Buriram Expats
Buriram Province - General Category => Jobs, economy, banking, business, investment in Buriram => Topic started by: Admin on September 12, 2008, 05:50:03 PM
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Foreign investors still keen to invest in Thailand but waiting for clarification
12 Sep 2008
Most foreign investors still keen to invest in Thailand
BANGKOK, Sept 12 (TNA) – Most foreign investors are still keen on investing in Thailand, but want to wait and see how political developments unfold for a time following the imposition of the State of Emergency Decree in the capital, according to a top securities executive.
Vorapak Tanyawong, president of J.P. Morgan (Thailand) Co, said he met with investors in the United States in a road show organised after the decree was declared and found most continued to view Thailand as an attractive investment spot.
However, they indicated that they would wait to see what actually takes place on the political situation for a while based on two reasons.
Firstly, the US economic conditions remain adversely affected by that country's sub-prime lending crisis. Recently the US government has financially assisted mortgage giants Fannie Mae and Freddie Mac. The move helped ease financial problems both ailing institutions are facing, but only to a limited extent.
Secondly, the ongoing political turmoil in Thailand, especially the imposition of the decree, has been closely monitored by foreign investors, who see the current political situation in Thailand as an unusual phenomenon.
Mr. Vorapak said the imposition of the decree in no way helped to curb the gathering of the People's Alliance for Democracy (PAD)-led protesters, nor did it boost public confidence.
He viewed the sooner the decree is lifted, the better the situation will be, and ventured that the new government must have clear-cut policies, especially regarding fiscal and monetary matters, if it wanted to boost foreign investor confidence.
Mr. Vorapak said the Stock Exchange of Thailand (SET) composite index had already dropped to a very low level.
Thai stock prices are considered quite low when compared with returns, which are higher than those of many countries in the region, so he advised investors to gradually accumulate stocks and hold them until their prices rise again. (TNA)
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2009 exports likely to outpace forecast
Bangkok Post: 13/9/2008
Exports next year are set to expand beyond their original 10% target, as shipments have been only affected marginally by political uncertainty, the Department of Export Promotion reported.
Importers from the US and Japan have also switched some orders to Thailand from China and Vietnam where costs are rising, said Piramol Charoenpao, the department's deputy director-general.
''Some items like leather goods have seen costs go up in China to comply with environmental requirements, thus US and Japanese importers are switching orders to Thailand,'' said Ms Piramol, adding that Vietnam's high inflation also pushed up the costs of its goods.
Demand from new markets, including the Middle East, South Africa and Western Europe has been strong, she added.
''We checked the data every month and found exports had grown in almost every item this year,'' she said. ''The political stalemate has had some psychological impacts on business confidence but there has been no drastic impact.''
Rail workers went on strike recently as part of the anti-government protests, while services at the Bangkok Port in Klong Toey were suspended for three days because of port's labour strike.
''We have assigned overseas trade representatives to explain to our trade partners that their orders will not be affected by the current situation,'' said Ms Piramol. ''Rail and short-term port strikes have yet to delay shipment delivery but made costs for exporters rise.''
Ms Piramol said the department would meet next week to possibly hike the 2009 target. This year, exports are projected to rise 12.5% to $171.1 billion.
''Absolutely, this year's target will be achieved. Now next year's target growth of 10% is considered too low,'' she said.Techa Boonyachai, vice-chairman of the Thai National Shippers' Council, said exporters had stayed in close touch with their foreign buyers regarding political uncertainties and the strikes.
The port strike cost 4,500 baht to move each container to Laem Chabang, 120 km southeast of the capital, he said.
''Those who import materials or parts to assemble here for exports would possibly see their shipments delayed. Businesses have to better address risks for the time being,'' he said.
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Lehman Brothers collapse to have low impact on Thai banks
The Nation: 16/9/2008
Lehman fiasco to have low impact on Thai banks: BOT
US investment bank Lehman Brothers' move yesterday to file for bankruptcy will have only a limited effect on Thai banks, due to the low volume of mutual transactions, says a Bank of Thailand official said.
