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Burma’s President Thein Sein in first European visit

Posted by Nuttapon_S On February - 26 - 2013 ADD COMMENTS

Burma’s President Thein Sein is set to embark on his first European tour, where he is expected to engage in high-level European Union talks.

The president will fly to non-EU state Norway and then visit Finland, Austria, Belgium and Italy, say officials.

He is expected to firm up bilateral ties and discuss Burma’s reform process and rights-related issues, reports say.

Last year, Thein Sein visited the US, the first Burmese leader to do so in 46 years.

He is expected back in Burma on 8 March.

Western sanctions against Burma have been loosened following the nominally civilian government’s series of reforms since the end of outright military rule in 2011.

These include freeing hundreds of prisoners – political detainees among them – and introducing more press freedom.

The US, the EU and Australia, among other countries, have already eased most sanctions against Burma.

In April, the EU lifted all non-military sanctions for a year during a visit by foreign policy chief Catherine Ashton.

Later in the year, European Commission chief Jose Manuel Barroso also offered Burma more than $100m (£66m) in development aid.

Thein Sein’s trip comes after opposition leader Aung San Suu Kyi visited Europe last June as part of a landmark tour, in what was seen as a milestone for Burma’s political progress.

Ms Suu Kyi, now a member of parliament, was under house arrest for more than two decades. She visited the UK, Switzerland, Ireland, France and Norway, where she accepted her 1991 Nobel peace prize.

Barcelona star Lionel Messi says his team need to “pull themselves together” if they are to overcome Real Madrid in Tuesday’s Copa Del Rey semi-final.

Barca snatched a crucial away goal to draw the first leg 1-1 in the Bernabeu.

But the Catalans lost 2-0 to AC Milan in the Champions League last week and have failed to keep a clean sheet in their last 11 matches.

“Against Madrid we will have to produce our best football as we will be against a great rival,” said Messi.

Barca have dipped from their usual high standards of late, following their shock defeat in Milan with a stuttering 2-1 home win over Sevilla.

Messi, whose winner against Sevilla was his 38th league goal of the season, wants Barca to put those under-par displays out of their minds against their greatest rivals.

“We need to get back to playing how we were doing before and not think about what happened in Milan or the Sevilla game,” he said.

“We have to pull ourselves together because there are some decisive games coming up.

“The cup and the Champions League are down to us and we aren’t concentrating on the opposition. Physically the team is in good shape and I am used to playing in all the games.”

Real beat Barcelona in the 2011 Copa Del Rey final but were beaten in the last eight last season by Barca, who went on to win the trophy.

Wednesday’s meeting is the first of two “Clasicos” this week with the two teams meeting in La Liga at the Bernabeu on Saturday.

But with Barcelona already 16 points clear of third-placed Real in the league, the Cup represents Madrid’s best chance of domestic silverware.

Despite Barca’s recent travails, Real coach Jose Mourinho does not believe it is a good time to be facing the Catalan side.

“There is no good moment when two great teams clash – Barca are always a very important rival,” he said.

“From that point of view when you take them on is immaterial.”

Mourinho said midfielder Xabi Alonso and striker Karim Benzema were fit again after missing their 2-1 away victory over Deportivo La Coruna on Saturday through injury.

Atletico Madrid and Sevilla meet in the second semi-final on Wednesday, with Atletico leading 2-1 from the first leg.

BOT sees no benefit from dropping rates

Posted by Nuttapon_S On February - 26 - 2013 ADD COMMENTS

Governor sends a strong signal that no change in interest rates is likely soon

Keeping the policy rate at its current level at its next meeting would mean the central bank is running with the tide, not against it, Bank of Thailand Governor Prasarn Trairatvora-kul has indicated.

Speaking at The Nation Exclusive Insights for CEOs on “Baht Watch 2013”, he explained why the interest rate cannot be lowered – telling the 32 guests a lower interest rate wouldn’t stabilise the baht or help the country in the long term.

Starting with an overview of the global foreign exchange market, which is influenced by quantitative easing by developed economies, he explained the “impossible trinity” (also known as the ‘trilemma’) – interest rate autonomy, capital mobility and exchange rate stability.

Striving for public trust after the disastrous 1997 financial crisis, the Bank of Thailand puts interest rate autonomy as a priority.

In this scenario, as Thailand draws more capital to finance domestic economic expansion, there is restriction on capital inflow. That means exchange rates would be a victim, to move in line with changes in capital flows.

“We can’t have them all,” the central banker told the CEOs during the event at the Dusit Thani Hotel last Friday.

The governor also sent a strong signal that the situation would not be changed soon. Resisting the urge for a switch from inflation targeting to exchange rate targeting, he insisted the interest rate had proved it could control the monetary condition well, while exchange rate instruments posed a problem of controllability. Performing well in reducing output and inflation volatility, the interest rate policy in Thailand provided adequate flexibility in economic and financial stability.

“We acknowledge the government’s concern that the baht appreciation will impact the country’s exports. Anyway, we cannot rely on only one strategic tool to solve two particular problems. We need to trade off,” Prasarn said.

“We (the Bank of Thailand), however, agree to undertake further discussion with the government to integrate our tools together in solving the country’s financial and economic problems in the future,” he said.

Prasarn gave the example of 1997 when the BOT tried to fully pursue all three objectives – interest rate autonomy, free capital mobility, and exchange rate stability – which proved to be the central bank’s worst failure.

