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Academics say Thai economy will not plunge into new crisis
The Thai economy will not plunge into a new crisis in a
similar way Argentina is now experiencing because its economic
fundamentals are stronger, according to leading academics. They feel that
there are very real differences between the two countries and that the way
Thailand handled its economic meltdown and the nation’s subsequent
recovery emphasizes the distinctions.
A debate entitled “Lessons of Economic Crisis from
Argentina to Thailand” was recently held by the opposition Democrat
Party. Dr. Ammar Siamwala, a prominent academic at the Thailand
Development Research Institute, said the economic situation in Thailand is
now much different from that in Argentina. The current economic conditions
in the Latin American country are as critical as those of Thailand in
1998. However, the Thai economy has now improved significantly and the
crisis management of the banking and financial institutions which ran into
trouble was administered in a different manner.
In Ammar’s view, Thailand’s public debts, which are
likely to rise by 5% of gross domestic products annually, are a critical
problem that bears watching and needs to be solved carefully. He said the
government has relied too much on a fiscal policy to stimulate the
economy. Unless it adjusted the policy, the country could face a new round
of crises. But with care and planning this can be avoided.
Ammar said the Thai economy is heavily linked with the
global economy. If the world economy recovers late this year as many
expect, the Thailand’s economy will benefit from the upturn and it would
lead to the improvement in non-performing loans and the country’s asset
prices.
Ammar suggested the government allow the asset prices
to move realistically. He said the government should not take any measures
to stimulate the property business with a hope to inflate asset prices.
Chavin Leenabanchong, lecturer of Thammasart
University’s Economics Faculty, said the economic crisis in Argentina
stemmed mainly from the government’s policy to focus spending on social
development which did not greatly benefit Argentina’s overall economy.
He said Thailand still had many distinguishing differences from Argentina.
The state should not be given too much power to prepare budget without
regard to the possible increase in public debt, and the public should be
encouraged to help address the economic woes because the actual economic
recovery is the restoration of the public confidence in the economy, he
said. (TNA)
Malaysia ready to accept Thai workers
Malaysia welcomes Thai nationals to work in the
country’s industrial and service sectors, according to a senior Labor
and Social Welfare Ministry official. Elawat Chandraprasert, permanent
secretary for Labor and Social Welfare recently announced that he believed
employment prospects for Thai workers in the Malaysian market were
promising.
“This is because Thai workers have a record of
working hard. They are not trouble-makers, in fact, they avoid problems
when they can and have less absenteeism,” he stated.
Thai workers are among foreign workers the Malaysian
government allows local employers to employ in case of shortages of
indigenous workers. The other foreign workers who fall into this category
include those from Myanmar, Laos, Cambodia, Vietnam, and Nepal. Elawat
explained that foreign unskilled laborers are allowed to work in Malaysia
up to five years, but skilled labors can work over five years.
The Malaysian government also recently announced a new
policy which is aimed at reducing reliance on foreign workers. In addition
it ordered the reduction of the number of Indonesian workers employed in
local industrial and service sectors and has now banned new Indonesian
workers following a recent riot involving illegal Indonesian laborers
housed in camps in the capital city of Kuala Lumpur. (TNA)
Singapore PM trip benefits Thai economy
Singapore Prime Minister Goh Chok Tong’s recent
three-day visit to Thailand will benefit the Thai economy in both the
short and long run, according to government spokesman Yongyudh Tiyapairat.
Yongyudh said that in the short run, the Singapore leader’s visit was
expected to lead to an increase in direct foreign investment in the Thai
economy, as Goh Chok Tong stated that he wants Thailand to be a leader in
re-building investors’ confidence in the ASEAN region.
The Singapore premier also expressed his appreciation
for Thailand’s success in inviting Japanese investors to invest in
automobile and automobile part industries in the Thai economy, which
reflects the country’s potential in the region.
In the long run, the two ASEAN neighbors agreed to join
hands to push for a stronger ASEAN in the future. The two countries will
also continue to cooperate under the framework of the ASEAN Free Trade
Area (AFTA) agreement and the ASEAN Investment Area Agreement.
Leaders in Singapore and Thailand feel it is time that
member countries of the Association of Southeast Asian Nations (ASEAN)
work together to expanded trade and investment, and promote cooperation in
other sectors such as tourism and service related areas. (TNA)
Australian Ambassador Miles Kupa visits Australian businesses on the Eastern Seaboard
Australian
Ambassador Miles Kupa visited Kirwan Industrial Services as part of his
tour of Australian businesses on the Eastern Seaboard.
Amongst the many Australian businesses visited by the
Australian ambassador during his busy four day visit to the region, the
ambassador found time to call in on Kirwan Industrial Services (ESIE
Plaza). During his visit the ambassador met with the Kirwan management
team. One of the highlights of his visit was a demonstration of the new Hi
Tech digital magnifying (x2500) equipment used by Kirwan to identify dirt
particles and bacteria, often too small to be seen by the human eye.
The managing director of Kirwan Industrial Services,
Steele Lambrinos explained that it is equipment such as this that makes
Kirwan a leader in specialized cleaning and support services in S.E. Asia.
