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Leaders call for currency action

Posted by arnon_k On October - 7 - 2010 ADD COMMENTS

Business leaders yesterday expressed frustration at the failure of the government and the Bank of Thailand to handle the baht’s rise and called for more measures to be taken, especially to help severely affected exporters.

“The continued appreciation of the exchange rate clearly reflects that measures introduced by the Bank of Thailand are not effective enough to stem its rise,” said Pornsil Patcharintanakul, deputy secretary-general of the Thai Chamber of Commerce.

“I think it is beyond the central bank’s capacity to prevent the baht to rise further as the inflows are so huge, while the dollar could depreciate for years as the US government wants to boost exports.”

He said the faster-than-expected baht appreciation would certainly dim the outlook for exports in the last four months of the year. In baht terms, the government’s target of 20% growth for exports this year looks unlikely.

Mr Pornsil said the private sector would like to see tax breaks for affected companies, especially those in the food and textile industries, which are losing competitiveness to regional rivals.

Payungsak Chartsutipol, chairman of the Federation of Thai Industries (FTI), said the strengthening of the baht to a range of 29 against the dollar was a bad level. “We have stated many times that the BoT should be responsible in making sure that the baht moves in line with other currencies in the region. But the central bank is not doing enough to help,” he said.

The FTI yesterday held talks with the Finance Ministry to propose measures to help exporters. These included soft loans, reducing time-charter rates and making it easier for exporters to trade in foreign currencies.

The ministry is expected to make a decision by the end of this week.

Commerce Minister Porntiva Nakasai said her officials would meet Finance Ministry and central bank officials this week to discuss more measures to assist exporters after receiving information from commercial advisers worldwide about the impact of the strong baht.

The Department of Export Promotion is planning to launch 200 projects to boost this year’s exports by 10% to 200 billion baht, she added.

Foreign businesses say they have been seriously affected by the strong baht.

“Foreign and Thai companies have been hurt, especially in industries using local raw materials. Mostly they don’t have profits left,” said Deepak Mittal, a member of the trade policy committee at the Board of Trade.

“I think it is difficult for the BoT to decide whether to introduce stronger measures that might result in harmful reaction. Let’s hope the government will find a solution that is win-win for all.”

Nandor von der Luehe, chairman of the Joint Foreign Chambers of Commerce in Thailand, expressed concern that exports, which account for 70% of gross domestic product, might not be as strong as expected because of the baht’s rise.

Given regional competitiveness, Thailand has not been affected much as most regional currencies have gained as the dollar has weakened, he added.

PTT pressured to end Carrefour bid

Posted by arnon_k On September - 22 - 2010 ADD COMMENTS

Cabinet questions state enterprise role

PTT Plc may abandon its bid to purchase the assets of the Carrefour retail chain in Thailand in the face of pressure from cabinet members.

Ministers yesterday questioned whether it was appropriate for the majority state-owned oil company to bid against the private sector.

The issue arose after prime Minister Abhisit Vejjajiva asked Energy Ministry officials on Monday whether PTT had received approval from its board to pursue the Carrefour deal.

Vachara Kannikar, a deputy government spokesman, quoted Energy Minister Wannarat Channukul as telling the cabinet that PTT would scrap its bid because retailing was not a core business of the company.

Mr Abhisit said PTT executives should consider carefully whether to go ahead because its large capital and state enterprise status _ it is also the largest listed company on the Stock Exchange of Thailand _ gave it advantages over private companies.

“At a time when the economic structure is changing very fast, a state-owned enterprises should be very careful with any move as sometimes the investment may not be for the national interest but rather for the state enterprise itself,” said Mr Abhisit.

Also bidding for the French retailer’s 43-store network in Thailand, estimated to be worth 16-19 billion baht, are Central Group, the SET-listed trading group Berli Jucker (BJC), and the French retail chain Casino.

PTT executives declined to comment yesterday on the latest developments.

Mr Wannarat said that even though PTT had entered the second round of bidding for Carrefour, PTT’s board had yet to approve the bidding intention.

He said the board and not the Energy Ministry should have the final say on whether to proceed.

Another source quoted Finance Minister Korn Chatikavanij as saying that while PTT Plc was a listed company, it was still majority state-owned.

Since the 2007 Constitution prevents state enterprises from competing with private companies, PTT might be on shaky legal ground, Mr Korn said.

“Also, retail is not PTT’s core business and it also is not related to energy security. Thus PTT should not bid for Carrefour,” he said.

Mr Wannarat said PTT reasoned that it was interested in the retail business as a way to diversify risk away from heavy dependence on fuel.

Shares of PTT closed yesterday on the SET at 287 baht, up three baht, in trade worth 1.54 billion baht.