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Operating results of banks likely to surge
Performance results of commercial banks as a whole are
expected to surge by 96-205% in the first quarter of this year as a result
of wider interest spread and eased loan-loss provisioning burdens,
according to the Thai Farmers Research Center (TFRC).
The Center has projected combined net profits in the
banking system will rise by 96-205% to 3.6-5.6 billion baht from 1.84
billion during the same period of the previous year. The significant
increase in the profits was attributed to the wider interest spread from
1.37% in the first quarter of this year to 1.99% this year.
Divided by bank status, five Thai-owned commercial
banks including 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 had
increased since late last year, the level was around 22% lower than that
of the previous year. The interest spread among these banks rose to 2.3%
from 1.79%, resulting in an increase in net interest income by 22.9%.
Banks with a major stake owned by foreigners, including
Bank of Asia, DBS Thai Danu, Standard Chartered Nakhonthon, and UOB
Radanasin, earned combined net profits of 190 million baht compared with
net losses of 550 million the same period the year before. The interest
spread among these banks increased to 2.41% from 1.96%, resulting in a
rise in net interest income by 21.2%. The significant increase in net
profits also stemmed from declined loan-loss provisioning burden.
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 their loan-loss provisioning burden. The interest spread
among these banks increased to 1.24%% from 0.44%. (TNA)
Commercial banks urged to accelerate lending
According to a leading banker, current low interest
rates will not benefit local investment as long as commercial banks remain
reluctant to lend.
Dr. Olarn Chaiprawat, the finance minister’s adviser,
said although interest rates are currently very low, this will not
necessarily be a contributing factor to local investment, mainly because
banks are still unwilling to extend loans, particularly to small and
medium-size enterprises.
Dr. Olarn feels that SMEs can play a significant role
in the nation’s economic turnaround. However, unless banks become more
sympathetic to their financial position, these businesses will not acquire
the working capitols they need to fulfill their potentially important
role.
“The SME loan problem is hard to solve in Thailand
because there is yet no precedent for their role in the nation’s
economy. The attention being paid to these businesses is very recent and
the government is trying to upgrade the Small Industrial Finance
Corporation into a commercial bank,” he said.
The extension of large business and consumer loans
looks promising since major operators in many business sectors are gaining
more liquidity, sales figures are increasing and these enterprises are
repaying their debts.
Operators with sound financial position are able to
raise funds through the capital market by issuing debentures. Consumer
loans, particularly housing loans, have significantly expanded due to the
recovery of property business and lower interest rates.
Thailand’s economy picked up in the first quarter of
this year, boosted by the property sector recovery, product development,
the government’s stimulus packages, and a booming tourist trade. (TNA)
SET to hold road shows in Hong Kong and Taiwan
The Stock Exchange of Thailand (SET) will organize road
shows in Hong Kong and Taiwan to attract more investors to the Thai stock
market. SET president Kittirat Na Ranong recently issued a statement
saying the road shows will be held sometime in the second half of this
year.
Kittirat said that SET also recently held a very
successful provincial road show in Hat Yai in Songkhla Province. Seventeen
financial institutes, including 10 securities firms, the Export-Import
Bank of Thailand (EXIM Bank) and the Industrial Finance Corporation of
Thailand (IFCT) agreed to join SET officials in giving advice to local
firms preparing to list on the Thai stock market. Local firms will also be
briefed on trends and prospects of the Thai economy and the stock market.
Over 60 small and medium-sized enterprises (SMEs) and
300 local investors attended the road show. Songkhla was chosen for
SET’s first provincial road show because the province is ranked second
after Bangkok in terms of market investors. SET will also organize road
shows in the northern province of Chiang Mai, as well as the northeastern
provinces of Nakhon Ratchasima and Khon Kaen later this year. (TNA)
Thailand wins UK support in EU trade battle
Prime Minister Thaksin Shinawatra scored a major
victory for Thailand after the British government promised to support the
kingdom in its battle to dismantle European Union (EU) trade barriers
affecting Thai products.
On the last day of his recent official visit to the
United Kingdom, the prime minister also won British commendation of
Thailand’s efforts to solve the problem of chemical residue in chickens,
one of the major stumbling blocks with the EU.
