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Interest rates ‘not a matter for
concern’ says Bank chief
One of Thailand’s leading bankers moved to defuse
concern that the nation’s interest rates could pose a cause for concern,
saying that Thailand’s banks were not raising their rates in line with the
United States Federal Reserve (FED) as liquidity remained high.
Responding to the US latest interest rate hike through the federal fund
rate, Boonthak Wangcharoen, Deputy CEO of Kasikorn Bank Plc, said that
long-term interest rates in Thailand would undoubtedly feel the impact.
However, commercial banks had sufficient liquidity - in excess of Bt800
billion - to keep short term interest rates at present levels, he noted.
While conceding that the rise in the federal fund rate could have an impact
on the Thai economy, he said that it would be minimal. (TNA)
Restaurants and taxis warn
of price hike as cooking gas prices soar
Consumers were warned recently that they might have to
prepare themselves for higher food and taxi costs, as restaurant owners and
taxi drivers complained that the Bt1 per kilogram increase in the price of
cooking gas could force them to put up their prices.
The new prices, enforced from midnight on 6 May, have
pushed up the price of a 48-kilogram cooking gas canister from Bt770 to
Bt830.
According to restaurant owner Napha Jirajariyawech, this
has thrown restaurateurs and food stall owners into a dilemma. Although
aware of the fact that higher prices could put off customers, Napha warned
that if the price of cooking gas rose any further, restaurateurs and food
stall owners might have no choice but to charge more for their food.
The increase in the price of gas has also affected taxi
drivers, many of whom use gas as an alternative to benzene to fuel their
vehicles. The price of fuel gas sold in petrol stations has now jumped from
Bt8.70 per liter to Bt9.20.
Describing the new prices as ‘extremely expensive’,
taxi driver Boonson Phuttha warned that any further increases could see taxi
drivers reverting to the use of gasoline.
Fears were also voiced by Thapthim Yaemphaeng, the owner of a gas store,
who said that although the price rise would not have an immediate impact on
the sale of gas, the consumption of gas would undoubtedly fall if the price
of gas rose any further. (TNA)
Cabinet paves way for import tax reductions
Manufacturers were given good news recently when the
Cabinet approved import tax exemptions and reductions for 76 raw material
items used in the manufacturing of electrical and electronic goods.
Announcing the move on May 4 after a Cabinet meeting,
Deputy Finance Minister Varathep Ratanakorn said that import taxes on 65
items on which income tax of 5-20 percent was currently payable would be
reduced to a rate not exceeding 5 percent. A further five items, for which
import tax was currently 5 percent or under, would become exempt from import
tax altogether.
The new tax regimen, which will bring Thailand in line
with other countries in the Association of Southeast Asian Nations (ASEAN)
region, will be welcomed by the manufacturers of electrical and electronic
goods, including fridges, irons, washing machines and hi-fis. Lower import
taxes will allow manufacturers to cut the price of their goods and compete
with other countries in the ASEAN market, while helping prevent companies
from shifting their production bases to countries with more favorable tax
concessions.
Varathep said that although the government would lose 1 billion baht a
year from the move, this was likely to offset by an increase in indirect
taxation. The new tax measures will come into effect in the near future.
(TNA)
Southern situation is a ‘temporary blip’ on stock market: SET president
Stock Exchange of Thailand (SET) President Kittirat Na
Ranong expressed confidence that Thailand’s stock market would witness a
resurgence of interest once the government had calmed the security situation
in the southern border region, saying that foreign traders who had engaged
in heavy selling would return to invest in the Thai stock market.
While conceding that a number of negative factors had
caused a temporary slump in Thailand’s stock market trading, Kittirat
voiced optimism that the situation would return to normal in the near
future. He said once the southern situation had returned to stability,
foreign investors would flock back to Thailand, he predicted, noting that
foreign stock traders were closely monitoring the situation.
“The movement of the Thai stock market this year is
similar to last year. The first five months of last year saw negative
factors engulfing the market, resulting in a fall in share prices. But once
these negative factors were eased, share prices responded to the favorable
performance of listed companies. I believe that this year will be the same,
as the situation in the southern region begins to die down, foreign
investors will undoubtedly return to invest in Thai stocks”, he said.
