Thai inflation won’t soar as in China, Indonesia, says SCB chief economist

Thailand’s inflation rate will not soar as dramatically as those in China and Indonesia because the rate is calculated based more than 30 percent on rice and food prices, according to a leading Bangkok commercial bank economist.

Sethaput Suthiwart-Narueput, head of the Siam Commercial Bank Economic Intelligence Centre, said the Monetary Policy Committee’s decision to raise the benchmark interest rate by 25 basis points from 2.25 percent to 2.50 percent on Wednesday lived up to expectations.

The Bank of Thailand signaled clearly it wanted to turn the actual interest rate, which is negative at present, to move in a positive territory.

Dr Sethaput believed the policy interest rate would continue rising by 0.25 percent each time because an interest rate rise by 50 basis points would make the baht strengthen too rapidly.

He said the baht has not appreciated sharply at present, so it is a proper time now for the MPC to raise the interest rate to stem rising inflation.

He predicted the inflation rate will stay within a range of 3.5-4 percent this year.

Dr Sethaput said although the interest rate had gradually increased, it would not adversely affect private-sector operating costs.

What is worrying now is the government’s announcement of a policy to raise the national minimum wage by a further 25 percent within two years, which would significantly add to operating costs of entrepreneurs.

The measure is seen as a distortion of the market mechanism. Although it could boost labor wages immediately, it would cause problems in the long run, he said.

“A further wage increase will push up business costs, which have been already fueled by higher interest rates and rising energy prices. Instead of raising the minimum wage, the government should find a way to increase incomes. It should also allow energy prices to move by market mechanisms so that the people turn to save on energy consumption,” he said. (MCOT)

“Shift Happens” - AFG goes blogging

Dr Iain Corness

The Automotive Focus Group (AFG), the fastest growing common interest group on the Eastern Seaboard, held another of its monthly meetings, this time at the Amari Orchid Resort in Pattaya.

Each month there is a speaker covering different subjects, but all focused around the automotive scene. This time it was Uli Kaiser, a self confessed IT freak who spoke to the group on the AFG Blog and how to access it, and how to contribute to it.

Uli presented some amazing statistics, showing that information and its dissemination were increasing exponentially with technical knowledge now doubling every two years. This he referred to as “Shift Happens”. Very shortly, if not now, at least by the time I have finished typing this, China will have the largest number of English speaking people in the world. There were also 2.7 billion internet searches on Google - this month! The five most needed jobs in 2008 were not even thought of in 1998, and we are now trying to train young people for positions that are not even known.

The second half of Uli’s presentation was to bring to the attention of the AFG members a proposed statistics project to be run with KPMG. The survey would be on items pertaining to the automotive industry in Thailand, and the statistics would be collated by KPMG, from information supplied by the AFG members. At this stage, it is still a discussion topic, as many hurdles would have to be cleared, such as confidentiality agreements, which are common in the industry, and how the information could be given without breaking those agreements.

The AFG website can be accessed at afg-thailand. blogspot.com, and the secretariat through Maurice Bromley at [email protected].

Thailand’s vehicle sales continue surging in February

The domestic sale of motor vehicles in Thailand surged by 44.2 percent to 78,039 units in February, with Toyota retaining its predominant market share of 30,592 units, up 44.2 percent, and Isuzu, ranked second largest with 14,713 units, up 22.2 percent, an informed source in the automotive industry revealed on Wednesday.

Mazda also enjoyed impressive sales last month with 3,356 units, up 45.4 percent, partly because Mazda Sales (Thailand) kicked off new promotional advertisements starring popular actors and announced its intention to go ahead with its marketing campaign using social networks.

Surapong Paisitpattanapong, spokesman of the Federation of Thai Industries (FTI)’s Automobile Industry Club, said although fuel prices would continue surging, auto sales remain sound.

Vehicle sales continue to enjoy a significant increase mainly because consumers in rural areas have more purchasing power to afford pickups, thanks to higher farm product prices.

Simultaneously, urban area residents paid greater attention to buying small and eco-friendly vehicles as the economy continued expanding satisfactorily.

It is expected that total vehicle sales for the whole year would be at least 850,000-870,000 units, up 8-9 percent year on year, he said. (MCOT)