Thursday, July 30, 2009

Recession drives Thailand's Kiatnakin Bank's non-performing loans

Writer: SOMRUEDI BANCHONGDUANG

Published: 30/07/2009 at 12:00 AM
Newspaper section: Business

Delayed impacts from the recession may cause Kiatnakin Bank's non-performing loans to rise in the second half despite signs that the economy is improving, the chief executive said.

The bank's distressed debt could increase to 7 billion baht in the second half from 6.6 billion baht currently.

Bad debts would rise in the second half as a result of the recession's delayed effects, even though Kiatnakin's NPLs have been falling since the second quarter and the economy is recovering slowly, said president Tawatchai Sudtikitpisan.

As of June 30, gross non-performing loans totalled 6.57 billion baht or 6.99% of total loans before allowance for doubtful accounts, compared with 7 billion or 7.15% the year before. Outstanding loans net of provisions as of the end of June was 78.67 billion baht.

Auto loans have the highest proportion of NPL, in line with the bank's key business of hire-purchase lending. KK will manage rather than sell the NPLs, as it has expertise in bad asset management and auto leasing, said Mr Tawatchai.

The bank, however, does plan to sell non-performing assets worth 3 billion this year. It sold 958 million baht of NPAs in the first half. The bank's NPA sales slowed as property prices declined in line with the economic downturn.

KK's total loan portfolio stands at 82.39 billion baht. Auto loans account for 56.64 billion baht or 70% of total outstanding loans. The bank's proportion of late payments remains normal at about 10% to 15% of the total loan portfolio.

Mr Tawatchai said the bank would maintain its 2009 loan growth target at 5% after it booked loan growth of 2% in the first half. Hopefully, loan demand would improve in the third to fourth quarters, as seasonal factors and improved performance in the automotive industry take effect, he said.

"Car sales, both new and used, have improved the past two months. This should build consumers' confidence and loan demand in the second half," he said.

Wednesday, July 29, 2009

Thai Economy Begins To Signal Recovery, Says FPO

BANGKOK, July 30 (Bernama) -- The Thai economy in June, and the rest of the second quarter of this year, began to show signs of recovery, with the production sector shrinking at a slower pace and purchase orders from overseas increasing, Thailand News Agency (TNA) reported quoting the Fiscal Policy Office (FPO) as saying.

FPO Director-General Somchai Sajjapong said private consumption and exports showed signs of improvement from earlier contraction, but private investment continued shrinking.

The economy had stabilised with the unemployment rate declining and employment in the production sector picking up. Simultaneously, the country's international reserves remain at a healthy level.

Given these positive factors, the FPO believes the economy had already bottomed out in the first quarter of this year and contracted more slowly in the second quarter.

It is expected the economy will further recover in the third quarter and resume positive growth in the fourth quarter.

He said FPO will revise the country's gross domestic product (GDP) for 2009 in the next two months. It had earlier forecast GDP would contract 3 per cent this year.

Now, various economic figures stay volatile, but there are positive aspects to the economic growth. As the economy now signal recovery, he said, FPO sees a need for private companies to prepare for investment expansion.

They should not wait until the economy recovers because it might too late.

He advised the government to accelerate spending to ensure it meets its target, and forge ahead with implementing Thailand's investment projects under the Thai Khem Kaeng (Stronger Thai) slogan to lead the way for private companies to decide to increase investment because the investment in the second quarter remained worrying.

Thailand's Siam Cement expects higher cement demand

Thailand's cement consumption will likely shrink by only 5-10 per cent this year instead of the 15-per-cent contraction forecast earlier, says the Siam Cement Group, the country's largest maker.

President and CEO Kan Trakulhoon yesterday attributed the expected stronger demand to increased investor confidence in the economy in the final two quarters.

In the first and second quarters, cement consumption fell 10 per |cent and 4 per cent, respectively, |due to the economic slowdown and delays in construction projects.

However, Kan is optimistic the whole year will see less of a demand contraction than previously forecast.

"We believe cement consumption in the second half will be higher than in the first six months. Investors now have more confidence to continue their projects," he said.

"Government mega-projects like the Purple Line mass-transit scheme are also in progress."

Meanwhile, SCG's sales and net profit from the cement business dropped 11 per cent and 21 per cent, respectively, year on year in the second quarter.

