BOT to conduct industry-wide Y2K test with 16 banks

The Bank of Thailand conducted Y2K tests in four essential areas with 16 commercial banks to ensure the computer systems are free from the millennium bug problems before the end of 1999. In another move, all the banks have been asked to prepare emergency plans to ensure smooth operation should there be any Y2K problems in early 2000 and beyond.

According BOT sources, this industry-wide test between the central bank and 16 government and private owned banks were conducted on February 27, 28 and March 1. All the banks must be Y2K compliant at least in four areas - depositing, lending, automatic telling and withdrawing systems, they said.

All the banks will have to submit their emergency plan to BOT in June. Banks have been urged to cooperate in setting up a Y2K center as the troubleshooting center collecting and responding to Y2K-related problems. A hot line center is also urged by the central bank, said the sources.

Thai Farmers Bank said its post-Y2K system has been in use since last November, after which 98 percent of the system is believed trouble-free; TFB said it had spent Baht 250 million in correcting its industry-wide computer system; IBM (Thailand) hired as consultant; 12 commercial banks reported to have conducted initial tests.

Tourists turn to Pattaya, escaping expensive rooms in Phuket

The situation may change a lot this year as thousands of tourists have turned away from Phuket, the hottest tourist destination in the Kingdom, after major hotels hiked room rates by 40-50 percent since late last year in spite of protests by tourism organizations and tour agencies.

More major travel agencies, mainly in Europe, have arranged package tours to Pattaya or other Pacific island destinations while turning their back to Phuket throughout 1999, said sources. While major hotels in Pattaya are dealing with tour groups from Europe, two and three-star hotels have been happy with a sharp rise in bookings for Asian tourists, they said.

"Pattaya is no less attractive to foreign tourists while rates of hotel rooms in this seaside resort city are 50-60 percent lower than those in Phuket," said Chatchaval Supachayanont, general manager of Dusit Resort Pattaya Hotel and president of the Eastern Hotel Association.

Even Singaporean and Malaysian tourists are found shying away from neighboring Phuket; local tourists, including those free individual travelers, may find it difficult to find rooms in Pattaya this year; there are 26,000 rooms in the resort city while demand turns higher every year with no new investment.

Liberalization gives Orient Air a rebirth

It is the time to come back. Orient Air is among a few domestic airlines which recently won new licenses to operate regular flights under the liberalization policy in the flying industry by the Transport and Communications Ministry. The policy is to be fully implemented next year.

According to Orient Thai Airline Co.’s managing director Udom Tantiprasongchai, the chartered flight business with Indonesia’s Merparti Airline had not been successful and the service was terminated last week after the company had run into deep liquidity problems.

Orient Air would withdraw all 4 passenger planes from Indonesia for domestic flights in Thailand while the company is considering purchasing 2 more Boeing 737 intermediate range wide-body planes, Mr. Udom said.

"Chiang Rai would be used as Orient Air’s flying center to connect Thailand with China," he said.

Regular flights include routes between Bangkok and Ubon Ratchathani, Bangkok-Chiang Rai, Bangkok-Surat Thani, Bangkok-Udorn Thani and Bangkok-Khon Kaen; the airline awaits permission to fly Bangkok-Tel Aviv and Chiang Rai-Peking chartered flights; protections on routes by the second national airline Angel Airlines valid until September next year.

Baht 113 billion fund approved to help relieve social problems

The government’s National Committee for Social Policy approved Baht 113.481 billion in funds to support projects by government agencies and ministries in efforts to relieve social impacts caused by the economic crisis and the wide-spreading drought in provinces. The relief was aimed to establish a foundation for sustainable development in rural communities.

According to Minister of the Prime Minister’s Office Khun Ying Supattra Masdit, local units and grassroots organizations, especially sub-district administration organizations in provinces, would manage the funds for development projects. The funds would be channeled through government agencies and 8 ministries this year.

"Provinces under the social development fund scheme are mainly those under water crisis caused by the worst drought in decades, where crop production is expected to sharply fall this year. The fund distribution process is expected to start next month," the minister said.

Over Baht 6.5 billion ADB loans are part of this development fund, the rest is from loan credits by the Government Savings Bank; drought still spreading in many Northeastern provinces; only 12 provinces, from 19 provinces under the crisis, were selected to be models.

TCC chief sees recovery taking 2-3 years

Going against government predictions, chairman of the Thai Chamber of Commerce Vichien Techapaibul said his trade organization did not see a recovery until after the next 2-3 years, as domestic demand had gradually declined. The TCC chief expressed his support for the government’s plan to cut down the value-added tax to help stimulate the demand.

Addressing a gathering of TCC members from provinces, Mr. Vichien said there had been absolutely no positive signs the combined spending in private sectors would increase in the first quarter of the year 1999, as expenditures in the system had continued to turn downward.

Mr. Vichien said domestic demand had fallen 23.8 percent last year, an indication of a slow recovery in the Thai economy. He said TCC fully supports the government’s move to introduce the 5-percent deficit fiscal budget next year, as well as the policy to bring down VAT, deposit interest tax and personal income tax.

Bank loans remain major problem to the recovery; government urged to be quick enough in executing foreign loans; Commerce Minister Supachai Panichpakdee orders probes into export declines in January; representatives from 5 export industries to discuss problems.

Parties voice concerns over liberalization in tourism industry

Parties in the tourism businesses gathered last week to voice concerns over the government’s policy to set free the industry early, which would let foreign giants own up to 100 percent of companies in Thailand, while local companies would not be able to compete. Tour agencies crying their fear said that almost all the local companies were likely to fall into foreigner’s hands.

Most of the participants in the seminar about Thai tourism and the new alien business law, of which the draft is yet to be approved by the House of Senators, expressed worry that the new law would let foreigners step in and tap from the multi-billion-baht a year industry. An early liberalization would only hurt local businesses, they said.

Foreign investors, allowed to own only 49 percent of a business under the current alien business law, will take full control over major hotels and restaurants, travel agencies, and tour-guide firms. Small and medium businesses would suffer the most from an early liberalization, they said.

Academics said the government should learn from recent lessons after liberalization in the finance sector led to the economic crisis; prospects would be dimmer for local investors in the tourism industry; an earlier survey finds most operators in tourism-related businesses fear they would be wiped out after liberalization.

Serveral SMEs likely to shut down in Y2K distress

Small and medium-sized industries, for over a year in financial distress, have left the Y2K problem unsolved and face difficulties as they are advancing to the end of 1999, the deadline to make all computer systems free from dangers of the millennium bug. Several SMEs did not have the budget to support Y2K corrections and they have less time now.

Computer experts said that among the toughest problems was that most of the machines being used in small and medium-sized industries used embedded computer chips in controlling or computing units. The embedded chips could not be corrected. Replacing those chips with the new Y2K compliant ones was very costly, they said.

There has been 13,000 factories registered with the Industry Ministry, about 98 percent of those are small and medium-sized. Only 2,000 of the factories are under the Industrial Estate Authority of Thailand; the rest are supervised by the Department of Industrial Works. Many factories are likely to close down in the middle of this year as their products with the Y2K threat would not be acceptable in the market, said experts.

The government has spent over Baht 4.4 billion in funds to help solve the Y2K in ministries and state enterprises; embedded chips remain the problem in about 25 percent of the computer systems of Thai Airways International; PTT said about 25 percent of its network with embedded computer chips left unsolved.

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Created by Andy Gombaz, assisted by Chinnaporn Sangwanlek.