Thailand’s economy signaling recovery not far off, says FPO

Thailand’s economy has signaled a recovery as witnessed by improved exports of various product items, a surge in the Stock Exchange of Thailand’s index to 500 from 400 points, and an easing in unemployment figures, according to the Fiscal Policy Office.
However, FPO’s Director-General Somchai Sujjapongse said there are certain factors that need to be monitored given that the government’s revenue is expected to fall short by 280 billion baht less than forecast.
Another positive sign for the economy is an increase in value-added tax (VAT) collection nationwide to 35 billion baht in April from 30 billion baht the month before.
He said the agency will continue to monitor VAT collection in May and June with the expectation that revenues would to improve on the back of increasing domestic consumption.
Regarding a revelation by the Thai Chamber of Commerce that consumer confidence index in April had dropped in all categories for the third consecutive month, he said the data was based to a great extent on pessimistic predictions and had the current VAT collection data been available, results of the survey might have been different.
However, the FPO is projecting gross domestic product (GDP) will shrink 6 percent in the first quarter of this year, 4 percent in the second quarter, and 3 percent in the third quarter before turning to growth of 1 percent in the fourth quarter.
GDP for the whole year is forecast to contract on average between 3 and 4 percent, he said. (TNA)

Finance minister reiterates need for loans to spur economy

Finance Minister Korn Chatikavanij on Friday reiterated the government’s need to seek 800 billion baht of loans locally to help stimulate the country’s economy.
Delivering a lecture on “Management of National Economy Amidst Global Economic Recession” to senior government officials from various business units, he said he would seek a first reading of the proposed issuance of the law governing local borrowing of 800 billion baht through executive decree and the new Act in Parliament on Monday.
He reaffirmed the loans remained within the fiscal discipline framework, acknowledging that they would increase public debt to 60 percent of gross domestic product (GDP), but insisted the amount is still manageable. He also conceded that all parties are worried about the increased debt burden.
“The government managed to earn tax revenue of only 1.3 trillion baht after the economy reacted to the crisis. The amount is enough only for payment of the monthly salary of government officials,” he said.
Unless the government sought loans for investment in various sectors, he said, the economy would experience difficulties, the number of jobless persons would increase significantly and the debt burden would be transferred to the household sector. More importantly, social problems would be manifest.
Because of this, he said, the government would need to take the debt burden and invest through various mega projects, which could create 1.5-2 million jobs.
He projected GDP would grow 2 percent annually during the three-year period of the government’s 2nd phase economic stimulus package. (TNA)
 

Gov’t revenue in first seven months of fiscal 2009 down 16.67% from projection

Government revenue in the first seven months of fiscal 2009 - from last October 1 to April 30, 2009 - fell 16.67 percent below projections, a senior Thai Finance Ministry official said.

Government revenue in the first seven months of fiscal 2009 fell 16.67 percent below projections.

Somchai Sujjapongse, director-general of the Fiscal Policy Office said government revenue during the period stood at Bt644.651 billion, down from Bt773.584 billion projected earlier.
The sharp decrease in government revenues from the target number was attributed to falling tax collections, a drop in budgeted revenues from government-run state enterprises and rebates and allowances instituted by the Revenue Department during the first quarter of fiscal 2009, said Somchai.
Value-added tax (VAT) and personal income tax collections during the period also slipped 18.6 percent and 7.6 percent respectively due to the sluggish economy in the country and tax reductions offered by the government, he said.
Although the government earlier this month increased excise tax on alcoholic drinks, which could generate higher income, the Finance Ministry forecast that government revenue for the entire fiscal 2009 would definitely retreat from an earlier projection of about Bt1.6 trillion, Somchai said. (TNA)

House deliberation on executive decree postponed

Tobacco hike approved

The House of Representatives on Monday postponed deliberation on an executive decree seeking funds worth Bt400 billion aimed at reviving the national economy.
House Speaker Chai Chidchob told House members that he had forwarded the decree to the Constitution Court to rule whether the issuance of the executive decree by the Cabinet might violate the constitution.
The move came after opposition Puea Thai members sought the judicial review, arguing that it was unnecessary for the coalition government to issue the executive decree to borrow the money.
Chai told House members that the opposition also charged that the issuance of the decree violated Article 184 of the constitution and, therefore, it was necessary to postpone the deliberation pending a ruling by the Constitution Court.
After the issue was dropped and the debate postponed, elected members of the House then deliberated on an executive decree on amending and raising excise stamp duty on tobacco and cigarettes.
Under the amendment proposed by the government, duty on tobacco and cigarettes would be raised by 90 percent or Bt3 per gram.
A total of 245 House members later voted in favor of this executive decree while 33 voted against and 21 abstained.
Deputy Finance Minister Pruttichai Damrongrat explained to opposition members in the chamber that the major reasons the government amended and increased the excise tax on cigarettes was to reduce consumption for health reasons while simultaneously collecting more than Bt30 billion in taxes for use in developing the country.
Last Thursday the government increased the excise tax on tobacco which saw prices of locally-made cigarettes jump by between Bt10-13 per packet, while prices of imported tobacco rose between Bt15-17 a packet.
The five-month-old coalition government of Prime Minister Abhisit Vejjajiva has also just increased excise taxes on fuel and alcohol as government revenues have fallen sharply from earlier projections.
The state is now eyeing increases in property and inheritance taxes to boost its coffers. (TNA)