Thailand aims to become the creative centre of Asean as well as derive 20 per cent of its economy from related industries by 2012, Prime Minister Abhisit Vejjajiva said yesterday.
The strategy would boost returns to the country and increase incomes for industries and manufacturers by adding value to products and services, he said while kicking off the Creative Thailand project.
Creativity will be a key engine to strengthen the country's economic growth in a more sustainable way, he said.
"Creativity will change the country's economic fundamentals from relying mainly on the global economy to relying more on the domestic economy.
"The combination of intellectural property, local wisdom and technology will strengthen Thai products and services to better compete in the global market," he said.
Creative industries - such as fashion, film and video, design, advertising, crafts, broadcasting, publishing and architecture - accounted for 10.7 per cent of GDP in 2006, with a combined value of Bt22.19 billion, according to the National Economic and Social Development Board.
To promote creativity-based industries, the government has set aside a budget of Bt20 billion for support projects.
Deputy Commerce Minister Alongkorn Ponlaboot said the government will encourage all sectors - including agriculture, entertainment, food, education, fashion, publishing, architecture, tourism, manufacturing, and services - to adopt the "vreative economy" model.
Under the support projects, the government will fully assist manufacturers and industries to develop their ideas and brand their products.
It will set up an Intellectual Property Bank (IP Bank) to give innovative enterprises the financial backing they need to commercialise their products.
A Creative Academy will also be established to promote students' creativity, Alongkorn added.
Monday, August 31, 2009
Thursday, August 27, 2009
Economically, the worst is over, says Abhisit
The Board of Investment, Esso (Thailand)Pcl and Exxon Mobil Ltd yesterday celebrated the sixth anniversary of the establishment of Exxon Mobil's Bangkok Business Support Centre. On this occasion Prime Minister Abhisit Vejjajiva was invited to deliver a speech, the excerpts of which are published here.
Despite our persisting political problems,Thailand has always remained investor-friendly and ready to welcome our foreign friends.
The current financial crisis - possibly the worst in 80 years - has sent a chill down the spines of many countries.The hardest hit of all have been the developing and small to medium-sized economies.These economies are suffering even though the cause of the crisis was not one of their own making. And as the world is interdependent and interconnected, the drop in purchasing power and the demand for our goods and services among our major trading partners have inevitably affected us.
A sharp drop of 20% in the export and tourism sectors in Thailand earlier this year clearly demonstrates this point, as our economy heavily depends on these two important income-earning sectors.
So, when the government came into office eight months ago, we knew that our priority was to tackle the economic problem right from the start. We also knew that we had to resolve the economic problem as well as our own internal political problems - hence,the "Twin-Challenges."
In this regard, we made sure that the political problems did not derail us, or distract us, from resolving the economic problems,for the welfare of our people has to come first.
That is why the government has swiftly introduced the First Stimulus Package which encompasses several short-term assistance and relief measures - including income support for low income people, skill-training programmes, and free basic education. This is primarily to make sure that our poorest,our vulnerable and the least fortunate in our society can weather the economic storm.I must say that while this stimulus package is somewhat unconventional, it makes a lot of sense.
It is also very practical as it is the quickest way to sustain the livelihood of our people
and to get the money rolling in our economy again.
Now that all of the projects in the First Stimulus Package have been completed, I am pleased to say that this unconventional approach has indeed paid off. We can now safely say that the "worst is over". We have seen signs of positive change. For example,we have seen a rebound in consumer confidence. We have seen a different pattern of consumer spending. We also have a huge current account surplus of 1.4 billion US dollars in the first half of this year and a comfortable level of foreign exchange reserves.
But perhaps a clearer indicator is the improvement in our GDP. From minus 7.1%in the first quarter of this year, the second quarter registered a contraction of 4.9%.But on a quarter-by-quarter basis we have now seen this figure turn positive to 2.3% in the second quarter. We expect the continuation of such improvement and are confident that by the fourth quarter the year-on-year figure will also turn positive.
So, to tackle the economic aspect of the "Twin-Challenges" that I mentioned earlier,the government has adopted a "TwinApproaches" solution. While we address the short-term economic problems, we are also looking into investing in our long-term socio-economic capability and competitiveness. That is why the government has introduced the Second Stimulus Package, which we call in Thai Patibudkarn Thai Kem Kaeng and in English,"Thailand: Investing from Strength to Strength."
This 45-billion-US dollar package, to be implemented over the next three years, will be used for investment in the long-overdue infrastructure projects such as roads, rail,communications, logistics, and water management and distribution system.
Part of this fund will be used to upgrade our healthcare and education facilities and create centres of excellence in medical services. Our service industry, which has tremendous potential to expand, will get a bite at this fund as well, along with the creative economy and tourism industries.
Last week, Cabinet approved several projects under this stimulus package and they will be put into operation very shortly. All in all, the Second Stimulus Package will be preparing Thailand to enter the post-crisis era as a stronger and healthier economy.
More importantly, what is important is that it is all about creating "opportunity"for all of us, Thai people and foreigners alike.
For foreign investors in particular, despite our persisting political problems, Thailand has always remained investor-friendly and has been ready to welcome our foreign friends.
After my visits to China and Japan, for instance, I can confidently say that the desire to come and invest in Thailand is still alive and well. I have already met with potential investors from these countries and the results were extremely encouraging.
I know many of you are now wondering if I am going to speak about the political situation - especially after the Cabinet resolved on Tuesday to invoke the Internal Security Act from August 29 to September 1. I would love to say no, as you have heard so much about Thai politics from the news almost on an hourly basis. But I think it is important that our people and our foreign friends truly understand the situation and the rationale behind the measure that we have adopted. Simply put, the Internal Security Act is imposed to pre-empt any violence that may be caused during the rally this weekend - a protective and precautionary measure, if you would like. It is not the same as the Emergency Decree that had been imposed before, because the Emergency Decree was imposed after the violence broke out, in order to contain the situation.And as experience is the best teacher, we have learnt our lesson from the incidents in April, and we cannot allow that to happen again.
The Internal Security Act will serve as a confidence-boosting measure for all concerned. It will create stability and prevent chaos.
And, most importantly, measures that will be carried out by the authorities concerned will be strictly in accordance with the law and the Constitution. The Act will only be imposed for a short period of time and only in Dusit district of Bangkok. So, in other areas of Bangkok and the rest of Thailand, business and social activities can proceed as normal.
I am pleased to hear that the business community has already expressed its support of the move by the government. They do not want any more riots, and the people of Thailand certainly do not want any more of the riots.
They want Thailand to move on and move ahead towards more peace and prosperity.
The above remarks were delivered at the "Year of Growth and Opportunities" event at the Mandarin Oriental hotel in Bangkok yesterday.
Despite our persisting political problems,Thailand has always remained investor-friendly and ready to welcome our foreign friends.
The current financial crisis - possibly the worst in 80 years - has sent a chill down the spines of many countries.The hardest hit of all have been the developing and small to medium-sized economies.These economies are suffering even though the cause of the crisis was not one of their own making. And as the world is interdependent and interconnected, the drop in purchasing power and the demand for our goods and services among our major trading partners have inevitably affected us.
A sharp drop of 20% in the export and tourism sectors in Thailand earlier this year clearly demonstrates this point, as our economy heavily depends on these two important income-earning sectors.
So, when the government came into office eight months ago, we knew that our priority was to tackle the economic problem right from the start. We also knew that we had to resolve the economic problem as well as our own internal political problems - hence,the "Twin-Challenges."
In this regard, we made sure that the political problems did not derail us, or distract us, from resolving the economic problems,for the welfare of our people has to come first.
That is why the government has swiftly introduced the First Stimulus Package which encompasses several short-term assistance and relief measures - including income support for low income people, skill-training programmes, and free basic education. This is primarily to make sure that our poorest,our vulnerable and the least fortunate in our society can weather the economic storm.I must say that while this stimulus package is somewhat unconventional, it makes a lot of sense.
It is also very practical as it is the quickest way to sustain the livelihood of our people
and to get the money rolling in our economy again.
Now that all of the projects in the First Stimulus Package have been completed, I am pleased to say that this unconventional approach has indeed paid off. We can now safely say that the "worst is over". We have seen signs of positive change. For example,we have seen a rebound in consumer confidence. We have seen a different pattern of consumer spending. We also have a huge current account surplus of 1.4 billion US dollars in the first half of this year and a comfortable level of foreign exchange reserves.
But perhaps a clearer indicator is the improvement in our GDP. From minus 7.1%in the first quarter of this year, the second quarter registered a contraction of 4.9%.But on a quarter-by-quarter basis we have now seen this figure turn positive to 2.3% in the second quarter. We expect the continuation of such improvement and are confident that by the fourth quarter the year-on-year figure will also turn positive.
So, to tackle the economic aspect of the "Twin-Challenges" that I mentioned earlier,the government has adopted a "TwinApproaches" solution. While we address the short-term economic problems, we are also looking into investing in our long-term socio-economic capability and competitiveness. That is why the government has introduced the Second Stimulus Package, which we call in Thai Patibudkarn Thai Kem Kaeng and in English,"Thailand: Investing from Strength to Strength."
This 45-billion-US dollar package, to be implemented over the next three years, will be used for investment in the long-overdue infrastructure projects such as roads, rail,communications, logistics, and water management and distribution system.
Part of this fund will be used to upgrade our healthcare and education facilities and create centres of excellence in medical services. Our service industry, which has tremendous potential to expand, will get a bite at this fund as well, along with the creative economy and tourism industries.
Last week, Cabinet approved several projects under this stimulus package and they will be put into operation very shortly. All in all, the Second Stimulus Package will be preparing Thailand to enter the post-crisis era as a stronger and healthier economy.
More importantly, what is important is that it is all about creating "opportunity"for all of us, Thai people and foreigners alike.
For foreign investors in particular, despite our persisting political problems, Thailand has always remained investor-friendly and has been ready to welcome our foreign friends.
After my visits to China and Japan, for instance, I can confidently say that the desire to come and invest in Thailand is still alive and well. I have already met with potential investors from these countries and the results were extremely encouraging.
I know many of you are now wondering if I am going to speak about the political situation - especially after the Cabinet resolved on Tuesday to invoke the Internal Security Act from August 29 to September 1. I would love to say no, as you have heard so much about Thai politics from the news almost on an hourly basis. But I think it is important that our people and our foreign friends truly understand the situation and the rationale behind the measure that we have adopted. Simply put, the Internal Security Act is imposed to pre-empt any violence that may be caused during the rally this weekend - a protective and precautionary measure, if you would like. It is not the same as the Emergency Decree that had been imposed before, because the Emergency Decree was imposed after the violence broke out, in order to contain the situation.And as experience is the best teacher, we have learnt our lesson from the incidents in April, and we cannot allow that to happen again.
The Internal Security Act will serve as a confidence-boosting measure for all concerned. It will create stability and prevent chaos.
And, most importantly, measures that will be carried out by the authorities concerned will be strictly in accordance with the law and the Constitution. The Act will only be imposed for a short period of time and only in Dusit district of Bangkok. So, in other areas of Bangkok and the rest of Thailand, business and social activities can proceed as normal.
I am pleased to hear that the business community has already expressed its support of the move by the government. They do not want any more riots, and the people of Thailand certainly do not want any more of the riots.
They want Thailand to move on and move ahead towards more peace and prosperity.
The above remarks were delivered at the "Year of Growth and Opportunities" event at the Mandarin Oriental hotel in Bangkok yesterday.
Philippines eludes slump in good Q2
The Philippines economy dodged the recession that engulfed much of Asia and enjoyed its strongest performance in more than two years in the second quarter, prompting the central bank to say it may change its policy.
Second-quarter gross domestic product growth at a seasonally adjusted 2.4% from the first quarter was the highest since 2.4% in the first three months of 2007, the state socioeconomic planning agency said yesterday, and beat market estimates.
The government's stimulus package - investments in infrastructure and social services - lifted economic output in the second quarter, offsetting stubbornly weak exports.
"Growth came mainly from investments in construction, government consumption expenditure, and household spending," said Romulo Virola,head of the government's statistics board.
Analysts had expected the Southeast Asian economy to expand by a seasonally adjusted 2.0% in the second quarter and to reverse the previous quarter's revised 2.1% contraction, according to the median of a Reuters poll.
The data justified the central bank's decision last week to end an eightmonth easing cycle, Diwa Guinigundo,a central bank deputy governor, told Reuters by text message.
"This clearly shows stronger signs of economic recovery," he said."The recent decision to pause was correct,from which perspective, a possible shift in monetary policy may be decided."
The central bank last week kept its interest rate at a record low of 4.0% to join its Asian peers in assessing the impact of accommodative policies. It has cut rates by two percentage points in eight months.
Analysts said the government would likely sustain spending and the central bank might keep rates steady for the rest of the year.
"Fiscal policies will very likely have to remain in expansionary mode," Vishnu Varathan, economist at Forecast."The BSP (central bank) is likely to keep rates steady at current record lows even with this growth uptick."
On an annual basis, second-quarter GDP climbed 1.5%, also higher than market estimates, and the government said it was likely to breach its full-year growth target this year and next.
The government had expected second-quarter growth to come in between a 0.1% contraction and 0.9%expansion from a year earlier.
Government spending climbed 9.1%in the second quarter from a year earlier,twice as fast as the 4.5% expansion in the first three months.
Private spending grew 2.2% in April to June from a year earlier, higher than the 1.3% gain in the first quarter. Consumption fuels about three-fourths of the economy.
The Philippines is one of few countries in Asia to escape recession amid the worst downturn in decades.Export-led economies such as Japan,Hong Kong, Singapore and Taiwan tumbled as demand from Western markets collapsed.
Japan, Hong Kong, Singapore,Malaysia and Thailand pulled out of their downturns in the second quarter but consumer demand remains weak,fueling worries about the sustainability of a global recovery.
Economists also fear that newfound growth could sputter as the impact of government stimulus spending wanes.
Second-quarter gross domestic product growth at a seasonally adjusted 2.4% from the first quarter was the highest since 2.4% in the first three months of 2007, the state socioeconomic planning agency said yesterday, and beat market estimates.
The government's stimulus package - investments in infrastructure and social services - lifted economic output in the second quarter, offsetting stubbornly weak exports.
"Growth came mainly from investments in construction, government consumption expenditure, and household spending," said Romulo Virola,head of the government's statistics board.
Analysts had expected the Southeast Asian economy to expand by a seasonally adjusted 2.0% in the second quarter and to reverse the previous quarter's revised 2.1% contraction, according to the median of a Reuters poll.
The data justified the central bank's decision last week to end an eightmonth easing cycle, Diwa Guinigundo,a central bank deputy governor, told Reuters by text message.
"This clearly shows stronger signs of economic recovery," he said."The recent decision to pause was correct,from which perspective, a possible shift in monetary policy may be decided."
The central bank last week kept its interest rate at a record low of 4.0% to join its Asian peers in assessing the impact of accommodative policies. It has cut rates by two percentage points in eight months.
Analysts said the government would likely sustain spending and the central bank might keep rates steady for the rest of the year.
"Fiscal policies will very likely have to remain in expansionary mode," Vishnu Varathan, economist at Forecast."The BSP (central bank) is likely to keep rates steady at current record lows even with this growth uptick."
On an annual basis, second-quarter GDP climbed 1.5%, also higher than market estimates, and the government said it was likely to breach its full-year growth target this year and next.
The government had expected second-quarter growth to come in between a 0.1% contraction and 0.9%expansion from a year earlier.
Government spending climbed 9.1%in the second quarter from a year earlier,twice as fast as the 4.5% expansion in the first three months.
Private spending grew 2.2% in April to June from a year earlier, higher than the 1.3% gain in the first quarter. Consumption fuels about three-fourths of the economy.
The Philippines is one of few countries in Asia to escape recession amid the worst downturn in decades.Export-led economies such as Japan,Hong Kong, Singapore and Taiwan tumbled as demand from Western markets collapsed.
Japan, Hong Kong, Singapore,Malaysia and Thailand pulled out of their downturns in the second quarter but consumer demand remains weak,fueling worries about the sustainability of a global recovery.
