|
Competition among G-stores set to intensify
Competition amongst convenience stores at petrol pump
stations, or “G-stores”, is intensifying now that giant discount
stores have teamed up with service stations to expand business, according
to Thai Farmers Research Center.
The think tank recently submitted a report on the
cooperation between oil traders and discount stores and found that
businesses most affected by the cooperatives are retail shops located in
the vicinity of G-stores, because more consumers are buying goods at
G-stores at the same time they are using services at the petrol stations.
However, the report concluded that department stores
are not adversely affected, since their target customers are different.
Normally, G-stores stress selling consumer products necessary for everyday
living, while department stores offer a larger variety of products.
TFRC expects competition in small retail businesses
will dramatically intensify as convenience stores at pump stations adopt a
price-cut strategy to attract potential customers, particularly commuters.
Consumers will ultimately benefit from stiff
competition, the report says, because as entrepreneurs come up with
different strategies to compete with each other, they will give consumers
more choice of what to buy and where to buy it. (TNA)
Exports remain cause for concern
The country’s overall economy has gradually improved,
but exports remain a cause for concern as they continued to drop for a
third consecutive month, according the Bank of Thailand. Kurkrai Chirapaet,
director of the BOT’s board, said the central bank’s economic data in
March showed that local consumption and investment continues to improve,
but the overall exports declined further in terms of product prices.
“The export value in March was around US$5 billion
based on 90% of information obtained. The value is likely to increase to
$5.1-5.2 billion if based on complete information. The figure edged down
slightly from that of the same period the previous year,” Kurkrai said.
Kiatisak Chirathiranart, another director of BOT’s
Board, said the economy remained stable with improved domestic consumption
and investment while export figures in March decreased slightly from
previous months. Even so, the trade balance remained in surplus for
several consecutive months. He said the BOT is not worried about declining
figures on month-to-month exports.
What is of mounting concern is the country’s export
competitiveness in the long run. The central bank sees an urgent need to
restructure the export sector to build up a competitive edge because the
country will most likely experience stiffer competition in the future. (TNA)
Commercial banks’ operating results likely to surge
Commercial banks’ performance results as a whole are
expected to surge 96-205% in the first quarter of this year as a result of
a wider interest spread and eased loan-loss provisioning burdens,
according to the Thai Farmers Research Center (TFRC).
The Center projected the combined net profits in the
banking system would rise by 96-205% to 3.6-5.6 billion baht from 1.84
billion over the same period the previous year. The significant increase
in profits is being attributed to an expected wider interest spread from
1.37% in the first quarter of this year to 1.99% this year.
Five Thai-owned commercial banks, Bangkok Bank, Thai
Farmers, Siam Commercial, Bank of Ayuthaya, and Thai Military, are likely
to enjoy an increase in net profits by 88% to 4.9 billion baht from 2.6
billion.
Although non-performing loans held by these banks have
gradually increased since late last year, their level is around 22% lower
than that of the previous year. The interest spread among these banks has
risen to 2.3% from 1.79%, resulting in an increase in net interest income
by 22.9%.
Banks with major stakes owned by foreigners, including
Bank of Asia, DBS Thai Danu, Standard Chartered Nakhonthon, and UOB
Radanasin, are expected to enjoy combined net profits of 190 million baht
compared with net losses of 550 million over the same period last year.
The interest spread among these banks increased to 2.41% from 1.96%,
resulting in a rise in net interest income of 21.2%. The significant
increase in net profits has also stemmed from declining loan-loss
provisioning burdens.
State-owned banks, including Krung Thai, BankThai, Siam
City, and Bangkok Metropolitan, are forecast to have operating results
ranging from net losses of 1.48 billion baht to net profits of 52 million,
depending on loan-loss provisioning burdens. The interest spread among
these banks increased to 1.24% from 0.44%, resulting in a problem which
would remain a deterrence to the profitability in the local banking
system. (TNA)
TRFC says there’s light at end of the tunnel for exports
Hope could be appearing around the corner for
Thailand’s dismal export figures, with a strong likelihood that the
negative growth rate could be less this month than in previous months,
according to a report published this week by Thailand’s leading economic
think-tank.
In its preliminary assessment of export figures for
March and the first quarter of 2002, the Thai Farmers Research Center
showed that the value of Thailand’s exports for March should stand at
around USD5.5 billion, compared to only USD4.7 billion in February. This
would represent a year-on-year growth rate for March of 5.8 percent.
Thailand’s export value for the first quarter of the
year, meanwhile, would stand at USD14.9 billion, down 6.7 percent from the
same period the previous year. However, the report noted that export
prospects are looking brighter, with the slowing of the negative growth
rate providing a hopeful signal for export figures for the remainder of
the year.
The authors of the report remained confident that
Thailand’s exports would witness a revival in line with the revival of
the US and regional economies, with the export growth rate for the year as
a whole likely to stand at 0 percent. At the same time, however, the
report expects a rise in imports, in part due to higher oil prices, with
imports in March likely to stand at US$5.2 billion, up from Bt4.3 billion
the previous month.
Nonetheless, this represents a year-on-year decline of
8.7 percent, which in turn is likely to push the import value for the
first quarter down by 10 percent from the previous year to US$14.35
billion. This means that Thailand’s trade surplus is likely to hit
around US$791 million in March, down from US$479 in February. For the
first quarter as a whole, the trade surplus is expected to be around
US$594 million, compared to a mere US$70 million in the first quarter of
the previous year.