Steele Lambrinos went on to say, “The equipment is used to help identify
the root cause of contamination; it is widely used at all of the
automotive companies where we operate. This new technology has been
instrumental in identifying and reducing paint defects; however, in more
recent times we are finding a broader use amongst food processing and
electronic manufacturers.”
The ambassador and Steele Lambrinos, both from
Melbourne Australia have a quiet passion for Australian Rules Football,
the ambassador, a Geelong supporter whilst Steele is a “one eyed”
Essendon supporter. It was therefore of little surprise that the two took
time out to discuss their respective teams’ fortunes during the 2002
season, which commenced last week end.
Sanyo shifts refrigerator production base to Thailand
Sanyo Universal Electric, Japan’s giant electrical
appliance maker has decided to use Thailand as its refrigerator production
base for exports. Suradej Boonyawat, president of Sanyo Universal Electric
(Thailand), said the Japanese parent firm has shifted its refrigerator
production base to Thailand because the country is seen as the largest
manufacturing base of refrigeration.
Many Japanese manufacturers of the product, including
Hitashi and Toshiba, had already relocated their production bases to
Thailand. This manufacturing base shift will benefit Thailand in terms of
increased exports, development of production technology and investment.
To complete the relocation of its production base,
Sanyo needs to increase its investment here by 130-150 million baht. It is
expected the company’s exports will increase to 50% of total products
manufactured this year from 41% last year. The total production for this
year is estimated to be 900,000 units a year as the company has an annual
capacity of 1.2 million units.
As for washing machines Thailand may lose out to China
because of the government has been slow to address tax restructuring.
Suradej said the company could produce 100,000 units as it has annual
capacity of 120,000 units. He added the parent firm was considering
shifting its production base for this product out of Japan. One of the
potential destinations is China because labor costs are cheap. Should
Thailand hope to become an attractive destination, he said, the government
must accelerate restructuring taxes on raw materials to ensure they are
lower than those on ready-to-used products. (TNA)
Thai exporters urged not to ignore Cambodia
Thai exporters should consider exporting into Cambodia.
There is a high demand for Thai products among consumers there. Boonyarith
Kalayanamitr, the Export Promotion Department’s commercial counselor in
Cambodia, said the overall picture of Thai exports to the country had
improved in the past five years.
Foods, cement, construction materials, seasoning
powder, milk, plastics, chemical products and cosmetics are in high demand
among Cambodian consumers. Cambodia’s imports were valued at more than
US$1.5 billion last year. Of this, over $450 million came from Thailand.
Imports from Thailand may grow by 10% to exceed $500 million this year.
Demand for Thai products among Cambodians is as high as
70 percent. Problems in the country, particularly political instability,
corruption, inefficient customs procedure, fraud, and poor transportation
and communication have already seen improvement. Cambodia is now more
interesting for trade and investment than in the past.
Mr. Boonyarith conceded that purchasing power among
Cambodian people remains low because it is a developing country. They
often import used equipment from Japan. As a result, should Thailand be
able to export used products and equipment such as farm machinery and
automobiles and parts to the country. (TNA)
Insurance business looks dim this year says research center
The Thai Farmer’s Research Center (TFRC) has
determined that prospects for the country’s insurance business do not
look promising this year because of uncertainties about the global economy
and continued cuts in premiums for fire and motoring insurance.
The leading think tank said the premium for fire
insurance was adjusted downward late last year and that for motoring
insurance followed early this year.
The slowdown in international trade in the wake of
global economic sluggishness will likely affect the marine insurance and
performance of reinsurance companies overseas. Given these factors, some
local insurance companies may experience difficulties running their
businesses in 2002.
However, companies with excellent management and those
who can make timely adjustments have the chance to place themselves in a
position to turn these negative factors into opportunities by expanding
their business and using the declines in overall premiums sales as a
strategy to broaden their customer base. They can also increase their
information campaigns to convince customers of the risk of ignoring
protection.
TFRC said marine and miscellaneous insurance as well as
reinsurance businesses have been affected by much higher premiums in the
wake of the tragic terrorist attacks on the United States in September
last year. Still, local insurers can seek reinsurance services from large
companies in Asian countries such as Japan in place of those in the US and
Europe, which had been directly affected by the tragic incident. (TNA)
Banks need not raise capital in next 2 years, says BOT chief
Thailand’s banking sector is looking healthier and
promising projections for future seem more certain. The Bank of
Thailand’s governor M.R. Pridiyathorn Devakula recently affirmed local
commercial banks will most likely not have to increase their capital in
the next two years, even though many parties had expressed concern for
that possibility.
He said the capital-to-risk asset ratio of the whole
banking system is 12% which is higher than 8.5% required under the Bank
for International Settlement rule. Even the commercial bank with the
lowest ratio maintains capital adequacy at 10%.
The BOT chief said although commercial banks will
accelerate lending this year their registered capital will not decrease to
the extent that they will have to raise capital.
He said the central bank’s decision to cut the 14-day
repurchase rate by 0.5% produced fruitful results as was expected since
commercial banks began in cutting interest rates. The repo rate cut has
also helped the baht weaken, which could benefit the country’s exports.
M.R. Pridiyathorn conceded he was not in a position to
tell precisely in which direction interest rates would take in the future.
It is the duty of the central bank’s Monetary Policy Committee, which
has to take into account many changing factors that affect the economic
system. (TNA)
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