Deputy governor Bandid Nijathaworn said losses could top Bt4.5 billion on top of a Bt4.3-billion exposure to financial papers issued by Lehman.
As of July, Thai banks' foreign investments totalled Bt102 billion, only 1.3 per cent of the banking sector's assets.
Even though some banks have had off-balance sheet transactions with Lehman, with a face value of Bt5.3 billion, any potential loss is expected to be less than Bt100 million.
Thai banks have been advised to monitor the situation closely in the next few months to be able to take prompt action. Bandid said it was not clear if all transactions with Lehman and its subsidiaries and affiliates would be subject to asset devaluation. If so, Thai banks would need to set aside additional capital.
Another risk factor lies in capital moving out of the Kingdom, because US banks are mobilising funds. However, Bandid said the Thai banking system was strong enough to withstand the negative impact, with a 15.2-per-cent capital-adequacy ratio and excess liquidity.
"The direct impact is quite limited and does not affect performance and stability of the banking system," he said, declining to name the Thai banks that have exposure to Lehman.
Bandid also believes the Lehman fiasco would not bring about systematic effect as feared, given the Federal Reserve Board's financial window to investment banks. Yet, if the turmoil is prolonged, it could lead to a credit crunch and the global economy could be affected.
He believed that Thai banks would withstand the negative impact, as 70 per cent of their funds are from domestic deposits.
Santi Vilassakdanont, chairman of the Federation of Thai Industries, expected the Lehman collapse to lead to more sell-offs of Thai shares. There has been no impact yet on Thailand's exports, he noted.
"This will definitely hit investment sentiment in Thailand. While the US is injecting money to address the problem, Thailand must also quickly address the political problems to restore investor confidence," Prasert Bunsumpun, president of the Federation of Thai Capital Market Organisations.
In the past 3-4 months, foreign sell-offs have exceeded Bt100 billion while market capitalisation has plunged 20 per cent. Though listed companies showed higher profits and are cheap, foreign investors could remain on the sidelines if political problems persisted.
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Bank of Thailand satisfied on liquidity
Bangkok Post: 24 Sep 2008
BoT satisfied with liquidity
There is still ample liquidity in local money markets to support the Thai economy, Bank of Thailand governor Tarisa Watanagase said yesterday.
"There is no need to inject added liquidity into the markets," she said.
Dr Tarisa added that turmoil on Wall Street over the past month would have a negligible impact on the Thai financial system and that capital outflows were low compared with other countries in the region.
Major central banks around the world have been injecting hundreds of billions of dollars into the international money markets to stave off a complete seizure of credit markets in the wake of the Lehman Brothers' bankruptcy and the near-collapse of insurance giant AIG.
Dr Tarisa stressed that the exposure of Thai banks to Lehman Brothers was insignificant compared with their total balance sheets.
The central bank has estimated that Thai banks hold just seven billion baht worth of Lehman Brothers investments or forward exchange contracts.
Total outstanding foreign assets held by Thai banks are also quite small, at just US$7 billion. Dr Tarisa said that a number of banks were in the process of unwinding their overseas positions to reduce risk.
Meanwhile, the appreciation of the Thai baht is being driven by weakness in the US dollar, which has fallen against most currencies over recent days as investors forecast prolonged difficulties for the US economy as the costs of the financial crisis increase.
The baht yesterday was quoted at 33.74/80 baht to the US dollar, a one-month high. Last week the currency was among the best performers in the region against the dollar.
"The fact that the baht appreciated stronger than other regional currencies may reflect the fact that foreign capital outflows from Thailand have been less than from other countries in the region," Dr Tarisa said.
She brushed off concerns that the central bank may have difficulties working with Suchart Thadathamrongvej, the presumed successor to Surapong Suebwonglee as Finance Minister.
Dr Suchart, an economist and academic, was a strong critic of the central bank's move to raise interest rates earlier this year to help curb inflation.
