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BOT still worries about excessive household spending
The Bank of Thailand (BOT) is still closely monitoring
the continued growth of personal loans in the non-banking sector, and has
expressed concerns regarding excessive household spending.
A BOT source said that the central bank’s Monetary Policy Committee (MPC)
noted in its January’s inflation trend report that a growth figure of loans
for industry and consumption was clearly contradictory in the third quarter
of last year.
Industrial loans grew at a slower pace, reflecting the country’s economic
slowdown. However, this did not show that investments would decline in the
future. Some analysts viewed that it might be due to the restructuring of
fund mobilization by the business sector.
Loans for consumption grew at an accelerated pace partly because of an
increase in housing loans and consumer loans while credit card loans slowed.
This has led to concerns over an inefficient allocation of resources and
more borrowing by households for spending. However, the source said that
personal loans provided by commercial banks and finance houses have
continued to grow steadily for quite a while now.
The BOT views that personal loans extended by non-bank institutions should
be closely monitored because this has continued to grow at an accelerating
pace. (TNA)
BOT says it won’t sell shares held
in BankThai to foreign investors
Bank of Thailand (BOT)’s governor, M.R. Pridiyathorn
Devakula reiterated that the central bank would not sell shares held in
BankThai through the Financial Institutions Development Fund (FIDF) to
foreign investors. Should the BOT decide to sell the bank’s shares, it would
sell them to the public and not offer them to any particular investors.
Also, the BOT sees no need to rush and sell shares because FIDF is still in
operation, pending consideration of the establishment of the deposit
insurance institute by the House of Representatives.
The BOT chief said the baht depreciation to 39.65 to the US dollar was not a
result of capital outflow. Rather, the local currency has weakened in the
same direction with other main currencies, including the euro and the
Japanese yen. The weakening of the Thai baht will contribute to the
country’s export growth, he added.
Tarisa Wattanagase, BOT’s deputy governor in charge of the Financial
Institution Stability Group, said the decision to dispose of shares of
commercial banks held by FIDF rested with the fund’s committee.
The central bank, as a regulator of FIDF, is not in a position to make a
decision on the matter. In principle, the shares could be sold at a better
price if they were offered to the public. But no matter whom FIDF would sell
the bank’s shares to, it must be able to answer any questions by the public,
she said. (TNA)
PM’s aide insists EGAT’s share offering won’t exceed 25%
Prime Minister’s Secretary-General Prommin Lertsuridej
insisted that the number of shares EGAT Public Company Limited (EGAT) plans
to distribute on the stock market would not exceed 25 percent of its
capital.
His insistence came after Chai-anant Samutavanich resigned as chairman of
EGAT’s board, citing he was afraid he would be unable to prevent a further
increase in the share float following an acquisition of Shin Corporation
Public Company Limited by a foreign investor.
Dr. Prommin said he respected Chai-anant’s rights to express concern over
the share distribution ratio of EGAT. He reiterated EGAT would not offer
shares exceeding 25 percent of its capital under the framework set by
Chai-anant and many parties concerned.
He said he did not want anyone to compare the EGAT share offering with the
sell-off of Shin Corporation shares because both companies are in different
types of industry. EGAT would not sell a large number of shares to foreign
investors because unlike Shin Corp., EGAT is a state-owned company, said Dr.
Prommin. (TNA)
Consumer confidence
index drops further in January
Thanawat Palavichai, director of the University of
Chamber of Commerce’s Economic and Business Forecasting Center, revealed the
confidence index on the overall economy in January declined from 83.6 in
December to 82, which is below 100 for the 21st consecutive month.
The index on the current economy dropped from 85.3 to 84.3, which is below
100 for the 24th month in a row. The index on the future economy edged down
from 81.1 to 79.6, below 100 for the 20th consecutive month.
He said the continued decline in the index stemmed from a rise in local fuel
prices, concerns over political woes that could shake the government’s
stability, rising product prices, higher living costs, and persistent
violence in the deep south.
Additionally, local interest rates are expected to increase further
following the decision by the Bank of Thailand’s Monetary Policy Committee
to raise the policy interest rate from 4 percent to 4.25 percent at its
recent meeting.
Thanawat feels that the political uncertainty has a significant
psychological effect on consumers. This, coupled with the oil price
volatility, caused confidence in the future economy to decline considerably.
However, he believes the country’s overall economy remains in an upward
trend. Effects from various negative factors will be short-lived.
Should there be any political change, the index in February is expected to
decline further. However, if no changes take place, the index is likely to
recover in the third quarter of this year.
Thanawat said the implementation of mega-projects is considered a key factor
for economic expansion. The center projected the country’s economy would
grow 4.7 percent this year, based on the fact that the government decided to
invest at least 200 billion baht in mega-projects. (TNA)
Foreign capital continues
to flow into country, says BOT chief
Bank of Thailand Governor M.R. Pridiyathorn Devakula
recently revealed that foreign capital has continued to flow into the
country, albeit in a smaller amount than before.
 BOT
Governor M.R. Pridiyathorn Devakula: Foreign investors are still confident
in Thailand’s economy.