Kan said SCG revenue from all businesses this year would likely plunge by 20-25 per cent, because of lower sales and the weakening of prices.

SCG posted net sales of Bt56.88 billion in the second quarter, up 3 per cent quarter on quarter but down 29 per cent year on year, due to lower prices of chemical and paper products.

Its consolidated net profit in the quarter was Bt6.837 billion, up 32 per cent from the previous three months, thanks to better performance in the chemicals, paper and building-material business units.

However, consolidated net profit was down 5 per cent year on year.

SCG recorded net sales of Bt112 billion for the first half of the year, down 29 per cent year on year, due to lower core-business prices. Net profit decreased by 16 per cent.

The company plans to issue a new lot of debentures not exceeding Bt10 billion and with a four-year maturity at the prevailing market interest rate at the time of issue.

It plans to sell the debentures to holders of existing debentures who are individual investors, and to the holders of the company's other debentures.

Kan said the issue would replace existing debentures due to be retired for redemption on October 1. After issuing the new batch, the company's overall debentures will not exceed Bt110 billion.

Meanwhile, SCG's planned petrochemical project in Vietnam has not been scrapped but has been delayed, because the global financial meltdown has made it difficult to find financing, Kan said.

SCG is also scheduled to test-run a new olefin plant in Rayong province next March and start commercial operations in the third quarter, he said.

The plant will boost the annual production capacity of ethylene from 800,000 tonnes to 1.7 million tonnes and of propylene from 400,000 tonnes to 1.2 million tonnes.

Kan also said the group would |support veteran SCG executive Payungsak Chartsutipol as a candidate to chair the Federation of Thai Industries.

CIMB Thai sees 2010 turnaround

BANGKOK: CIMB Thai Bank, 94 per cent owned by Malaysia’s CIMB, hopes its recent restructuring and an expected recovery in Thailand’s economy will help it return to net profit next year, earlier than expected.

In 2008 it posted a net loss of nearly 2.0 billion baht, making it three consecutive annual losses. It also made a net loss of 502 million baht in the first six months of 2009.

“A return to net profit this year, that’s hard to predict,” President Subhak Siwaraksa said. “Even though we are already showing operating profits, the key variable is provisioning charges, which depend on economic conditions.”

“But we will surely make a net profit next year, after spending all this year on cleaning up the bank, ... things like controlling asset quality,” he said. CIMB has previously said its Thai unit, the country’s eleventh-largest lender by assets, was unlikely to show a net profit in the next two or three year because of the global economic slump and the investment needed to revamp it.

CIMB Thai, formerly BankThai, maintained its aim of expanding lending by 15 per cent this year, adding 12 billion baht (US$353 million) in loans, even though lending shrank 9.6 per cent in the first six months, Subhak said.

“The target isn’t easy to meet, but it’s possible,” he said. “So far this year, we have been busy with restructuring, but now we are ready to run the business fully from the third quarter.”

“We see opportunities in exports, the construction sector, and property,” he added.

The bank, which has 150 billion baht in assets and 74 billion in loans, completed its restructuring in early July.

CIMB, controlled by Bumiputra-Commerce Holdings, bought a stake in BankThai from a Thai central bank unit in 2008 and completed its acquisition in the first quarter of 2009.

CIMB Thai operates 147 branches and runs a securities firm, an asset management company and a non-life insurance firm.

The bank set aside loan-loss provisions of 600-700 million baht in the first six months, Subhak said, adding it planned to reduce its non-performing loans to below 8 per cent of total lending from 9.79 per cent at the end of June.

Last week, the Bank of Thailand forecast the economy would shrink 3.0 to 4.5 per cent this year, then grow by 3.0 to 5.0 per cent in 2010.

CIMB Thai had no plans to expand through mergers or acquisitions, Subhak said.