But Dr Tarisa said she did not expect any problems. "The central bank is confident that it can work with anyone. There are no conflicts," she said.
Meanwhile, Vachira Aromdee, director of international economics for the Bank of Thailand, said regional central bankers were in agreement that the US financial crisis would have a modest impact on the region.
Last weekend in Bangkok, the Bank of Thailand hosted the 27th Seanza Governors' symposium, which brought together central bankers from 20 countries in the Asia Pacific, Australia and New Zealand.
Mrs Vachira said while the fallout from the US crisis was expected to be mild for the region, central bankers agreed that more aggressive policies were required to help accommodate the rise in volatility in financial markets.
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Crisis what crisis
TBWG sawadi
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Crisis what crisis
TBWG sawadi
If only the dollar could talk... :D Now the US government's $700bn emergency bail-out of the banking industry collapsed in disarray as Congress voted against the plan, sending Wall Street stocks plummeting and spreading ripples of shock through the global financial markets.
Thats not gonna be easy..thats for sure . helpsos
and to our local thai economy news: :laugh:
arrowright Thai stocks rebound regaining much of earlier losses
: 30 Sep 2008
Thai Cabinet acts to boost stock market investment incentives
BANGKOK, Sept 30 (TNA) - In an attempt to calm jittery investors after the US House of Representatives rejected a US$700 billion Wall Street bailout, the Thai cabinet on Tuesday approved several measures to encourage investment in the Stock Exchange of Thailand (SET).
Deputy Prime Minister Olarn Chaipravat told the weekly cabinet meeting that short-term measures would be issued to address the impact on the Thai financial system from the US financial crisis.
On the capital market, the SET, which plunged 33.11 points to 568.18 on opening Tuesday following a huge loss on Wall Street after US lawmakers rejected the US administration's emergency bailout plan, will urge investors not to panic because the Thai bourse still has strong fundamentals.
Thai share prices rebounded steeply before closing 0.79 percent lower on Tuesday as investors cautiously awaited further news of the US plan to curb its financial crisis, dealers said.
The SET composite index lost 4.75 points to close at 569.54 points, while the blue-chip SET-50 index slid 3.34 points to 417.23.
The government and SET-backed mutual funds such as energy and government pensions will lead in buying strong fundamentals and lower-priced stocks to prevent their prices from retreating too much.
The finance ministry will consider expanding as well as exempting taxes for investments in the retirement mutual fund and the long-term equity fund during the last quarter of 2008 with the objective to encourage investors to venture in them as well as in the stock market.
Regarding the possible problem of capital outflows in terms of foreign currencies after stock sales by foreign investors, there should be no problem because Thailand has more than US$100 billion in foreign reserves.
If a crisis does occur, the finance ministry still can borrow money from neighbouring countries on a government-to-government basis, while the Bank of Thailand (BoT) will monitor to see that Thai financial institutions have sufficient liquidity.
The finance ministry will ensure that government-run financial institutions to extend credits to general borrowers and small- and medium-sized enterprises.
In the long-term, Thailand will cooperate with its fellow members in the Association of Southeast Asian Nations (ASEAN) to borrow money on long-term basis.
Reiterating that Thailand has no liquidity problem, BoT governor Tarisa Watanagase said lending by financial institutions in August grew 13 per cent while non-performing loans stood at only 3 per cent.
Local commercial banks have borrowed only 1.3 per cent of their total borrowings from overseas which, according to Mrs. Tarisa, is not much.
Regarding financial woes being faced by Belgium's Fortis, she said the group had extended only Bt167 million in credits to Thai financial institutions, while its business commitments totaled Bt2.5 billion which is still low.