He also downplayed the fact that brokers have downgraded Thailand’s
target index for the 2004 year-end, saying that the new targets reflected
negative news, rather than underlying economic strengths. At the same time,
he noted that confidence in the stock market was likely to be partially
restored by the performance announcement of listed companies on 15 May.
Dismissing fears that foreign investors were cleaning out their share
portals, he said that foreign traders were likely to return to the stock
market once prices picked up. (TNA)
Myanmar opens door to power station investors
Myanmar has offered to sweep away obstacles to investment
and to maximize investment privileges along the Thai-Myanmar border in order
to encourage Thai investors to put their money into over 10 electricity
generating plants, a senior Board of Investment (BOI) official announced last
week.
Speaking after talks with Myanmar Industry Minister U Aung
Thaung and over 20 Thai businesspeople, BOI deputy secretary-general Phiromsak
Lapharojkij revealed that Myanmar was now making preparations in several areas
to encourage more investment from Thailand. This included the search for
suitable land on which to establish industrial estates and the upgrading of
infrastructure.
In addition, Phiromsak said, Myanmar was inviting Thai
investors to invest in the construction of this infrastructure, with the main
focus on encouraging Thai investment in electricity generating plants.
Within the next two years, Myanmar hopes to construct at
least 10 hydroelectric power stations to cope with current electricity
shortages and frequent power cuts. Myanmar has promised that once industrial
estates are established in the border region, it will lure investors by
facilitating the import of raw materials and offering attractive investment
packages specifically for the border region.
A total of 27 foreign countries currently invest in
Myanmar, with total investment worth around USD7.592 billion. Thailand is
Myanmar’s second largest investor after Singapore, with investment projects
worth USD1.312 billion.
Thai businesspeople participating in the meeting came from a variety of
industries, including furniture, pharmaceuticals, fabrics, plastics,
machinery, construction materials and steel. While all expressed interest in
investing in Myanmar, they also pointed to the obstacles that would have to be
faced, including frequent power cuts, difficulties regarding domestic travel,
visa problems and the ownership of land. (TNA)
Property sector
on upward trend
The country’s property sector continued to expand
promisingly in the first quarter of this year, with total sales of residential
land jumping by 65.1% at the end of February, according to the Bank of
Thailand (BOT).
The BOT said in a report released on May 4 that the
continual expansion of the domestic property sector was due mainly to the
steady recovery of the Thai economy and low interest rates. The expansion of
the domestic property sector was, however, unlikely to overheat in the local
real estate industry as feared, given key indicators of the property sector at
the moment, the central bank stated in the report.
Total sales of residential land at the end of February jumped to 36.752
billion baht, or 65.1% increase from the same period of last year; while
housing units in Bangkok and its environs increased to 3,950 units. (TNA)
Senate to warn China over dam construction
The Senate Foreign Affairs committee confirmed that it was
on the brink of sending a letter to Beijing protesting China’s construction
of dams along the Mekong River, while revealing that the Vietnamese foreign
affairs minister agreed that the issue should be deliberated by the
Association of Southeast Asian Nations (ASEAN).
Warning that China’s construction of dams along the
Mekong was having a devastating impact on the environment of downstream
nations, the committee chair, Kraisak Choonhavan, said that the issue of
China’s Mekong dam construction had formed the focal points of talks last
week with his Vietnamese counterpart. Both countries had agreed that the
matter should now be raised at the next meeting of the ASEAN parliament.
Kraisak also confirmed that the Senate committee would send a letter of
protest to Beijing via China’s ambassador to Thailand, calling on Beijing to
discuss the matter further with Thailand. The letter is expected to express
the Senate committee’s concern over China’s damming and dynamiting of
rapids on the Mekong River. It will also warn that the objectives of the
Greater Mekong Sub-region, which groups together China’s Yunan Province,
Myanmar, Thailand, Laos, Cambodia and Vietnam, to bring economic prosperity to
the region were being stymied by China’s activities on the upper Mekong.
