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Haj delays prompt inquiry

Posted by arnon_k On October - 15 - 2010 ADD COMMENTS

An inquiry is being launched into flight delays that have left more than 2,000 haj pilgrims stranded at Hat Yai International Airport.

Culture Minister Nipit Intarasombat said yesterday the problem had arisen because the Civil Aviation Department had allowed Iran Air and Mahan Air to fly Thai pilgrims to Mecca.

The permission was in breach of a cabinet resolution that authorises Thai Airways International to select airlines to carry pilgrims, the minister said.

Mr Nipit said Iran Air and Mahan Air were not permitted to fly across the airspace of some countries or to land at Jeddah airport in Saudi Arabia. This was causing delays to trips.

The airlines also each had only one aircraft available to fly pilgrims, so they were having to fly back and forth between Saudi Arabia and Thailand.

Mr Nipit said he suspected certain influential figures had put pressure on the Civil Aviation Department to allow Iran Air and Mahan Air to share in the flights.

Suthas Thitiraweewong, head of the haj affairs centre at the Southern Border Provinces Administration Centre, said delays to flights to Mecca at Hat Yai stemmed partly from airlines’ red tape.

PAD’s Pathompong, Joy report to CSD

Posted by arnon_k On October - 15 - 2010 ADD COMMENTS

Former armed forces chief adviser Pathompong Kesornsuk and actress Siriluck Pongchoke, better know as Joy, on Friday morning reported to Pol Col Sanit Mahathavorn, deputy commander of the Crime Suppression Division, to acknowledge charges of involvement in the occupation of Suvarnabhumi and Don Mueang airports in late 2008, reports said.

They were accompanied by lawyers Nitithorn Lamluea and Natthaporn Toprayoon. About 30 yellow-shirts showed up at the Crime Suppression Division in a show of support for the two suspects, according to the reports.

Gen Pathompong, who is retired, said he is not heavy hearted about the charges, as by his action he had been calling for democracy and for the protection of the high institution.

One company of commando police was deployed to maintain law and order.

Panel considers 5-baht price reduction

Posted by arnon_k On October - 12 - 2010 2 COMMENTS

The proposal to reduce the sugar price by five baht a kilogramme will likely be opposed by sugarcane planters at a panel meeting next week, says an Industry Ministry source.

A panel chaired by Deputy Prime Minister Trairong Suwannakhiri will discuss the situation with the Cane and Sugar Fund, with the main topic being the five-baht reduction in price.

The Cane and Sugar Fund is scheduled to complete its debt repayment to the Bank for Agriculture and Agricultural Co-operatives (BAAC) next month, and the Commerce Ministry wants the price reduction made at that time.

The Samak Sundaravej government in 2008 approved a five-baht increase in sugar prices to help cane farmers repay their debts, as the price hike went to the fund.

“The issue of sugar price reduction has come up because the cane price for the 2010-11 season is expected to fall from last year if the baht strengthen further below 30 to the US dollar,” said Prakit Pradipasen, co-chairman of the dialogue and chairman of the Three Sugar Millers Associations.

Kamthorn Kitichotisub, president of the National Federation of Sugarcane Planters, said the baht appreciation has made a serious impact on cane planters, as they will hardly see sugar priced at 1,000 baht per tonne in the new harvest season.

“Someone should do something about this,” he said, adding that talks have begun with the Cane and Sugar Fund about whether to provide loans to sugarcane planters.

The Industry Ministry source said sugarcane planters do not want to scrap the five-baht levies and also do not want the fund to provide more loans. Instead, they want an extension of debt repayment terms.

Meanwhile, the source said the Thai Beverage Industry Association supports the idea of scrapping the levy, but the panel is expected to support cane planters, who have gained political support.

Two-thirds of sugar produced in Thailand is exported and priced in dollars. Therefore, the strengthening baht will cause sugar exporters to earn less.

The Thai Sugar Millers Corp (TSMC) is also concerned the stronger baht will affect sugarcane planters, as 70% of their income is generated from sugarcane sales.

“Every one baht rise against the dollar will cause the selling price of sugarcane to decline by about 23 baht a tonne,” said Mr Prakit, who is also the TSMC chairman.

If the baht is at 30.50 to the dollar, initial prices of sugarcane in the 2010-11 season are estimated to be 977.56 baht a tonne. If it strengthens to 29.50 to the dollar, the price will drop to 954.01 baht a tonne. And if the currency rises to 29 baht to the dollar, the price will fall even further to 942.24 baht per tonne.

The initial price of sugarcane in the 2009-10 season was 1,102 baht a tonne on average.

Bond yield tax weighed

Posted by arnon_k On October - 12 - 2010 ADD COMMENTS

Levy on foreigners likely to slow inflows

The Finance Ministry is studying the pros and cons of scrapping a long-standing waiver on capital gains taxes for foreign investors in the local bond market, says Deputy Finance Minister Pradit Phataraprasit.

If completed in time, a package of measures aimed at assisting businesses adversely affected by the appreciation of the baht, together with new tax measures to deter speculative inflows would be considered by the cabinet today, he added.

The study follows reports Finance Minister Korn Chatikavanij may propose to the cabinet a new measure to control foreign capital inflows to slow the pace of the appreciating baht, coupled with tariff measures to ease the burden on Thai small and medium-sized business entrepreneurs (SMEs).

Mr Pradit said one idea being considered is to scrap the current exemption on capital-gains taxes for fixed-income investments for foreign investors, and unify tax rules with the 15% capital gains tax paid on investments by Thai individuals.

In any case, the government this week is expected to announce a plan of assistance measures to help SMEs with limited resources to hedge against currency risk or who have been particularly affected by currency movements due to low import content.

“We still have a lot of topics that need to be discussed as there are pros and cons to each tactic. Any group of measures can provide a different outcome,” said Areepong Phucha-oom, permanent-secretary for the Finance Ministry.

The baht and other regional currencies have gained strongly against the dollar this year due to trade surpluses and capital inflows as investors seek to take advantage of higher yields in Asia’s high-performing economies.

With interest rates in the US and Eurozone near zero, investment capital has poured into the region to profit from higher interest rates as well as stronger prospects for capital gains and currency appreciation due to stronger economic fundamentals.

Imposing a capital gains tax would effectively reduce the yields on investments and the attractiveness of local debt. Government bond yields yesterday corrected sharply on reports that authorities are considering a capital gains tax, with the five-year bond yield jumping 16.69 basis points to 2.71594% and the 10-year bond up 12.22 points to 3.12437%.

One hundred basis points is equal to one percentage point. Bond yields move opposite to prices.

The baht has become a political flashpoint in recent months, with industry groups warning that the stronger currency will hurt the country’s export competitiveness over the next several months.

On the other hand, a strong baht reduces the cost of imports, in particular oil, and also eases inflationary pressure within the economy, giving leeway to the central bank to maintain lower interest rates.

Mr Pradit said authorities would co-ordinate programmes with state-controlled banks to develop hedging instruments for private businesses.

Dusit Nontanakorn, chairman of the Thai Chamber of Commerce, said local businesses were having trouble setting export prices due to the volatility in currency rates.

“When you set the selling price today, the actual delivery won’t be for another two months, and who knows what the baht will be then,” he said.

“[An exporter] might profit 5% or 10% from a sale and be happy. But if the baht appreciates 10% over the same period, it means a loss. Sometimes you can only accept the loss, just to help maintain the customer relationship.”