Rival Thanachart Bank, 49 per cent owned by Canada’s Bank of Nova Scotia, has expressed interest in buying almost half of Siam City Bank. -- Reuters


Bangkok Bank sees 2009 loan growth of 0-3 pct

BANGKOK, July 29 (Reuters) - Bangkok Bank, Thailand's biggest bank by assets, said on Wednesday it expected its lending to rise 0-3 percent this year, based on its forecast that the economy would contract 3 percent.
The bank, which had outstanding loans of 1.04 trillion baht ($30.6 billion) at the end of June, also expected non-performing loans of about 5.0 percent of lending, similar to the first half, President Chartsiri Sophonpanich told reporters.
"We will try for growth of 0-3 percent for the whole year, even though our lending shrank in the first half of this year," Chartsiri said, referring to a 6.2 percent drop in loans.
Last month, the bank said it was optimistic a surge in government stimulus spending would revive loan growth and that it could hit its 2-4 percent target this year, which would help push 2009 earnings near to last year's 20.2 billion baht.
The new loan target is in line with the forecast of 2 percent by analysts for the banking industry average.
Second-ranked Krung Thai Bank PCL has forecast 5-6 percent loan growth this year while number three Siam Commercial Bank expects 3-5 percent growth and number four Kasikornbank PCL is aiming for 5 percent.
The top lender reported a 3.4 percent drop in second-quarter net profit to 4.86 billion baht, hit by sluggish lending and soft margins, which dropped to 3.04 percent in the quarter from 3.37 percent a year earlier as a result of lending rate cuts.
"Probably, our net interest margins might be below 3 percent on average this year," Chartsiri said.
The bank, which has assets of 1.74 trillion baht, reported gross non-performing loans of 4.6 percent at the end of June, down from 4.75 percent at the end of March.
Chartsiri said its provision charges were at a normal level over the past six months. The bank plans to set aside 1.5-2.0 billion baht in loan-loss reserves each quarter this year.
At 0811 GMT, Bangkok Bank shares were down 2.61 percent at 112 baht, while the overall stock market was 1.17 percent lower.

($1=33.96 Baht)

Tuesday, July 28, 2009

Thailand's Siam Cement Q2 net profit falls, above forecasts

BANGKOK, July 29 (Reuters) - Siam Cement PCL (SCC), Thailand's biggest industrial conglomerate, posted a 5 percent fall in second-quarter net profit on Wednesday as the economic recession hurt cement and paper earnings.

SCC which earns up to half its profit from petrochemicals, reported an April-June net profit of 6.84 billion baht ($201.4 million), below a year-earlier profit of 7.2 billion baht but above the 5.2 billion baht forecast by six analysts polled by Reuters.

SCC, which also makes paper, cement and building materials, posted a 5.2 billion baht net profit in the first quarter.

Before the earnings announcement, SCC shares were down 0.57 percent at 173 baht at the midday break, when the broader stock market was down 0.25 percent.

($1 = 33.98 Baht)

(Reporting by Viparat Jantraprap; Editing by Alan Raybould)


Monday, July 27, 2009

Chinese investors eye Thai projects

Nine Chinese companies yesterday agreed to explore more than Bt10 billion worth of investment projects in Thailand with local partners on the first day of the Thai-Chinese Business Forum in Pattaya.

Some 35 local companies are also in talks on possible deals with Chinese companies, Industry Minister Charnchai Chairungrueng said yesterday.

The two-day meeting hosted by the Industry Ministry has drawn 260 Chinese investors from 50 companies belonging to the World Eminence Chinese Business Association, as well as 500 local businessmen.

The Chinese are interested in 16 kinds of businesses in Thailand and would like to set up manufacturing bases here.

Combined investment could reach as high as Bt20 billion.

Among the parties signing a memorandum of understanding (MoU) to conduct a feasibility study were the Small and Medium Enterprises Promotion Office with the China Association of Small and Medium Enterprises; the Industrial Estate Authority of Thailand with Sunshine Biotech International; Bangkok Thonburi University with the World Eminence Chinese Business Association; Pacific Rubber Works with the Brazil-China Chamber of Commerce; and Petch Thai Pattana with Dashan Technology.

Sunshine Biotech International is interested in setting up a Bt3.5-billion biochemical plant in a local industrial estate.

Saha Farms, the Kingdom's leading boiled-chicken producer and exporter, entered into an MoU with leading investment conglomerate the New Hope Group to conduct a feasibility study on setting up a boiled-chicken base in Thailand.

ComLink will work with the China Sun Bio-Chem Technology Group to establish a processed-tapioca plant.

BBCA of China has asked the Industrial Estate Authority of Thailand to help it find a location to open a processing plant. The company focuses on exporting citric acid made from cassavas.