The current account balance meanwhile is likely to
record a surplus of around US$431 million in March, and US$1.7 billion for
the first quarter. However, the authors of the report warn that the net
outflow of capital in March would lead to a balance of payments deficit in
March of around US$409 million. Nonetheless, the first quarter as a whole
would witness a balance of payments surplus of around US$605 million.
The report said that domestic consumption remained the
main driver of the Thai economy in the first three months of the year,
with the automobile and construction industries leading the way. The Thai
Farmers Research Center predicted that Thailand’s gross domestic product
for the first quarter of the year would stand at around 2 percent. (TNA)
EU supports Thailand as Asian intellectual property hub
Thailand’s Intellectual Property Department reported
that the European Patent Office has put down 5 million Euros to study the
possibility of turning Thailand into an Asian center for intellectual
property. Banyong Phuangrat said that officials from the European Patent
Office had met with him to discuss the second phase of cooperation on
patenting regulations, which would last from this year to 2006.
The European Union expressed interest in Thailand
becoming a center for intellectual property in the Asian region, as
Thailand has made the greatest strides in this area, he said.
Thailand has systems in place to protect all aspects of
intellectual property, including all-encompassing legislation, an
intellectual property court, and police officers specially delegated to
deal with intellectual property rights.
Banyong, who said that the EU has already allocated
money to study the framework of the project, added that the eventual aim
of the exercise was to produce an integrated system for the protection of
intellectual property rights within the Asian region.
This system would mean, for instance, that a patent
issued in one country would be valid for all the countries in the group.
However, it would not be necessary for Asia to have as complete a system
as in the EU, as information systems in Asia were not yet fully developed.
Banyong said that the EU has offered financial support
to the Philippines, Singapore, Indonesia and Vietnam, and that Thailand
was pressing it to give further assistance to Laos, Burma and Cambodia, in
order that the latter three countries could develop patent systems. Such
development would be beneficial to Thailand, as the patents for a large
number of Thai products are violated in those countries. (TNA)
More banks likely to merge in next 5-10 years
A merger of local commercial banks is expected to gain
momentum in the next 5-10 years, as they have to prepare themselves to
stiffer competition with foreign counterparts in the future, according to
a leading banker. Chavalit Thanachanand, chairman of Bank of Asia, said
more local banks were likely to merge with each other so they could expand
their capital base and strengthen business to compete with foreign
financial institutions planning to do business in Thailand.
The trend is considered a normal phenomenon - financial
institutions around world merge when they reach a certain point in their
business growth and need to expand.
He said the merger of financial institutions is normal
practice in developed countries such as the United States and the European
Union. He conceded the merger of local commercial banks might take time
because it would affect a lot of staff at both the operational and
executive levels.
However, given a sharp decline in current shareholdings
by existing owners of many banks, particularly major ones, mergers would
not be difficult because the power of decision is already distributed to
other shareholders.
Chavalit predicted interest rates would not rise in the
short run because liquidity remains excessive in the banking system, but
that capital outflow is possible if the US’ Federal Reserve raised
interest rates. (TNA)
Thailand sells more rice to neighbors
Thailand has successfully clinched a rice deal with the
Philippines and expects to agree on similar deals with India, Pakistan and
Vietnam in the near future. The Department of Foreign Trade said that
Manila has agreed to purchase a new lot of 70,000 tons of 25% white rice
from Thailand at the price of US$183 a ton.
The government-to-government agreement was reached last
week when a negotiation team from the Department of Foreign Trade visited
the Philippines to discuss the deal with Filipino authorities. Under the
deal, Thailand would start to ship the rice to the Philippines next month.
Negotiations are also underway with the governments of
India, Pakistan, and Vietnam, and it is likely that the Department of
Foreign Trade will reach similar rice deals with the three governments
soon. India has shown interest in purchasing 100,000 tons of 15% white
rice from Thailand; while Vietnam and Pakistan want to buy 50,000 tons of
25%, and 25,000 tons of 5% white rice respectively. Since the beginning of
this year, Thailand has exported over 1.9 million tons of rice overseas,
accounting for B16.76 billion, or about US$383 million (TNA)
BOT abandons income floor for credit cards
The central bank says that it will do away with the
minimum income limit for credit card issuance, and instead allow
individual banks to determine their own criteria. As part of the same
package, the Bank of Thailand (BOT) agreed to lower the minimum age for
holding a credit card from 22 to 20 years, and reduce the monthly fee from
10 percent to five percent of outstanding credit.
Thassana Ratchatapho, the BOT’s deputy manager for
financial institution policy, said that the move was aimed at enabling
commercial banks to better react to market forces and competition. This
means that commercial banks are being allowed a greater degree of
independence, enabling them to set their own criteria for credit card
issuance. Thassana said that this will require a good risk management
policy on the part of the banks, adding that the BOT will ensure that such
policies were in place. The monthly fee will be lowered from no less than
10 percent of outstanding credit, to no less than 5 percent.
These latest moves are intended to allow banks to reach
out to a wider range of customers with their credit card services, while
also giving more choices, and more appropriate levels of interest
spending, to credit card users. Thassana expressed confidence that the
number of credit card users in Thailand will show an upward swing within a
month of the new policies being put into effect. However, the interest
rate criteria would remain the same, she said. (TNA)
|
