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Thai private sector signals SOS, warning local economy may crash
Thailand’s private sector on Friday called for the formation of a permanent
government as soon as possible, or the country will be overtaken by
neighboring countries.
 Isara
Vongkusolkit, chairman of the Thai Chamber of Commerce (TCC) and Board of
Trade of Thailand (BOT).
Isara Vongkusolkit, chairman of the Thai Chamber of Commerce (TCC) and Board
of Trade of Thailand (BOT), said a general election and a new government
will speed public spending and stimulate the economy which has been stagnant
for the past several months.
He expressed hope that the new government should take office in the third
quarter to push for economic growth at 2.5-3 percent, or the growth will be
less than 2.5 percent if formation of a new administration takes longer.
He said exports and tourism are two driving elements for the Thai economy
while border trade also generates income for the country.
The political stalemate should end as soon as possible and negotiations
should concentrate on the future of Thailand, he said, calling for the
appointment of an interim prime minister to run the country in parallel with
national reform which should take about a year.
He said the political turmoil and absence of a permanent government to issue
investment-attracting policy has diminished Thailand’s opportunity and
foreign companies are relocating their manufacturing base from Thailand to
neighboring countries such as Indonesia.
The Indonesian government has attracted foreign investors with an investment
of over Bt17 trillion for infrastructure development - seven times more than
Thailand’s earlier project which has been suspended, he said.
Thailand is lacking sufficient skilled labor and the government lacks
transparency in its administration, while other Southeast Asian countries
are speeding up development to take advantage of investment opportunities in
place of Thailand, he said.
Isara said he received the latest report about the relocation of Japanese
manufacturers of electronics products and automobiles from Thailand to
Indonesia, partly thanks to the neighboring country’s large population and
market.
Pornsilp Patcharintanakul, TCC deputy secretary general, called on the
government to step down to pave the way for negotiations which should lead
to national reform within three months.
After that, Parliament should restart to materialize significant issues into
legislation, he said, adding that he doubted if the political crisis will
end this year.
If Thailand has a new government early next year, the economy and investment
will spring back in the third quarter of next year, he said.
He said Thailand’s economic future is rather bleak as the caretaker
government cannot initiate new investment and the private sector will
neither jump into new investment.
Thailand has lost about Bt500 billion a year from foreign investment now
that the Board of Investment cannot fully operate, he said.
Thailand’s exports this year will expand less than 5 percent since the
economies of trading countries have yet to pick up and the risk from a
political encounter among Russia, the US and Europe remains, he said.
The Thai baht has weakened but manufacturing costs are high, he said. (MCOT)
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Finance Ministry axes
economic growth projection from 4% to 2.6%
The Finance Ministry has lowered Thailand’s projected
economic growth for this year from 4 percent to 2.6 percent, according to
the Fiscal Policy Office (FPO).
FPO Director Somchai Sujjapongse said gross domestic product (GDP) in the
first quarter, which suffered a deficit compared to the same period last
year, will decline further in the second quarter.
 FPO
Director Somchai Sujjapongse.
The economy will surge back in the final quarter if the
new government takes office in the third quarter, otherwise the economy will
dip further down, he said.
He said the political situation will be the crucial indicator for Thailand’s
economy, expressing concern that Thailand’s credit rating will be impacted
in the next round of assessments later this year or early next year.
He said neither the Election Commission nor the caretaker government is
empowered to approve the 2015 budget while it is necessary to stimulate the
economy.
Exports will become the only economy-stimulating sector while the public
sector will have to speed up disbursement of the Bt350 billion budget to
help activate the economy, he said.
Somchai said the state revenues from the value added tax has declined over
the last two months with a 2.4 percent deficit in domestic consumption
registered in February.
The declining trend will have an impact on both state revenue and customs
tax collections, he said.
Exports of electronics products, electrical appliances and automobiles were
satisfactory in accord with the strengthened economies in the US and Europe,
while the Chinese economy will expand 7.5 percent, he said.
Though the agricultural sector has grown, the tourism sector declined for
the first time in 27 months with tourist arrivals dipping 8.1 percent,
mainly from China, Malaysia and Japan.
He was optimistic that the cancellation of the state of emergency, after
which 50 countries revoked warnings for their citizens, will improve
Thailand’s tourism.
He said the overall economy has been stable but smaller-sized businesses
have encountered operational, employment and financial problems.
The number of small-sized companies which failed to pay their debts for over
a month has increased, he said, adding that non-performing loans were at
about a 2.5 percent level. (MCOT)
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Setback for Thai tourism
confidence index
Thailand’s Tourism Confidence Index in the first quarter
dropped below its normal level for the first time since last year, according
to the Tourism Council of Thailand (TCT).
TCT President Piyamarn Techapaibul said Thailand lost over Bt82 billion in
anticipated revenues from tourism since the enforcement of the emergency
decree.
The confidence index declined to 96 in Q1 - the first time since last year
when it dropped below the normal point given tourists’ concern over the
political conflicts.
Tourism operators called on the government to build confidence among
foreigners through publicity, stimulate tourism-related activities including
workshops and seminars, and to offer tax incentives to tourists.
“When Suvarnabhumi Airport was closed in 2008, the then government offered
over Bt1 billion of financial assistance to uplift the tourism industry. It
should do the same this time,” she said.
Ms Piyamarn said the tourism business and hotel occupancy have yet to come
to life again after the government revoked the state of emergency.
The number of tourist arrivals through Suvarnabhumi and Don Mueang airports
dropped 22 percent compared to the same period last year.
It is urgent that the government stimulate such sensitive markets as China,
Hong Kong and Japan, she said. (MCOT)
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Finance Ministry assured of Bt20 billion return in May
The Commerce Ministry has given assurances that it will
pay back Bt20 billion it borrowed from the central fund to make good the
overdue payment to farmers under the rice pledging scheme within May as
required.
Caretaker Deputy Commerce Minister Yanyong Phuangrach expressed confidence
that nearly one million tonnes of rice will be released through the
Agricultural Futures Exchange in Thailand (AFET) this year.
The Commerce Ministry expects to earn more than Bt6 billion after auctioning
over 500,000 tonnes of rice through AFET this month, he said.
He said 230,000 tonnes of rice will be auctioned in the eighth round with 13
bidders, including three new ones.
The seventh auction released more than 500,000 tonnes of rice, at a total
value of Bt6 billion, he said, adding that this year’s rice release via AFET
will break the 2009 record when 600,000 tonnes of rice were auctioned
through AFET.
Yanyong said the Commerce Ministry will try to release rice through AFET
twice a month at 200,000 tonnes in each auction, and the next bid in April
will involve 100,000-200,000 tonnes of rice.
He said government-to-government trading with China is another channel to
release rice and the Commerce Ministry has targeted selling 100,000 tonnes
of rice to China each month.
It’s quite likely that the Finance Ministry will be paid back the Bt20
billion owed by the May deadline, he said.
He said the Commerce Ministry has inspected more than 60 percent of the
government’s rice stocks and should wrap up the survey on March 30. (MCOT)
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