He said the uninterrupted capital inflow shows that foreign investors are
still confident in the country’s economy. The Thai baht has not been
volatile, but has moved in the same direction with other regional currencies
against the US dollar.
The BOT chief refused to comment on some analysts’ projections that the
stock market would be sluggish until the middle of this year due to
political tension. He said that the only thing he can confirm at this time
is foreign capital is still flowing into Thailand and that this trend would
continue for a short while yet. (TNA)
Ad business competition
to intensify this year
Competition in Thailand’s advertising business is set to
intensify with money circulating in the system expected to increase by 8-10
percent, according to the Kasikorn Research Center (KRC).
In a research report on “Advertising Business in 2006: Stiff Competition But
Recovery,” the leading think tank said spending on ads through the local
media last year totaled 88.93 million baht, up 5.7 percent, which is the
lowest growth in 4-5 years. In 2003-2004, the business enjoyed an average
growth of 16 percent a year.
For 2006, KRC projected that the overall Thai economy would grow 4.5-5
percent, close to that of last year. Manufacturers and service providers
need to rely on ad strategies to stimulate sales growth.
Since there is the final round of the World Cup football tournament this
year, many of those who are not official supporters might try to cash in on
the soccer fever to attract clients through various strategies, including
advertising through the media. Therefore, it is expected advertising will
begin to recover from last year.
Spending through television is expected to grow 10 percent, radio 5-7
percent, newspapers 4 percent, and magazines 8-10 percent.
KRC believes that outdoor ads would continue to grow at a high rate since
most consumers still spend plenty of time outdoors. Additionally, ad rates
offered by outdoor media are lower than those of indoor ones. (TNA)
Revenue collection in January exceeds target by Bt200m
Revenue collection by the government in January exceeded
the target by approximately 209 million baht, according to Finance Ministry
Spokesman Somchai Sajjapongse.
Somchai revealed that last month, the government managed to collect net
revenue of 99.74 billion baht, which is 209 million baht higher than earlier
targeted.
Collection through value-added tax was 1.72 billion baht, or 5.2 percent
higher than targeted, and corporate tax was 1.26 billion baht or 11.3
percent higher than targeted.
Additionally, revenue remitted by state enterprises to the state coffer was
1.56 billion baht or 27.5 percent beyond the target.
Somchai, who is also the director-general of the Fiscal Policy Office (FPO),
said that revenue collection in the first four months of fiscal 2006 was
372.88 billion baht, which is 4.18 billion baht or 1.1 percent higher than
projected. However, he said, revenue collection by the Excise and Customs
Departments was lower than targeted. (TNA)
New top negotiator vows to emphasize national interest in free trade talks with US
The new chief negotiator in the
Thai-US free trade talks vowed to put national interests first and to listen
to all sides in his new role.
Speaking to journalists after being appointed by the Cabinet to replace
Nitya Pibulsongkram, who resigned last month, Commerce Permanent Secretary
Karun Kittisataporn said he was grateful for the trust the government has
shown in him and promised to perform his duty to the best of his ability.
“I’m now wearing many hats at the same time. The hat of permanent secretary
of the commerce ministry will be removed when I assume the role of chief
trade negotiator,” he said, adding he would work fairly and take differing
opinions into account.
Karun conceded that the next round of free trade negotiations would be
tougher than the previous ones, as it involves high stakes and multiple
dimensions. However, the veteran trade negotiator reiterated that he would
give priority to national interests and would work to minimize any adverse
impacts that may arise.
Karun also said there would be no changes to the negotiating team, but
stressed that the framework of the talks needs to be harmonized.
The sixth round of talks, which were disrupted by thousands of protestors
from civil society groups, ended on January 13 in the northern city of
Chiang Mai with little progress reported.
The main obstacles were intellectual property rights, drug patents,
liberalization of financial services and telecommunications, according to
both Thai and US negotiators.
Karun’s predecessor resigned in January, citing criticism of his role in the
negotiations by non-governmental organizations (NGOs) as the main reason for
his departure.
Thai Prime Minister Thaksin Shinawatra and US President George W. Bush
indicated last year that they wanted an agreement concluded this year. The
United States is Thailand’s largest export market, while Thailand is the
18th-biggest US trading partner.
Bilateral trade rose 14 percent to US$23.9 billion (980 billion baht) in
2004, according to US statistics. (TNA)
Alcohol advertisements to be banned round-the-clock in Thailand
A national committee on
alcohol-consumption control has agreed that advertising of alcohol will be
banned 24 hours on Thai television and radio with exceptions for
international professional sports events.
The agreement was reached last Friday during a committee meeting chaired by
Public Health Minister Pinij Jarusombat.
The proposal for the total alcohol-advertising ban will be forwarded to the
Public Relations Department to be implemented.
Whether print ads or labels on alcoholic drinks should be under the control
of the ministry’s Food and Drug Administration (FDA) or under the Consumer
Protection Board (CPB), which is under the supervision of the Prime
Minister’s Office, will be considered at a later date.
Pinij said he believed that the private businesses selling alcoholic
beverages and advertising agencies would not object to the decision. He said
the government plans to introduce measures for alcohol vendors soon because
at present, drinks are too readily available. (TNA)
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