Economists also fear that newfound growth could sputter as the impact of government stimulus spending wanes.
INDUSTRIAL INDEXES SHOW IMPROVEMENT SINCE JANUARY
Thailand's industrial indexes have improved significantly since the start of the year, with the July manufacturing index contracting only 9 per cent year on year compared to 25.6 per cent in January, according to the Industrial Economics Office.
The index in February contracted 23.1 per cent year on year, March by 23.1 per cent, April by 12.8 per cent, May by 12.4 per cent and June by 6.8 per cent.
Arthit Wuthikaro, director-general of the office, yesterday said the month-on-month figures had also shown improvement since February, when the index rose 0.5 per cent from January.
In March, the index expanded 14.2 per cent month on month. Due to political violence, the April figure contracted 8.7 per cent, before expanding 9.2 per cent and 6.6 per cent in May and June respectively.
The July index, however, dropped 1.3 per cent from June.
Arthit said that despite the July reversal, the index should return to positive territory soon due to new orders in several industries and many plants having to increase capacity as a result.
July capacity utilisation stayed at 57 per cent, well above the trough of 50 per cent in February.
Hard disk drives are one sector for which the manufacturing index has increased for three consecutive months, as manufacturers have been able to offer new products to customers. They are, however, concerned about a labour shortage.
In the first seven months of the year, the sector's output and distribution dropped 6.3 per cent and 6.5 per cent respectively from the same period last year. The sector is expected to show positive growth in the fourth quarter.
The frozen-food sector in July also enjoyed growth in manufacturing and sales.
The index in February contracted 23.1 per cent year on year, March by 23.1 per cent, April by 12.8 per cent, May by 12.4 per cent and June by 6.8 per cent.
Arthit Wuthikaro, director-general of the office, yesterday said the month-on-month figures had also shown improvement since February, when the index rose 0.5 per cent from January.
In March, the index expanded 14.2 per cent month on month. Due to political violence, the April figure contracted 8.7 per cent, before expanding 9.2 per cent and 6.6 per cent in May and June respectively.
The July index, however, dropped 1.3 per cent from June.
Arthit said that despite the July reversal, the index should return to positive territory soon due to new orders in several industries and many plants having to increase capacity as a result.
July capacity utilisation stayed at 57 per cent, well above the trough of 50 per cent in February.
Hard disk drives are one sector for which the manufacturing index has increased for three consecutive months, as manufacturers have been able to offer new products to customers. They are, however, concerned about a labour shortage.
In the first seven months of the year, the sector's output and distribution dropped 6.3 per cent and 6.5 per cent respectively from the same period last year. The sector is expected to show positive growth in the fourth quarter.
The frozen-food sector in July also enjoyed growth in manufacturing and sales.
Next lot of spending urged
Business operators have repeated their calls for the government to speed up the next wave of stimulus spending to improve purchasing power and consumer confidence, a survey reveals.
Consumer spending has yet to recover and is unlikely to do so while domestic political rifts persist, according to the University of the Thai Chamber of Commerce Business Poll, which surveyed 810 business operators nationwide from the agriculture, trade, service and manufacturing sectors between Aug 17 to 24.
Operators said a combination of high oil prices, low interest rates, weak consumer and investor confidence, low agricultural product prices and a strong baht were dampening a local recovery.
Respondents estimated diesel prices at 29.50 bahtper litre in the fourth quarter,with gasoline prices at 35 baht. An annual lending rate of 6.25% is expected with the baht at 34.50 against the dollar.
But most respondents said diesel and gasoline should cost 27 and 33 baht per litre respectively. They see acceptable lending and foreign-exchange rates at 7% per year and 35.50 baht to the dollar.
However, the country's economy is improving on a gradual basis, according to the poll, with 57.96% of respondents expecting the economy to improve in the fourth quarter with a full recovery in the first half of next year.
The majority of businesspeople surveyed forecast the Thai economy would contract by 3% to 4.9% this year, with 1% to 2% growth expected next year.
Large-sized businesses in the manufacturing sector were likely to reap the greatest benefits from an economic recovery, with foreign purchase orders expected to resume in the third quarter after inventories were depleted over the last two quarters, said UTCC economist Thanavath Phonvichai.
But benefits have yet to fall on small and medium-sized enterprises (SMEs)and service providers, whose liquidity remained tight while production costs increased due to higher oil prices and a stronger baht, he said.
Consumer spending has yet to recover and is unlikely to do so while domestic political rifts persist, according to the University of the Thai Chamber of Commerce Business Poll, which surveyed 810 business operators nationwide from the agriculture, trade, service and manufacturing sectors between Aug 17 to 24.
Operators said a combination of high oil prices, low interest rates, weak consumer and investor confidence, low agricultural product prices and a strong baht were dampening a local recovery.
Respondents estimated diesel prices at 29.50 bahtper litre in the fourth quarter,with gasoline prices at 35 baht. An annual lending rate of 6.25% is expected with the baht at 34.50 against the dollar.
But most respondents said diesel and gasoline should cost 27 and 33 baht per litre respectively. They see acceptable lending and foreign-exchange rates at 7% per year and 35.50 baht to the dollar.
However, the country's economy is improving on a gradual basis, according to the poll, with 57.96% of respondents expecting the economy to improve in the fourth quarter with a full recovery in the first half of next year.
The majority of businesspeople surveyed forecast the Thai economy would contract by 3% to 4.9% this year, with 1% to 2% growth expected next year.
Large-sized businesses in the manufacturing sector were likely to reap the greatest benefits from an economic recovery, with foreign purchase orders expected to resume in the third quarter after inventories were depleted over the last two quarters, said UTCC economist Thanavath Phonvichai.
But benefits have yet to fall on small and medium-sized enterprises (SMEs)and service providers, whose liquidity remained tight while production costs increased due to higher oil prices and a stronger baht, he said.
CREATIVE ECONOMY ON AGENDA
Prime Minister Abhisit Vejjajiva will make the "Creative Economy" project part of the national agenda on Monday, Apirak Kosayodhin, an adviser to the PM, said yesterday.
The government has allocated Bt15 billion to be spent on the project over three years, Apirak said at the "Post-Crisis Strategies for New Growth" seminar held by Bangkok University's Creative Entrepreneurship Development Institute.
The project-through which the government will promote use of local wisdom and culture in the business sector - has already been allowed Bt3.8 billion for its first phase.
Essentially, the project is divided into four strategic frameworks. The first will include creation of a state body within six months to implement a creative economy, creation of an information-and communications-techonology infrastructure and regulations and laws to support the project.
The second will include establishment of an institute to encourage constructive thinking, while the third will promote a favourable business environment through such measures as matching funds and tasx incentives, all aimed at turning Thailand into the centre of Creative Economy in Asean. The last strategy would cover the creation of a creative society.
Apirak said the "Creative Economy" project would cover mainly four types of business: cultural heritage and cuisine; art and performance art; music and digital content; and design.
He said these businesses had a combined value of Bt800 billion, accounting for 11 per cent of Thailand's gross domestic product, and that he believed the project would boost their value further.
"Creative Economy" is part of the governemnt's "Strong Thailand" project, which focuses on education, irrigation systems, alternative energy and business infrastructure, such as logistic facilities.
Aprirak said South Korea had deployed a similar concept to create globally recognised brands and product design.
The government has allocated Bt15 billion to be spent on the project over three years, Apirak said at the "Post-Crisis Strategies for New Growth" seminar held by Bangkok University's Creative Entrepreneurship Development Institute.
The project-through which the government will promote use of local wisdom and culture in the business sector - has already been allowed Bt3.8 billion for its first phase.
Essentially, the project is divided into four strategic frameworks. The first will include creation of a state body within six months to implement a creative economy, creation of an information-and communications-techonology infrastructure and regulations and laws to support the project.
The second will include establishment of an institute to encourage constructive thinking, while the third will promote a favourable business environment through such measures as matching funds and tasx incentives, all aimed at turning Thailand into the centre of Creative Economy in Asean. The last strategy would cover the creation of a creative society.
Apirak said the "Creative Economy" project would cover mainly four types of business: cultural heritage and cuisine; art and performance art; music and digital content; and design.
He said these businesses had a combined value of Bt800 billion, accounting for 11 per cent of Thailand's gross domestic product, and that he believed the project would boost their value further.
"Creative Economy" is part of the governemnt's "Strong Thailand" project, which focuses on education, irrigation systems, alternative energy and business infrastructure, such as logistic facilities.
Aprirak said South Korea had deployed a similar concept to create globally recognised brands and product design.
Ample stock may cut China orders
Despite several improving economic indicators, the Finance Ministry has warned that China might import less from the world once it has stocked up again on the goods and materials it needs, resulting in a drop in Thai exports.
"We have two alternative assumptions about the current stage of economic conditions in China: that it is fully refilling its inventory; or that its economy recovery is decelerating," Finance Ministry spokesman Ekniti Nitithanprapas said yesterday.
The ministry was surprised by a sharp drop in the Kingdom's exports to China last month following a number of months of improvement. Exports fell by 21.6 per cent year on year, against a contraction of only 3.6 per cent in June.
China may have imported more previously, as it took advantage of cheap goods such as electronics parts, said Ekniti. Now, however, it may be stocking up on raw materials and intermediate products. The alternative explanation is the momentum of economic recovery driven by a huge stimulus package may be decelerating.
In a separate development, the Chinese government on Wednesday said it planned to curb overcapacity in the key industries of steel and cement. It will also increase "guidance" over parts of the coal, glass and power industries, the State Council said on its website.
Controls on stock and bond sales by companies in targeted sectors will be strengthened, it said. Asian stocks fell yesterday, dragging the MSCI Asia Pacific Index to a one-week low after China said it might curb steel and cement production, and Esprit Holdings - the Hong Kong-based clothing and accessories giant - reported a lower profit.
The signal from China is it is not confident about the pace of the global economic recovery.
However, Ekniti remains upbeat about the potential of the Chinese economy, saying it had contributed much to the recent improvement of the Asian economy.
Another promising market is India, where Thailand's exports last month expanded 4.7 per cent year on year, he said.
Ekniti said Asia could decouple from the United States, due to high savings among corporate firms and households. Increasing trade in the region will eventually turn people into final consumers.
Fiscal Policy Office director-general Somchai Sujjapongse said several economic indicators last month suggested further improvement in the Thai economy, which rose 2.3 per cent in the second quarter from the previous three months.
He predicted gross domestic product would contract by 2-3 per cent in the third quarter and expand by 2-3 per cent in the final quarter.
Yesterday, the International Monetary Fund said in a statement that the Kingdom's economic contraction this year would be limited to 3 per cent, as the government was increasing spending to counter falling exports.
Consumer spending in July rose from June, Somchai said, pointing to the collection of value-added tax, which increased on a seasonally adjusted basis by 7.3 per cent month on month.
While VAT collection contracted 11.4 per cent year on year, he said the month-on-month movement was a sign of economic recovery. Public spending also contributed to the fledgling recovery, as budget disbursement for capital spending jumped 61.6 per cent year on year to Bt30.1 billion, while routine disbursement rose 18.2 per cent to Bt164 billion.
Sales of passenger cars in July rose by 2.4 per cent from June, although they contracted 9.1 per cent from July 2008. Private investment also showed signs of improving, as imports of capital goods last month rose 6.2 per cent from June.
However, the recovery in private investment is still fragile and requires government investment to lead it, said Somchai. He expects that public investment in the "Strong Thailand" stimulus package to lead to a "crowding in" of private investment. He expects the economy will expand by 2-3 per cent in the fourth quarter after contracting by 7.1 per cent and 4.9 per cent in the first and second quarters, respectively.
Although the government is running a fiscal deficit, the public debt-to-GDP ratio was 43 per cent in June, a moderate level by international standards. Foreign reserves stood at US$12 billion (Bt410 billion), indicating economic stability, Somchai added.
"We have two alternative assumptions about the current stage of economic conditions in China: that it is fully refilling its inventory; or that its economy recovery is decelerating," Finance Ministry spokesman Ekniti Nitithanprapas said yesterday.
The ministry was surprised by a sharp drop in the Kingdom's exports to China last month following a number of months of improvement. Exports fell by 21.6 per cent year on year, against a contraction of only 3.6 per cent in June.
China may have imported more previously, as it took advantage of cheap goods such as electronics parts, said Ekniti. Now, however, it may be stocking up on raw materials and intermediate products. The alternative explanation is the momentum of economic recovery driven by a huge stimulus package may be decelerating.
In a separate development, the Chinese government on Wednesday said it planned to curb overcapacity in the key industries of steel and cement. It will also increase "guidance" over parts of the coal, glass and power industries, the State Council said on its website.
Controls on stock and bond sales by companies in targeted sectors will be strengthened, it said. Asian stocks fell yesterday, dragging the MSCI Asia Pacific Index to a one-week low after China said it might curb steel and cement production, and Esprit Holdings - the Hong Kong-based clothing and accessories giant - reported a lower profit.
The signal from China is it is not confident about the pace of the global economic recovery.
However, Ekniti remains upbeat about the potential of the Chinese economy, saying it had contributed much to the recent improvement of the Asian economy.
Another promising market is India, where Thailand's exports last month expanded 4.7 per cent year on year, he said.
Ekniti said Asia could decouple from the United States, due to high savings among corporate firms and households. Increasing trade in the region will eventually turn people into final consumers.
Fiscal Policy Office director-general Somchai Sujjapongse said several economic indicators last month suggested further improvement in the Thai economy, which rose 2.3 per cent in the second quarter from the previous three months.
He predicted gross domestic product would contract by 2-3 per cent in the third quarter and expand by 2-3 per cent in the final quarter.
Yesterday, the International Monetary Fund said in a statement that the Kingdom's economic contraction this year would be limited to 3 per cent, as the government was increasing spending to counter falling exports.
Consumer spending in July rose from June, Somchai said, pointing to the collection of value-added tax, which increased on a seasonally adjusted basis by 7.3 per cent month on month.
While VAT collection contracted 11.4 per cent year on year, he said the month-on-month movement was a sign of economic recovery. Public spending also contributed to the fledgling recovery, as budget disbursement for capital spending jumped 61.6 per cent year on year to Bt30.1 billion, while routine disbursement rose 18.2 per cent to Bt164 billion.
Sales of passenger cars in July rose by 2.4 per cent from June, although they contracted 9.1 per cent from July 2008. Private investment also showed signs of improving, as imports of capital goods last month rose 6.2 per cent from June.
However, the recovery in private investment is still fragile and requires government investment to lead it, said Somchai. He expects that public investment in the "Strong Thailand" stimulus package to lead to a "crowding in" of private investment. He expects the economy will expand by 2-3 per cent in the fourth quarter after contracting by 7.1 per cent and 4.9 per cent in the first and second quarters, respectively.
Although the government is running a fiscal deficit, the public debt-to-GDP ratio was 43 per cent in June, a moderate level by international standards. Foreign reserves stood at US$12 billion (Bt410 billion), indicating economic stability, Somchai added.
Wednesday, August 26, 2009
MASSIVE LENDING PROGRAMME BY SPECIALISED BANKS TO BOOST RECOVERY
State-owned banks have begun a campaign of aggressive lending aimed at pulling the country out of recession.
Measures involve fast-track loans on three-day approval, waiving loanguarantee fees and offering credit to foreign importers.
Finance Minister Korn Chatikavanij and executives of seven specialised financial institutions yesterday launched fast-track lending, in which borrowers could obtain loans within three days, or no more than 21 days.
The Finance Ministry wants these banks to increase their combined target lending this year from Bt625.5 billion to Bt927 billion.
Fast-track lending is major feature of the scheme. Korn said banks would not only reduce days of waiting, but also make loan documents simpler, with fewer pages.
To achieve the new lending target, Korn said the Samll Business Credit Guarantee Corporation (SBCG) would waive its 1.75-per-cent-per-year guarantee fee for the first year of the loan term. It will also double its per-bank-per-borrower loan guarantee to Bt40 million.