These activities, it will say, are damaging the life of people living along
the river. The letter will ask that Beijing works with the lower Mekong
countries to draw up mechanisms to solve such problems. (TNA)
Krung Thai Bank
launches massive grassroots credit project
The state-owned Krung Thai Bank announced that it would
continue to support local communities by offering unlimited credit to
grassroots projects.
Disclosing the bank’s latest policy initiatives, Krung
Thai Deputy Manager Anantaphol Phanpheng said that this year the bank wanted
to see more capital going to local communities in accordance with government
policy.
Citing the Baan Sam Kha Community Finance Organization,
established last year, and a similar project in Yasothon Province involving
the export of organic rice as examples of the way forward for the bank’s
projects, he said that Krung Thai Bank would continue to offer support in the
form of circulating capital and information technology. In addition, the bank
would offer personal credit to market traders across the country.
Noting that grassroots credit involved a large number of people but
relatively a relatively small amount of capital, he said that bank would put
no limitations on the amount of credit available. (TNA)
EGAT’s board rules out listing plan
Monopoly not a bad thing says chairman
The Electricity Generating Authority of Thailand’s Board
of Directors ruled out a listing plan on the stock market early this month,
saying the authority was ready to seek loans for the construction of its own
power plants and transmissions.
Board Chairman Chai-anant Samutavanich said the meeting
approved the Power Development Plan in 2004-2015 under which the authority
would make its own investment in building four power plants and transmissions
at Songkla, North and South of Bangkok, and Bangpakong. The construction is
expected to require total investment of 242.34 billion baht and take around
five years. He projected the local power demand would increase at an average
of 1,900 megawatts per year. He said the investment amount would stem from
borrowings or other forms of fund-raising without having to list EGAT on the
Stock Exchange of Thailand. The loan portion will not exceed 4% of the gross
domestic product.
“Privatization means a reform of the organization to
enhance efficiency. EGAT is creditworthy. It is a state-owned monopoly to
which financial institutions are willing to lend. So, it is unnecessary to
list the authority on the stock market. The listing, if necessary, should be
in the next life,” Chai-anant said.
On the PDP in 2010-2015 under which almost 20 power plants
must be built, he said, the meeting agreed to allow EGAT to construct half of
the number. The investment in the remaining half would be in the form of
bidding by private companies.
Chai-anant forecast the power demand for 2015 would rise by around 7-8% per
year to 40,978 megawatts from 19,600 this year. “It is not unusual for EGAT
to remain monopolistic in power business if the monopoly is needed for the
sake of national interest. But at the same time, the authority must be
reformed on a continual basis to ensure transparent performance. The monopoly
is not a bad thing. Consumers will be given fair treatment since the
government will set up a committee to oversee power business,” he said.
(TNA)
Overall investment remains sound despite southern violence
According to Industry Minister Pinij Jarusombat, the spate
of violence in the South has not affected the overall investment, as can be
witnessed by a continued increase in applications for the Board of Investment
(BOI)’s promotions. He said foreign investors still had confidence in
investment in Thailand since the country’s economy had remained strong, and
the world economy had picked up.
The applications for BOI’s investment promotions
continued to rise in many regions except in the southernmost provinces of
Yala, Narathiwat and Pattani, where large investment projects remain
unavailable. However, Pinji said, the planned investment in the establishment
of the Halal Industrial Estate and in the integrated frozen chicken industry
in the provinces remained intact despite the violence.
BOI’s Secretary-General Somphong Wanapha said that the southern violence
would have a short-term impact on the stock market and tourism. But he noted
it would not directly affect the industry since most investment was made in
the central and eastern regions. The country’s industrial factors have
production capacity of around 75-80%, and plan to expand investment. The BOI
chief said he was confident the total amount of investment projects seeking
the promotions this year would reach 290 billion baht, as targeted. He added
that the government is currently attempting to promote investment in the three
southernmost provinces by offering maximum tax incentives, and other supports
in the forms of insurance premiums and interest. (TNA)
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