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Consumer confidence index drops again in July
The consumer confidence index in July shows it has
dropped for seven consecutive months due mainly to the oil price increase
and a spate of violence in the South.
Thanawat Polavichai, director of the University of
Chamber of Commerce’s Economic and Business Forecasting Center, disclosed
that a survey found the confidence index on the economy declined to 95.2
from 98 points in June. It is the third month the index dropped below 100.
The confidence index on job opportunities edged down to 91.1 from 93.5 and
that on future income to 108 from 110.5. The overall consumer confidence
index stood at 98.3, which is below 100 for the first time in one year.
It is expected the index will be lower than 100 in the
next three months since people are already aware of economic hardship.
However, they remained confident of future income as consumption was not
reduced. However, should the oil price hike and the southern unrest continue
to go unabated, people will feel uncertain and may slow consumption in the
next six months.
Negative factors that undermined confidence include higher fuel prices,
downward revision of the economic growth estimate by the Bank of Thailand,
continued drop in the Stock Exchange of Thailand’s index, weakening of the
baht, concern on non-performing loans, and southern violence. Positive
factors in July include a 29% increase in exports in July and the
government’s policy on low interest rates to stimulate the economy. (TNA)
Microsoft confident
of Thailand’s credentials
as web service hub
Computer giant Microsoft expressed confidence in the
future of Thailand as a global web services center, and pledged support for
Thailand’s bid to become a world-class player on the software market.
Stressing Thailand’s potential in the burgeoning global
software industry, Andrew McBean, Managing Director of Microsoft (Thailand),
said that Microsoft was launching a ‘Global Web Services Hub’ program to
back the development of Thai software on three fronts.
Under the scheme, Microsoft will back the sale of
Thai-produced web services software on the global market, enable Thai
developers to gain patent rights of their material, and create new markets
for Thai software products.
Microsoft hopes that by the year 2009, the scheme, which has already been
proposed to Prime Minister Thaksin Shinawatra and the Ministry of
Information and Communications Technology, will have earned Thailand 180
billion baht in revenue. However, McBean noted that Thailand was currently
home to a mere 500 web service developers, a situation which necessitated
the urgent generation of more skilled personnel. (TNA)
Real estate
center gets cabinet nod
The government has approved the establishment of a real
estate information center to act as a barometer to warn of possible future
economic crises. Finance Minister, Somkid Jatusripitak said it will collect
all possible information on real estate from government and private
agencies. The center will start operations on August 25 and will be run by
the Government Housing Bank (GHB).
During the economic crisis in Thailand in the late 1990s,
there was an acute shortage of information on the real estate market - both
demand and supply for housing and commercial properties. The planned center
will help gather, analyze and publicize the latest information on property
trends so that the government can more effectively control the expansion of
the real estate sector. The information from the new real estate center will
also help the private sector when they draw up their business plans.
President of the GHB, Khan Prachuabmoh, said the center would report
directly to the Finance Ministry. A committee composed of representatives
from the property sector, financial institutions, and relevant government
agencies will oversee the center’s work. (TNA)
Thai wine growers told to buck up before launch of FTA with Australia
A leading research center has called on Thailand’s wine
producers to rush to upgrade the quality of their products to win greater
international acceptance amid fears that the liberalization of trade between
Thailand and Australia next year could see a rapid decline in the domestic
market share of Thai wine.
In its report, the Kasikorn Research Center (KRC) warned
that the enforcement of the Thai-Australian Free Trade Area (FTA) Agreement
on 1 January 2005 would see an influx of Australian wine. Noting that
Australian wine had already become the second most popular wine in Thailand
after that from France, KRC called on Thai wine producers to upgrade the
quality of their products as a matter of urgency.
Thailand’s future FTA deals with other countries including wine-growing
nations such as the United States and New Zealand, could serve to compound
the difficulties faced by Thai wine growers. By upgrading the taste and
quality of Thai wine, Thai vineyards could simultaneously work to maintain
their domestic market share, and win over new export channels opened up by
the liberalization of trade, the report said. (TNA)
R&D fund to advance local industry
The Federation of Thai Industry has announced plans to set up
a fund for research and development (R&D) to encourage more private
investment into research. The fund aims to increase Thai manufacturers’
competitiveness, especially small and medium- sized enterprises (SMEs), and will
allow them to conduct research on limited budgets.
The high cost of R&D has prevented many small companies
from investing in product development. The fund will raise capital from the
private sector, and also hopes to get a government subsidy. The FTI is
negotiating a tax exemption for manufacturers who invest in the fund with the
government. The fund will support R&D in various industries; however, the
FTI expects to start with the fashion industry as it has a high development
potential. (TNA)
Thai-Indian FTA comes into effect next month
Thailand and India are about to sign a bilateral free
trade agreement (FTA) that will come into effect next month. Under the pact,
Thailand’s food and agricultural exports to India are expected to double,
according to Commerce Minister Watana Muangsook.
“India is a country with a huge population. Thai food
and agricultural sectors should benefit from the FTA because these two kinds
of goods are necessary, and consumed daily,” the commerce minister said.
Under the FTA, both countries are committed to reduce
import tariffs on 82 items of products to zero percent within three years
from the starting of the agreement on September 1. Among the 82 items of
products included in the FTA, 11 are agriculture produce and the rest
industrial materials.
A Thai delegation, led by Watana, will visit India later
this month to sign the agreement on 23 August 23. This follows the
cabinet’s recent approval of the deal.