SBCG chairman Pichit Akrathit pledged to meet the target of providing loan guarantees worth Bt30 billion even though the scheme had not yet made much progress. So far, the corporation has provided guarantees worth only Bt3 billion.
Pichit said if the SBCG could fully implement its pledge, it would lead to bank lending worth up to Bt100 billion.
The Finance Ministry next week will ask the Cabinet to provide a financial subsidy to the SBCG to compensate it for the cost of implementing the project. For the whole project, the corporation needs Bt2.5 billion in compensation from the government.
Export-Import Bank of Thailand (Exim Bank) president Apichai Boontherawara said his bank would offer credit to foreign importers, in order to promote the country's goods and services. To mitigate its risk, Exim Bank will advance loans via foreign banks. Apichai said he believed foreign importers could repay their debts even though they faced a lack of liquidity in their countries.
The bank will also offer credit to suppliers of Thai exporters.
For fast-track Exim credit, the bank will offer a revolving credit line of up to Bt10 million and notify eligible exporters within five business days of the completion of loan documents. Teh bank will also offer working-capital loans of more than Bt10 million and notify exporters of whether their application has passed preliminary screening within seven days.
Government Savings Bank (GSB) president and CEO Lersuk Chuladesa has promised to reduce loan documents from eight pages to two, group guarantees will require only two people rather than three, and loan approvals will be notified within three days.
This applies to microcredit loans for low-income applicants from the People's Bank and credit to small entrepreneurs who run businesses from their townhouses.
Ennoo Suesuwan, acting president of the Bank for Agriculture and Agricutltural Cooperatives (BAAC), said the bank's fast-track lending would be offered to 680,000 farmers and ordinary borrowers, with a total loan target of Bt22 billion. The bank's existing customers will get loans within five days, while new clients will be notified with 15 days.
Government Housing Bank (GHB) president Khan Prachuabmoh said h is bank would offer mortgages totalling Bt15 billion to people buying homes from land developers or building their own homes. The interest rate would be 1.5 per cent for the first three months, 2.99 per cent for the rest of the first year and the bank's minimum retail rate minus 2 per cent for the second and third years.
The finance minister said the GSB and the Small and Medium Enterprise Development Bank of Thailand (SME Bank) would take care of the tourism industry. He said new loans would contribute 0.5-0.9 per cent to expansio of gross domestic product and that he expected 730,000 people to access them.
The specialised financial institutions have lent 99.54 per cent of their earlier combined target of Bt625.5 billion. The BAAC has lent 105 per cent, the GSB 116 per cent, the GHB 73.55 per cent, the SME Bank 64.76 per cent, Exim 50.26 per cent and the Ialamic Bank 75.78 per cent.
Lending by the specialised financial institutions rose 6.5 per cent in the first half of the year, while commercial bank's lending contracted 0.4 per cent in the first five months.
Measures involve fast-track loans on three-day approval, waiving loanguarantee fees and offering credit to foreign importers.
Finance Minister Korn Chatikavanij and executives of seven specialised financial institutions yesterday launched fast-track lending, in which borrowers could obtain loans within three days, or no more than 21 days.
The Finance Ministry wants these banks to increase their combined target lending this year from Bt625.5 billion to Bt927 billion.
Fast-track lending is major feature of the scheme. Korn said banks would not only reduce days of waiting, but also make loan documents simpler, with fewer pages.
To achieve the new lending target, Korn said the Samll Business Credit Guarantee Corporation (SBCG) would waive its 1.75-per-cent-per-year guarantee fee for the first year of the loan term. It will also double its per-bank-per-borrower loan guarantee to Bt40 million.
SBCG chairman Pichit Akrathit pledged to meet the target of providing loan guarantees worth Bt30 billion even though the scheme had not yet made much progress. So far, the corporation has provided guarantees worth only Bt3 billion.
Pichit said if the SBCG could fully implement its pledge, it would lead to bank lending worth up to Bt100 billion.
The Finance Ministry next week will ask the Cabinet to provide a financial subsidy to the SBCG to compensate it for the cost of implementing the project. For the whole project, the corporation needs Bt2.5 billion in compensation from the government.
Export-Import Bank of Thailand (Exim Bank) president Apichai Boontherawara said his bank would offer credit to foreign importers, in order to promote the country's goods and services. To mitigate its risk, Exim Bank will advance loans via foreign banks. Apichai said he believed foreign importers could repay their debts even though they faced a lack of liquidity in their countries.
The bank will also offer credit to suppliers of Thai exporters.
For fast-track Exim credit, the bank will offer a revolving credit line of up to Bt10 million and notify eligible exporters within five business days of the completion of loan documents. Teh bank will also offer working-capital loans of more than Bt10 million and notify exporters of whether their application has passed preliminary screening within seven days.
Government Savings Bank (GSB) president and CEO Lersuk Chuladesa has promised to reduce loan documents from eight pages to two, group guarantees will require only two people rather than three, and loan approvals will be notified within three days.
This applies to microcredit loans for low-income applicants from the People's Bank and credit to small entrepreneurs who run businesses from their townhouses.
Ennoo Suesuwan, acting president of the Bank for Agriculture and Agricutltural Cooperatives (BAAC), said the bank's fast-track lending would be offered to 680,000 farmers and ordinary borrowers, with a total loan target of Bt22 billion. The bank's existing customers will get loans within five days, while new clients will be notified with 15 days.
Government Housing Bank (GHB) president Khan Prachuabmoh said h is bank would offer mortgages totalling Bt15 billion to people buying homes from land developers or building their own homes. The interest rate would be 1.5 per cent for the first three months, 2.99 per cent for the rest of the first year and the bank's minimum retail rate minus 2 per cent for the second and third years.
The finance minister said the GSB and the Small and Medium Enterprise Development Bank of Thailand (SME Bank) would take care of the tourism industry. He said new loans would contribute 0.5-0.9 per cent to expansio of gross domestic product and that he expected 730,000 people to access them.
The specialised financial institutions have lent 99.54 per cent of their earlier combined target of Bt625.5 billion. The BAAC has lent 105 per cent, the GSB 116 per cent, the GHB 73.55 per cent, the SME Bank 64.76 per cent, Exim 50.26 per cent and the Ialamic Bank 75.78 per cent.
Lending by the specialised financial institutions rose 6.5 per cent in the first half of the year, while commercial bank's lending contracted 0.4 per cent in the first five months.
Ministry urges early cut in air-con prices
The Commerce Ministry is calling on manufacturers of air-conditiong units to bring their retail prices down in line with their lower tax liability.
The Internal Trade Department is studying the manufacturing costs of air-conditioners to see if retail prices can be brought down by 10 to 15 per cent, or by Bt2,000 to Bt2,500 per unit, in order to lower the burden on consumers.
Director-general Yangyong Phuangrach said manufacturers should start lowering their retail prices because they will be benefiting greatly from the waiver of 17-per-cent excise duty.
"The department is studying the product's price structuring and producers should be able to cut their retail prices as soon as their tax burden eases," he said.
According to the department, most plants have stockpiles, so producers should have no problems in reducing their retail prices in the next few weeks.
The Cabinet this week agreed to waive excise duty on air-conditioners after manufacturers claimed that the 17-per-cent tax was far too much of a burden and ate into their profit margins.
Yangyong said manufacturers should use the waiver as an opportunity to stimulate the market and consumer interest.
The Internal Trade Department is studying the manufacturing costs of air-conditioners to see if retail prices can be brought down by 10 to 15 per cent, or by Bt2,000 to Bt2,500 per unit, in order to lower the burden on consumers.
Director-general Yangyong Phuangrach said manufacturers should start lowering their retail prices because they will be benefiting greatly from the waiver of 17-per-cent excise duty.
"The department is studying the product's price structuring and producers should be able to cut their retail prices as soon as their tax burden eases," he said.
According to the department, most plants have stockpiles, so producers should have no problems in reducing their retail prices in the next few weeks.
The Cabinet this week agreed to waive excise duty on air-conditioners after manufacturers claimed that the 17-per-cent tax was far too much of a burden and ate into their profit margins.
Yangyong said manufacturers should use the waiver as an opportunity to stimulate the market and consumer interest.
AUSTRALIA LOOKS TO DITCH THE BEACH FOR A NEW IMAGE
Australia launched a multi-million-dollar bid to rebrand itself yesterday as more than a nation of beach-goers, following a failed campaign deemed too offensive to air in some countries.
Trade Minister Simon Crean said the government would spend 20 million Australian dollars (Bt568.6 million) recasting the nationa's image to capture the "essence of Australia" as a trade, education and investement destination in Asia.
"We are much more than a nation of great people and great places. We have won 10 Nobel Prizes and we are a nation bursting with creativity and ingenuity," Crean said.
He vowed to avoid a repeat of the controvesial A$180-million "Where the Bloody Hell Are You?" 2006 torusim campaign, which was originally deemed too offensive to be screened in some countries, and largely failed in Asia.
Prime Minister Kevin Rudd last year described that campaign as a "rolled gold disaster".
Claims of racism and exploitation have also plagued Australia in recent months amid a rach of bad publicity relating to violent attacks and education scams targeting Indian students.
Todd Sampson, head of advertising firm Leo Burnett Australia, said the country needed to "stand for something" in the eyes of the international public.
"You think of Australia and you sort of draw a blank," Sampson said.
"Beyond koalas, kangaroos and beaches, there's not much there and that's the challenge Australia has."
Trade Minister Simon Crean said the government would spend 20 million Australian dollars (Bt568.6 million) recasting the nationa's image to capture the "essence of Australia" as a trade, education and investement destination in Asia.
"We are much more than a nation of great people and great places. We have won 10 Nobel Prizes and we are a nation bursting with creativity and ingenuity," Crean said.
He vowed to avoid a repeat of the controvesial A$180-million "Where the Bloody Hell Are You?" 2006 torusim campaign, which was originally deemed too offensive to be screened in some countries, and largely failed in Asia.
Prime Minister Kevin Rudd last year described that campaign as a "rolled gold disaster".
Claims of racism and exploitation have also plagued Australia in recent months amid a rach of bad publicity relating to violent attacks and education scams targeting Indian students.
Todd Sampson, head of advertising firm Leo Burnett Australia, said the country needed to "stand for something" in the eyes of the international public.
"You think of Australia and you sort of draw a blank," Sampson said.
"Beyond koalas, kangaroos and beaches, there's not much there and that's the challenge Australia has."
Korn warns upturn at risk
Renewed political violence could jeopardise Thailand's budding economic recovery, Finance Minister Korn Chatikavanij warns.
"The economy is improving, thanks to the efforts of all parties," he said yesterday."But [violence] will certainly hurt the business environment, and be a drag on efforts towards economic recovery."
The Democrat-led government has announced it would use powers under the Internal Security Act to keep law and order from Saturday to Tuesday in anticipation of red shirt protests in the capital on Sunday.
The protesters, under the banner of the United Front for Democracy against Dictatorship, oppose the government and are largely supporters of ousted prime minister Thaksin Shinawatra.
Last April, UDD-led protests led to the disruption of the Association of Southeast Asian Nations summit in Pattaya and several days of rioting in Bangkok.
Mr Korn asked all parties to "remain within the limits of the law", saying the government respected the people's right to peaceful assembly.
Speaking at a ceremony to launch the Thai-Asean News Network, Mr Korn insisted the government had made strides in reviving the economy.
The National Economic and Social Development Board this week said the economy shrank 4.9% in the second quarter from last year, a slower pace of decline compared with the 7.1%year-on-year contraction in the first quarter. The economy in the second quarter grew 2.3% from the end of March, compared with a 1.8% decline quarter-on-quarter in the first three months of the year.
Mr Korn said there were clear signals of economic recovery, and state stimulus programmes had played a key part in helping to reduce job losses as a result of the global economic crisis.
Unemployment now stood at700,000 people, a significantly better outcome than had been originally feared of 2 million without work.
The "Thailand Strength" investment programme, to be formally launched next week, would create 2 million new jobs over the next three years and pave the way for sustained, medium-term growth, the minister said.
Mr Korn said 1.06 trillion baht worth of investment projects under the Thai-land Strength programme had been approved and were ready to begin,out of a total 1.5 trillion baht in spending earmarked through 2012.
A website would be set up for the public to monitor the progress of each project to ensure the transparency of the programme.
"The Thailand Strength projects were selected from among those ready to go. We dropped a number of projects,not because they were bad but because they were not ready," Mr Korn said.
"[These are the] projects that the public have been waiting for."
Prime Minister Abhisit Vejjajiva welcomed the launch of the Thai-Asean News Network.
He said the country remained fully committed to press freedom.
A strong, free press helped increase transparency within a society as well as support democracy, he said.
"The economy is improving, thanks to the efforts of all parties," he said yesterday."But [violence] will certainly hurt the business environment, and be a drag on efforts towards economic recovery."
The Democrat-led government has announced it would use powers under the Internal Security Act to keep law and order from Saturday to Tuesday in anticipation of red shirt protests in the capital on Sunday.
The protesters, under the banner of the United Front for Democracy against Dictatorship, oppose the government and are largely supporters of ousted prime minister Thaksin Shinawatra.
Last April, UDD-led protests led to the disruption of the Association of Southeast Asian Nations summit in Pattaya and several days of rioting in Bangkok.
Mr Korn asked all parties to "remain within the limits of the law", saying the government respected the people's right to peaceful assembly.
Speaking at a ceremony to launch the Thai-Asean News Network, Mr Korn insisted the government had made strides in reviving the economy.
The National Economic and Social Development Board this week said the economy shrank 4.9% in the second quarter from last year, a slower pace of decline compared with the 7.1%year-on-year contraction in the first quarter. The economy in the second quarter grew 2.3% from the end of March, compared with a 1.8% decline quarter-on-quarter in the first three months of the year.
Mr Korn said there were clear signals of economic recovery, and state stimulus programmes had played a key part in helping to reduce job losses as a result of the global economic crisis.
Unemployment now stood at700,000 people, a significantly better outcome than had been originally feared of 2 million without work.
The "Thailand Strength" investment programme, to be formally launched next week, would create 2 million new jobs over the next three years and pave the way for sustained, medium-term growth, the minister said.
Mr Korn said 1.06 trillion baht worth of investment projects under the Thai-land Strength programme had been approved and were ready to begin,out of a total 1.5 trillion baht in spending earmarked through 2012.
A website would be set up for the public to monitor the progress of each project to ensure the transparency of the programme.
"The Thailand Strength projects were selected from among those ready to go. We dropped a number of projects,not because they were bad but because they were not ready," Mr Korn said.
"[These are the] projects that the public have been waiting for."
Prime Minister Abhisit Vejjajiva welcomed the launch of the Thai-Asean News Network.
He said the country remained fully committed to press freedom.
A strong, free press helped increase transparency within a society as well as support democracy, he said.
State-bank loan applications on fast track
LOANS APPROVED BY SIX STATE BANKS JAN-JULY 99.5% of targets 622 billion baht
State banks will be able to approve new loans as quickly as three days under the government's new "Fast Track" system,according to Finance Minister Korn Chatikavanij.
No loan application with any specialised state-owned financial institution should take longer than 21 days to approve, he added.
The Finance Ministry has told state banks to speed up lending to support the recovery, particularly for the tourism,export and small business sectors.
Commercial bank lending in the first half contracted from the same period last year, due in part to falling demand for working capital and project loans under the recession. As well, banks were taking a more risk-averse approach to new lending.
The Finance Ministry recently increased its loan target for the state banks to a total of 927 billion baht for the full year, up from 625 billion.
"Accelerating state bank lending will help add 0.5 to 0.9 percentage points to GDP growth, depending on the disbursal rate of new loans," Mr Korn said.
The National Economic and Social Development Board on Monday cut its economic forecast for 2009 to a contraction of between 3% and 3.5% from last year, down from earlier estimates of a decline of 2.5% to 3.5%.
The six state banks participating in the Fast Track programme are the Government Savings Bank, the Bank for Agriculture and Agricultural Co-operatives,the Government Housing Bank, the SME Bank, the Islamic Bank and the Small Industry Credit Guarantee Corp.