Meanwhile, Atchana Waiquamdee, deputy BoT governor, said the central bank would inject cash into its financial market to help financial institutions in case it is hit badly by the global credit crisis. (TNA)
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The GOOD News:
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Special thanks to Mr.Obama,Billions will be just enough for Buriram Expats.. love1
AIG to sell its stakes in Thai insurance
Bangkok Post: 6 Oct 2008
AIG to sell its stakes in Thai insurance, bank businesses
Succumbing to the US financial crisis, American International Group Inc (AIG), one of the region's leading life insurers, yesterday acknowledged it is preparing to sell its stake in its regional life insurance and consumer finance banking arms.
The company is looking for a strategic investor to hold a minority stake in Hong Kong-based AIA Holding, which owns the Thai life insurance unit American International Assurance (AIA), the country's largest life insurer, through AIA Hong Kong.
AIG is also considering selling its consumer finance businesses as part of efforts to raise funds to repay a US$85 billion government bailout.
"We anticipate it will be sold on a regional level," said Thomas White, executive vice-president and general manager of AIA Thailand.
"We are looking for a partner to support our growth in Asia. For the non-life business, we will not take any strategic partner."
AIG Retail Bank president and CEO Charly Madan said the new partner for the consumer finance business will possibly buy stakes from the group's parent firm (AIG Consumer Finance Group) and take over all the Asian operations, or it could buy the Thai unit individually.
Percentage of stakes to be sold are not yet available, but for AIA, Mr White said minority stakes could range from 1% to as much as 49%.
In Asia, AIA operates in China, Australia, Brunei, Guam, Hong Kong, India, Indonesia, Japan, Macau, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.
Despite the anticipated shareholder restructuring, Mr White insisted the change would not affect the operations of AIA Thailand, adding that a new strategic partner would instead bring value to AIA Thailand.
"We confirm that AIA Thailand's assets will remain in Thailand," said Mr White. "What we are selling only is just a minority stake of the holding firm of the regional operations of AIA in Hong Kong, not assets [of AIA in particular countries].
"On top of that, AIA Thailand has no authority to sell assets or transfer any funds to help its parent without the approval of the industry's regulatory body.
"We can't sell assets, transfer any funds or even remit profits to foreign parent firms on our own," said senior vice-president and deputy general manager Anucha Laokwansatit. "They first need the approval of the regulatory body - the Office of Insurance Commission (OIC) - even for foreign investments."
Chantra Purnariksha, secretary-general of the OIC, noted yesterday the regional shareholder restructuring is unlikely to affect AIA's financial status or its policyholders.
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Bank of Thailand holds rates steady
Bangkok Post: 8 Oct 2008
Central bank holds rates as growth slows
The monetary policy committee of the Bank of Thailand announced on Wednesday it had decided to maintain the key policy interest rate at 3.75 per cent per annum.
The MPC cited persisting inflationary pressures and risks to economic growth.
However, the central bank committee said it expects a notable increase in farm income and lower inflation in coming months that could improve consumers' purchasing power and support a continued economic growth.
In a statement accompanying the monetary policy announcement, the central bank said the latest economic data up to August pointed towards a slowdown in the Thai economy, due to both domestic and external demand.
Economic growth in the second quarter eased to 5.3 per cent year-on-year from 6.1 per cent in the first quarter. On a seasonally adjusted basis, gross domestic product climbed just 0.7 per cent in the second quarter, compared with 1.3 per cent growth in the first quarter.
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I read in the news and see on television all the trouble and strive in the world financial markets. It's terrible and frightening at the same time. What will become of us all? I only want to know one thing: Why? Why are we is such trouble now? What happened to all the money that is needed to bail out financial giants? Where did it go? Who has it now? Not the bail-out money but the money that was there in the first place and seemed to have dissapeared. Why? I turn on the BBC or watch CNN and all I hear is that stock markets fell through the floor. Nobody explains where the money went. Can someone here tell me?
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No answers so far.
Let me put the figure of 700 Billion dollars in perspective:
With that money you can:
Give the entire population of earth appox. $108 each or
the entire population of Europe $965 each or how about this…
$10,688 for every person in Thailand or
$455,515 for every person in Buriram!
