must have information in their hands to plan to develop industries in their own provinces, Thanong said, and business figures must be able to set up factories and industries in their own provinces, instead of being forced to order goods from manufacturers in Bangkok, he said. If this scheme is carried out, it could help reduce transportation costs.

The Board of Investment of Thailand (BOI) and related government agencies must assist in creating new businesses, he said, adding that the cost of land upcountry is cheaper than in the capital.

He further said that a number of provinces are now well prepared to host new industries because of sufficient infrastructures available there.

He also urged provincial CFOs, set up by Finance Ministry last year, to help provincial governors, who are the provincial chief executive officers (CEOs), in developing the economy in their provinces.

The Finance Ministry is ready to provide budget intended for conducting feasibility studies for projects. (TNA)

Capital inflows and healthy economic figures behind rise in baht, says BOT

The Bank of Thailand (BOT) has said the current strength of the baht against most other regional currencies is a result of a range of factors, including the country’s robust economic performance and capital inflows attracted by rising domestic interest rates.

However, BOT Governor M.R.Pridiyathorn Devakula said the strong baht would not weaken Thailand’s global competitiveness.

The governor also said that the value of the local currency was being boosted against currencies such as the US dollar by the profitability of local commercial banks and profit repatriation.

“The Bank of Thailand has closely monitored the situation. We think that while the baht is stronger than many other currencies, it won’t have any impact on our competitiveness. Therefore, we won’t be intervening to regulate the value of the currency. The Bank of Thailand has not been buying US dollars to store up on foreign currency reserves,” the governor said on Monday.

He said that the continuing sale of Thai stock by foreign investors would have no impact on the baht, arguing that the value of a currency is determined by capital flows, not whether foreigners buy or sell shares on the stock market.

He acknowledged that increasing Thai interest rates are attracting capital inflows, triggered in particular by trade and financial transactions from the European Union market. But the governor said he was not worried by such inflows, arguing they were not short-term speculative funds, but backed by concrete trade transactions. (TNA)

Garment industry plans big export boost in 2006

Thai textile and garment manufacturers have announced they are preparing plans to increase exports by up to 25 percent in 2006, especially to the American market.

A senior representative of the sector, Gartchai Jaemkajornkiat, said industry strength and weakness analysis and a competition strategy were being drawn up with the aim of boosting Thailand’s exports to the world market next year by 20-25 percent.

Gartchai sits as an industry representative on the Fashion Sector Competitiveness Committee, which has 122 companies as members.

The strategy will be presented to Vice Minister for Commerce Suvit Mesinsee in November, before being forwarded to Deputy Prime Minister and Commerce Minister Somkid Jatusripitak.

According to Gartchai, the private sector was expected to focus on defining and building new market opportunities. Thai manufacturers were also being encouraged to make ASEAN a significant base for the textile and garment industry export trade.

“The US market is worth 211 billion dollars and we aim to reduce trade barriers to a minimum. The emphasis is also on how Thai entrepreneurs can have direct access to major importers, which means possible joint ventures between Thai businesses and US importers,” Gartchai said. Problems with logistics and how to add value to Thai exports would also need to be addressed, he said.

During the first eight months of 2005, Thailand exported 2.2 billion dollars worth of garments, a 3.5 percent increase over the same period last year, and 2.1 billion dollars worth of textiles, up 8.75 percent. (TNA)

Thai business cautiously upbeat about economic outlook for 2006

Thai business leaders see good prospects for the Thai economy in 2006 which they believe will grow by 4-4.5 percent.

The Economic and Business Forecasting Center of the University of the Thai Chamber of Commerce polled over 800 members of the nationwide Thai Chamber of Commerce during their annual meeting in this central province.

Tanavat Polvichai, director of the center, said chamber members from across the country believe that the Thai economy will grow next year despite a number of risk factors that include the global energy price, violence in the southern border provinces, the bird flu threat, as well as the looming problem of non-performing loans, rising interest rates and inflation.

These factors may pose a threat to the Thai economy during the first half of the year. However, the outlook for the second half of 2006 could improve in response to government stimulation - chiefly investment activities for the mega-infrastructure development projects, along with its export drive.

Saowanee Thairungroj, dean of the Economics Faculty of the University of the Thai Chamber of Commerce, said the survey on Thai economic outlook for 2006 conducted among Chamber members and public sector representatives revealed a consensus growth projection of 4-4.5 percent. The respondents also suggested that the government ensure equal distribution of development opportunities, investment in human resources and alternative energy.

The private sector called for more government support for investment in the fisheries, tourism and agribusiness sectors.

