Caution on big spending: mega-projects can fuel hyperinflation, analy‚t warns
The government should approach implementation of its
much-publicized mega-infrastructure development projects next year with
caution, an analyst has warned.
Speaking at a forum organized by the Stock Exchange of
Thailand, academic Padej Pirunsit, who is also a board member of the Thai
Investors Association, said investment in unprofitable mega-projects would
only further aggravate the economy next year, which will remain
characterized by high energy costs and slow growth.
Imprudent investment in costly projects could bring about
“hyperinflation,” as incomes fail to keep up with rising expenses.
Inflation has risen steadily this year in parallel with
energy prices, and the government has addressed the problem through several
rounds of interest rate hikes in a bid to reign in economic activities.
While the economy is expected to head for a slowdown in
2006, Padej said that the government should do its utmost to achieve a real
GDP growth rate of 4 percent by keeping inflation in check.
The government should therefore be extremely cautious
about its policy to stimulate the economy through a budget deficit policy
and investment in mega-projects, as these activities will further spur
inflation, which will in turn have a negative impact on investor sentiment,
he said. (TNA)
BoT calls for national savings boost
National savings should be boosted by up to 3.5 percent
of gross domestic product (GDP) over the next five years to facilitate
investment, according to a report issued by the Bank of Thailand (BoT).
National savings currently stands at 30.5 percent of GDP.
In its report on inflation for October, the central bank
said if Thailand wanted to maintain its current account deficit at not more
than 3 percent of GDP, national savings should be boosted between 2-3.5
percent over the next five years to be in line with investment, which should
increase by 2 percent of GDP because of the government’s major
infrastructure development program.
The report said an increase in savings was also necessary
to cater for a projected rise in investment from the private sector
amounting to approximately 4-5.5 percent of GDP. It was added that any rise
in savings would also help prop up the national economy.
According to the report, national savings declined
steadily from 35.2 percent in 1991 to 30.5 percent in 2003.
Household savings also retreated alarmingly from a high
of 14.4 percent in 1989, to a mere 3.8 percent in 2003.
The BoT cited a study conducted by the state-run National
Economic and Social Development Board (NESDB) in 2003 as saying that the
sharp increase in household consumption was a significant factor behind the
decline in household savings. Purchase of durable goods such as cars, cell
phones and electrical appliances between 1999-2003 jumped 16.1 percent,
higher than the growth in overall spending on consumables.
The study said various factors attributed to the decline
in household savings. These include easier access to borrowing funds; a
government-run health scheme which allowed people to avoid saving for
accidents or illnesses; and changes in occupations such as farming, which is
highly dependent on weather and other risk factors. (TNA)
East Water announces
solution to water shortages
in eastern seaboard
Factories located in Thailand’s eastern seaboard
provinces of Chonburi, Rayong and Chacherngsao will have sufficient water
for industrial use by early next year, Eastern Water Resources Development
and Management Plc (East Water) announced Wednesday.
East Water President Wanchai Lawatanatrakul said that the
company’s three water storage reservoirs at Dokkrai, Nong Pla Lai and
Klong Yai now have 205 million cubic meters of raw water on hand, capable of
being delivered to the region’s industries.
The announcement came as a striking turnaround from
industrial complaints voiced only a few months ago that factories might have
to cut production by half - or halt production altogether - if the problem
of persistent water shortages could not be solved.
For several years industrial estates in the eastern
seaboard have been competing with agricultural and household users for
increasingly scarce water supplies, and the expanded commercial water
service is expected to alleviate the situation.
Wanchai said his company would receive an annual capacity
of 50 million cubic meters of water from the Bangpakong River to support
Chonburi.
A water pipeline network project to divert water from the
Bangpakong river is 95 percent complete, and expected to begin operating
later this month.
When completed, he said, the project could enhance water
distribution efficiency to respond to higher demands of both household and
industrial sectors in Chonburi, Rayong and Chacherngsao.
East Water is confident that next year, users in the
eastern provinces will not face water shortages. (TNA)
Bangkok Bank gears up for head-on competition next year
Bangkok Bank (BBL), Thailand’s largest commercial bank,
has said it expects to weather intense competition next year, but is well
prepared.
Chartchai Srirasami, a senior executive of BBL, said
competition in the local banking sector is expected to intensify next year
after a string of mergers and acquisitions brought strong foreign players
into the market and increased the number of new banks licensed to operate.
Bangkok Bank has spent the last few years restructuring
internally. Four billion baht has also been spent on information technology
and reform of the bank’s nationwide network of branches so that it could
respond to the growing demands and more diverse banking needs of customers,
Chartchai said.
Bangkok Bank is geared up to face “competition of any
form next year,” and Chartchai expressed confidence that the bank’s
business would continue to grow.
Another Bangkok Bank executive, Deja Tulanand, said
lending has experienced a steady growth, with the bank focusing on loans to
small and medium sized enterprises. (TNA)
BlueScope Steel expansion opens at Maptaput
Australian steel firm opens 2.5 billion baht second metallic coating facility
One busy factory at Rayong’s Maptaput Industrial Estate
just got much busier. BlueScope Steel (Thailand) Limited, one of
Thailand’s leading manufacturers of quality steel building solutions, on
Tuesday announced the official opening of its second metallic coating line
at its Maptaput plant.
Kirby
Adams, BlueScope CEO
The company is a partnership between Australia’s
BlueScope Steel Limited and Thailand’s Loxley PLC. Its new metallic
coating line will produce premium quality metallic coated flat steel, used
by Thailand’s construction and manufacturing sectors.
The new facility, which cost approximately 2.5 billion
baht to build, more than doubles the plant’s capacity to produce metallic
coated flat steel. The new line has been constructed with dual pot
processing capability, which allows the plant to boost its annual production
by more than 200,000 tonnes to 375,000 tonnes.
While attending the opening ceremony, BlueScope Steel’s
managing director and CEO, Kirby Adams said, “The opening of the second
metallic coating line will enable BlueScope Steel in Thailand to further
strengthen the success we have already enjoyed as the leading manufacturer
and supplier of quality painted and coated steel products to the Thai
manufacturing and construction industries.”
The Maptaput plant - BlueScope’s largest facility in
Southeast Asia - opened in 1998, on the heels of the Asian financial crisis.
Instead of giving up in those difficult initial years, the company focused
on the long-term and continued delivering its products to its Thai
customers.
BlueScope’s
facility
That strategy of staying the course paid off.
Thailand’s strong economic growth in the past few years led BlueScope to
announce the building of the second metallic coating line in early 2004.
“This expansion reflects BlueScope’s confidence in
the long-term business opportunities offered in Thailand and its local
commitment to its customers here. The current economic growth in Thailand is
encouraging and we are seeing its effect on the local building and
construction market,” added Adams.
BlueScope Steel is Australia’s largest investor in
Thailand. The company has invested over 8 billion baht over the past 17
years and employs over 600 local people at its three facilities in Thailand.
In addition to the metallic coating and painting
facilities at Maptaput, the BlueScope Lysaght business manufactures high
quality building components and pre-engineered buildings at its plants at
Rangsit and Khon Kaen.
BlueScope Lysaght Thailand recently announced the
construction of a 550 million baht pre-engineered building (PEB)
manufacturing facility - the first of its kind in Thailand - adjacent to
this facility at Maptaput. When it opens in the second half of 2006, the new
PEB manufacturing facility will provide an expanded product and solutions
portfolio to the company’s domestic customers as well as neighbouring
Southeast Asian markets.
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