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Cabinet announces tax cuts
On December 3rd the Cabinet made moves to stimulate
domestic consumption to protect the country from economic uncertainties next
year by putting more money in the pockets of low-income wage earners. It
approved a tax-cut package which will exempt individuals with annual incomes
of less than 80,000 baht from paying 5% income tax. The present minimum is
50,000 baht. The package will take effect in January 2003.
The Cabinet also decided to continue boosting the
property sector, which saw a strong recovery in 2002 and is projected to
further expand in 2003.
The cabinet approved a proposal to let homeowners sell
property and pay no income tax on the proceeds. However, the money must be
used to buy a new home. Tax is payable if the new home costs less than the
sold property, in which case tax is due on the difference.
Sellers must repurchase within one year of sale, and must
actually live in the home for at least one year.
In another compromise to aid the real-estate sector, the
Cabinet approved the extension of existing tax incentives for another year.
This package includes a specific business-tax cut from 3.3% to 0.11% and a
reduction of transfer fees for land and buildings from 2% to 0.01%.
Revenue Department director-general Suparut Khawatkul
said the new tax cut will reduce the government’s revenue from personal
income tax by approximately 4 billion baht per year, and the tax-incentive
extension could cost the government another 11.7 billion baht annually.
However, he said personal-tax cuts will stimulate increase in consumer
spending. To balance things out the government projects that tax revenues
from increased business capital spending will compensate for the losses from
tax cuts. (TNA)
Thailand able to repay debts with
IMF ahead of time
Prime Minister Thaksin Shinawatra has again stated that
the government is in a position to repay debts with the International
Monetary Fund (IMF) ahead of schedule. He said the country now has political
stability and considerable international reserves and its foreign debts have
decreased.
The Thai leader said it was likely the government would
make the debt repayment with the IMF ahead of time, but it needed to wait a
while longer to assess whether a war between the United State and Iraq
breaks out.
Thaksin said, “We sought loans from IMF to support our
country’s international reserves. Now our reserves are sufficient. Why
should we pay interest on the loans? Previously, we needed the loans to show
our deposits were enough. But now the deposits are more than enough, so we
no longer need to keep the loans.”
The premier said the government would be in a position to
repay the debts by the end of this year or early next year. (TNA)
Thailand’s organic farm products look promising in world market
After presiding over the recent 1st National Organic
Farming Fair, Petipong Pungbun Na Ayudhya - the ministry’s permanent
secretary, said health foods made from chemical-free farming, particularly
organic farm products are currently being more recognized and are in greater
demand from consumers both locally and overseas.
The increased recognition and demand stems from the
production process which focuses on hygiene and the health and safety of
consumers. Relying on raw materials from natural resources in farmlands,
these products and their production methods are considered environmentally
friendly.
Key export destinations of organically gown farm products
include the European Union, the United States, Canada, and Japan. Consumers
in these countries place high importance on chemical free food products
because they feel they have a direct impact on their health.
Thailand is one of the world’s top 20 exporters of farm
products and earns a lot of hard currency from this sector. However,
Petipong said that production in the country’s farming sector continues
increasing output for export by using chemical substances and fertilizers.
But this approach has caused higher production costs, degraded soil and
environment, and put producers and consumers at risk of health problems.
Petipong said Thailand has also experienced non-tariff
barriers in the international trade of farm products such as strict control
of product quality and standard, price cutting and ‘dumping’.
To avoid these problems, Thailand needs to improve
production efficiency, quality of product, and production management to
boost competitiveness in the world market. Increased organic farm production
can be one of the effective options to cushion the country from these
adverse effects.
Organic farm products available in the world market now
include rice, cotton, bananas, pineapples, tea, and various vegetables.
These items account for only 1% of the value of farm goods people are
consuming at present. However, it is expected this value will expand to 10%
in the next 5-10 years.
Petipong said Thailand is in a better position than many
other countries to produce organic farm output given geological advantage
and farmers’ skills in production. (TNA)
Senior officials of rice-trading nations want better information exchange
Senior officials of 5 rice-trading countries gathered in
Bangkok on December 6 hoping to outline the framework of information
exchange on rice in a more concrete manner. Commerce Minister Adisai
Bodharamik presided over the Senior Official-Level Meeting on Rice Trade
Cooperation of 5 countries including China, Vietnam, Pakistan, India and
Thailand.
The meeting was the follow-up of the recent discussions
amongst the ministers of the 5 nations in order to provide better
information exchange at the decision-making level involving production,
consumption, export, stock, price and policy.
The meeting also aimed for an agreement which could go
before the ministerial-level meeting to be held in Vietnam in the middle of
next year.