Speaking after talks with UK Trade and Industry
Minister Patricia Hewitt, the prime minister said that the UK government
expressed sympathy for Thailand’s concerns over trade barriers, and has
promised to support Thailand in raising the issue with the EU.
Thailand has repeatedly faced EU trade restrictions,
the latest being the return of a consignment of chickens which the EU
claimed were contaminated with chemical residue.
Commerce Minister Adisai Boharamik said that the two
sides discussed seven trade problems that Thailand was experiencing with
the EU. The UK, a core member of the EU, praised Thailand for its efforts
to solve the residue problem in chickens, he said.
The PM’s success in trade negotiations follows
similar productive talks with the UK government. UK Defence Minister
suggested a deal whereby Thailand would receive British weapons in
exchange for Thai agricultural goods.
Deputy Prime Minister and Defence Minister Chavalit
Yongchaiyudh voiced enthusiasm for the deal, saying that it would go
beyond mere “counter trade”.
For example, in a counter trade deal Thailand might
get, for instance, a tank in exchange for rice. In a deal involving
economic compensation Thailand would not only get an opportunity to export
its rice, but also receive assistance in the development of rice
cultivation and matters of agriculture and public health.
Gen Chavalit said that once the deal has been drafted a
national committee will be established to work out the details, although
he conceded that it could take some time before the scheme gets off the
ground. Further discussions will take place when UK Defence Minister
visits Thailand in the near future. (TNA)
April revenue from tax collection rises
The Revenue Department collected 40.29 billion baht in
all categories of taxes in April, an increase of 3.36 billion or 9.11%
from that of the same month the year before, according to director-general
Supawat Kawatkul. The amount is 1.03 billion baht or 2.62% higher than the
previous estimate.
Supawat said the department collected total taxes of
262.19 billion baht from the beginning of the fiscal year to April. This
represents a rise of 15.96 billion or 6.48% from that of the corresponding
period the previous year and an increase of 2.93 billion or 1.13% from an
early projection. Supawat said the increased tax collection indicated the
overall picture of the country’s economy is on a path to recovery. He
added that revenue from duty stamps on business contracts had also
considerably increased. (TNA)
Local rice whiskey gets thumbs up
A locally produced rice whiskey is about to be launched
abroad after proving so popular at home that production lines can barely
keep up.
From humble beginnings, ‘Couprey’ brand sato, or
rice whiskey produced by a local traditional liquor cooperative in Khun
Han District, Si Saket, now plans to go international.
At present the cooperative, headed by Sunthorn Senaket,
produces a mere 3,000-4,000 bottles a day, but already traders from Si
Saket and the surrounding provinces are literally queuing up to purchase
the drink that is fast winning the hearts of the local people.
Its popularity undoubtedly lies in its price - only B20
a bottle wholesale, or B23 retail - plus its long shelf life of six
months. Sunthorn insists that taste is also a major factor.
The cooperative is now looking to expand its operations
abroad to Cambodia, Malaysia and Laos, where surveys show that it goes
down well with drinkers in that region.
‘Couprey’ has even won accolades from Si Saket
governor, Sucharit Nantamontri, who sees production of the local alcohol a
example of a SME boosting local employment and preserving local
traditions. (TNA)
PM praises UK retailer
In an unequivocal show of support for foreign
retailers, Prime Minister Thaksin Shinawatra recently heaped praise on
British retail giant Tesco.
In a meeting with Tesco president Sir Terry Lehey,
Thaksin said that Tesco, which operates in Thailand under the label Tesco
Lotus, has helped Thai entrepreneurs upgrade the quality of their products
to meet international standards.
The PM expressed hope that Tesco will promote Thai food
products abroad, and use Thailand as a hub to export Thai goods to its
branches across the world.
Tesco, along with other foreign retailers, has come
under a barrage of criticism in Thailand for edging out Thai small-scale
retailers, thousands of which are said to have gone under since the
arrival of giant retail chains.
Legislation is currently being worked on that will
limit the opening hours of large retail stores, and ensure that they are
established only in specially designated areas.
The prime minister’s comments were welcomed by the
Tesco president, who said the store would support the government’s
‘One tambon, one product” campaign, and would work with small-scale
producers to bring their products up to export quality. (TNA)
Stronger baht not yet affecting economic recovery
The strengthening of the baht at the current level has
not yet had any negative effect on the country’s economic recovery,
according to Thai Farmers Research Center.