Thai Diamond City has paired up with Luqing.

Saha Farms president and CEO Manoonsri Chotitawan said his company was looking for a partner to complete its new plant in Lop Buri province. The final phase requires Bt7 billion to install 10 new processing lines.

The plant now runs 20 lines capable of dressing 500,000 chickens a day. The expansion would allow the company to double that.

New Hope Group chairman and CEO Liu Younghao said if the Thai government could design clearer investment promotions and increase the benefits of foreign direct investment, his company would double its investment in Asean.

The group has poured US$100 million (Bt3.4 billion) into the Philippines. Its four core businesses are livestock and food, chemicals and energy, property and infrastructure and finance. The group achieved sales of $10 billion last year.

"It's a good time to explore opportunities in Thailand. It makes the group more confident in Thai politics, the economic crisis and the type-A (H1N1) problem," he said.

Amata chief operating officer Viboon Kromadit said the developer had reserved 600 rai of land in its Amata Industrial Estate in Rayong province for Chinese investors. The company plans to woo five-10 Chinese companies to build plants in its estate.

Bangkok Bank sees Thailand’s exports plunging over 10%


Kosit Panpiemras, Chairman of the Board of Executive Directors of Bangkok Bank, Thailand s largest commercial bank, predicts that Thailand s exports in 2009 would plunge more…

See the original post:
Bangkok Bank’s Kosit sees Thailand’s exports plunging over 10%

Doing business in Thailand

Recent crashes in Thailand’s GDP and export markets, plus the drop in tourism fuelled by recession and last year’s domestic political turmoil, have dispelled illusions that the country is insulated from the effects of the global downturn. Numerous indicators of economic health are hitting the red, foreign investment is evaporating, unemployment is surging, and credit lines are freezing up. Thailand’s government still says there is a possibility of positive growth this year, despite facing a rougher ride than in the 1997 Asian financial crisis as conditions infest the real economy on a broader scale.bkkbank

Regulations and bureaucratic procedures that firms have reported as severely affecting their businesses and investment decisions were mainly on delays in tax refunds, uncertainties around the time taken to clear customs or obtain permits and certifications, and uncertainties around regulatory policies. The delays in tax refunds referred to both value-added tax refunds and import tax refunds for exporters. The Revenue Department and Customs Department have been introducing programs and employed internet-based services to reduce the time taken to do so. However, few firms have participated in these programs or have benefited from the services. On the other hand, the average number of days needed to clear import customs or obtain permits is not exceptionally high in Thailand compared to other countries.

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Thai Exim Bank Likely To Beat 09 Lending Target Of THB19.7 Billion

BANGKOK -(Dow Jones)- State-owned Export-Import Bank of Thailand expects its credit extension this year to exceed its THB19.70 billion ($579 million) target, thanks to healthy loan approvals during the first half despite slowing international trade activities, President Apichai Boontherawara said Monday.
A capital injection of THB5 billion by the government, due by September, will also support the bank's activities in providing aid to troubled exporters suffering from weakening demand, Deputy Finance Minister Pruttichai Damrongrat told a conference.

During the first six months of this year, the bank has granted THB13.37 billion worth of new loans and export guarantee facilities, up from THB10.90 billion in the same period a year ago.

The bank posted a net profit of THB104 million for the period, up from THB58 million in the first six months of last year.

Based on raw customs data, Thailand's exports in the first half plunged 23.5% to $68.21 billion while imports fell 35.4% to $57.22 billion.

As of end-June, outstanding loans amounted to THB46.21 billion while export guarantee obligations totaled THB13.07 billion. Nonperforming loans dropped to 8.84% of total loans from 9.24% at the end of last year due to debt restructuring attempts.

Sunday, July 26, 2009

Phuket tourism: Patong performs best

Patong is outperforming the rest of Phuket in a low-season that many local hotel industry experts describe as dismal.

Phuket Tourist Association (PTA) President Somboon Jirayus said current average occupancy rates are about 30-40 per cent in most parts of the island, down about 30 per cent year-on-year, on average.

Revenue is down even further because of all the discounts and promotions hotels are putting on to attract tourists, he said.

The main reason for the drop in tourist arrivals figures is not the swine flu pandemic, but the global economic downturn and Thailand's internal political situation, he said.