The combined value of trade and investment between the
two countries is expected to reach two billion US dollars this year - a 25
percent increase over last year. Trade between the two countries grew at an
average of 30 percent between 2003 and 2004. Indian exports to Thailand grew
by 16 percent, and this is expected to leap by 43 percent after the
agreement comes into affect.
Meanwhile, Thai exports to India in the same period
increased by 61 percent, and are expected to grow by more than 113 percent
after the FTA is implemented.
Indians have a taste for Thai fruits like rambutans,
longans and mangosteens, a Thai Chamber of Commerce committee member, Satit
Segal revealed. He believes the value of Thai fruit exports to the
subcontinent could increase by 500% under the agreement.
Meanwhile, the Board of Investment of Thailand has signed
an agreement with the Confederation of Indian Industry to promote bilateral
investment. A working plan for joint investment has already been drafted.
Delegates from each industry will meet later to discuss
investment prospects and specific projects. Thai investors are interested in
India’s auto part industry. India is regarded as the world’s largest
potential automobile market.
New Delhi is interested in the high potential of Thailand’s computer
software industry. Both India’s government and private sector believe
Thailand has great potential in this area. Software could be produced much
more cheaply in the future if it is manufactured locally. (TNA)
Local car battery market still promising
The local car battery market is expected to continue to
grow in line with the government’s policy to promote Thailand as a
“Detroit of Asia,” according to the Kasikorn Research Center (KRC).
The country’s leading think tank said the government is
determined to make the local auto industry become one of strategic
industries for the national development, and to promote the country as a
regional auto production base, or the “Detroit of Asia.”
The auto industry development would contribute to an
increase in car battery demand, and its market value in the country to
around 4 billion baht. KRC said the local car battery is one of the key
supporting industries that could accommodate and grow along with the auto
industry. It could be developed into the export-oriented industry by
counting on the auto industry base for sales of the product overseas in the
form of auto-parts to enhance the country’s currency revenue.
KRC reported that the local car battery market had continued to expand in
the same direction with a leapfrogging growth in total production and sales
of vehicles in the original equipment manufacturing (OEM) and the
replacement equipment manufacturing (REM) markets in the past few years.
Given the continued demand for the product, KRC projected that the car
battery market would grow by at least 12% this year, from that of last year.
(TNA)
Life insurance business looks bleak this year
Thailand’s life insurance business looks unfavorable
this year due to many negative factors, particularly the government’s
issuance of saving bonds, worth 70 billion baht, according to an industry
executive.
Somphot Kiatkraiwalsiri, the Senior Executive Vice
President of ING Life Insurance Co, said the first-year insurance premium
experienced negative growth of 10% in the first half of this year, as many
life insurance firms reduced returns on insurance policies and fringe
benefits of brokers. The companies need to reduce costs as much as possible
since returns on investment had continued to drop, he noted. However, he
believed the business would regain momentum in the second half of this year.
Somphot said the saving bonds, worth 70 billion baht, to
be issued by the government soon were expected to draw great public
attention since average interest rates are as high as 5%, compared with
around 4% offered by insurance firms for returns on policy holding. So, the
saving bonds should be considered a valuable alternative investment to the
general public, he said.
“Investment in saving bonds must be made in a lump sum,
while purchasers of insurance polices can gradually pay premiums. Should
insurance policy holders pass away, beneficiaries will receive the full
amount insured plus interest. It is like a hedge against life’s
uncertainties with returns on interest,” he pointed out.
Somphot said life insurance companies need to
differentiate their products in the remaining period of this year to satisfy
customers’ needs if they want to gain more first-year premiums amid
uncertainties. He conceded that the life insurance business is unlikely to
enjoy growth of 20-25% for this year, as earlier targeted.(TNA)
Chantaburi Jewelry Cluster to be set up
In an attempt to make the eastern province of Chantaburi
the center of jewelry production and trade in Thailand, and to become a
world jewelry trade hub by 2006, the Thai Chamber of Commerce has given
support to its branch office in the province to set up the Chantaburi
Jewelry Cluster.
Dr. Ajva Taulanada, Chairman of The Thai Chamber of
Commerce and the Thai Trade Council, said that directive measures had been
given to the Chantaburi Chamber of Commerce and the Chantaburi Ornament and
Jewelry Traders’ Association to establish the cluster in the province in
order to strengthen local jewelry business operators, and to promote the
industry worldwide.
The plan will be submitted to the provincial governor and
Prime Minister Thaksin Shinawatra. Vichai Usrasakorn, who heads the Thai
Chamber of Commerce’s committee on jewelry and ornaments, said a
memorandum of understanding would be signed on August 24 , and would be
submitted to the provincial governor on the day when the province will also
launch the ‘Chantaburi: City of Jewelry’ Project.
Thailand’s exports of jewelry and ornaments are worth about 100 billion
baht annually. Chantaburi’s earnings from jewelry trade account for 50% of
the country’s total jewelry trade, or more than 7.2 billion baht per year,
according to Dr. Ajva. (TNA)
Longan ice cream for export
Thailand is to study the feasibility of producing and
exporting longan ice cream. The idea has been proposed to help the
country’s farmers because of the oversupply of longans on the domestic
market.
Under the proposed plan, dehydrated longans would be used
as the main ingredient in the dessert. Longan ice cream would then be
exported through Thai restaurants abroad, according to senior Agriculture
and Cooperatives Ministry official Banpot Hongthong. There are more than
5,000 Thai restaurants around the world.
Thailand believes prospects for the export of longans
remain good. Experts believe the Chinese demand for Thai longans is likely
to increase. China is currently Thailand’s largest customer, but the
government hopes to promote longan exports to Indonesia, Australia, Canada
and Europe. (TNA)
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