All six banks will revamp their loan application procedures to approve new credit requests within 3,5,7,15 or 21 days after documentation is complete,depending on the complexity, size and type of loan and borrower.
A loan to a shophouse business may take just seven working days for approval,while revolving credit lines of up to 10 million baht may be approved within five days.
The ministry also announced special programmes run by each of the six banks to help accelerate credit lending and support economic recovery.
The SICG will take a more aggressive role in offering credit guarantees for borrowers without collateral, and will waive guarantee fees of 1.75% for the first year and double credit lines to 40 million baht from 20 million earlier.
The ministry also said the GSB and SME Bank would take the lead in lending to tourism operators affected by the global economic crisis and domestic political turmoil.
The GSB also will aim to increase lending through its People's Bank microfinance programme to another 500,000 borrowers by the end of the year, with each borrower eligible for up to 100,000 baht. The People's Bank also aims to lend up to 500,000 baht each to another 500,000 shophouses and small retailers nationwide.
The Exim Bank, meanwhile, will ease terms and permit purchase orders or letters of credit to serve as documentation against credit requests.
For the BAAC, officials said lending to small farmers would be accelerated while the bank also prepares to introduce a new price support programme for key crops to replace the crop mortgage programme now used by the government.
The GHB, meanwhile, announced that it would offer special interest rates for 15 billion baht in new home mortgage loans.
From January to July, the six state banks approved loans of 622 billion baht,or 99.5% of their targets. The GSB posted the strongest performance, with loans exceeding targets by 115%, followed by the BAAC at 105%. The Exim Bank was the worst performer, at 50%.
Mr Korn said the Finance Ministry estimated that 730,000 borrowers nationwide would receive state loans, with an approval target of 80% of the 927 billion baht target and a disbursal target of 70%.
State banks will be able to approve new loans as quickly as three days under the government's new "Fast Track" system,according to Finance Minister Korn Chatikavanij.
No loan application with any specialised state-owned financial institution should take longer than 21 days to approve, he added.
The Finance Ministry has told state banks to speed up lending to support the recovery, particularly for the tourism,export and small business sectors.
Commercial bank lending in the first half contracted from the same period last year, due in part to falling demand for working capital and project loans under the recession. As well, banks were taking a more risk-averse approach to new lending.
The Finance Ministry recently increased its loan target for the state banks to a total of 927 billion baht for the full year, up from 625 billion.
"Accelerating state bank lending will help add 0.5 to 0.9 percentage points to GDP growth, depending on the disbursal rate of new loans," Mr Korn said.
The National Economic and Social Development Board on Monday cut its economic forecast for 2009 to a contraction of between 3% and 3.5% from last year, down from earlier estimates of a decline of 2.5% to 3.5%.
The six state banks participating in the Fast Track programme are the Government Savings Bank, the Bank for Agriculture and Agricultural Co-operatives,the Government Housing Bank, the SME Bank, the Islamic Bank and the Small Industry Credit Guarantee Corp.
All six banks will revamp their loan application procedures to approve new credit requests within 3,5,7,15 or 21 days after documentation is complete,depending on the complexity, size and type of loan and borrower.
A loan to a shophouse business may take just seven working days for approval,while revolving credit lines of up to 10 million baht may be approved within five days.
The ministry also announced special programmes run by each of the six banks to help accelerate credit lending and support economic recovery.
The SICG will take a more aggressive role in offering credit guarantees for borrowers without collateral, and will waive guarantee fees of 1.75% for the first year and double credit lines to 40 million baht from 20 million earlier.
The ministry also said the GSB and SME Bank would take the lead in lending to tourism operators affected by the global economic crisis and domestic political turmoil.
The GSB also will aim to increase lending through its People's Bank microfinance programme to another 500,000 borrowers by the end of the year, with each borrower eligible for up to 100,000 baht. The People's Bank also aims to lend up to 500,000 baht each to another 500,000 shophouses and small retailers nationwide.
The Exim Bank, meanwhile, will ease terms and permit purchase orders or letters of credit to serve as documentation against credit requests.
For the BAAC, officials said lending to small farmers would be accelerated while the bank also prepares to introduce a new price support programme for key crops to replace the crop mortgage programme now used by the government.
The GHB, meanwhile, announced that it would offer special interest rates for 15 billion baht in new home mortgage loans.
From January to July, the six state banks approved loans of 622 billion baht,or 99.5% of their targets. The GSB posted the strongest performance, with loans exceeding targets by 115%, followed by the BAAC at 105%. The Exim Bank was the worst performer, at 50%.
Mr Korn said the Finance Ministry estimated that 730,000 borrowers nationwide would receive state loans, with an approval target of 80% of the 927 billion baht target and a disbursal target of 70%.
Malaysia exits slump
Government spending helped lift Malaysia out of recession in the second quarter amid signs of stabilisation in the world economy.
Gross domestic product expanded by 4.8% from the first quarter following contractions in the previous two quarters - the technical definition of a recession - the central bank said yesterday.
The economy, battered by the downturn in global trade, was kick-started by government pump priming that included new spending of 67 billion ringgit ($19 billion). Higher private consumption contributed to the improvement as well,Bank Negara Malaysia said.
Other heavily export-dependent Asian economies including Japan, Singapore and Thailand also broke out of recession in the latest quarter after getting a lift from government stimulus.
"There are increasing signs that conditions in the global economy are stabilising," said Bank Negara Governor Zeti Akhtar Aziz.
Ms Zeti said the government's forecast for the economy to shrink by 4% to 5%this year would be upgraded when the 2010 budget is tabled in October.
Gross domestic product expanded by 4.8% from the first quarter following contractions in the previous two quarters - the technical definition of a recession - the central bank said yesterday.
The economy, battered by the downturn in global trade, was kick-started by government pump priming that included new spending of 67 billion ringgit ($19 billion). Higher private consumption contributed to the improvement as well,Bank Negara Malaysia said.
Other heavily export-dependent Asian economies including Japan, Singapore and Thailand also broke out of recession in the latest quarter after getting a lift from government stimulus.
"There are increasing signs that conditions in the global economy are stabilising," said Bank Negara Governor Zeti Akhtar Aziz.
Ms Zeti said the government's forecast for the economy to shrink by 4% to 5%this year would be upgraded when the 2010 budget is tabled in October.
CABINET APPROVES EXCISE WAIVER
Consumers should be able to buy air-conditioners for 10 to 15 per cent less than current prices following the Cabinet's decision to approve a tax waiver, Deputy Finance Minister Pruttichai Damrongrat said yesterday.
Manufacturers said they were ready to bring their retail prices down immediately, but only by the full amount for newly produced equipment.
The Cabinet approved the Finance Ministry's proposal to waive excise duty on air-conditioners with a capacity below 72,000 British thermal units. After the 15-per-cent tax is waived, the retail price should fall by between 10 and 15 per cent, said Pruttichai.
He said this would relieve some of the burden on small and medium-sized enterprises and would help local businesses compete against some air-conditioning units brought into the country but evading the duty.
Somyos Kiratichivanant, managing director of Bitwise (Thailand), manufacturer and distributor of the Tasaki brand, said most manufacturers had a large level of old stock as sales had been slow due to the economic slowdown.
"However, consumers expect prices to be cut immediately. So, we may slash the prices of our old stock somewhat in order to have a psychological impact and be competitive," he said.
He said an old-stock air-conditioner currently priced Bt10,000 could be reduced to Bt9,000 to Bt9,500, but not to Bt8,500. The manufacturer would therefore still bear some loss.
"It will not however be possible for units that are old inventory to be reduced by as much as 15 per cent from their previous price tag," said Somyos.
He added that the company had a lot of stock for some of its Tasaki range and it could take until the end of the year to release it.
However, prices could be lowered for some models immediately.
Meanwhile, Finance Minister Korn Chatikavanij said the ministry had been unable to submit its draft property tax bill for Cabinet consideration this month.
He said the Fiscal Policy Office needed more time to gather public opinion from all interested parties, adding that private firms in the provinces also wanted to submit their own proposals to the ministry, said Korn.
He pledged to submit the draft law to the Cabinet soon. It would then take about two or three months for the government's legal advisory body, the Council of State, to review the draft.
Korn said the government may not therefore be able to submit the bill to Parliament in the current session.
He ruled out any change to the tentative tax rates already proposed.
According to the draft, residential units will be subject to an annual tax of 0.1 per cent of the property's value, while owners of land used for agricultural purposes will have to pay 0.05 per cent of the land's value and land for commercial use will be subject to a 0.1-per-cent tax.
Undeveloped land will be taxed at 0.5 per cent over the first three years, rising to a maximum of 2 per cent over the next six years.
Manufacturers said they were ready to bring their retail prices down immediately, but only by the full amount for newly produced equipment.
The Cabinet approved the Finance Ministry's proposal to waive excise duty on air-conditioners with a capacity below 72,000 British thermal units. After the 15-per-cent tax is waived, the retail price should fall by between 10 and 15 per cent, said Pruttichai.
He said this would relieve some of the burden on small and medium-sized enterprises and would help local businesses compete against some air-conditioning units brought into the country but evading the duty.
Somyos Kiratichivanant, managing director of Bitwise (Thailand), manufacturer and distributor of the Tasaki brand, said most manufacturers had a large level of old stock as sales had been slow due to the economic slowdown.
"However, consumers expect prices to be cut immediately. So, we may slash the prices of our old stock somewhat in order to have a psychological impact and be competitive," he said.
He said an old-stock air-conditioner currently priced Bt10,000 could be reduced to Bt9,000 to Bt9,500, but not to Bt8,500. The manufacturer would therefore still bear some loss.
"It will not however be possible for units that are old inventory to be reduced by as much as 15 per cent from their previous price tag," said Somyos.
He added that the company had a lot of stock for some of its Tasaki range and it could take until the end of the year to release it.
However, prices could be lowered for some models immediately.
Meanwhile, Finance Minister Korn Chatikavanij said the ministry had been unable to submit its draft property tax bill for Cabinet consideration this month.
He said the Fiscal Policy Office needed more time to gather public opinion from all interested parties, adding that private firms in the provinces also wanted to submit their own proposals to the ministry, said Korn.
He pledged to submit the draft law to the Cabinet soon. It would then take about two or three months for the government's legal advisory body, the Council of State, to review the draft.
Korn said the government may not therefore be able to submit the bill to Parliament in the current session.
He ruled out any change to the tentative tax rates already proposed.
According to the draft, residential units will be subject to an annual tax of 0.1 per cent of the property's value, while owners of land used for agricultural purposes will have to pay 0.05 per cent of the land's value and land for commercial use will be subject to a 0.1-per-cent tax.
Undeveloped land will be taxed at 0.5 per cent over the first three years, rising to a maximum of 2 per cent over the next six years.
PM URGES CABINET TO VOTE FOR THE 2010 BUDGET BILL
Prime Minister Abhisit Vejjajiva yesterday displayed his leadership qualities when he urged the Cabinet to vote for the 2010 budget bill and said that if the voting was found to be unconstitutional, his administration would readily step down.
The Parliament is scheduled to deliberate on the budget bill during its second and third reading today and tomorrow.
The Cabinet did not vote for the 2010 budget bill in the first reading when the Lower House was undecided on whether its acceptance of the bill in principle might be considered unconstitutional.
During the Cabinet meeting yesterday, Abhisit said he would vote for the budget bill regardless.
"Nobody needs to be afraid. If the bill is wrong, I and everybody else will step down. Whether my decision is in line with the Constitution Court or not, is another matter,'' he said.
Council of State secretary-general Pornthip Jala informed the Cabinet that ministers who are also MPs could not vote in the no-confidence motion against the prime minister and other minsters.
Ministers who are MPs can vote for issues that do not concern their own interest. For instance, if a minister or MP owns or is involved in the liquor industry, they cannot vote on bills involving excise tax on the product on the grounds of conflict of interest.
The Parliament is scheduled to deliberate on the budget bill during its second and third reading today and tomorrow.
The Cabinet did not vote for the 2010 budget bill in the first reading when the Lower House was undecided on whether its acceptance of the bill in principle might be considered unconstitutional.
During the Cabinet meeting yesterday, Abhisit said he would vote for the budget bill regardless.
"Nobody needs to be afraid. If the bill is wrong, I and everybody else will step down. Whether my decision is in line with the Constitution Court or not, is another matter,'' he said.
Council of State secretary-general Pornthip Jala informed the Cabinet that ministers who are also MPs could not vote in the no-confidence motion against the prime minister and other minsters.
Ministers who are MPs can vote for issues that do not concern their own interest. For instance, if a minister or MP owns or is involved in the liquor industry, they cannot vote on bills involving excise tax on the product on the grounds of conflict of interest.
Tuesday, August 25, 2009
Asia leads recovery and China takes wheel
The United States is also being shoved aside as the make-or-break
customer for export-driven nations like Germany and Japan.
In past global slowdowns, the United States invariably led the way out,followed by Europe and the rest of the world. But for the first time,the catalyst is coming from China and the rest of Asia, where resurgent economies are helping the still-shaky West recover from the deepest recession since World War II.
Economists have long predicted that an increasingly powerful China would come to rival and eventually surpass the United States in economic influence.While the US economy is still more than three times the size of China's, the nascent global recovery suggests that this long-anticipated change could arrive sooner than had been expected.
Such a shift would have significant ramifications for the United States and the rest of the West, even after the global economic recovery takes hold.
"The economic centre of gravity has been shifting for some time, but this recession marks a turning point," said Neal Soss, chief economist for Credit Suisse in New York."It's Asia that's lifting the world, rather than the US, and that's never happened before."
China's government-dominated, topdown economy is surging after Chinese banks doled out more than US$1 trillion (35 trillion baht) in loans in the first half of the year, in addition to a nearly $600 billion government stimulus programme.
Though the benefits are manifest,some economists wonder whether China is laying the groundwork for sustainable growth or just increasing its export capacity despite more frugal spending habits on the part of Western consumers.
"The big question is what happens next," said Kenneth S Rogoff, a professor of economics at Harvard."If the consumer in the United States and Europe doesn't come back, I'm not sure Asia has a Plan B."
But robust demand among Chinese consumers and businesses is one reason oil prices have doubled to more than $70 a barrel since bottoming out early this year, and China is likely to keep buying US debt as Washington borrows heavily to finance its myriad stimulus and bailout plans.
The United States is also being shoved aside as the make-or-break customer for export-driven nations like Germany and Japan. China overtook the United States as Japan's leading trading partner in the first half of 2009, while in Europe manufacturers are looking east instead of west.
"What we're losing in the transAtlantic trade with the US, we are gaining in China," said Jens Nagel, head of the international department of the German Exporters Association.
In the near term, however, the United States should benefit from a resurgent Asia, as the US economy finally begins growing again, as expected in the second half of 2009.
"Vigorous rebounds overseas, particularly in East Asia, suggest that US imports and exports will soon improve,"Mr Soss said.
Last week, Hewlett-Packard pointed to double-digit revenue growth in China as a rare bright spot in an otherwise lacklustre earnings report. Meanwhile,overall US exports to China have already been picking up, rising to $5.5 billion in June from $4.1 billion in January.
"The numbers are volatile, but the trend is clear," said Robert Brusca of FAO Economics in New York."It's a big contrast with Japan, where US exports are still dropping, but China is different."
Of course, other factors have played a significant role in helping the global economy begin to stabilise, including trillions of dollars in support from central banks for frozen credit markets, as well as bailouts and rescues of major financial institutions, insurers and automobile companies.
But as the engine for future demand growth shifts from the government back to the private sector, and Americans remain wary of returning to their freespending ways, Asian consumption is expected to pick up at least some of the slack. And if China does slow, as some experts fear it could in the second half of 2009, America's effort to climb out of recession could be that much harder.
After the recession of 2001-02 and the slowdown in the early 1990s, the US economy served as the global locomotive,said Michael Saunders, head of European economics research for Citigroup.
Back then, he said, China and other Asian countries lacked huge cash reserves that could buttress them in the event of recession. But in the last decade, China has enjoyed huge trade surpluses with the West, and it holds $2.13 trillion in foreign reserves, solidifying its position as a rapidly emerging economic power.