Regarding public administration policy, the private sector said the government should carefully study implications of deregulation of various sectors, and be careful about budget expenditure and reduce corruption. (TNA)

Trade among ACMECS members believed to grow more than 700 percent in future

Thai Foreign Minister Kantathi Suphamongkhon said that he believes regional trade among the five member countries of the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) will grow more than 700 percent in the future.

In 2004 alone, trade among the ACMECS member states, including Cambodia, Myanmar, Laos, Vietnam and Thailand, grew 700 percent, Kantathi noted.

After an ACMECS foreign ministers’ meeting, Thai foreign minister told TNA, “I believe that trade among the ACMECS members will further expand considerably from the impressive growth of 700 percent last year after tariff barriers are eliminated.”

The ACMECS member countries agreed at the Foreign Ministers’ Meeting to reduce trade barriers, including red-taped customs procedures and double taxation, to further boost regional trade, he disclosed.

Thailand also agreed to cut import tariffs for the other four ACMECS members to zero percent under a regional contract farming deal.

Thailand’s four neighbors will be granted import privileges on 10 items, according to the Thai foreign minister. The products include cashew, castor oil, palm, potato, soybean, green bean, peanut, maize, sweet corn and eucalyptus. (TNA)

Canadian private sector keen to invest in Thailand

Deputy Finance Minister Chaiyot Sasomsub has said several Canadian private sector representatives have expressed interest in pursuing investment opportunities in Thailand.

During his visit to Canada, Chaiyot had talks with representatives of the Bank of Nova Scotia. The bank has a branch in Thailand and has expressed an interest in expanding its operations in Thailand. In response, Chaiyot said the Finance Ministry was in the process of amending the regulations to allow foreign financial institutions to hold up to 49 percent of shares, from the present limit of 25 percent.

The deputy finance minister also met executives of Magna International, one of Canada’s largest car parts manufacturers.

The firm, which supplies parts to many leading brands, said it was keen on a possible joint venture with Thai Summit Auto Parts, given Thailand’s role as the automobile industry hub of Southeast Asia.

During a visit to Montreal, Chaiyot held talks with executives of the Canadian engineering-construction firm SNC Lavalin on the company’s possible participation in future bids to build mass transit systems in Thailand. (TNA)

Private sector submits economic measures to PM

A meeting of national chambers of commerce has presented a list of suggested economic reforms to Prime Minister Thaksin Shinawatra.

Thaksin presided over the closing ceremony of the two-day gathering.

Thai Chamber of Commerce Secretary General Dusit Nontanakorn said the proposals included measures to improve the quality of Thai goods to enable them to compete more effectively as global tariffs fall over the next 20 years.

The meeting also called for setting up a high-level government body to monitor the impact of the various free trade agreements Thailand has negotiated with other countries.

Among its other proposals, Dusit said the chambers of commerce tackled the problem of high oil prices. He said suggestions included the promotion of alternative energy sources in the production process; an enlargement of revolving capital for use in procuring oil conservation equipment; and for the state to reward energy-efficient firms through the tax system. (TNA)

Surging inflation to highest level in seven years won’t affect Thai economy

Deputy Prime Minister and Commerce Minister Somkid Jatusripitak on Wednesday voiced confidence that a surging inflation rate to the highest level in seven years would not affect Thailand’s overall economy, saying the economy would stay at 4 percent as earlier targeted for the whole year.

Deputy Prime Minister and Commerce Minister Somkid Jatusripitak

He said the general inflation rate soared to a hefty level of 6.2 percent in October because it was calculated based on last year’s level, which was very low.

Actually, the core inflation rate remained at the same level, showing the government’s measures to control product prices were proven successful.

As long as the fuel tariff (FT) charge and transport costs remain unchanged, he believed, product prices would not edge up definitely.

Somkid projected that the average inflation rate for the whole year would stay close to 4 percent as targeted because the rate stayed at an average of 4.4 percent in the first nine months of this year.

He said, however, that the government would have to pay attention to supervising power bills and transport costs. An upward adjustment should be made only if necessary, he noted. To ease people’s burdens, the government would attempt to accelerate increasing their incomes, said the deputy premier.

Overall, he said, state agencies concerned had managed to control product prices on the domestic market quite efficiently, while goods prices in many countries around the world had significantly risen.

The minister insisted that the planned listing of EGAT Public Company Limited (EGAT) did not mean the newly privatized power firm had a policy to raise electricity bills.

Instead, he said, EGAT has attempted to enhance its production efficiency to reduce power generation costs and avoid increasing power bills. (TNA)

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