Patong is outperforming the rest of the island in terms of occupancy, he said.

The PTA hopes and expects the tourism picture to improve following the successful hosting of the Asean-led meetings at Laguna Phuket that ended on Thursday.

Thai tourism in general and Phuket in particular should benefit as a result, he said.

An improvement in the domestic political situation and an expected increase in the number of charter flights expected in October should help boost occupancy rates to around 60 per cent going into the high season, he said.

Nampetch "Nikki" Tipaxsorn, Marketing Communications Manager at the Hilton Phuket Arcadia Resort & Spa, said occupancy rates and revenue were down to only about 30 per cent of what they would be 'under optimal circumstances'.

She likewise blamed the bleak economic picture and internal politics for the occupancy drop-off at the island's largest resort.

This low season is worse than last year's, although the situation has improved in the last two months, she said.

Methee Tanmanatragul, President of Thai Hotels Association Southern Chapter, estimated that occupancy in the region is down about 20 per cent year-on-year.

Rooms going at 1,000 baht per night last year are now typically being offered at 800 baht, while promotional offers have increased costs, he said.

Patong was faring better than the rest of the island, with occupancy rates about 10-15 per cent higher than the rest of the island, he said.

As for the prospects for next year, the internal political situation would be the most critical factor, he said.

"If Thai people stop fighting, everything will surely improve, but if we can't find harmony we will remain stuck in this rut," he said.

Promchote Traivate, director of Phuket Tourism and Sports Office, noted that European tourists are far less likely to cancel trips to Thailand due to the swine flu outbreak.

Asian tourists are far more sensitive to health and security issues when it comes to holiday planning, he said.

Figures released by Thai Immigration support this. June arrivals from some important source countries in East Asia are down about 40 per cent compared to around 10 per cent from Europe.

Thai exports start to benefit from China

Beijing's massive plans beginning to bear fruit

Writer: POST REPORTERS
Published: 25/07/2009 at 12:00 AM
Newspaper section: Business

Thailand's exports to China are likely to continue to grow over the remainder of this year as massive stimulus spending by Beijing is showing clear signs of lifting consumption and demand.

Data from Kasikorn Research Center show that Thai exports to China contracted by 3.5% year-on-year in June, compared with a 10.9% decline in the previous month. While the contraction continued, June featured the fifth consecutive month of month-on-month growth, at 11.8%, compared to 1.9% in May.

The improvement in June narrowed the first-half contraction in export value to 18.2% year-on-year from 27.6% in the first quarter.

Imports from China to Thailand have improved slightly, from a 30.7% year-on-year contraction in May to 27.1% in June, resulting in a 28% decline for the first half.

The stimulus measures introduced by the Beijing government contributed to 7.9% growth in the Chinese economy in the second quarter of this year, which had been slowing since the third quarter of 2008 and apparently bottomed out at 6.1% in the first quarter of this year.

China's industrial production in June expanded by 10.7% from a year earlier, compared with 8.9% in May. Investment in fixed assets in urban areas grew 35.3%, resulting in increasing demand for imports of materials, intermediary goods, and capital for the production and investment.

China has stepped up its imports of copper, aluminium and iron, which are benefiting from state construction projects, while imports of materials and intermediary goods such as plastic pellets and synthetic rubber are also gaining from the expansion of industrial production.

The expansion of China's heavy industry is playing a key role in accelerating the growth of the investment sector, while steadily rising vehicle sales volume resulted in 17.7% year-on-year growth in the first half of the year. At the same time, prices of consumer products have increased in line with demand.

Light industry including textiles and household appliances expanded 8.2% in the first half of the year, benefiting from government programmes to help rural consumers acquire appliances. The industry is also being helped by a government decision to increase export tax rebates and credit assistance for exporters.

Among the imports showing improving growth in June were plastic pellets (up 3.5% year-on-year against a 13% shrinkage in May), copper (up 64.6% from 20.2% in May) and aluminium (up 123.5% from 78%). Iron ore imports in June declined 12% decline in June, compared with 19% in May, while synthetic rubber imports were down 7.3%, an improvement from 12% in the previous month.

