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Seminar: Stimuli to cut downside risks

Posted by pakin On October - 3 - 2014 ADD COMMENTS

Hope is private sector will be motivated

The government’s recently announced economic stimulus measures are expected to cut downside risks to Thailand’s growth this year and help to drive next year’s growth to 4.8%, says the Bank of Thailand.

But central bank governor Prasarn Trairatvorakul cautioned the effects of the measures would probably emerge only next year, as the disbursement amount for the rest of this year was small.

He was speaking at a seminar in Bangkok hosted by Siam Commercial Bank’s Economic Intelligence Center (SCB EIC).

The government on Wednesday approved a 364.5-billion-baht stimulus package including expediting 129 billion baht in disbursements from the fiscal 2015 investment budget, taking leftover funds from the Thai Khem Khaeng project to spend on repair work under the Education and Public Health ministries as well as on irrigation projects, and a cash handout of up to 15,000 baht per rice farming household.

The measures are aimed at boosting growth in the fourth quarter for a full-year figure of 2%.

The package has received a favourable response, as the measures reduce risks associated with the government’s budget disbursement since they ensure public spending is just one of the essential factors driving the economy.

Although the government can theoretically disburse its fiscal budget at 91.7%, the rate is usually lower, so any move to increase the disbursement rate will help to reduce downside risks to the economy, Mr Prasarn said.

“This is a sign of the government’s intention of stimulating the economy, and it’s hoped this will build up private-sector confidence,” he said.

“If the private sector follows suit in terms of spending and investment, this will help to support the positive momentum.”

Private spending and investment typically accounts for a higher proportion than public spending.

The central bank recently slashed its economic growth forecast for next year to 4.8% from 5.5% due to potentially lower-than-expected domestic consumption, private investment and exports.

Public spending is expected to be the main driving force in boosting the economic momentum.

The measures do not distort market forces, while the implementation process will be short term, Mr Prasarn said.

Regarding the decision by the military-appointed State Enterprises Policy Commission to allow the central bank to supervise specialised financial institutions, he said plans were still being prepared, and clearer plans would be discussed with the Finance Ministry.

Sutapa Amornvivat, an executive vice-president of SCB and chief economist at the SCB EIC, said the economic stimulus measures were expected to support the economy in the short term, as they were not conducive to debt accumulation and did not distort market forces.

A “multiplier effect” is expected to occur to some degree since the measures are aimed at stimulating economic activity at the grass-roots level, she said.

Ms Sutapa has proposed three strategies to for sustainable growth in the country.

They are pushing the country towards greater innovation in the supply chain, exploring new markets and adjusting to match the country’s changing demographics.

Education and labour development are necessary to reach annual economic growth of 5% in the long run, she
said, adding that otherwise annual
growth would average about 3% from 2014-20.

In addition, Ms Sutapa urged local business operators to adjust their strategies to cope with the country’s ageing society.

At the same time, Generation Y consumers, born from 1981-2000 and representing 28% of Thailand’s population, will be a major new market, she added.

Experts pinpoint tourism setbacks

Posted by pakin On September - 17 - 2014 ADD COMMENTS

Experts with long experience in the tourism industry have outlined two major problems that have been holding back the sector for many years and need to be reformed for long-term competitiveness.

The first problem is that data and statistics provided by official bodies is inaccurate, and the second is that political power over the tourism sector is too centralised.

“These are the biggest problems for the Thai tourism industry and have been hurting the entire sector for decades. As a result, the industry is now facing the risk of collapse and losing its strength,” one senior expert said.

These two big issues were raised in response to the appointment of a new tourism minister, Kobkarn Wattanavrangkul.

Members of this high-profile group claim 30-50 years of experience in the industry, some in the Tourism Authority of Thailand, as well as major hotel players and representatives of key travel firms and private-sector associations.

According to Apichart Sankary, former president of the Association of Thai Travel Agents (ATTA), certain authorities have forced organisations to provide unrealistic data, especially on international arrival numbers, or often provide only optimistic information to public.

He claimed that some information given out by officials was inaccurate. One mistake is counting one-day cross-border trippers as tourists. Moreover, arrivals are not categorised clearly, such as whether they are for business, leisure, long stays and so on, but are counted as one category, “tourist”.

For instance, the official number of international arrivals between January and August this year was 15 million, down from 17 million in the same period last year, or a 10-per-cent drop. But ATTA’s statistics showed that arrivals during those eight months plunged by 40 per cent year on year.

“Officials are claiming high numbers of tourist just for budgetary reasons,” he said.

One hotelier, who declined to be named, said the tourism industry had been dominated by a single political party for about 12-15 years. He strongly advised the government to reform the travel sector by cleaning up inaccurate statistics and data and providing real information to the public as well as business operators.

ML SuravutThongthaem, senior vice president for development and owner relations for Southeast Asia at Onyx Hospitality Group, urged the government to enhance human-resource development and also consider issuing some regulations to preserve local management in order to strengthen long-term competitiveness.

Crackdowns urged

Crackdowns on illegal hotels, apartments and residences should also be carried out ahead of the opening of the AseanEconomic Community next year.

