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Banks need to coordinate efforts to speed up NPL reduction
Bank of Thailand (BOT) recently discussed with top
executives of commercial banks some ways to accelerate the reduction of
non-performing loans in the banking sector.
Governor M.R. Pridiyathorn Devakula called bank
executives to a meeting on November 27th to discuss common ways to cope with
non-performing loans (NP) which now stand at 840 billion baht.
The NPL debt figures remain stagnant. The BOT says the
amount needs to be reduced faster so that interest costs borne by banks can
drop. To speed up the reduction of NPLs in the sector as much as possible
banks need to coordinate efforts to solve the problem.
Chatisiri Sophonpanich, president of Bangkok Bank Plc,
said efforts to solve the NPL problem depended on the overall economy.
Should the economy improve, the problem could be tackled more easily. He
said re-entry NPLs have not increased significantly, but conceded the
remaining NPLs were harder to solve.
Chatisiri said, “Currently, NPLs represent 10% of total
outstanding loans in the banking system, which is quite high. Still, the
problem has eased considerably. It could take around 2 more years to reduce
the problem loans to below 5% percent. (TNA)
Philippines agrees to import rice and sugar from Thailand
The Philippines has agreed to import rice and sugar from
Thailand in exchange for Thailand’s support for a delay in sugar import
tariff reductions to 0-5% under the ASEAN Free Trade Area pact.
Speaking after a meeting with Philippine Secretary of
Trade and Industry Manuel A. Roxas II, Commerce Minister Adisai Bodharamik
said the secretary had sought Thailand’s support for the postponement of
sugar import tariff cuts under the AFTA agreement.
Manila has agreed in principle to import 100,000 tons of
sugar or 33% of its total imports of the product and 20% of its total
imports of rice from Thailand. Dr Adisai added Thailand also wants the
Philippines to make a long-term rice deal on the state-to-state basis. (TNA)
MOF confident economy will continue
to grow next year
Finance Minister Somkid Jatusripitak voiced confidence
that country’s economy will continue to grow next year despite mounting
concern on possible impact from external risk factors.
Speaking at a recent seminar on “Direction of Thai
Economy in 2003” held by the Federation of Thai Industries (FTI) and the
Stock Exchange of Thailand, Somkid said foreign credit rating agencies have
begun to increase the country’s economic outlook position. He said he
views this move as a New Year gift for Thai people because it reflects the
country’s bright economic prospects and future growth.
The finance minister said the steady economic growth was
attributed to coordinated efforts to stimulate the economy by the National
Economic and Social Development Board, the Bank of Thailand and the Finance
Ministry.
These efforts have produced conditions for the economy to
grow 3.9% in the first quarter of this year, 5.1% in the second quarter, and
it is expected to grow 5% in the third quarter. The annual growth projection
now stands at 4.5% for the year.
Dr Somkid said Thailand’s economic recovery was boosted
by local consumption and spending. Because of this, the Thai economy should
be able grow even though there is global economic uncertainty, particularly
in the United States.
Concerns over the US-Iraq war had already eased to a
certain extent. But what had many worried was possible deflation around the
world. Dr. Somkid said if global deflation kicks in Thailand would be
unavoidably affected.
The Ministry of Finance (MOF) acknowledged that to
cushion the impact of deflation, all parties must cooperate in helping the
country weather the storm. Bankers need to help accelerate lending and
cooperate with Thai Asset Management Corporation in coping with
non-performing loans. FTI must join hands with all private segments to boost
the economy.
The minister said that alone, the fiscal measures being
taken by the government are not enough to stimulate the economy. The country
must also rely on exports, tourism and improve the strength of local
economy. (TNA)
Thailand ready to establish FTA with US, says MOC
Commerce Minister Adisai Botharamik says that Thailand is
ready to make an economic cooperation agreement with the United States or
even establish a free trade area (FTA) with the country. He said he
discussed progress being made in working out a bilateral economic
cooperation between the US and Thailand with the US trade representative
during a meeting in Manila on November 27th.
The US was asked to outline the framework of cooperation
between the two countries in many areas including intellectual properties
and electronic commerce to ensure smooth coordination and implementation.
A meeting of senior officials of the two countries will
be held during January-February 2003 to follow up the task.
Dr Adisai said Thailand would apply the FTA agreement
between the US and Singapore as a guideline for a similar agreement with the
US. He said the US wanted Thailand to liberalize communications, insurance
and financial services while Thailand wants the US to help facilitate goods
importation.
Dr. Adisai said believes Thailand would not be placed at
a disadvantage if it liberalizes these services because many private
companies have already adjusted themselves to accommodate the changing
business environment. (TNA)
Latest survey says local businessmen upbeat about economy growth
Most Thai businessmen are beginning to have confidence
that the Thai economy has picked up and is likely to recover noticeably in
the long run.
The University of Thai Chamber of Commerce’s Economic
and Business Forecast Center conducted a survey by seeking opinions from
members of chambers of commerce nationwide during the 20th annual Seminar of
the Chambers held recently in Bangkok.
Thanawat Polvichai, director of the center, said that the
poll revealed a majority of businessmen believe the economy has begun a
sustainable recovery. But they added that some problems need to be addressed
so that economic growth can gain momentum.
According to the survey businessmen were ready to list
these problems and present them to the government for consideration.