Thai exports to China with higher growth rates included chemical products, cassava products, electrical and electronic appliances and parts, wood and wooden products, and chilled, frozen and dry fruits. Positive but decreasing growth figures were recorded by rubber products, and motors and electrical generators. Negative but improving growth rates were seen in computers and parts, raw rubber, plastic resins, processed oil, and chips.

Significantly, June was the first month to feature year-on-year export growth of Thai industrial goods, which account for more than 70% of all Thai exports.

Kasikorn Research Center believes Thai exports to China in the second half will improve in line with projected GDP growth of of 7.5% to 8.0%, as a result of various factors including the US$586-billion stimulus programme that began in November last year.

In addition, the Chinese government is expected to continue to relax its fiscal policy for the remainder of the year as the global economy appears unlikely to fully recover this year. Beijing is also launching other measures to assist various sectors of the economy to stimulate consumption and investment.

A steady but modest recovery in the global economy, meanwhile, is expected to improve prospects for Chinese exports, which in turn will fuel more demand for imports from Thailand and other Asian countries to make more goods.

China's exports in June contracted by 21.4% year-on-year, but the decline was smaller than in May, with a month-on-month growth rate of 4.5%, the eighth consecutive month of improvements.

Thai exports to other major markets such as the United States, the European Union and Japan also showed some improvement in June, though the contraction was still in double digits: to the US -22% compared with -35.7% in May; EU 27.4% vs -34%, and Japan -27.8% vs -30%. The improving trend of the global economy in the remainder of this year should cause Thai exports to improve as well.

In addition, the June export figures of other countries, as announced by their governments, are showing that the rates of decline are slowing. They include South Korea, Taiwan and Singapore.

Relate Search: Kasikorn Research Center, Beijing government

Siam Thailand's Cement sees 2009 cement demand falling 5-10 pct

Thailand's Siam Cement PCL expects domestic cement demand to fall 5-10 percent in 2009 but is banking on a recovery in 2010 on the back of government spending on infrastructure.

Siam Cement, Thailand's biggest producer of the building material, predicted domestic consumption of 23 million tonnes this year, with its own cement sales falling in line with the industry, cement division president Pramote Techasupatkul said.

"For the full year, we expect cement demand to fall by 5-10 percent. The decline is close to the range of last year. It's not a big worry," he told Reuters in an interview.

Domestic cement consumption has weakened over the past three years because of the slowdown in the economy and prolonged political turmoil.

However, the government's 1.43 trillion baht ($42 billion), three-year economic stimulus package is expected to increase demand for cement in both public and private construction projects later this year.

Domestic cement consumption growth is usually about 1.5 times GDP growth. Thailand's economy is expected to contract 2.5-3.5 percent this year after 2.6 percent growth in 2008, according to the Finance Ministry. A recovery is expected next year.

Pramote said the company's cement exports could fall by 10 percent to around 7.6 million tonnes this year because of the global economic crisis. Its main overseas markets are in South and Southeast Asia.

Last year, it shipped about 8 million tonnes.

COST SAVINGS

A 5.8 billion baht investment in developing waste-heat power generation at five domestic cement plants and a plant in Cambodia was due for completion in the fourth quarter, which would cut energy costs by an annual 25 percent, Pramote said.

The company would invest another 0.5 to 1.0 billion baht on improving energy efficiency at its cement plants over the next four or five years, he said.

Last year, cement earnings increased 10 percent, helped by lower energy costs, whereas the company made losses in its petrochemical and paper divisions, hurt by the global recession.

Siam Cement will spend 100 million baht this year on increasing capacity at the Cambodian plant, Pramote said.

It was also looking at building another cement plant in Cambodia and was looking to buy cement firms in Southeast Asia, including Vietnam and Indonesia, he added.

Siam Cement is the biggest domestic cement producer with capacity of 23.2 million tonnes. Its cement plant in Cambodia has a capacity of 1 million tonne.

At 0751 GMT, shares in Siam Cement, valued at $5.9 billion on the Thai bourse, were up 2.4 percent at 170.5 baht and the main Thai stock index <.SETI> was also 2.4 percent higher. ($1=34.03 Baht)

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Saturday, July 25, 2009

Bangkok Bank's Kosit sees Thailand's exports plunging over 10%

BANGKOK, July 25 (TNA) -- Kosit Panpiemras, Chairman of the Board of Executive Directors of Bangkok Bank, Thailand’s largest commercial bank, predicts that Thailand’s exports in 2009 would plunge more than 10 per cent, more than projection made by the Commerce Ministry.