Buy 2,058,823 2008 Rolls-Royce Phantom Sedan, enough to give every person in the metropolitan area of Stockholm each a Roller
It will buy 952,380,952 tonnes of rice at current prices. Thailand consumes 10 million tonnes of rice per year. You can buy enough rice to feed Thailand for 95 years at current population figures.
Buy a fleet of 2,140 Airbus A380’s.
Or build:
70,000 small hospitals at 10 million a piece or
7,000 large city office building at 100 million a piece
700,000 Huge houses in the suburbs at a million dollars a piece or (that's in the U.S.A.) or 1,400,000 medium sized houses
That's a huge sum of money and would be noticed if it got lost. Who is to blame? And why didn't I get my share?
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I think there has been no reply because nobody really knows. The money is still there it is just not flowing, after all, lets take Shell for instance it is still the same company it was 3 months ago, it still has the same infrastructure, still has the same oil deposits but the company value is now less due to the reduced share price. So was the additional value ever there in the first place! The additional value was in confidence not actual assets.
So if a lot all savers cash was invested in stocks .. Poof! jumping3 half of it has gone overnight!
It will come back but it will take time .. for me I am all for the 700 billion dollars Buriram option :biggrin: and I am on my way back now to collect the family share, used notes please!
All of the above might be absolute drivel but that is how I understand it.
TBWG sawadi
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So if a lot all savers cash was invested in stocks .. Poof! jumping3 half of it has gone overnight!
Gone where? It wasn't destroyed. It must be somewhere in someone's bank account = earning interest. Just let them give it back. I must be ignorant, but it makes no sence to me. Someone is making a lot of money somewhere..... :wacko:
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So if a lot all savers cash was invested in stocks .. Poof! jumping3 half of it has gone overnight!
Gone where? It wasn't destroyed. It must be somewhere in someone's bank account = earning interest. Just let them give it back. I must be ignorant, but it makes no sence to me. Someone is making a lot of money somewhere..... :wacko:
All this situation is so funny,its just show how all the system built , speculants and gambling games on the people's money.. well,maybe not so funny after all........ confused1
In the mean time... party11
Bank of Thailand affirms liquidity in the system plentiful
Bangkok Post: 11 Oct 2008
Liquidity ample despite sharp falls in SET: BoT
The ongoing sharp declines of the Stock Exchange of Thailand (SET) do not pose a significant threat to liquidity in the market, short-term interest rates, the baht currency or to domestic financial institutions, Bank of Thailand (BoT) deputy governor Bandid Nijathaworn said Saturday.
His remarks were made after the SET composite index fell heavily this week by 138.09 points or 23.4 per cent from Friday last week on investor concerns over global financial crisis and Thailand's persisting political problems.
Stricter lending controls by local commercial banks should be considered as normal as banks do not want to see non-performing loans, he said.
However, liquidity in the system is still plentiful while lending growth is still at a double-digit which is satisfactory, he noted.
The BoT will, however, monitor the liquidity situation to ensure that lending by financial institutions is not affected, Mr. Bandid said.
As several sectors want the BoT to lower its one-day policy rate currently at 3.75 per cent by between 50 or 100 basis points in line with recent rate reductions imposed by central banks in oversea, he said the decision by the central bank to maintain its rate was resulted from retreating inflation risks while local financial institutions did not encounter much financial problems. (TNA)
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Thai banks to benefit from global turmoil
Bangkok Post: 14 Oct 2008
Thai banks to benefit from turmoil
Companies likely to look locally for loans
Local banks could be beneficiaries from the global financial turmoil in early 2009 as foreign banks are likely to scale back operations due to constraints in their home markets.
Kannikar Chalitaporn, the president of Siam Commercial Bank, said the bank would increase corporate loan activity in 2009.
Funding demand in the domestic market was expected to increase in 2009 as the international markets remain uncertain, she said.
"Large companies will turn to raising funds locally rather than going abroad. Under this assumption, SCB will focus more on wholesale and corporate banking in 2009," Mrs Kannikar said.