Thailand’s leading think tank says a stronger baht
could dampen the inflow of foreign capital since the investment cost in
baht denomination is higher. A strong baht could also encourage
profit-taking in the stock market and lower export competitiveness.
However, unless local currency strengthens to an
average range of 43.30-43.50 to the US dollar throughout the year, the
Thai economy is still predicted to grow at the rate of 3-3.5%.
TFRC said economic growth at this moderate rate is
attributed to an increase of spending on local investment and consumption
as well as government stimulus packages.
The low interest rate policy will continue to encourage
spending in these sectors. (TNA)
Foreigners may get higher stake in telecom firms
The government has said it will backtrack on the
much-criticized legislation limiting foreign ownership of
telecommunications companies to 25 percent, instead upping the ceiling to
49 percent.
The present 25 percent ceiling has been attacked by
telecommunications firms for being impossible to implement, and many
people see the unusually low ceiling as a political move aimed to benefit
a telecommunications company with close links to the prime minister.
The government said it will consider boosting the
ceiling to 49 percent in order to fit in with its liberalization policy
for the telecommunications industry and to accord with the present
economic and investment situation.
In addition, hopefully changes made in the
Telecommunications Business Act will help spur foreign investment in
Thailand’s telecommunications industry, and allow telecommunications
companies to build up capital in order to boost their potential.
Proposed modifications to the Act, if endorsed, could
enable telecommunications companies to ask for advance payment of service
fees from their customers. Such advance payments are in fact already being
made for a variety of pre-paid mobile phone packages. (TNA)
800 million baht earmarked for “e-citizen cards”
The government intends to plow 800 million baht into a
pilot scheme to introduce electronic ID cards, or so-called
‘e-citizen’ cards. This new system will eventually do away with the
mountain of different documents that Thais are asked to produce each time
they contact a government agency.
Deputy Public Health Minister Surapong Suebwonglee
announced the new cards will act as ‘smart cards’, enabling several
types of information to be stored on a single piece of plastic. In
addition to the present information already required for ID cards held by
Thai citizens, data relating to house registration, health care rights,
medical information such as blood group and allergies will be added to the
‘e-cards’.
M.D. Surapong said that each card, which will be issued
with a 13-digit code, will cost B50-100 to produce. The National
Information Board will determine the exact price once they decide on the
size of the card’s memory.
The pilot project will kick off this year with a budget
of B800 million, and the new smart cards will be issued to 8-10 million
Thai citizens.
The Health Minister said the project, which has already
been put before Cabinet, will take around two years to fully implement.
He also predicted that the new cards will one day
replace medical records, and allow patients to view their personal medical
information. Many doctors are currently reluctant to disclose this
information to patients. (TNA)
Thailand’s employment shows improvement
Employment in the country is rising as a result of
tourism, service-related business expansion, and the government’s
efforts to stimulate the economy at a grass-roots level, according to the
Bank of Thailand.
Atchana Waikwamdee, senior director of the Local
Economy Division, said a survey on employment of workers in the
non-farming season period (February 2002) found there are 33.5 million
people of working age in the labor market.
Around 31.9 million are employed. Of this, 11.7 million
work in the farming sector and 20.2 million in the non-farming sector.
There are 1.6 million unemployed. The number of people of working age but
who are not yet ready to work for various reasons totals 14 million. This
resulted in the country’s labor force rate standing at 70.6%.
The survey showed that employment in February of this
year for both farming and non-farming sectors significantly increased by
1.2 million from that of the same period of the previous year.
Of the total number of newly employed, 900,000 are in
the retail, hotel and restaurant sectors, which enjoyed an employment
increase by 16.1% and 14.8% respectively.
Employment in government service and manufacturing
sectors dropped by 7.6% and 2.5% respectively. The number employed in both
sectors was reduced by 230,000.
Atchana said employment in the private sector has
improved uninterrupted. Employment in the non-farming sector, particularly
in retail, hotel and restaurant businesses, had significantly risen mainly
because government’s support for tourism promotion. The first quarter of
this year showed an increase of foreign tourists in the first of 7.6%
totaling 2.89 million. (TNA)
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