Citigroup recently increased its estimate for annual Chinese economic growth to 8.7% in 2009 from 8.2%t, and to 9.8% next year from 8.8%.
While economists like Mr Soss expect that growth to spill over to the United States shortly, the effect is already visible in Europe.
Indeed, after the French and German economies shocked most economists this month by turning in positive performances for the second quarter, the normally conservative Deutsche Bank released a report titled "Eurozone Q2 GDP: Made in China?"
For now, the answer seems to be yes."It's quite amazing, because usually Asia doesn't play such a big role in European exports or output," said Gilles Moec,senior European economist with Deutsche Bank in London.
French exports to China and other East Asian economies rose 18.7% in the second quarter, according to customs data, a sharp turnaround from the 16.2%drop recorded in the previous quarter.Overall exports to the region from the 16 countries that use the euro currency increased 6.3% in the second quarter,reversing a 6.2% drop in the first quarter,Mr Moec said.
While Western European countries have been more timid about embarking on big spending programmes because of their already mounting deficits, and European banks took huge hits on their holdings of subprime American debt,Beijing does not face either obstacle.
In the first half of 2009, Chinese banks lent a record $1.1 trillion in new loans,setting off fears that the lending binge might create a bubble over the long term.
China's moves have also helped its neighbours increase industrial production sharply from recession lows.Since hitting a trough in late 2008 and early 2009, industrial production has jumped 28% in Korea and 26% in Taiwan.In July, American industrial production rose for the first time since December 2007, but it remains just half a percentage point above the bottom in June.
"Asia is still relatively small in the world, but it reflects how the world is changing, and economic power does translate, of course, into political power,"said Simon Johnson, a former chief economist for the International Monetary Fund and now a senior fellow at the Peterson Institute for International Economics."You can use it to win friends and influence people, as the Chinese are already doing in Africa and Latin America."
customer for export-driven nations like Germany and Japan.
In past global slowdowns, the United States invariably led the way out,followed by Europe and the rest of the world. But for the first time,the catalyst is coming from China and the rest of Asia, where resurgent economies are helping the still-shaky West recover from the deepest recession since World War II.
Economists have long predicted that an increasingly powerful China would come to rival and eventually surpass the United States in economic influence.While the US economy is still more than three times the size of China's, the nascent global recovery suggests that this long-anticipated change could arrive sooner than had been expected.
Such a shift would have significant ramifications for the United States and the rest of the West, even after the global economic recovery takes hold.
"The economic centre of gravity has been shifting for some time, but this recession marks a turning point," said Neal Soss, chief economist for Credit Suisse in New York."It's Asia that's lifting the world, rather than the US, and that's never happened before."
China's government-dominated, topdown economy is surging after Chinese banks doled out more than US$1 trillion (35 trillion baht) in loans in the first half of the year, in addition to a nearly $600 billion government stimulus programme.
Though the benefits are manifest,some economists wonder whether China is laying the groundwork for sustainable growth or just increasing its export capacity despite more frugal spending habits on the part of Western consumers.
"The big question is what happens next," said Kenneth S Rogoff, a professor of economics at Harvard."If the consumer in the United States and Europe doesn't come back, I'm not sure Asia has a Plan B."
But robust demand among Chinese consumers and businesses is one reason oil prices have doubled to more than $70 a barrel since bottoming out early this year, and China is likely to keep buying US debt as Washington borrows heavily to finance its myriad stimulus and bailout plans.
The United States is also being shoved aside as the make-or-break customer for export-driven nations like Germany and Japan. China overtook the United States as Japan's leading trading partner in the first half of 2009, while in Europe manufacturers are looking east instead of west.
"What we're losing in the transAtlantic trade with the US, we are gaining in China," said Jens Nagel, head of the international department of the German Exporters Association.
In the near term, however, the United States should benefit from a resurgent Asia, as the US economy finally begins growing again, as expected in the second half of 2009.
"Vigorous rebounds overseas, particularly in East Asia, suggest that US imports and exports will soon improve,"Mr Soss said.
Last week, Hewlett-Packard pointed to double-digit revenue growth in China as a rare bright spot in an otherwise lacklustre earnings report. Meanwhile,overall US exports to China have already been picking up, rising to $5.5 billion in June from $4.1 billion in January.
"The numbers are volatile, but the trend is clear," said Robert Brusca of FAO Economics in New York."It's a big contrast with Japan, where US exports are still dropping, but China is different."
Of course, other factors have played a significant role in helping the global economy begin to stabilise, including trillions of dollars in support from central banks for frozen credit markets, as well as bailouts and rescues of major financial institutions, insurers and automobile companies.
But as the engine for future demand growth shifts from the government back to the private sector, and Americans remain wary of returning to their freespending ways, Asian consumption is expected to pick up at least some of the slack. And if China does slow, as some experts fear it could in the second half of 2009, America's effort to climb out of recession could be that much harder.
After the recession of 2001-02 and the slowdown in the early 1990s, the US economy served as the global locomotive,said Michael Saunders, head of European economics research for Citigroup.
Back then, he said, China and other Asian countries lacked huge cash reserves that could buttress them in the event of recession. But in the last decade, China has enjoyed huge trade surpluses with the West, and it holds $2.13 trillion in foreign reserves, solidifying its position as a rapidly emerging economic power.
Citigroup recently increased its estimate for annual Chinese economic growth to 8.7% in 2009 from 8.2%t, and to 9.8% next year from 8.8%.
While economists like Mr Soss expect that growth to spill over to the United States shortly, the effect is already visible in Europe.
Indeed, after the French and German economies shocked most economists this month by turning in positive performances for the second quarter, the normally conservative Deutsche Bank released a report titled "Eurozone Q2 GDP: Made in China?"
For now, the answer seems to be yes."It's quite amazing, because usually Asia doesn't play such a big role in European exports or output," said Gilles Moec,senior European economist with Deutsche Bank in London.
French exports to China and other East Asian economies rose 18.7% in the second quarter, according to customs data, a sharp turnaround from the 16.2%drop recorded in the previous quarter.Overall exports to the region from the 16 countries that use the euro currency increased 6.3% in the second quarter,reversing a 6.2% drop in the first quarter,Mr Moec said.
While Western European countries have been more timid about embarking on big spending programmes because of their already mounting deficits, and European banks took huge hits on their holdings of subprime American debt,Beijing does not face either obstacle.
In the first half of 2009, Chinese banks lent a record $1.1 trillion in new loans,setting off fears that the lending binge might create a bubble over the long term.
China's moves have also helped its neighbours increase industrial production sharply from recession lows.Since hitting a trough in late 2008 and early 2009, industrial production has jumped 28% in Korea and 26% in Taiwan.In July, American industrial production rose for the first time since December 2007, but it remains just half a percentage point above the bottom in June.
"Asia is still relatively small in the world, but it reflects how the world is changing, and economic power does translate, of course, into political power,"said Simon Johnson, a former chief economist for the International Monetary Fund and now a senior fellow at the Peterson Institute for International Economics."You can use it to win friends and influence people, as the Chinese are already doing in Africa and Latin America."
Chinese PM vows to keep policy loose
China "will maintain its stimulative policy stance because the economy, far from being on solid footing,is facing fresh difficulties," Prime Minister Wen Jiabao said yesterday.
In a downbeat statement on the government's website following a trip to the eastern province of Zhejiang, known as a hotbed of private enterprise, Wen said Beijing would ensure a sustainable flow of credit and a "reasonably sufficient" provision of liquidity to support growth.
A drop in new yuan bank loans in July to 356 billion yuan ($52 billion),compared with an average of over 1.2 trillion yuan in each of the first six months of the year, has created worries among some analysts that the recent rebound in growth could be knocked off track.
"We must clearly see that the foundations of the Wen: Sustainable recovery are not flow of credit stable, not solidified and not balanced. We cannot be blindly optimistic," Wen was cited as saying on www.gov.cn.
"Therefore, we must maintain continuity and consistency in macroeconomic policies, and maintaining stable and quite fast economic growth remains our top priority. This means we cannot afford the slightest relaxation or waver-ing," he said.
China still faced great pressure from the slowdown in demand for exports,Wen said, adding that it was difficult to boost domestic demand in the short term to fill in the gap - despite the boost from the government's fourtrillion-yuan ($585-billion) stimulus package.
Thanks to the pump-priming, annual economic growth in the second quarter accelerated to 7.9% from 6.1% in the first three months of the year.
Although the most important aim of the stimulus is to prevent a sharp drop in growth, Wen said that its purpose was also to make China's economic growth model more sustainable.
In particular, the premier said China would continue to increase fiscal spending on infrastructure and environmental protection.
"The impact of some short-term policies will fade gradually, but it takes time to see the effects of medium- and long-term policies, and there are many new difficulties and problems in economic operations," he said.
The prime minister's comments come amid volatility in the Shanghai stock market that has fanned worries the economy could be coming off the boil as the government reins in break-neck credit growth.
The Shanghai Composite Index ended up 1.1% yesterday after falling 2.8% last week in wide-ranging trading. It is now down by nearly 14% from its peak reached on August 4.
China's latest economic data for July indicated that while growth was moderating after a strong second quarter,the recovery remained on track to achieve the government's goal of 8%growth for the full year.
Central bank adviser Fan Gang said in remarks published yesterday that he expected growth to hold up at 8% next year as well, as property and corporate investment, together with rising exports,pick up the slack from waning government investment.
Fan added that the Chinese economy had established a recovery trend and the pace of the recovery was quite rapid,the official Shanghai Securities News reported.
The People's Bank of China adviser also told a conference that the global economy had stabilised, although he predicted that it would still experience a period of weakness in the future.
Fan added that the composition of next year's economic growth would be more diverse and healthier than this year's.
In a downbeat statement on the government's website following a trip to the eastern province of Zhejiang, known as a hotbed of private enterprise, Wen said Beijing would ensure a sustainable flow of credit and a "reasonably sufficient" provision of liquidity to support growth.
A drop in new yuan bank loans in July to 356 billion yuan ($52 billion),compared with an average of over 1.2 trillion yuan in each of the first six months of the year, has created worries among some analysts that the recent rebound in growth could be knocked off track.
"We must clearly see that the foundations of the Wen: Sustainable recovery are not flow of credit stable, not solidified and not balanced. We cannot be blindly optimistic," Wen was cited as saying on www.gov.cn.
"Therefore, we must maintain continuity and consistency in macroeconomic policies, and maintaining stable and quite fast economic growth remains our top priority. This means we cannot afford the slightest relaxation or waver-ing," he said.
China still faced great pressure from the slowdown in demand for exports,Wen said, adding that it was difficult to boost domestic demand in the short term to fill in the gap - despite the boost from the government's fourtrillion-yuan ($585-billion) stimulus package.
Thanks to the pump-priming, annual economic growth in the second quarter accelerated to 7.9% from 6.1% in the first three months of the year.
Although the most important aim of the stimulus is to prevent a sharp drop in growth, Wen said that its purpose was also to make China's economic growth model more sustainable.
In particular, the premier said China would continue to increase fiscal spending on infrastructure and environmental protection.
"The impact of some short-term policies will fade gradually, but it takes time to see the effects of medium- and long-term policies, and there are many new difficulties and problems in economic operations," he said.
The prime minister's comments come amid volatility in the Shanghai stock market that has fanned worries the economy could be coming off the boil as the government reins in break-neck credit growth.
The Shanghai Composite Index ended up 1.1% yesterday after falling 2.8% last week in wide-ranging trading. It is now down by nearly 14% from its peak reached on August 4.
China's latest economic data for July indicated that while growth was moderating after a strong second quarter,the recovery remained on track to achieve the government's goal of 8%growth for the full year.
Central bank adviser Fan Gang said in remarks published yesterday that he expected growth to hold up at 8% next year as well, as property and corporate investment, together with rising exports,pick up the slack from waning government investment.
Fan added that the Chinese economy had established a recovery trend and the pace of the recovery was quite rapid,the official Shanghai Securities News reported.
The People's Bank of China adviser also told a conference that the global economy had stabilised, although he predicted that it would still experience a period of weakness in the future.
Fan added that the composition of next year's economic growth would be more diverse and healthier than this year's.
ASIAN ECONOMIES OUTPACING US AND EUROPE ON GROWTH
Asia is outpacing the United States and Europe in the rebound from the global economic slump, thanks to multi-billion-dollar stimulus packages and robust demand from China, analysts said.
Second-quarter indicators showed the region's recession-hit economies such as Singapore and Hong Kong have returned to the growth path despite sluggish demand from the US and European markets, their main export destinations.
Countries with bigger domestic populations, including China, India, Indonesia, South Korea, the Philippines and Vietnam, have been growing during the global downturn although the pace has slowed.
Japan, the world's second largest economy, lumbered out of recession in the Philippines and Vietnam, have been growing during the global downturn although the pace has slowed.
Japan, the world's second largest economy, lumbered out of recession in the second quarter and Prime Minister Taro Aso credited the government's stimulus package for the achievement.
In contrast, US gross domestic product was estimated to have shrunk 1 per cent in the second quarter, and the eurozone economy dipped a m ilder than expected 0.1 per cent after Germany and France emered from recession.
US - based credit ratings firm Standard and Poor's said that five of the 14 Asia-Pacific economies it covers will post positive growth this years, with nine expected to report contractions.
But by next year, all 14 should post year-on-year growh, led by by china's projected expansion of 8-8.5 per cent. The US economy is forecst to contrract by 2.9 per cent this year and grow 1.5 per cent in 2010, it added.
Asian economies were hammered after a crisis in the US housing market sparked global financial and econnomic turmoil late last year.
Some analysts said hte impact on Asia showed that the region's fortunes remain largely linked to the West and tht there would be no recovery until after the industrialised economies had rebounded.
"The pattern we're seeing is that while the US remains a very significant contributor to Asian growth, it has become less significant over time," Subir Gokarn, Standard and Poor's chief economist for the Asia Pacific, said at a recent media briefing in Singapore.
Second-quarter indicators showed the region's recession-hit economies such as Singapore and Hong Kong have returned to the growth path despite sluggish demand from the US and European markets, their main export destinations.
Countries with bigger domestic populations, including China, India, Indonesia, South Korea, the Philippines and Vietnam, have been growing during the global downturn although the pace has slowed.
Japan, the world's second largest economy, lumbered out of recession in the Philippines and Vietnam, have been growing during the global downturn although the pace has slowed.
Japan, the world's second largest economy, lumbered out of recession in the second quarter and Prime Minister Taro Aso credited the government's stimulus package for the achievement.
In contrast, US gross domestic product was estimated to have shrunk 1 per cent in the second quarter, and the eurozone economy dipped a m ilder than expected 0.1 per cent after Germany and France emered from recession.
US - based credit ratings firm Standard and Poor's said that five of the 14 Asia-Pacific economies it covers will post positive growth this years, with nine expected to report contractions.
But by next year, all 14 should post year-on-year growh, led by by china's projected expansion of 8-8.5 per cent. The US economy is forecst to contrract by 2.9 per cent this year and grow 1.5 per cent in 2010, it added.
Asian economies were hammered after a crisis in the US housing market sparked global financial and econnomic turmoil late last year.
Some analysts said hte impact on Asia showed that the region's fortunes remain largely linked to the West and tht there would be no recovery until after the industrialised economies had rebounded.
"The pattern we're seeing is that while the US remains a very significant contributor to Asian growth, it has become less significant over time," Subir Gokarn, Standard and Poor's chief economist for the Asia Pacific, said at a recent media briefing in Singapore.
Thai rebound finally takes hold
The Thai economy emerged from the recession in the second quarter, thanks to a pickup in government spending.
The National Economic and Social Development Board said the Thai economy contracted 4.9% in the second quarter from the same period last year,a slower decline than the 7.1% yearon-year contraction in the first quarter.
The economy posted 2.3% growth in the second quarter from the end of March on a seasonally-adjusted basis,compared with a 1.8% contraction quarter-on-quarter in the first three months of the year and a 5.9% decline in the fourth quarter of 2008.
