The Nation December 15, 2012 1:00 am
Private sector concerned about opening of professional labour market; Yingluck reportedly keen to wrap up full free-trade deal soon
The private sector has asked Prime Minister Yingluck Shinawatra not to announce any agreement to proceed with a bilateral free-trade pact with India, expressing particular concern over the country’s request that Thailand open its market to Indian professional workers.
“If the prime minister agrees with India to proceed with a Thailand-India free-trade deal, it means the government has committed to all [aspects]. However, the government should seriously consider this sensitive issue, as India has a huge population, [a fact] that would affect the Thai economy,” said a source at the Thai Chamber of Commerce.
The same source said Yingluck had ordered officials to wrap up the bilateral free-trade agreement. She has scheduled a meeting with her Indian counterpart, and this issue will be on the agenda, the source said.
Yingluck will participate in the Asean-India Commemorative Summit to be held in New Delhi from December 20-22. While there, she will jointly celebrate 20 years of relations between Asean and India.
Thailand and India formed an FTA on September 1, 2004, through an early-harvest scheme featuring 84 items coming under zero tariff. The two countries want to proceed further with a comprehensive FTA, but India has offered only 59 items for tariff reductions, much lower than Thailand’s proposed 150 items.
India wants Thailand to open its labour market to higher-educated professional workers such as doctors and engineers, as India has a surplus of such manpower. Critics have warned, for example, that even with Thailand’s stringent requirements for obtaining a local licence to practise medicine – which include passing a Thai-language exam – many Indian doctors will be qualified to work in the Kingdom, given the sheer size of the country’s population.
The source said Thailand should wait for results of the Asean-India FTA talks before making any commitment to New Delhi. Asean and India are currently holding final discussions in Jakarta on an FTA on services and investment, with India strongly pushing Asean to open its market to India’s general job seekers.
“If Asean refuses such a proposal from India, Thailand should say no as well,” said the source.
The Thai government should have a clear policy on the FTA, which it expects to complete by next month, the source said.
“The negotiation of trade in goods is advancing to a satisfactory outcome; the issue of professional workers is the only major obstacle,” the source said.
The investment issue poses another hurdle for the Thai-India FTA talks, as India offers fewer protection measures for Thai businesses, the source said. The Thai private sector has asked the government to consider thoroughly the positive and negative effects of bowing to India’s requests.
“The opening of markets in any sector – be it trade or investment – should not be rushed, but needs to be balanced to benefit both partners. If we stand to lose, we should not agree with any deal,” said the source.
A former trade-negotiation source said the negotiations with India had been very tough. India has focused strongly on its own benefit and pushed its advantages over its trading partners with a lot of bargaining, the source said.
“Thailand should have a strong stance and be well educated on the positive and negative points to be gained from the bilateral FTA, when compared with other trading partners. The government now is heading to negotiate bilateral free-trade agreements, rather than multilateral talks as in the past, so they cannot be aware of the overall benefits,” said the trade-negotiation source.
Japan December 15, 2012 1:00 am
The Energy Ministry is prepared to impose regulations next year requiring an increase in the statutory oil reserve from the present 36 days of consumption to 45 days, said Energy Ministry permanent secretary Norkun Sitthi-phong.
He made the remark while on a study tour of Fukuoka, Japan, to learn about the Strategic Petroleum Reserve of Shirsashima Oil Storage Company accompanied by senior ministry officials and members of the House of Representatives’ Energy Committee from Sunday to Thursday this week.
He added that the government wanted to see the oil reserve increased to a maximum of 90 days to assure foreign investors that Thailand has sufficient supplies if an energy crisis were to erupt.
The ministry assigned the Department of Energy Business to conduct a feasibility study on the oil-reserve strategy and find ways to increase the statutory reserve from 36 to 45 days next year. The department has also studied a possible increase of the reserve to 90 days, which would require huge spending and incur high storage costs, including the construction of depots.
Japan has reserves of fuel, crude oil and finished oil products equivalent to 206 days of consumption. The government is responsible for 116 days of this, with private companies responsible for 90 days. The reserve is managed by Japan Oil, Gas and Metals National Corporation (JOGMEC). The country has 10 oil reserve depots with combined capacity of more than 253 million barrels.
Shirsashima Oil Storage Co, which was founded in 1981, is the country’s third-largest oil reserve depot with total capacity of 35.2 million barrels, representing 6 per cent of the national reserve capacity. The amount is adequate for about 12 days of consumption.
“Undertaking the strategic oil reserve is like buying energy insurance,” Norkun said. “If we’ve enough reserve, the investors will have confidence in investing in Thailand. However, we don’t have as much money as Japan, so we have to devise short-term, medium-term and long-term strategies to set a clear direction for the reserve in a manner that will not put a heavy burden on the country’s budget.”