Small and medium-sized business loans and retail banking will likely slow in 2009 due to the global economic slowdown, she said. Falling export growth and tourism arrivals would also hurt the Thai economy and potential growth for consumer banking.
Mrs Kannikar said given the volatility in the global market, SCB had tightened its credit lending practices and risk management.
"Liquidity in the market has tightened, and the loan market will not be open for everyone. Businesses should plan for this in setting their funding plans for 2009," she cautioned.
Krung Thai Bank president Apisak Tantivorawong agreed that local banks would have greater growth opportunities in the corporate and syndicate loan market as a result of the crisis.
"Only Krung Thai Bank can provide loans of up to 30 billion baht per corporate customer," he said.
But Mr Apisak agreed that the trend towards tighter market liquidity and higher funding costs would act as a constraint on businesses.
TMB Bank president Boontuck Wungcharoen said local banks would limit term loans for large financial projects more than foreign institutions.
Local banks typically set terms for up to five years, compared with 10 to 20 years for overseas banks, he said.
"Funding mismatches will remain a constraint for local banks in lending services," Mr Boontuck said, adding he expected more syndicated loans with other Asian financial institutions in 2009.
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Northeast farmers and business tell Thai govt to 'make economy the focus'
The Nation: 30 Oct 2008
'Make economy the focus'
The government is being urged by the Northeast Chamber of Commerce to pay more attention to economic stability than political stability, as the public is in need of advice and assistance to adjust to the global economic crisis.
"Little has been said about the economy. The government should stop taking care of only its own business," said secretary-general Taweesan Lonanurak, who urged the government to dispatch teams to different areas to gauge the extent of the worsening situation.
His main concern is over spiralling unemployment, which could reach 2 million nationwide next year, and the decline in commodity prices.
While farmers in the North suffer from lower corn prices, those in the Northeast have witnessed a drop in tapioca prices and those in the South suffer from cheaper para-rubber prices.
More than 20,000 workers are without jobs in Nakhon Ratchasima, prompting the province's officials to work hard to find them alternative employment.
However, Preecha Inthornchathorn, a job-placement official in the province, insists the number of unemployed is not at a critical level, as it represents only a tiny portion of the province's population of 2.7 million.
Most of the unemployed have a bachelor's-degree education, he said.
Recently, a Nakhon Ratchasima jewellery factory was shut down and 120 workers laid off. An electronic-parts manufacturer also launched a voluntary programme to shed 115 workers.
Preecha said the office was monitoring whether these employers were complying with the labour law in expelling workers. Meanwhile, a list of vacant jobs is being offered to the laid-off employees, he added.
The office will also approach companies and factories to survey their employment needs.
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EARLIER REPORT:
BAAC worries over wild swings in farm product prices
The sharp twists and turns in the fortunes of farmers due to the global financial crisis has made executives of the Bank for Agriculture and Agricultural Cooperatives (BAAC) jittery.
While farmers' incomes jumped when prices of farm products rose sharply early this year, the situation has now reversed, with farm prices plunging along with that of crude oil.
Crude oil prices have plummeted because fears of a global recession fear have affected demand for oil.
"We're concerned about debt repayment that will be due in December and March," acting president Ennoo Suesuwan said yesterday.
Farmers may buy goods on credit when prices of rice, rubber and other farm products are rising and run into financial trouble when prices drop, said Ennoo.
The prospect is also bleak, due to the threat of a sharp global economic slowdown next year.
"We cannot rely on the export market, as our competitors, such as Vietnam, recently cut their rice price sharply," said Ennoo.
The BAAC has sent its staff to meet farmers and advise them on how to cope with the fast changing environment. If they cannot repay their debt, the bank will undertake debt restructuring for them, he said.
In the past six months of its fiscal year (April to September), the bank lent farmers Bt183.8 billion, exceeding its target by 80 per cent.