Mr. Kosit, a former finance minister and former deputy prime minister, said although he believed the fall in the country’s exports had hit bottom, the Bank of Thailand should control the baht to move “at an appropriate level” or almost at the same level with other currencies.

However, he said it is difficult to control currency exchange because the US dollar continues to weaken.

Bank of Thailand deputy governor Atchana Waiquamdee echoed his views, saying that both the export and service sectors would continue to decline in line with weakening world trade and falling tourism revenue due to the current spread of the A(H1N1) virus.

Mrs. Atchana said country’s exports are expected to start recovering from late 2009 until next year.

The central bank, she said, projects that exports will drop 9.5-22.5 per cent in 2009 and would grow around 14.5-17.5 per cent in 2010. (TNA)

Thursday, July 23, 2009

Thailand's Tourism plunges 22 per cent

Writer: BangkokPost.com

Published: 23/07/2009 at 03:07 PM

The tourism industry has suffered its deepest slump in many decades with the number of visitors expected to be down 22 per cent on last year, according to the Tourism Council of Thailand chairman Kongkit Hiranyakij.

It was the biggest plunge in tourism growth in 49 years, he said.

Besides the global economic crisis, the country's continuing political turmoil had contributed to the sharp decline in tourism, Mr Kongkit Hiranyakij said on Thursday.

The expected number of tourist arrivals had been reduced from the expected 14.1 million to 11 million, he said.

The A(H1N1) flu outbreak could make tourism contract by three to four per cent, causing the country to lose up to 200 billion baht of tourism revenue this year, he said.

Last year, Thailand gained 540 billion baht in tourism revenue.

"If the government can solve its political problems and is able to host the Asean meetings successfully, tourism should be revived by the end of this year or the beginning of 2010," Mr Kongkit predicted.

However, he said Thai tourists would help generate an estimated 430 billion baht in revenue this year.

Thailand's Virabongsa : No recovery in near term:

Published on July 23, 2009

Former Finance Minister Virabongsa Ramangkura bluntly announced on Thursday that there is no sign of recovery in Thai economy, due to a number of risk factors.

Against general optimism that the economy would return to the positive territory in the fourth quarter, Virabongsa said despite some improvements, economic indicators could fall again. Meanwhile, there is no hope from private investment, as their capacity utilisation is only 50 per cent of total.

He commented on the lack of clarity of the second economic-stimulus package. While it is known that Bt200 billion would be used to replenish fiscal deficits, there is no clarity on how the remaining Bt600 billion fund would be used to stimulate the economy. As such, he had no idea how this package would boost the economy later this year.

"The government needs to look forward, what needs to be done for the next 4-5 days," he said at the Fiscal Policy Office's seminar on "Thailand's Economic Survival amid Global Pressure".

He expressed concerns over the government's lack of measures to tame the influenza A (N1N1) pandemic, to restore foreign tourist confidence particularly those from China.

Wednesday, July 22, 2009

Thailand's gem sector looks forward to VAT cut

But exports may still fall by 25%

Writer: CHADAMAS CHINMANEEVONG
Published: 22/07/2009 at 12:00 AM
Newspaper section: Business

The elimination of the 7% value-added tax on coloured stones next month will help gem and jewellery operators survive after suffering the biggest drop in exports in three decades, says Somchai Phornchindarak, vice-president of the Thai Gem and Jewelry Traders Association.

"The zero VAT on coloured stone imports will soften the sharp drop in coloured stone exports as well," he said.

During the first five months of this year, coloured stone exports declined 33.6% from a year earlier to US$159 million, but exports of jewellery including gold grew by 65.7% to $4.76 billion due to a significant rise in gold prices.

Mr Somchai said he hoped the VAT reduction would arrest the fall in exports and keep it no greater than a contraction of 25% to $933 million.

"It's good for gem and jewellery operators that the government is lending them the help, otherwise they won't able to compete with India, Dubai and Hong Kong," he said, adding that the association had spent 15 years to obtain the tax incentive.