Thailand is expected to export 6.63 million tons worth
US$1.4 billion in all kinds of rice from January to December 2. It is
projected the rice export will reach 7.2-7.3 million tons which exceeds the
target of 7 million tons.
The Ministry of Commerce is encouraging exporters to
focus on penetrating the Chinese market with jasmine fragrant rice. Thailand
has annually exported only 250,000 tons of jasmine rice to China. The
government hopes the annual export can reach 500,000 tons in the next three
years. (TNA)
King advises brand name be created for Thai products
The government will create a symbolic brand name for Thai
exports so that they will be easily recognized, according to Prime Minister
Thaksin Shinawatra.
On December 7th Thaksin said that the government will
heed His Majesty the King’s advice that Thailand should have a common
symbolic brand name for its products sold in the world market so that they
would be easier to recognize by international consumers.
The symbolic brand name will help to upgrade the image of
Thai products, and when it becomes well-known in the international community
the prices for Thai goods can increase in the world marketplace.
The government says it needs time to come up with an
appropriate name. (TNA)
Government determined to stimulate economic growth and address NPL problem
Speaking at a recent gala dinner organized by the
Federation of Thai Industries (FTI) at the Sirikit National Convention
Center, Prime Minister Thaksin Shinawatra told his audience that it was
likely that the country’s economic growth rate could reach 4.5-4.8% this
year.
“But I’m still not satisfied with the expected growth
rate. The government will implement many more policies and measures to
generate more economic activities and stimulate economic expansion so that
all Thai people will have better living conditions and will be happier. In
achieving this goal, the government needs cooperation from all parties,”
he urged.
However, the Thai leader expressed his concern over the
problems of non-performance loans in the banking system (NPLs) - which are
still high, and of excess liquidity in the system because local banks have
been reluctant to extend new loans.
He said that he will call a meeting with representatives
of local banks soon to discuss ways to address these problems. “The
government will try to use the excess liquidity economic stimulus purposes.
Over the rest of the two and a half years of the government’s term, I
believe the government will be able to pull excess cash from 500-600 billion
baht from the banking system into real economic sectors. If successful,
local production and consumption will be expanded,” Thaksin said.
The government plans to siphon the excess liquidity into
the real economic sectors, including introduction of measures which will
encourage people to speedily transform their assets into capital. The
government will encourage state-run banks to do so first if local commercial
banks remain reluctant to cooperate in the initial stage.
Economic analysts predict local banks will begin to
extend new loans to their clients by next year. The government also plans to
focus more on research and development projects (R&D) to enhance the
country’s competitiveness.
The Ministry of Finance has been told to work out tax
incentives to promote R&D, including human resource development by
giving tax incentives to local firms and organizations to encourage sending
their personnel to further their studies at local or overseas institutes. (TNA)
Thai product production law being worked out in parliament
Thailand is currently working on a law which would
protect Thai products throughout the international marketplace. This law
will mirror that which the World Trade Organization (WTO) defines as
‘geographical indications’ or GIs. Dozens of Thai products may be tagged
for geographical-indications protection once the law passes parliament.
These products include Thai hom mali rice from Buri Ram, salt eggs from
Chaiya, ‘pomelos’ from Nakhon Chaisri and ‘mon thong’ durians from
Chanthaburi.
Expected to be in effect next year, the law on
geographical-indications protection passed through the senate in early
December and was sent back to the lower house for another reading.
The World Trade Organization defines geographical
indication as “indications which identify goods as originating in the
territory of a member, or a region or locality in that territory, where a
given quality, reputation or other characteristic of the good is essentially
attributable to its geographical origin.”
For example, when consumers refer to whisky, they
immediately think of Scotch. Genuine Scotch is only made in Scotland. The
same thing applies to the wines of France. Genuine Champagne and Bordeaux
come from regions of France. ‘Champagne’ from California or Australia is
referred to as a ‘sparkling wine’. Many countries can produce red wine,
but red wine is not Bordeaux unless it comes from this region in France.
A product protection law will be good for Thailand and
will allow the country to register Thai ‘hom mali’ rice from Buri Ram,
which tells the consumer it is high-quality rice from that region of
Thailand. Other countries produce jasmine rice; however, after the law
passes, they will not be able to call it Thai ‘hom mali’ rice.
Geographic indication laws will also protect Thai
products from counterfeiting and illegal use of Thai names and destinations.
These laws also provide the consumer with detailed information on the origin
and quality of the product.
WTO members are considering how to extend
geographical-indications protection to cover all products. At present it
covers only wine and spirits. France has thus been able to protect its
Champagne name. Other countries producing similar products can only call
them sparkling wines. GIs will not only help consumers to identify and
discriminate, the registration laws also help producers sell products at
higher prices. (TNA)
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