NESDB secretary-general Ampon Kittiampon said the economy was clearly on the road towards recovery.
According to the state planning agency, government consumption rose 5.9%in the second quarter of this year from a year earlier, an increase from a 3.6%year-on-year rise in the previous quarter.Public investment rose 9.6% year-onyear after contracting 9.1% in JanuaryMarch due to accelerated disbursals by the central government, local governments and state enterprises.
However, agricultural production decreased by 2.7% year-on-year compared with a rise of 3.4% in the first quarter due mainly to the decrease of major crop production such as paddy,sugarcane, and oil palm.
The non-agricultural sector also dropped by 5.0% year-on-year, compared with a fall of 8.1% in the previous quarter.
Sectors with favourable growth were construction and financial intermediation with increases of 2.5%and 5.6%.
Household consumption improved slightly with a drop of 2.3% after contracting by 2.5% in the first quarter partly due to a lower unemployment rate, lower inflation and fuel prices.
"The Thai economy has passed the lowest point. There are signs of recovery in the second quarter in terms of jobless figures, government investment and private construction," he said.
But he forecast the economy would continue to contract in the third quarter before moving into positive territory in the last three months of the year.
"The economy in the second half of the year will improve, even though the GDP in the third quarter will shrink due to a limited global economic recovery affecting Thai exports," he said.
According to the NESDB's the country's economy for the first six months contracted by 6% compared with the same period last year.
The board also revised its growth forecast for 2009 to -3% to -3.5% from its previous estimate of -2.5% to -3.5%.
The agency predicted exports would decline 16.3% this year and imports would shrink by 24.2%, with the trade surplus at US$14 billion. Inflation is forecast at -0.5% to -1%.
Santi Vilassakdanont, chairman of the Federation of Thai Industries, said he was increasingly upbeat on the country's economic prospects in the third and fourth quarters, citing the improving Thai Industries Sentiment Index (TISI) that turned positive in July and the forward-looking TISI index for August to October which exceeds 100.
"Our economy could recover to zero percent, as purchase orders have resumed, manufacturing is rebounding,and the government's new spending is due in the fourth quarter," he said.
The National Economic and Social Development Board said the Thai economy contracted 4.9% in the second quarter from the same period last year,a slower decline than the 7.1% yearon-year contraction in the first quarter.
The economy posted 2.3% growth in the second quarter from the end of March on a seasonally-adjusted basis,compared with a 1.8% contraction quarter-on-quarter in the first three months of the year and a 5.9% decline in the fourth quarter of 2008.
NESDB secretary-general Ampon Kittiampon said the economy was clearly on the road towards recovery.
According to the state planning agency, government consumption rose 5.9%in the second quarter of this year from a year earlier, an increase from a 3.6%year-on-year rise in the previous quarter.Public investment rose 9.6% year-onyear after contracting 9.1% in JanuaryMarch due to accelerated disbursals by the central government, local governments and state enterprises.
However, agricultural production decreased by 2.7% year-on-year compared with a rise of 3.4% in the first quarter due mainly to the decrease of major crop production such as paddy,sugarcane, and oil palm.
The non-agricultural sector also dropped by 5.0% year-on-year, compared with a fall of 8.1% in the previous quarter.
Sectors with favourable growth were construction and financial intermediation with increases of 2.5%and 5.6%.
Household consumption improved slightly with a drop of 2.3% after contracting by 2.5% in the first quarter partly due to a lower unemployment rate, lower inflation and fuel prices.
"The Thai economy has passed the lowest point. There are signs of recovery in the second quarter in terms of jobless figures, government investment and private construction," he said.
But he forecast the economy would continue to contract in the third quarter before moving into positive territory in the last three months of the year.
"The economy in the second half of the year will improve, even though the GDP in the third quarter will shrink due to a limited global economic recovery affecting Thai exports," he said.
According to the NESDB's the country's economy for the first six months contracted by 6% compared with the same period last year.
The board also revised its growth forecast for 2009 to -3% to -3.5% from its previous estimate of -2.5% to -3.5%.
The agency predicted exports would decline 16.3% this year and imports would shrink by 24.2%, with the trade surplus at US$14 billion. Inflation is forecast at -0.5% to -1%.
Santi Vilassakdanont, chairman of the Federation of Thai Industries, said he was increasingly upbeat on the country's economic prospects in the third and fourth quarters, citing the improving Thai Industries Sentiment Index (TISI) that turned positive in July and the forward-looking TISI index for August to October which exceeds 100.
"Our economy could recover to zero percent, as purchase orders have resumed, manufacturing is rebounding,and the government's new spending is due in the fourth quarter," he said.
Monday, August 24, 2009
2010 budget deliberations
House Speaker Chai Chidchob said the House would deliberate the budget for the 2010 fiscal year in the second and third read-ings on Wednesday and Thursday.
He said two days of deliberation should be enough for a final decision.
The government's budget for fiscal 2010 stands at Bt1.7 trillion.
He said two days of deliberation should be enough for a final decision.
The government's budget for fiscal 2010 stands at Bt1.7 trillion.
New monthly pension plan
The Finance Ministry will seek Cabinet approval for a new monthly pension plan aimed at state employees who currently receive only a lump sum upon retirement.
Deputy Finance Minister Pruttichai Damrongrat said yesterday the plan would cover those not belonging to the Government Pension Fund, which covers civil servants and members of the police and military.
Out of 205,478 permanent officials now at work, 8,660 will retire thise year. Only those who have served the government for 25 years and leave when they reach 60 years are eligible to join the new scheme.
Deputy Finance Minister Pruttichai Damrongrat said yesterday the plan would cover those not belonging to the Government Pension Fund, which covers civil servants and members of the police and military.
Out of 205,478 permanent officials now at work, 8,660 will retire thise year. Only those who have served the government for 25 years and leave when they reach 60 years are eligible to join the new scheme.
Saturday, August 22, 2009
Mexico suffers amid US recession
Mexico's economy plunged 10.3% in the second quarter,its deepest contraction on record as withering exports forced factories to slash production and cut jobs.
The year-on-year decline in gross domestic product reported by the national statistics agency on Thursday was the deepest decrease in quarterly GDP in records dating to 1981.
With a downturn in the United States choking off demand for its manufacturing goods, Mexico is on track for its most severe recession since the 1930s. The economy is expected to shrink about 7% this year.
"Exports have declined very sharply and we do not see yet a reaction to the slow improvement in economic activity in the United States," said Claudio Loser,president of the economic think-tank Centennial Group Latin America.
Compared with the first quarter,Mexican GDP fell 1.12%, compounding a recession that has wiped out hundreds of thousands of manufacturing jobs.Some 80% of Mexican exports, including cars and televisions, go to the US.
A severe bout of the H1N1 influenza virus made matters worse, hurting the country's key tourism industry and other services.
"Things are really tough right now,"said Karla Grijalva,22, who was laid off from her job as a secretary six months ago and has yet to find work.
To be sure, there have been some signs of recovery in both Mexico and America.
In the United States, the battered housing sector is showing signs of bottoming out, and manufacturing surveys have been ticking steadily higher.
In Mexico, industrial output is deteriorating at a less drastic clip and consumer sentiment has edged higher from a record low in May.
A separate report released on Thursday showed the economy sank 8.08% in June from a year earlier, a more moderate decline than during the prior two months.
"I expect Mexico's economy to stabilise by the fourth quarter and begin growing by next year, as long as the US economy doesn't fall off a cliff," said Benito Berber, economist for Latin America at RBS Greenwich.
Still, some analysts believe Americans are undergoing a secular shift in their spending patterns, converting a once free-spending nation into one of savers - and boding poorly for a Mexican recovery.
The year-on-year decline in gross domestic product reported by the national statistics agency on Thursday was the deepest decrease in quarterly GDP in records dating to 1981.
With a downturn in the United States choking off demand for its manufacturing goods, Mexico is on track for its most severe recession since the 1930s. The economy is expected to shrink about 7% this year.
"Exports have declined very sharply and we do not see yet a reaction to the slow improvement in economic activity in the United States," said Claudio Loser,president of the economic think-tank Centennial Group Latin America.
Compared with the first quarter,Mexican GDP fell 1.12%, compounding a recession that has wiped out hundreds of thousands of manufacturing jobs.Some 80% of Mexican exports, including cars and televisions, go to the US.
A severe bout of the H1N1 influenza virus made matters worse, hurting the country's key tourism industry and other services.
"Things are really tough right now,"said Karla Grijalva,22, who was laid off from her job as a secretary six months ago and has yet to find work.
To be sure, there have been some signs of recovery in both Mexico and America.
In the United States, the battered housing sector is showing signs of bottoming out, and manufacturing surveys have been ticking steadily higher.
In Mexico, industrial output is deteriorating at a less drastic clip and consumer sentiment has edged higher from a record low in May.
A separate report released on Thursday showed the economy sank 8.08% in June from a year earlier, a more moderate decline than during the prior two months.
"I expect Mexico's economy to stabilise by the fourth quarter and begin growing by next year, as long as the US economy doesn't fall off a cliff," said Benito Berber, economist for Latin America at RBS Greenwich.
Still, some analysts believe Americans are undergoing a secular shift in their spending patterns, converting a once free-spending nation into one of savers - and boding poorly for a Mexican recovery.
Leading indicators show US recession may have ended
A research group's measure of employment, stocks and other indicators suggests that the recession will end this summer, if it hasn't already.
The Conference Board said on Thursday that its index of leading indicators rose 0.6% in July, its fourth straight gain.The measure is meant to project economic activity in the next three to six months.
The indicators suggest the recession has bottomed out, and growth in economic activity will begin soon. Gross domestic product, which has shrunk for four straight quarters, could grow this quarter, said Ken Goldstein, the Conference Board's economist.
"Looks like the recession ended in June," Tim Quinlan, economic analyst for Wells Fargo Securities, wrote in a research note.
The National Bureau of Economic Research, which officially calls the beginning and end of economic cycles,has in the past set an end-date to recessions after several consecutive months of gains in the leading indicators, he said.
"But even when the downturn is over,it's still going to feel like a recession to the average consumer, the average business," Goldstein said.
The US likely saw economic growth early in the current July-September quarter as the "Cash for Clunkers" programme boosted auto sales, said Jennifer Lee,economist with BMO Capital Markets.
An accompanying index meant to measure the current state of the business cycle was flat in July, after dropping for eight straight months, the Conference Board said.
Meanwhile, the six-month growth rate rose to 3% through July, up from 2.1%through June. That's the highest growth rate since mid-2004, the Conference Board said.
However, July's 0.6% growth was slower than the 0.8% rise in July and 1.2% gain in May. Economists polled by Thomson Reuters had expected the indicators to rise 0.7% last month.
Six of the 10 indicators that comprise the index increased in July, including employment data and stock prices.
The biggest gainer was the "interest rate spread," the difference between yields on 10-year Treasurys and the federal funds rate, which the Federal Reserve is keeping at a record low near zero.
The funds rate is the interest banks charge each other for loans. A big difference between it and the 10-year Treasury is viewed as positive because investors are willing to lend for longer periods.
Consumer expectations hindered growth in the Conference Board index last month more than any other factor.Job losses and worries about making mortgage payments continue to weigh on spending by American shoppers,which power 70% of the US economy.
Many private economists and the Fed expect the unemployment rate to hit double digits by next year. The jobless rate was 9.4% in July.
The Labour Department on Thursday said the number of new jobless claims rose to a seasonally adjusted 576,000 last week from 561,000 the previous week.Wall Street economists expected a drop to 550,000, and initial claims need to fall to 325,000 or below to indicate a healthy economy.
Unemployment is exacerbating the problem in housing. Delinquencies and foreclosures hit a record-high during the second quarter, according to the Mortgage Bankers Association. More than 13% of American homeowners are behind on payments or in foreclosure.
That's bad for consumer spending."You're not going to go on vacation or buy yourself new furniture unless you're able to make your mortgage payments," said Lee."The foreclosure problem is definitely going to be a huge overhang. The US consumer is still in poor financial health."
The Conference Board said on Thursday that its index of leading indicators rose 0.6% in July, its fourth straight gain.The measure is meant to project economic activity in the next three to six months.
The indicators suggest the recession has bottomed out, and growth in economic activity will begin soon. Gross domestic product, which has shrunk for four straight quarters, could grow this quarter, said Ken Goldstein, the Conference Board's economist.
"Looks like the recession ended in June," Tim Quinlan, economic analyst for Wells Fargo Securities, wrote in a research note.
The National Bureau of Economic Research, which officially calls the beginning and end of economic cycles,has in the past set an end-date to recessions after several consecutive months of gains in the leading indicators, he said.
"But even when the downturn is over,it's still going to feel like a recession to the average consumer, the average business," Goldstein said.
The US likely saw economic growth early in the current July-September quarter as the "Cash for Clunkers" programme boosted auto sales, said Jennifer Lee,economist with BMO Capital Markets.
An accompanying index meant to measure the current state of the business cycle was flat in July, after dropping for eight straight months, the Conference Board said.
Meanwhile, the six-month growth rate rose to 3% through July, up from 2.1%through June. That's the highest growth rate since mid-2004, the Conference Board said.
However, July's 0.6% growth was slower than the 0.8% rise in July and 1.2% gain in May. Economists polled by Thomson Reuters had expected the indicators to rise 0.7% last month.
Six of the 10 indicators that comprise the index increased in July, including employment data and stock prices.
The biggest gainer was the "interest rate spread," the difference between yields on 10-year Treasurys and the federal funds rate, which the Federal Reserve is keeping at a record low near zero.
The funds rate is the interest banks charge each other for loans. A big difference between it and the 10-year Treasury is viewed as positive because investors are willing to lend for longer periods.
Consumer expectations hindered growth in the Conference Board index last month more than any other factor.Job losses and worries about making mortgage payments continue to weigh on spending by American shoppers,which power 70% of the US economy.
Many private economists and the Fed expect the unemployment rate to hit double digits by next year. The jobless rate was 9.4% in July.
The Labour Department on Thursday said the number of new jobless claims rose to a seasonally adjusted 576,000 last week from 561,000 the previous week.Wall Street economists expected a drop to 550,000, and initial claims need to fall to 325,000 or below to indicate a healthy economy.
Unemployment is exacerbating the problem in housing. Delinquencies and foreclosures hit a record-high during the second quarter, according to the Mortgage Bankers Association. More than 13% of American homeowners are behind on payments or in foreclosure.
That's bad for consumer spending."You're not going to go on vacation or buy yourself new furniture unless you're able to make your mortgage payments," said Lee."The foreclosure problem is definitely going to be a huge overhang. The US consumer is still in poor financial health."
Asia needs to change its mindset
The US-initiated financial crisis should change Asia's economic mindset from one of export-led and GDP-based growth to more self-reliance and sustainability,says 2001 Nobel laureate Joseph Stiglitz.
Asia must be less dependent on exports, particularly to the United States,as its markets are huge and they have great potential to propel growth, said Mr Stiglitz at a United Nations Economic and Social Commission for Asia and the Pacific (Escap) public lecture in Bangkok yesterday.
The ability to absorb technology and the capability to pump Stiglitz: Go for demand and self-reliance supply to accommodate its own national economies should bring about the reorientation of Asia's economic strategy, especially in light of lessons learned from flawed US policy approaches such as GDP-based measures,reliance on non-bank financial institution self-regulation, and improper consumption of natural resources, he said.
The Nobel laureate economist devoted much of his speech to criticism of the George W Bush and Barack Obama stimulus packages and the way the US government bailed out its financial institutions.
However, he did not pinpoint exactly what Asian countries should do to get themselves out of the US-led malaise that has affected the entire world economically.
Mr Stiglitz said it is a time for reflection about how to create a more sustainable global economic architecture - a sort of global reserve fund deviating from the US dollar-based currency approach.
Any stimulus package launched by any government, he said, should not only be designed to suit its particular social and economic conditions but also take account of the global economic environment.
"The national economic multiplier effect is important for a global recovery as well. Small countries cannot just wait for the world to recover," he said.