The surge in lending has largely been driven by the government policy to boost the economy at the grass roots level, Ennoo said. With the government continuing to direct state owned banks to lend more, the BAAC plans to lend more than Bt100 billion in the present fiscal year.
The bank has also provided financial support for the government's price intervention scheme, in order to shore up farm product prices. At the latest rice pledging, the government is guaranteeing a price of Bt12,000 a tonne for paddy rice.
In the past six months, the BAAC has mobilised deposits worth Bt10.38 billion. It plans to raise more by launching lottery savings products. Next month, the bank will issue lottery deposits, with each unit worth Bt100 at interest of 1.5 per cent for a three year deposit. Each unit could also win a lottery, with a first prize of Bt1 million and total prizes worth Bt13.25 million.
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Govt urges Bank of Thailand to cut interest rate
The Nation: 7 Nov 2008
SUCHART URGES BOT TO CUT RATE
Finance Minister Suchart Thadathamrongvech has urged the Bank of Thailand (BOT) to slash its policy interest rate of 3.75 per cent to below the deposit interest rate. He said the central bank should also reduce bond issues to financial institutions and buy back bonds from primary dealers in the repurchase marke
His recommendations follow concerns over liquidity in the economy as the government's additional budget deficit of Bt100 billion could suck out liquidity, discouraging borrowing by the real sector.
Suchart said in the economic slowdown the deposit interest rate should be higher than the repurchase interest rate.
The BOT's breakdown of bond issues along with the bond repurchase would improve liquidity in the real economy, which would help boost economic growth. About Bt1.5 trillion of BOT bonds have been in the banks' portfolio, he said.
"The government needs to issue the bonds to finance the budget deficit and the rice pledge worth a total of Bt110 billion. If the central bank does not reduce the bond issues, the liquidity will not be enough," he said.
The minister said he had already given his suggestions to the central bank, but the final decision depended on the BOT.
The minister earlier called for collaboration of fiscal and monetary policies to boost the economy amid the global economic slowdown. The minister said he was worried that shortage of liquidity would dent private investment.
Bank of Thailand Governor Tarisa Watanagase said separately that the banking system's lending has incessantly risen, with a 13.5percent growth in September.
The expansion has been reflected both in loans for consumers and the business sector's working capital and investment.
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Bank of Thailand likely to cut rates
Bangkok Post: 18 Nov 2008
BoT will likely cut policy interest rate: Tarisa
The Bank of Thailand (BoT) will likely adjust its economic forecast and key economic indicators and cut the policy interest rate because of the grave global economic crisis, BoT governor Tarisa Watanagase said on Tuesday.
According to Mrs Tarisa, the central bank on October 8th projected that Thailand’s economy in 2008 and 2009 would expand by 4.3 to five per cent and 3.8 to five per cent respectively. The assessment was based on the information from the second quarter, but the figures could lessen because many factors had changed in the third quarter, she noted.
The central bank previously forecast that the country’s economic growth rate in the third quarter of 2008 was between five and 5.3 per cent, but it was slashed to only four to 4.5 per cent mainly due to the consequences from the economic downtrend worldwide.
The International Monetary Fund (IMF) foresaw that the global economic growth in 2009 would be only 2.2 per cent, down by 0.8 percent from its previous forecast in October. Economic figures in many countries in Europe as well as Japan were also adjusted downward, and Thailand’s export sector would be hit more severely than expected.
The gross domestic product (GDP) growth rate and the policy interest rate will be revised at the Monetary Policy Committee meeting on December 3, Mrs Tarisa said.
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Bank of Thailand to cut rates today
Bangkok Post: 3 Dec 2008
Interest rate cut expected today
The financial market expects the Bank of Thailand to reduce its benchmark one-day repurchase interest rate by between 25 and 50 basis points today, even though the economy has deteriorated quickly in the past few months.
According to the central bank, the manufacturing sector and capacity utilisation declined sharply in October as exports fell faster than expected. Business sentiment indicators and imports also pointed to a trend of moderating private investment.