He said the BOT currently employed interest rates as the main policy instrument based on three criteria for appropriate monetary policy instruments, which are the ability to control monetary policy conditions and to mitigate the impact from the economic cycle to ensure growth and inflation stability.

It was flexible in responding to shocks, and could be used in combination with other policy tools.

Interest rates appear to be a more appropriate instrument in the Thai context under the ‘flexible inflation targeting’ regime. Interest rates had proved to be able to control monetary conditions well, while the exchange rate instrument was limited in controllability.

Bank of Thailand research supported this, he said. Foreign capital was flowing into Thailand mainly because of investor confidence (15 per cent), expected baht appreciation (15 per cent), economic conditions (11 per cent) and implied dollar/ baht volatility (10 per cent).

The weight of interest rate differential is only 3 per cent as well as inflation (3 per cent).

In another scenario, among 12 economies in Asia, Thai real rates are the third lowest by 0.64 per cent, higher than only those of Singapore (4.02 per cent) and Hong Kong (3.27 per cent). To the governor, the interest rate is already low, being at the point that encourages speculation in some sectors, particularly the stock market and condominiums, as real interest rates have been in negative territory for some time.

Prasarn said that the too-low interest rate environment was likely to be a source of financial imbalance build-up as it induces domestic investors to shift their investments into more risky assets.

He said the Thai baht was currently fairly valued from the market’s view. However, current concerns, which may affect financial stability and private consumption in the future, are the rise of credit and household debt, especially auto and personal loans.

New South Korea president warns the North

Posted by Nuttapon_S On February - 26 - 2013 ADD COMMENTS

SEOUL – Park Geun-Hye became South Korea’s first female president Monday, vowing zero tolerance with North Korean provocation and demanding Pyongyang “abandon its nuclear ambitions” immediately.

As leader of Asia’s fourth-largest economy, Ms Park, the 61-year-old daughter of late military strongman Ms Park Chung-Hee, faces challenges of slowing growth and soaring welfare costs in one of the world’s most rapidly ageing societies.

Taking the oath of office less than two weeks after North Korea carried out its third nuclear test, Ms Park Geun-Hye called on the regime in Pyongyang to “abandon its nuclear ambitions without delay” and rejoin the international community.

“North Korea’s recent nuclear test is a challenge to the survival and future of the Korean people, and there should be no mistake that the biggest victim will be none other than North Korea itself,” she said.

“I will not tolerate any action that threatens the lives of our people and the security of our nation,” Ms Park said, while promising to pursue the trust-building policy with Pyongyang that she had promised in her campaign.

“I will move forward step by step on the basis of credible deterrence,” she added.

Media reports from Seoul said that Prime Minister Yingluck Shinawatra congratulated the new president with a wish she would be a successful woman leader.

The two then moved into a private room for talks. South Korean sources said Ms Park may have raised the hope that South Korean firms would get contracts in the post-flood water-management schemes.

Ms Yingluck, spokesmen said, pressed the idea of a Comprehensive Economic Partnership Agreement between Thailand and South Korea, as well as expanding bilateral trade to US$30 billion by 2016, a goal already set last year.

Ms Yingluck left Seoul Monday night for Hong Kong, and another two-day official visit.

Observers say Ms Park’s options will be limited by the international outcry over the North’s February 12 nuclear test, which has emboldened the hawks in her ruling conservative party who oppose closer engagement.

There was no immediate reaction from Pyongyang, but an editorial Monday in the ruling Workers’ Party newspaper Rodong Sinmun carried a clear message for Ms Park to avoid the “confrontational” policies of her predecessor Lee Myung-Bak.

“Inter-Korean relations have become so tense that the Korean peninsula is threatened with armed conflict,” the newspaper warned.

Monday’s two-and-a-half hour inauguration ceremony, held on a chilly and cloudy morning, included a musical warm-up concert that saw Korean rapper Psy perform his global hit “Gangnam Style”.

President Park took office a little more than 50 years after her father, a vehement anti-communist, seized power in a military coup.

Park Chung-Hee ruled with an iron fist for the next 18 years until his assassination, and remains a divisive figure — credited with dragging the country out of poverty but reviled for his regime’s human rights abuses.

The bulk of Ms Park’s inauguration speech focused on the economy, and included commitments to job creation, expanded welfare and “economic democratisation” at a time of growing concern with income and wealth disparity.

South Korea’s extraordinary economic revival from the rubble of the 1950-53 Korean War — known as the “Miracle on the Han” — has faltered in recent years, with key export markets hit by the global downturn.

Promising “another miracle”, Ms Park said her administration would build a new “creative economy” that would move beyond the country’s traditional manufacturing base and focus on science and technology.

In a clear warning to the giant, family-run conglomerates, or “chaebols”, that dominate the national economy, Ms Park promised a more level playing field and a “fair market” where small and medium-sized businesses could flourish.

“By rooting out various unfair practices and rectifying the misguided habits of the past which have frustrated small business owners… we will provide active support to ensure that everyone can live up to their fullest potential,” she said.

Chaebols such as Samsung and Hyundai were the original drivers of the nation’s industrialisation and economic growth, but have been criticised as corporate bullies who muscle out smaller firms and smother innovation.

South Korea’s journey from war-torn poverty to economic prosperity has done little to break the male stranglehold on political and commercial power in what in many ways remains a very conservative nation.

As South Korea’s first female president, Ms Park leads a country that is ranked below the likes of Suriname and the United Arab Emirates in gender equality.