"It is time that we design a new global financial infrastructure in a democratic manner.
"In a multi-polar world, the efforts need to be bottom-up, but certainly it's going to be a slow and gradual process,"Mr Stiglitz said.
Asia must be less dependent on exports, particularly to the United States,as its markets are huge and they have great potential to propel growth, said Mr Stiglitz at a United Nations Economic and Social Commission for Asia and the Pacific (Escap) public lecture in Bangkok yesterday.
The ability to absorb technology and the capability to pump Stiglitz: Go for demand and self-reliance supply to accommodate its own national economies should bring about the reorientation of Asia's economic strategy, especially in light of lessons learned from flawed US policy approaches such as GDP-based measures,reliance on non-bank financial institution self-regulation, and improper consumption of natural resources, he said.
The Nobel laureate economist devoted much of his speech to criticism of the George W Bush and Barack Obama stimulus packages and the way the US government bailed out its financial institutions.
However, he did not pinpoint exactly what Asian countries should do to get themselves out of the US-led malaise that has affected the entire world economically.
Mr Stiglitz said it is a time for reflection about how to create a more sustainable global economic architecture - a sort of global reserve fund deviating from the US dollar-based currency approach.
Any stimulus package launched by any government, he said, should not only be designed to suit its particular social and economic conditions but also take account of the global economic environment.
"The national economic multiplier effect is important for a global recovery as well. Small countries cannot just wait for the world to recover," he said.
"It is time that we design a new global financial infrastructure in a democratic manner.
"In a multi-polar world, the efforts need to be bottom-up, but certainly it's going to be a slow and gradual process,"Mr Stiglitz said.
ABHISIT UNVEILS NATIONAL PROGRESSIVE INDEX ON A LETTER-BY-LETTER BASIS
Prime Minister Abhisit Vejjajiva yesterday unveiled his new national progressive index at The Nation-sponsored "Asia: Road to a New Economy" conference in Bangkok, which featured Nobel economics laureate Joseph Stiglitz.
Speaking before a packed house at the Plaza Athenee Hotel, Abhisit said his government had been working hard to deliver a sustainable, progressive and caring society for the people of Thailand despite the global economic crisis.
"For many small and medium-size economies, it has been difficult to completely protect ourselves from the global economic crisis despite the hard work we put in as a result of the 1997 economic crisis," he said.
Abhisit said the biggest obstacle in addressing globalisation imbalances was a national sovereignty issue. "If financial instruments and investment can freely flow across borders and no institutions can truly provide global regulations and implement those measures, there is now way we can correct the fundamental problems," he said.
"At the very least, Western countries should respond to the call so that emerging countries should have a fair representation at existing global-level institutions."
The premier also said that although the current market system guaranteed efficiency, no economic theory suggested that the system should be just and guaranteed a fair distribution. "In the market system, food doesn't neccessarily go to the hungry," he said.
All governments, Abhisit said, should consider reorienting their policies. "The issue is not coming up with a single index to replace gross domestic product."
According to Abhisit, governments should be more well-rounded and not obsessed with GDP growth. Financial institutions should also not be obsessed with maximising financial returns.
"What began as mere financial risks led to economic problems that fed the current crises and may easily lead to future social and political problems," he said.
Abhisit said his government had developed its progressive-Thailand philosophy to deal with the current global economic crisis and internal political challenges.
The government, he added, had made good progress on all fronts. "The political situation is stable and all indicators indicate that economic recovery is on the way." The PM said his government would make Thailand progressive by using each letter of the word to denote key goals.
The letter P stands for people, he said. "From day one, when we approached the crisis, we realised all our policies must be people-oriented so that the most vulnerable and poorest are protected."
R is for reconciliation. "We want to ensure that our political system is not an obstacle to recovery and that law enforcement is proficient and fair."
O is for openness. "We want to keep our economy open and not resort to protectionism."
G stands for good governance, because it is clear to everyone that a lack of good governance led to the current and past crises, the premier said.
"Adherence to the rule of law is a fundamental principle of democracy and, together with the promotion of rights and fundamental freedoms, must be high on the agenda," he said.
R stands for regional integration by 2015 so all Asean nations become one large market. "It will contribute to decoupling as more opportunities present themselves to all 10 nations."
E stands for economic recovery. "Our second stimulus package will spend US$45 million [Bt1.53 billion] on infrastructure. It will not only create jobs but also provide a competitive foundation for future growth," he said.
The double S's stand for His Majesty the King's theories on sufficiency economy and sustainable development. "To erase any confusion, sufficiency economy is not about self-sufficiency. It's about living in a balanced manner and living in moderation," he said.
I is for innovation, V for vision and E for education. "Education is a most worthwhile investment and our 15-year free-education initiative will help Thailand build a long-term sustainable economy," he said.
Speaking before a packed house at the Plaza Athenee Hotel, Abhisit said his government had been working hard to deliver a sustainable, progressive and caring society for the people of Thailand despite the global economic crisis.
"For many small and medium-size economies, it has been difficult to completely protect ourselves from the global economic crisis despite the hard work we put in as a result of the 1997 economic crisis," he said.
Abhisit said the biggest obstacle in addressing globalisation imbalances was a national sovereignty issue. "If financial instruments and investment can freely flow across borders and no institutions can truly provide global regulations and implement those measures, there is now way we can correct the fundamental problems," he said.
"At the very least, Western countries should respond to the call so that emerging countries should have a fair representation at existing global-level institutions."
The premier also said that although the current market system guaranteed efficiency, no economic theory suggested that the system should be just and guaranteed a fair distribution. "In the market system, food doesn't neccessarily go to the hungry," he said.
All governments, Abhisit said, should consider reorienting their policies. "The issue is not coming up with a single index to replace gross domestic product."
According to Abhisit, governments should be more well-rounded and not obsessed with GDP growth. Financial institutions should also not be obsessed with maximising financial returns.
"What began as mere financial risks led to economic problems that fed the current crises and may easily lead to future social and political problems," he said.
Abhisit said his government had developed its progressive-Thailand philosophy to deal with the current global economic crisis and internal political challenges.
The government, he added, had made good progress on all fronts. "The political situation is stable and all indicators indicate that economic recovery is on the way." The PM said his government would make Thailand progressive by using each letter of the word to denote key goals.
The letter P stands for people, he said. "From day one, when we approached the crisis, we realised all our policies must be people-oriented so that the most vulnerable and poorest are protected."
R is for reconciliation. "We want to ensure that our political system is not an obstacle to recovery and that law enforcement is proficient and fair."
O is for openness. "We want to keep our economy open and not resort to protectionism."
G stands for good governance, because it is clear to everyone that a lack of good governance led to the current and past crises, the premier said.
"Adherence to the rule of law is a fundamental principle of democracy and, together with the promotion of rights and fundamental freedoms, must be high on the agenda," he said.
R stands for regional integration by 2015 so all Asean nations become one large market. "It will contribute to decoupling as more opportunities present themselves to all 10 nations."
E stands for economic recovery. "Our second stimulus package will spend US$45 million [Bt1.53 billion] on infrastructure. It will not only create jobs but also provide a competitive foundation for future growth," he said.
The double S's stand for His Majesty the King's theories on sufficiency economy and sustainable development. "To erase any confusion, sufficiency economy is not about self-sufficiency. It's about living in a balanced manner and living in moderation," he said.
I is for innovation, V for vision and E for education. "Education is a most worthwhile investment and our 15-year free-education initiative will help Thailand build a long-term sustainable economy," he said.
GLOBAL CRISIS REPRESENTS "FAILURE OF US CAPITALISM"
Nobel laureate Stiglitz calls for new global reserve system
Nobel laureate Joseph Stiglitz yesterday advocated the creation of a new global reserve system that would provide a viable venue for countries to invest surplus funds.
Speaking at an international seminar in Bangkok hosted by the Nation Multimedia Group, he said Asian economies would recover if they were successful in decoupling their dependence on export-led growth to Western economies.
"Developing edication and closing the knowledge and IT gaps will allow Asian economies to sustain future high growth rates," Stiglitz said.
Prie Minister Abhisit Vejjajiva, presided over the opening ceremony of the seminar, entitled "Asia: Road to a New Economy", said economic decoupling would be a big challenge for Asia.
On the US dollar, Stiglitz said the currency's role as a good store of value was now "questionable".
"The current system of using the US dollar as a reserve is in the process of fraying," sais the Nobel laureate.
A new global reserve system should result in more stable, stronger and equitable global growth.
Speaking before a packed house in the Plaza Athenee Hotel, Stiglitz also said the present global economic crisis represented a colossal failure of the unregulated US free market system.
"The current crisis, which is the worst since the Great Depression, represents a failure of American-style capitalism," he said, adding that no one in the West really learned from the 1997 Asian economic crisis, because it did not spread to the developed countries.
He said that most people mistakenly believed that freemarket policies advanced by the Western economies were a success despite the terrible effects they had on countries in the region.
"It reinforced the overall view that the overall system was working," Stiglitz said.
He said in reality, the largely unregulated free-market financial system was working only because of repeated government bail-outs.
The financial markets were repeatedly saved from their failure to allocate capital and manage risk properly.
The present global financial crisis and failure of US-style market capitalism, Stiglitz said, highlights the critical need to rebalance market, state and other stakeholders' roles in society.
"It points out that the basic self-regulation Base II framework was an oxymoron," he said.
Self-regulation simply can not work because oftenuncontrollable "externalities" were pervasive.
"The financial markets have shown thay have enormous external feefects on the rest of the economy,' he said.
The inordinate risks undertaken by a few US banks and insurance companies did not affect only their shareholders.
"Their bad behaviour has devastated our home-owners and taxpayers, costing billions of dollars," he said.
Moreover, their actions have caused often-lethal external effects. Globalisation has led to closer integration, which requires more collective action at the global level.
"However, we don't have the institutions or mindsets to address these problems. We have been building a global economy with out constructing an appropriate legal and institutional framework," Stiglitz said.
He said no organisations had misallocated capital resources as much as the US private sector in the past decade.
"Although innovations are largely good for an economy, the US financial-sector innovations in the past decade did not enhance the economy," he said.
Instruments like creditdefault swaps that were supposed to mitigate risk instead become "financial weapons of mass destruction". As a result, the US now has economic and social problems.
"Almost 2 million Americans have lost their homes," he said.
The financial crisis has highlighted the growing inequality in many nations and the reduction in aggregate demand.
To address the crisis, Stiglitz said national policies must be reformulated.
"We con't say that this has been a once-in-a-100 year storm, because this has been a man-made crisis caused by flawed economic policies," he said.
Governments must begin understanding that materialistic societies based on maximising consumption are not viable.
"Wasting resources to increase consumption is not a sustainable economic model," he said.
Stiglitz praised Thai adn Bhutanese initiatives to develop new ways of measuring economic progress.
"GDP may not be good for measuring economic wellbeing from a broader societal view," he said.
Nobel laureate Joseph Stiglitz yesterday advocated the creation of a new global reserve system that would provide a viable venue for countries to invest surplus funds.
Speaking at an international seminar in Bangkok hosted by the Nation Multimedia Group, he said Asian economies would recover if they were successful in decoupling their dependence on export-led growth to Western economies.
"Developing edication and closing the knowledge and IT gaps will allow Asian economies to sustain future high growth rates," Stiglitz said.
Prie Minister Abhisit Vejjajiva, presided over the opening ceremony of the seminar, entitled "Asia: Road to a New Economy", said economic decoupling would be a big challenge for Asia.
On the US dollar, Stiglitz said the currency's role as a good store of value was now "questionable".
"The current system of using the US dollar as a reserve is in the process of fraying," sais the Nobel laureate.
A new global reserve system should result in more stable, stronger and equitable global growth.
Speaking before a packed house in the Plaza Athenee Hotel, Stiglitz also said the present global economic crisis represented a colossal failure of the unregulated US free market system.
"The current crisis, which is the worst since the Great Depression, represents a failure of American-style capitalism," he said, adding that no one in the West really learned from the 1997 Asian economic crisis, because it did not spread to the developed countries.
He said that most people mistakenly believed that freemarket policies advanced by the Western economies were a success despite the terrible effects they had on countries in the region.
"It reinforced the overall view that the overall system was working," Stiglitz said.
He said in reality, the largely unregulated free-market financial system was working only because of repeated government bail-outs.
The financial markets were repeatedly saved from their failure to allocate capital and manage risk properly.
The present global financial crisis and failure of US-style market capitalism, Stiglitz said, highlights the critical need to rebalance market, state and other stakeholders' roles in society.
"It points out that the basic self-regulation Base II framework was an oxymoron," he said.
Self-regulation simply can not work because oftenuncontrollable "externalities" were pervasive.
"The financial markets have shown thay have enormous external feefects on the rest of the economy,' he said.
The inordinate risks undertaken by a few US banks and insurance companies did not affect only their shareholders.
"Their bad behaviour has devastated our home-owners and taxpayers, costing billions of dollars," he said.
Moreover, their actions have caused often-lethal external effects. Globalisation has led to closer integration, which requires more collective action at the global level.
"However, we don't have the institutions or mindsets to address these problems. We have been building a global economy with out constructing an appropriate legal and institutional framework," Stiglitz said.
He said no organisations had misallocated capital resources as much as the US private sector in the past decade.
"Although innovations are largely good for an economy, the US financial-sector innovations in the past decade did not enhance the economy," he said.
Instruments like creditdefault swaps that were supposed to mitigate risk instead become "financial weapons of mass destruction". As a result, the US now has economic and social problems.
"Almost 2 million Americans have lost their homes," he said.
The financial crisis has highlighted the growing inequality in many nations and the reduction in aggregate demand.
To address the crisis, Stiglitz said national policies must be reformulated.
"We con't say that this has been a once-in-a-100 year storm, because this has been a man-made crisis caused by flawed economic policies," he said.
Governments must begin understanding that materialistic societies based on maximising consumption are not viable.
"Wasting resources to increase consumption is not a sustainable economic model," he said.
Stiglitz praised Thai adn Bhutanese initiatives to develop new ways of measuring economic progress.
"GDP may not be good for measuring economic wellbeing from a broader societal view," he said.
Filipinos lament how far they haven't come
"The poverty is still there. The corruption is still there.Unemployment is still there. I don't see improvement."
When former President Corazon Aquino died this month, Filipinos filled the streets in mourning and in celebration of the golden moment in 1986 when she led them in a peaceful uprising that some called a revolution.
The nation's dictator, Ferdinand Marcos,had fled as masses of people faced down his tanks, and democracy was restored after 20 years of repressive rule. Mrs Aquino, the opposition leader who became president,ushered in wide-ranging political reforms.
But the weeks since her death at the age of 76 have been a period of self-examination and self-doubt among many Filipinos, as they consider how little has really changed since then.
"The legacy is the mess we are in," said F Sionil Jose,84, the nation's most prominent novelist, pointing to continuing poverty,inequality and political disarray as evidence that the nation failed to capitalise on its moment of possibility.
"We have a word for it -sayang -'what a waste'," he said.
In schools, coffeehouses, rice fields,churches and offices around Manila and in the countryside, there seemed to be a shared sense that the people of the Philippines had failed themselves.
"We thought all we needed to do was remove the dictator and do nothing about it," said Teresita I Barcelo, president of the Philippine Nurses Association."We thought the problem was just the dictator. I say the problem is us. We did not change."
Sister Dory Reyes,61, a former Roman Catholic nun and teacher in the farming town of Santa Maria, said:"The poverty is still there. The corruption is still there. Unemployment is still there. I don't see improvement."
The Philippines, with a population of 92 million, is one of the most vibrant nations in Asia, with a flamboyantly free press and a creative, assertive body of independent organisations and interest groups.
But it has not managed to tame its Communist and Muslim insurgencies or its restive military, which seems constantly to be plotting coups. The military has regularly been accused of human rights abuses and disappearances.
And the political arena sometimes seems more like a form of mass entertainment than a place of governance.