Meanwhile, headline inflation in November fell to the lowest level in 14 months at 2.2% year-on-year in light of weakening domestic demand due to increasing unemployment and eroding economic confidence.
Kobsith Silapachai, a Kasikornbank executive for economic research and capital markets, said the central bank's Monetary Policy Committee (MPC) might not cut its rate as aggressively as many had expected because it could weaken the baht in light of the unfolding global financial crisis. It is likely to cut the interest rate by a quarter percentage point from 3.75% to 3.50%, he believes.
"The central bank might want to be more careful about foreign reserves which decreased by $2 billion between Nov 14 and 21 because of risk aversion in the world market," he said.
"We have a slimmer current account surplus, and there is risk in terms of income opportunity."
The MPC, he added, was unlikely to view monetary policy, instead of fiscal policy, as the priority for stimulating domestic demand.
In any case, Mr Kobsith said, the economy might not be as bad as some fear due to global and political factors.
"Real GDP [gross domestic product] might still expand although nominal GDP may not grow at all. Low inflation could help stimulate domestic consumption," he said, based on a scenario that inflation could turn negative in 2009.
Credit-rating agencies' revisions of Thailand's sovereign credit ratings are likely to pose a higher risk of outflows of short-term external debt, now totalling $20 billion, in the future, he added.
Ariya Tiranaprakij, an executive vice-president for the Thai Bond Market Association, said bond investors had anticipated the MPC would cut rates by a quarter to half a percentage point today, resulting in a significant decline in yields during the past few days.
In addition, local institutional investors have shifted from equities to bonds in that period.
"Yields differ very little between five-year government bonds, which are at the lowest since the beginning of the year at 3.3%, and 10-year ones at 3.5%. This shows that the market expects demand to be weak and the interest rate to remain low in the long term," she said.
However, yields of corporate bonds increased in line with risk perceptions in the private sector, she added.
The baht staged a modest rebound yesterday to 35.64/68 to the dollar from 35.70/74 the day before.
The baht strengthened early yesterday in line with an unusual appreciation of the Chinese yuan. It then weakened because of the central bank's intervention. But news of the disbanding of three coalition parties helped prop the baht up later.
"We expect the baht to continue to weaken and the dollar to appreciate. The fact that the European Central Bank tends to reduce interest rates aggressively in the future could lift the dollar further," the dealer said.
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Thailand 'Open for business' message key to investors
Bangkok Post: 15 Dec 2008
'Open for business' message key
The new government needs to tell investors outside Thailand that the country is open for business again after Bangkok's airports reopened, the Australian-Thai Chamber of Commerce says. Even though expatriates living in Thailand know Thailand is safe and remains a good place to invest, the perception of the country by those living abroad remains unchanged, said Andrew Durieux, the chamber's director.
Suvarnabhumi and Don Mueang airports were shut down from Nov 25 to Dec 2 by protesters from the People's Alliance for Democracy (PAD).
"The major concerns of business communities are the political situation, the rule of law and whether the airports will be closed again," Mr Durieux said. "And for business communities outside Thailand, there is still the perception that Thailand is closed for business."
Consequently, explaining this to the outside world is among the top priorities he recommends for the new government to win back foreign investors.
"The first priority is to restore stability and then impose regulatory changes and eliminate those unnecessary for investment," Mr Durieux said. In his view, the government has not performed as the business sector would hope ever since the coup that ousted Thaksin Shinawatra in September 2006.
"The view of Australian foreign investors is that there will be an extended period of instability in Thailand. Combined with the impacts of the global economic crisis, some companies hesitate to invest further here and some have already decided to delay their investments," said Mr Durieux.
With competition from neighbouring countries, especially Malaysia and Vietnam, Thailand needs attractive investment strategies such as liberalising the service sector, he added.
Nonetheless, while overall foreign direct investment was down 38% year-on-year from January to November, Australia bucked the trend.
Net applications of Australian companies to the Board of Investment totalled 3.72 billion baht, compared with 3.18 billion a year earlier.