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BoT asserts Thailand insulated from
Lehman collapse, AIG liquidity crunch
Amid troubles facing equity and financial markets worldwide in the wake of
the collapse of US investment bank Lehman Brothers and a liquidity crunch
faced by the American Insurance Group (AIG) in the United States, Bank of
Thailand (BoT) governor Tarisa Watanagase on Wednesday calmed the public,
saying that the problems would not pose a direct impact on Thai financial
institutions.
According to Ms. Tarisa, the US Federal Reserve has already provided loans
amounting US$85 billion to AIG.
Exposure by Thai commercial banks in the Lehman Brothers debacle amounted to
only Bt6.7 billion, a small portion compared to their total lending of Bt7
trillion, which represents only 0.009 percent of the total.
Liquidity in Thailand is still ample, she said, and there is no need for
injecting more funds into the system. But, Tarisa added, the Thai central
bank will closely monitor the situation and is prepared to implement
necessary measures to prevent the crisis from hurting local institutions.
Her data apparently contradicted that released by Nattapol Chavalitcheevin,
president of the Thai Bond Market Association, who said Tuesday that Thai
commercial banks are expected to suffer an estimated loss of Bt3 billion
from total exposures of Bt4.3 billion in their investments with Lehman
Brothers.
Tarisa said the “BoT will monitor the situation and financial crisis in the
US closely and (is) ready to inject funds to boost liquidity in the system
locally if necessary,” while she believes that the crisis will not produce a
chain reaction worldwide.
Touching on debt instrument investments by Bangkok Bank, Thailand’s largest,
in Lehman Brothers - investments valued at Bt3.5 billion, she said she is
confident the bank could handle the problem and that their investment was
not much compared to its assets. (TNA)
PTT chief downplays concerns over impact of US financial crisis
PTT president Prasert Bunsumpun on Wednesday asserted that
the company’s performance had not been affected directly by the financial
institutions’ crisis in the United States.
But he conceded that the country’s giant oil trader had been “somewhat impacted”
by the continued decline in oil prices upon concerns over the global economic
slowdown.
PTT’s production segment took the brunt of the sharp oil price fall to around
US$90 per barrel, he said.
Prasert admitted a continued oil price drop would impact PTT’s performance to a
certain extent, but said the company still enjoyed a margin from the price
difference between crude oil and retail fuel because the price of fuel had
dropped more slowly than that of crude.
“The oil price decline is considered a good sign because it can reduce
construction costs. It proves in every crisis, there is an opportunity,” he
said.
Prasert added PTT would forge ahead with its investment overseas, but that it
would make its investments with greater caution. (TNA)
Government urged to issue new economic stimulus measures
The Thai government should come up with a new economic stimulus package and
accelerate implementation of the long-planned mega-investment projects to
ensure the country’s economic survival amid the current global financial
crisis, according to a leading academic.
Speaking at a seminar on “The Way to Survive amid Economic Crisis,” Dr.
Anusorn Tamajai, dean of Rangsit University’s Faculty of Economics said the
new government being formed by newly-elected Prime Minister Somchai
Wongsawat is expected to be short-lived since the current political
conflicts might lead to the dissolution of the House of Representatives.
At the same time, the court’s ruling on the critical case regarding the
People Power Party dissolution is imminent. So, it might be difficult for
the new government to push to implement fiscal policy.
However, he said, the government needs to issue new economic stimulus
measures, including tax reductions, and the injection of money into the
economic system through flood relief programs.
He advised that the Bank of Thailand should inject money into the system by
issuing bonds and reducing the policy interest rate by 50 basis points to
jump start investment.
Dr. Anusorn believes that political restructuring should take place over the
long term, but the state-sponsored mega-projects, particularly the
construction of extensions to the mass transit system for metropolitan
Bangkok, should be implemented urgently.
At the same time, he said, private-sector companies should be allowed to
take up and manage the projects with the government acting as supervisor.
Such an approach would help save the projects from being tied with the
political woes, he said. (TNA)
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