Furthermore, improvements in infrastructure and connectivity are needed as soon as possible, while tourist security is another issue to consider. “Those who are going invest overseas should have full support from the government,” he added.

Kobkarn on Monday assured her team and the private sector that her ministry would continue working to increase arrivals and tourism revenue. She also will promote a transparent working system while reducing duplication of tasks in the ministry’s departments.

The new minister plans to promote secondary tourist cities to help small and medium-sized businesses, promote tourism through social media and online channels, and make immigration procedures less time-consuming.

Thais have high expectations of the new Cabinet, but to maintain that confidence, the military-appointed ministers will need to facilitate state spending and do something about falling crop prices, said the University of the Thai Chamber of Commerce (UTCC)’s survey.

The UTCC survey found that the Thai Consumer Confidence Index (CCI) had improved for the fourth consecutive month in August, to 80.1 points compared with 78.2 in July. The August figure, though still below the 100-point baseline, was the highest in 13 months.

Rising consumer confidence last month was attributed to the appointment of junta leader General Prayuth Chan-ocha as prime minister and a new Cabinet, lowering of fuel prices, a positive outlook for next year’s economic expansion, the stable policy interest rate, a rising stock market, and slight appreciation of the baht.

Athough confidence is on the rise, the UTCC found consumers had high expectations on future economic growth, meaning the new government will need to stimulate disbursement of the state budget and reverse the slide of agricultural prices very quickly.

“The dropping prices of rubber and rice are major negative factors that could affect consumer confidence in the near future. The new government should urgently proceed on budget disbursement, as about Bt100 billion is still waiting in the pipeline, to promote domestic economic growth,” said Thanavath Phonvichai, director a the UTCC’s Economic and Business Forecasting Centre.

Accelerating state spending, particularly to renovate tourist attractions nationwide, should help increase people’s incomes and stimulate employment in local communities, he said. He said the price of rice was a worrisome problem because it involved a very large proportion of the population. Now that subsidies have been discontinued, the government should stabilise the rice price to ensure it does not fall below Bt8,500-Bt9,000 per tonne so that farmers can see some profit and not suffer from production losses.

The falling price of rubber is also a problem that needs to be solved soon; otherwise, it could affect spending power for people in many regions, including the South, the North and the Northeast.

However, with politics stabilised by the military’s overthrow of the elected government, the UTCC foresees that consumer confidence will continue to rise into next year, barring serious negative factors such as a conflict between Russia and Ukraine driving up world oil prices.

The UTCC forecasts that gross domestic product will grow by 5 per cent in the final quarter of this year, resulting in full-year growth of 1.5-2 per cent. Next year, the Kingdom’s economy is expected to expand by 4-5 per cent, based on hopes of export growth between 5 and 7 per cent.

Based on the UTCC survey of 2,252 respondents, confidence in employment opportunity rose from 71.7 points to 73.6 last month, while confidence in future incomes improved from 94.6 to 96.4 points.

Distressed people send SOS to junta

Posted by pakin On July - 3 - 2014 ADD COMMENTS

Rallies were held outside the Royal Thai Army Headquarters yesterday, seeking the help of the National Council for Peace and Order (NCPO) to deal with financial and work-related issues.

The protesters included a Thai helicopter pilot group wanting the NCPO to act against foreign pilots working for nominee firms, despite the profession being reserved by law for Thais. Another group of Bangkok city workers said they were in heavy debt due to the city’s retrospective order to cut salaries; and a third were dispossessed villagers from Buri Ram.

The helicopter pilots, led by labour union president Kiattipoom Saengthi, claimed nominee companies in the past decade had hired foreign pilots to fly in Thailand, accounting for 50 per cent of jobs, especially in oil-drilling bases off the Gulf. They wanted the NCPO, which is now regulating migrant workers, to check on foreign pilots.

The Bangkok Metropolitan Administration employees, led by Choti Khiewchan, said they were affected by the BMA’s December 2013 order reducing salaries of 500 city workers with retrospective effect from April 1, 2010.

The workers, whose pay cheques have been shrinking since January, were told on April 10 to sign their approval within 15 days for retrospective deduction from their current salaries or face lawsuits, Choti said.

The group wanted the BMA to explain the three-year retrospective salary cut, which was unfair because none of the workers had done any wrong, he said. The city tried to deduct Bt30 million from the workers’ current salary total – a six-digit figure in baht per worker, he added.

“We get smaller pay cheques and are forced to pay a “debt”, while the BMA did not probe or punish the persons who had caused this damage. The BMA holds the workers accountable for a wrongdoing they didn’t do. Low-ranking workers have no bargaining power and have families to take care of; some have less than Bt100 left after all cuts,” Choti said. If the BMA persisted, the group would file a lawsuit with the Administrative Court for a temporary injunction, he added.

A group of villagers from tambon Lam Nang Rong in Buri Ram’s Noen Daeng district sought the NCPO’s help in dealing with the Forestry Department. They said department officials had driven them out of a eucalyptus plantation whose concession to a private sector had expired. The villagers had settled in a 500-family community there since 2007.