Regarding Prime Minister Thaksin Shinawatra’s
announcement of his intention to inject 300-400 billion baht to stimulate
the economy in the next few years, Thanawat expressed his support, saying
the budget was sufficient to sustain economic growth and that the amount
would not be a burden to the government. He said that should the gross
domestic product continue to grow, the government would gain enough revenue
from taxes to repay public debts public debt. (TNA)
Change in economic policies in China unlikely after leadership transfer
Arch Taolanont, Chairman of the Thai Chamber of Commerce
recently stated that he believes there will be no change in economic
policies after the recent leadership transfer in China. Thus, business
contacts between China and Thailand should not be affected by the power
change in the world’s most populous country. This was because power
transfer in China had been pursued with no change in key policies, he noted.
Prime Minister Thaksin Shinawatra expressed a similar
opinion after Chinese Vice President Hu Jin Tao was recently elected as the
new Secretary-General of the Chinese Communist Party, and is widely expected
to be elected as the new Chinese president soon - replacing incumbent
President Jiang Zemin.
Thaksin said that he was confident the upcoming change of
the Chinese top leader would not affect long-time bilateral relations
between Beijing and Bangkok.
Arch said that China’s leadership transfer to the
younger generation is expected to strengthen economic policies of the
world’s largest market of consumers.
Pairat Burapachaisri, Secretary-General of the
Thai-Chinese Business Council commented that he considered improvement of
marketing and other strategies would be needed for Thai businesses to boost
their competitiveness although there would be no major policy change in
China. “This is because Beijing has entered the World Trade Organization (WTO),
meaning that Thai businesses will face more competition with each other in
the domestic market, and with their rivals in the giant Chinese market as
well”, he pointed out.
Pairat suggested, however, that many Thai products have
promising prospects in the Chinese market, including Hom Mali rice, rubber,
automobile parts, toys and products for children.
Thanavat Polvichai, Director of the Economic and Business
Forecast Center of Thai Chamber of Commerce University, said that he
believed the new generation of Chinese leaders would continue to support the
free trade and investment policy, which would benefit trading partners,
including Thailand. “Beijing’s policy on expansion of growth to the West
will boost the purchasing power of its people, which would also benefit Thai
exporters and investors,” he noted. (TNA)
External factors could affect oil prices
A recent report out from Thai Farmers Bank Research
Center says external factors should be closely monitored since they may
affect domestic oil prices, although world oil prices have recently dropped.
The Bangkok-based research center said that external
factors to watch closely include over-quota production of crude oil of the
Organization of Petroleum Exporting Countries (OPEC), easing tensions
between the United States and Iraq, and selling of oil on the future markets
by traders in large bulk.
Oil prices in the world market have dropped from the
highest recorded average level in late September by US$5.52 a barrel, which
amounts to18.8%, to around US$23.87 a barrel.
However, the report warned that the global oil market
could still be vulnerable in the near future due to such uncertain factors
as international terrorism, halt of over-quota oil production of OPEC, and
renewed tension between the United States and Iraq, which would most likely
cause a renewed oil price hike.
Current oil prices are higher than the average level of
US$19.47 a barrel at the beginning of this year by US$4.4 a barrel, or 22.6%
percent.
PTT Plc recently announced a new price cut of 0.20 baht a
liter for all its types of gasoline at its petrol stations nationwide. With
the new reduction, the retail price of PTT benzene 95 in Bangkok and its
peripheral areas is 15.59 baht a liter; while the prices of PTT benzene 91
and diesel in the areas are14.59 baht and 14.19 baht respectively.
The new gasoline price cut followed a recent drop of oil
prices in the world market due to continued over-quota production of OPEC
countries, increase in the United States’ domestic oil reserves, and an
agreement by Iraq to allow UN inspection of its suspected weapons sites
without conditions.
Gasoline prices in Singapore also dropped to US$ 28.35 a
barrel for benzene 95, and to US$29.98 a barrel for diesel. (TNA)
UN-ESCAP warns of severe hardship for millions
Five years after the 1997 financial crisis, many workers
in Southeast Asia are not far from extreme poverty, according to the authors
of a new UN-ESCAP publication. “Protecting Marginalized Groups During
Economic Downtown: Lessons from the Asian Experience,” provides some sober
reading and its conclusion call for determine action.
Southeast Asia, is still recovering from economic shock
that accompanied the sudden devaluation of regional currencies. But the
people worst affected were, and continue to be, individuals toward the
bottom of the socio-economic ladder.
Many countries in the UN-ESCAP region still have few or
no social safety nets, like unemployment benefits, and it is this
disadvantaged group that would suffer most during the onset of a fresh and
rapid recession, depression, or currency devaluation. The main fear is job
loss due to downsizing and/or restructuring.
The report warns that another financial crisis - or
sudden economic downturn - could result in more severe hardship for millions
of people across the region, especially for those in the so-called
“informal sector”, many of whom are self-employed.
This study, through quantitative and qualitative surveys
conducted in three countries, Indonesia, South Korea and Thailand, also
finds that most of the program introduced following the last financial
crisis did not benefit persons who lost jobs in the urban formal sector,
which is especially vulnerable to fluctuations in the economy and
competitive pressure.
Women are affected disproportionately.
Aggravating the situation is the pattern of shifting
production centers, according to changes in competitive and comparative
advantages across the region, further perpetuating the boom-and-bust cycle.
The revolution in ICT and a freer flow of goods, services and technologies
further exacerbate the situation.
The study advises governments to act now to avoid the
socio-economic turmoil that a fresh downturn or crisis could cause by
initiating a package of measures: Longer-term public works program,
coordinated between national, regional and local governments; the creation
of national unemployment insurance schemes; micro-credit facilities to be
made available to the unemployed; information and counseling centers for
small and medium-sized enterprises (SMEs), and further encouragement of the
long-standing Asian tradition of developing networks of families, friends
and communities. (TNA)
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