Gem and jewellery operators believe that the industry will develop in the same direction as the gold market, which also has benefited from tax breaks on both gold imports and exports.

The gold market has increased in value by sixfold since the government reduced the VAT on gold imports and exports.

Normally, the country imports coloured stones worth around $1.5 billion per year. Currently, there are more than 1.1 million workers in the industry but 275,000 of them have been laid off since the global economic crisis began last year.

Mr Somchai hopes employment will revive after the VAT reduction takes effect ahead of the 44th Bangkok Gems & Jewelry Fair from Sept 15-19 at Impact Challenger.

Most operators hope the exhibition and the tax break will help them create marketing promotions to compete with other rivals, especially in terms of pricing and product values.

Mr Somchai said the number of visitors to the jewellery fair would likely decrease, compared with around 30,000 in normal conditions, because of the H1N1 u and the economic downturn. The value of orders at the fair will likely drop to $520 million from US$780 million at the last fair held early this year.

"The big opportunity markets will change from the United States and Europe to China, Russia and the Middle East," he said.

The fair, with space of 60,000 sq m, will have 3,000 booths, down from 3,500 at the last fair.

Thai Central bank: Worst is over

Writer: BangkokPost.com

Published: 22/07/2009 at 03:54 PM

The Thai economy has passed through the trough, according to the Bank of Thailand (BoT).

Several positive factors indicated the economy was headed for improvement, such as the global economic rebound, central bank deputy governor Bandid Nijathaworn said on Wednesday.

"I am confident that the country's gross domestic product will turn out positive in 2010 despite this year's high inflation pressure," he said.

He said the BoT will revise its economic growth estimate based on a realistic hypothesis on Friday.

The bank earlier expected the GDP to shrink by 1.5 to 3.5 per cent, but expected next year's economy to expand by 1.5 to 3.5 per cent.

"The liquidity in the monetary system is still adequate as it is five times higher than the BoT's standard, and commercial banks should see no problem in approving loans," Mr Bandid said.

He said nonperforming loans rose five per cent in April due to the seven per cent economic contraction in the first quarter, but the increase was not substantial.

The Finance Ministry's order for seven state-owned banks to make loans totalling 1.25 trillion baht for the entire year would help the private sector and stimulate the economy, the deputy governor said.

He said all state banks have enough liquidity, and financial problems can be avoided through good management.

Meanwhile, Finance Minister Korn Chatikavanij said the Revenue Department has announced an exemption from withholding tax on bank savings accounts which earn no more than 20,000 baht interest a year.

Altogether 62 million savings accounts would benefit from the tax exemption, which was aimed at increasing depositors' incomes, Mr Korn said.

Savings account owners who earn more than 20,000 baht a year interest could make an agreement with their respective financial institutions on whether to allow an immediate deduction of due tax or pay the tax themselves at revenue offices.

Thai Stock Rally ‘Just Beginning,’ KGI Says: Technical Analysis

By Anuchit Nguyen

July 22 (Bloomberg) -- Thailand’s benchmark stock index may advance a further 8 percent by the end of August, according to a trading momentum chart that shows the rally is “just the beginning,” KGI Securities (Thailand) Pclsaid.

The SET Index may rise to 660 after the Moving Average Convergence-Divergence oscillator this week rose above the so- called signal line, saidAdisak Kammool, a Bangkok-based analyst at KGI. The relative strength index at about 60 also indicates more room for the gauge to rally, he said.

“The MACD crossover signals the recent rally may be just the beginning,” Adisak said in a telephone interview. “The RSI is still below the selling territory, while daily stock trading volume of more than 20 billion baht demonstrates strong demand among investors.”

The SET Index, which has gained 37 percent this year, rose 0.8 percent to 614.95 as of 10:03 a.m. local time.

Daily trading turnover on the Stock Exchange of Thailand surged 31 percent this week to an average 22 billion baht ($647 million), from 16.8 billion baht last week, according to the Stock Exchange of Thailand’s data.

Technical buyers usually step in when the MACD rises above its signal line, a so-called bullish crossover. MACD charts can indicate whether a price shift is a change in trend or a short- term deviation, by comparing moving averages based on nine-, 12- and 26-day periods.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Anuchit Nguyen in Bangkok atanguyen@bloomberg.net

Last Updated: July 21, 2009 23:18 EDT