Since Mrs Aquino left office in 1992, there have been three presidential elections, two attempts at impeachment, two apparent attempts to stay in power through constitutional change, one popular uprising that ousted an elected president and another that failed.
"We keep coming up with new ways to describe the country," said Sheila Coronel,director of the Stabile Centre for Investigative Journalism at Columbia University in New York, who for years was a leading journalist in the Philippines.
"Democracy in decay, a non-functioning democracy, a challenged democracy," Ms Coronel said, listing some of the epithets."There was a time when the phrase 'illiberal democracy' was fashionable."
Almost nothing in the Philippines escapes politics, and Mrs Aquino's funeral procession on Aug 5 has been widely seen as a protest against the unpopular incumbent president,Gloria Macapagal Arroyo, whose term is scheduled to end next May.
"When Cory's term ended, she did not seek to extend her stay," said Consolacion Paje,53, a housewife, as she stood in the rain with tens of thousands of people to view the funeral cortege, referring to Mrs Aquino by her nickname."That's what makes her different from Gloria. Cory was honest.She had integrity."
Mrs Arroyo is barred from running for a second six-year term as president. But the nation is transfixed by the possibility that she could amend the constitution and stay in power as prime minister in a parliamentary system, a concern she sought to tamp down last month during her state of the nation address.
Despite constant attacks on her, Mrs Arroyo is a ferocious politician, and she has already used her majority backing in Congress to turn aside attempts at impeachment.
With so much energy expended on political theatre, not much progress has been made in improving the lives of ordinary Filipinos in a nation where 30% of the population lives below the poverty line.
"Things get harder and harder every year,"said Ernesto Policarpio,74, a farmer in Santa Maria,20 miles northeast of Manila, who sells snacks and supplies from a stall by his rice field for extra income."But here in the province you don't feel the hard times as much as in the city. Here if you have nothing to eat you can always go to the neighbour and ask for food."
Mr Policarpio said he had worked abroad for a while, as many Filipinos have, earning $2,000 a month as a security guard in Los Angeles until the economy stumbled and he headed home. Eight million Filipinos work overseas, or 25% of the country's work force, its leading export. They send home about $17 billion a year, accounting for 13%of gross domestic product in 2007, according to the World Bank.
Before the financial crisis, the Philippine economy was growing by an average of more than 5% a year, World Bank figures show.But even that was not fast enough to outpace some of the world's worst corruption or a birthrate that will bring the population to an estimated 101 million by 2015.
Many families here depend on remittances from abroad, and an overseas job can be one of the highest ambitions for the upwardly mobile."I'm optimistic," said Danica Canonigo,16, a high school student in Santa Maria."I'm looking forward to another future in another country."
This umbilical connection to the outside world may come in part from the history of the Philippines, which was an American colony for half a century, until 1946, after spending 400 years as a colony of Spain.
"We are not yet a nation," said Mr Jose,the novelist."This is the whole problem.We have all the trappings of a modern state,but we are not yet a nation."
The Philippines remains a collection of fiefdoms and oligarchies and political dynasties that include the children of Marcos and of Mrs Aquino. She was herself elected as the widow of a prominent politician,Benigno S Aquino Jr, who was gunned down at Manila airport upon his return from abroad.
"I'm for Noynoy," said Win Rico,25, who serves coffee at a Starbucks outlet, referring to Senator Benigno S Aquino III, whose name has become a hot item in next year's presidential election manoeuvres since his mother's funeral.
"I think Noynoy is a person who will put our country first," Mr Rico said,"the same as his father and his mother."
When former President Corazon Aquino died this month, Filipinos filled the streets in mourning and in celebration of the golden moment in 1986 when she led them in a peaceful uprising that some called a revolution.
The nation's dictator, Ferdinand Marcos,had fled as masses of people faced down his tanks, and democracy was restored after 20 years of repressive rule. Mrs Aquino, the opposition leader who became president,ushered in wide-ranging political reforms.
But the weeks since her death at the age of 76 have been a period of self-examination and self-doubt among many Filipinos, as they consider how little has really changed since then.
"The legacy is the mess we are in," said F Sionil Jose,84, the nation's most prominent novelist, pointing to continuing poverty,inequality and political disarray as evidence that the nation failed to capitalise on its moment of possibility.
"We have a word for it -sayang -'what a waste'," he said.
In schools, coffeehouses, rice fields,churches and offices around Manila and in the countryside, there seemed to be a shared sense that the people of the Philippines had failed themselves.
"We thought all we needed to do was remove the dictator and do nothing about it," said Teresita I Barcelo, president of the Philippine Nurses Association."We thought the problem was just the dictator. I say the problem is us. We did not change."
Sister Dory Reyes,61, a former Roman Catholic nun and teacher in the farming town of Santa Maria, said:"The poverty is still there. The corruption is still there. Unemployment is still there. I don't see improvement."
The Philippines, with a population of 92 million, is one of the most vibrant nations in Asia, with a flamboyantly free press and a creative, assertive body of independent organisations and interest groups.
But it has not managed to tame its Communist and Muslim insurgencies or its restive military, which seems constantly to be plotting coups. The military has regularly been accused of human rights abuses and disappearances.
And the political arena sometimes seems more like a form of mass entertainment than a place of governance.
Since Mrs Aquino left office in 1992, there have been three presidential elections, two attempts at impeachment, two apparent attempts to stay in power through constitutional change, one popular uprising that ousted an elected president and another that failed.
"We keep coming up with new ways to describe the country," said Sheila Coronel,director of the Stabile Centre for Investigative Journalism at Columbia University in New York, who for years was a leading journalist in the Philippines.
"Democracy in decay, a non-functioning democracy, a challenged democracy," Ms Coronel said, listing some of the epithets."There was a time when the phrase 'illiberal democracy' was fashionable."
Almost nothing in the Philippines escapes politics, and Mrs Aquino's funeral procession on Aug 5 has been widely seen as a protest against the unpopular incumbent president,Gloria Macapagal Arroyo, whose term is scheduled to end next May.
"When Cory's term ended, she did not seek to extend her stay," said Consolacion Paje,53, a housewife, as she stood in the rain with tens of thousands of people to view the funeral cortege, referring to Mrs Aquino by her nickname."That's what makes her different from Gloria. Cory was honest.She had integrity."
Mrs Arroyo is barred from running for a second six-year term as president. But the nation is transfixed by the possibility that she could amend the constitution and stay in power as prime minister in a parliamentary system, a concern she sought to tamp down last month during her state of the nation address.
Despite constant attacks on her, Mrs Arroyo is a ferocious politician, and she has already used her majority backing in Congress to turn aside attempts at impeachment.
With so much energy expended on political theatre, not much progress has been made in improving the lives of ordinary Filipinos in a nation where 30% of the population lives below the poverty line.
"Things get harder and harder every year,"said Ernesto Policarpio,74, a farmer in Santa Maria,20 miles northeast of Manila, who sells snacks and supplies from a stall by his rice field for extra income."But here in the province you don't feel the hard times as much as in the city. Here if you have nothing to eat you can always go to the neighbour and ask for food."
Mr Policarpio said he had worked abroad for a while, as many Filipinos have, earning $2,000 a month as a security guard in Los Angeles until the economy stumbled and he headed home. Eight million Filipinos work overseas, or 25% of the country's work force, its leading export. They send home about $17 billion a year, accounting for 13%of gross domestic product in 2007, according to the World Bank.
Before the financial crisis, the Philippine economy was growing by an average of more than 5% a year, World Bank figures show.But even that was not fast enough to outpace some of the world's worst corruption or a birthrate that will bring the population to an estimated 101 million by 2015.
Many families here depend on remittances from abroad, and an overseas job can be one of the highest ambitions for the upwardly mobile."I'm optimistic," said Danica Canonigo,16, a high school student in Santa Maria."I'm looking forward to another future in another country."
This umbilical connection to the outside world may come in part from the history of the Philippines, which was an American colony for half a century, until 1946, after spending 400 years as a colony of Spain.
"We are not yet a nation," said Mr Jose,the novelist."This is the whole problem.We have all the trappings of a modern state,but we are not yet a nation."
The Philippines remains a collection of fiefdoms and oligarchies and political dynasties that include the children of Marcos and of Mrs Aquino. She was herself elected as the widow of a prominent politician,Benigno S Aquino Jr, who was gunned down at Manila airport upon his return from abroad.
"I'm for Noynoy," said Win Rico,25, who serves coffee at a Starbucks outlet, referring to Senator Benigno S Aquino III, whose name has become a hot item in next year's presidential election manoeuvres since his mother's funeral.
"I think Noynoy is a person who will put our country first," Mr Rico said,"the same as his father and his mother."
Taiwan contraction eases
Taiwan's economy shrank 7.5%in the second quarter from a year earlier,improving from a record contraction in the previous quarter and prompting the government to raise its forecast for 2009.
In a further sign of a gradual recovery,gross domestic product rose 20.69% in the April-June period on a seasonally adjusted, annualised basis, its first growth in over a year, the government said in its first release of such series yesterday.
"It suggests a 10% quarter on quarter growth. I would say this is not surprising at all because you had exports and industrial production that increased significantly in the second quarter. It is mostly external driven and partly driven by," said Qian Wang, economist at JPMorgan in Hong Kong.
Like the rest of Asia, economists expect Taiwan's economy to improve through the rest of the year, with growth likely to return in the fourth quarter, which would be the first expansion since the second quarter of 2008.
The 7.5% drop in GDP was in line with analysts forecast in a Reuters poll but still bigger than South Korea's 2.5%fall, Singapore's 3.5% decline and Hong Kong's 3.8% drop.
"For the full year, Taiwan's economy is now expected to contract 4.04%, its worst performance on record but better than its May forecast for a 4.25% fall,"the statistics agency said.
The weak economy has prompted the central bank to cut interest rates seven times to a record low of 1.25%, though it kept rates steady in March and June partly due to signs that the global economy was bottoming out.
"The economy is expected to grow 3.92% next year," the bank said, with reconstruction from Typhoon Morakot,which triggered the island's worst floods in about 50 years, likely to boost government spending.
A pick-up in external demand will also help the export-reliant economy.
Taiwan's companies make 80% of the world's laptop computers and more than 40% of its liquid crystal displays, or LCDs,used in flat-screen TVs. It is also home to the world's top two contract chip makers, TSMC and UMC.
With the tech sector leading other industries in a global recovery, Taiwan's exports are expected to starting seeing growth in the fourth quarter.
The central bank also said yesterday that Taiwan's second-quarter current account surplus was $9.9 billion, up from a revised $7 billion a year earlier. Taiwan's balance of payments recorded a surplus of $11.82 billion in the second quarter.
In a further sign of a gradual recovery,gross domestic product rose 20.69% in the April-June period on a seasonally adjusted, annualised basis, its first growth in over a year, the government said in its first release of such series yesterday.
"It suggests a 10% quarter on quarter growth. I would say this is not surprising at all because you had exports and industrial production that increased significantly in the second quarter. It is mostly external driven and partly driven by," said Qian Wang, economist at JPMorgan in Hong Kong.
Like the rest of Asia, economists expect Taiwan's economy to improve through the rest of the year, with growth likely to return in the fourth quarter, which would be the first expansion since the second quarter of 2008.
The 7.5% drop in GDP was in line with analysts forecast in a Reuters poll but still bigger than South Korea's 2.5%fall, Singapore's 3.5% decline and Hong Kong's 3.8% drop.
"For the full year, Taiwan's economy is now expected to contract 4.04%, its worst performance on record but better than its May forecast for a 4.25% fall,"the statistics agency said.
The weak economy has prompted the central bank to cut interest rates seven times to a record low of 1.25%, though it kept rates steady in March and June partly due to signs that the global economy was bottoming out.
"The economy is expected to grow 3.92% next year," the bank said, with reconstruction from Typhoon Morakot,which triggered the island's worst floods in about 50 years, likely to boost government spending.
A pick-up in external demand will also help the export-reliant economy.
Taiwan's companies make 80% of the world's laptop computers and more than 40% of its liquid crystal displays, or LCDs,used in flat-screen TVs. It is also home to the world's top two contract chip makers, TSMC and UMC.
With the tech sector leading other industries in a global recovery, Taiwan's exports are expected to starting seeing growth in the fourth quarter.
The central bank also said yesterday that Taiwan's second-quarter current account surplus was $9.9 billion, up from a revised $7 billion a year earlier. Taiwan's balance of payments recorded a surplus of $11.82 billion in the second quarter.
STRATEGY OF PARTNERSHIP URGED AHEAD OF SINGLE MARKET
Thailand's private sector is being urged to draw up strategies to make the most of the opportunities that will be made available once Asean countries form a single market and production base.
Kiat Sittheeamorn, president of the Office of the Trade Representative, Kiat Sittheeamorn said Thai manufacturers should learn to look beyond the domestic market.
"The private sector should be enthusiastically seeking partners in each country and planning how to utilise each country's resources and markets to expand their businesses. If the private sector takes serious action in setting up these strategies, the government will introduce measures such as tax incentives to support them in the future," he said.
Kiat was speaking at the "Opportunity from Asean Economic Community" seminar held at the Foreign Ministry yesterday.
He said once this financial crisis was over, trade focus would shift more toward China instead of the United States, so Asean+3 (which includes Japan, China and South Korea) should prove to be beneficial for Thai operators.
"China has become the No-1 trading partner in every Asean country. Plus China is trying to increase the significance of the yuan, instead of the US dollar, in the global trading market particularly in Southeast Asia," he explained.
Aat Pisarnvanich, director of the International Trade Studies Centre, University of the Thai Chamber of Commerce, said small and medium enterprises (SMEs) in the Thai service sector were facing the risk of losing their competitiveness after the Asean free-trade agreement is put into effect next year.
"We will allow Asean investors up to 71 per cent ownership in aviation, health, IT and tourism industries as well as up to 51 per cent in logistics business. Thai SMEs should realise this and prepare for intense competition in the near future," he said.
Similarly, he said, Thailand's upstream industries should move to other Asean countries in order to utilise their resources and minimise production costs.
"Operators in processed food, fishing and forestry industries have expanded their production bases in Laos, Burma, and Indonesia because of the plentiful natural resources. This is the direction Thai operators should be aware of. Meanwhile, more foreign investment will pour into Thailand particularly in IT and logistic businesses," he added.
He added that the government should focus on developing the country's infrastructure, which is quite poor when compared to other Asean countries.
Kiat Sittheeamorn, president of the Office of the Trade Representative, Kiat Sittheeamorn said Thai manufacturers should learn to look beyond the domestic market.
"The private sector should be enthusiastically seeking partners in each country and planning how to utilise each country's resources and markets to expand their businesses. If the private sector takes serious action in setting up these strategies, the government will introduce measures such as tax incentives to support them in the future," he said.
Kiat was speaking at the "Opportunity from Asean Economic Community" seminar held at the Foreign Ministry yesterday.
He said once this financial crisis was over, trade focus would shift more toward China instead of the United States, so Asean+3 (which includes Japan, China and South Korea) should prove to be beneficial for Thai operators.
"China has become the No-1 trading partner in every Asean country. Plus China is trying to increase the significance of the yuan, instead of the US dollar, in the global trading market particularly in Southeast Asia," he explained.
Aat Pisarnvanich, director of the International Trade Studies Centre, University of the Thai Chamber of Commerce, said small and medium enterprises (SMEs) in the Thai service sector were facing the risk of losing their competitiveness after the Asean free-trade agreement is put into effect next year.
"We will allow Asean investors up to 71 per cent ownership in aviation, health, IT and tourism industries as well as up to 51 per cent in logistics business. Thai SMEs should realise this and prepare for intense competition in the near future," he said.
Similarly, he said, Thailand's upstream industries should move to other Asean countries in order to utilise their resources and minimise production costs.
"Operators in processed food, fishing and forestry industries have expanded their production bases in Laos, Burma, and Indonesia because of the plentiful natural resources. This is the direction Thai operators should be aware of. Meanwhile, more foreign investment will pour into Thailand particularly in IT and logistic businesses," he added.
He added that the government should focus on developing the country's infrastructure, which is quite poor when compared to other Asean countries.
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