Japan’s Ministry of Economy, Trade and Industry has oversight for the strategic oil reserve, directing the reserve policy and assigning JOGMEC to maintain the reserve for the government. In an energy crisis, METI is authorised to release such reserves to cushion the impact.
Nuttachat Charuchinda, PTT’s chief operating officer for downstream petroleum business, said the company was ready to follow the government’s plan to boost the oil reserve to 45 days, which would require PTT to build four tanks, each with capacity of 1 million litres to store reserve crude oil and finished oil products. The appropriate locations for storing crude oil are close to the sea and to refineries. PTT is also looking for locations to build these four tanks.
He said Sattahip Naval Base was an appropriate location for the strategic oil reserve, adding that PTT was ready to assume the role of managing the oil reserve depot for the government.
THE NATION December 15, 2012 1:00 am
The Commerce Ministry will soon strengthen its Trade Competition Act by redefining market dominance as a share of only 30 per cent, down from 50 per cent currently, to protect consumers in the changing trade environment towards a seamless system.
At a seminar on “Definitions and Restrictions for Market Leaders” held by the Internal Trade Department yesterday, panellists asked the ministry to revise its definition of market dominance, as the trading environment was changing amid the move towards the Asean Economic Community (AEC).
The panellists said large enterprises that now have more than 30-per-cent share could monopolise the market and influence consumers and suppliers. Thus the government should restrict their power to ensure fair competition to all players.
Commerce Minister Boonsong Teriyapirom, who chaired the seminar, said revision of the market-dominance regulations was needed to protect consumers and small traders from unfair trading.
The regulations have been in force for many years but have never been used to punish unfair traders. Their revision will ensure that a giant trader cannot easily manipulate the market by forcing its suppliers and consumers to agree to unfair conditions, he said.
Boonsong added that the revision of this law was also urgently needed to ensure fair practice and a level playing field for Thai entrepreneurs as the country liberalises the market for other Asean enterprises.
“Market dominance” is currently defined as a player having a market share in the previous year of at least 50 per cent and annual sales of at least Bt1 billion. The revision will reduce the market share to 30 per cent.
According to the Fiscal Policy Research Institute, 10 businesses that are at risk of market dominance are beer, alcohol, craft paper, paper pulp, bunker oil, plastic pellets, mirrors, steel sheet, cable TV and feed meal.
THE NATION December 15, 2012 1:00 am
The broadcasting committee of the National Broadcasting and Telecommunications Commission (NBTC) has postponed its decision on what action should be taken over the appearance of former prime minister Thaksin Shinawatra on Channel 11 until its next meeting early next year.
On Sunday night, the fugitive ex-prime minister appeared on state-controlled media when he presided over the opening of a Thai-boxing programme televised live from Macau.
The appearance has become a heated issue, with the NBTC pressured to take action as the official broadcast regulator. The commission’s subcommittee on TV programming and content yesterday decided to put this matter on the agenda of the board meeting of the NBTC’s broadcasting committee.
However, Natee Sukonrat, chairman of that committee, said the watchdog wanted to make sure it had enough information before making a decision or launching any action against the Public Relations Department, the operator of NBT (commonly known as Channel 11), which televised the event.
Without sufficient data and evidence, the committee had to drop this proposal and assign its subcommittee on TV programming and content to seek further information related to the live broadcast of the opening ceremony of a Thai-boxing programme, and on the details of a subcontract between the NBT and its contractors.
Natee added that this issue was considered a sensitive one among Thais. The subcommittee on TV programming and content would be able to resubmit this proposal with full details at the board meeting of the NBTC’s broadcasting committee on Monday, January 7.
Meanwhile, Supinya Klangnarong, an NBTC commissioner, said that at the coming meeting, she would propose that the broadcasting committee further extend the implementation of new regulations on subleasing airtimes of digital terrestrial TV broadcasting channels for TV production houses, covering existing analog terrestrial TV channels.
Early this week, the broadcasting committee wound up public hearings on this draft regulation. The committee needs to revise and submit it for the NBTC’s approval before it is published in the Royal Gazette early next year.
The Nation December 14, 2012 1:00 am
Chamber of commerce warns exports will be hit due to labour shortage
If the deadline for verification of alien workers’ nationality is not extended from today, several labour-intensive industries in Thailand such as fisheries or construction are likely to be hurt.
In the face of severe labour shortages at home, these industries have long relied heavily on alien workers.
The Thai Chamber of Commerce yesterday called on the authorities to extend the deadline for nationality verification.
“Otherwise, the country’s export and economic growth will be adversely affected,” chamber vice president Phumin Harinsut said. Fisheries and related industries generate Bt150 billion income from exports each year.
The government has yet to respond to the chamber’s request. Initially, authorities had planned to deport all registered workers whose nationality had not been verified by the deadline, today, along with unregistered workers whose number is estimated at between 500,000 and 800,000.
According to the Employment Department, as many as 356,351 alien workers have registered themselves – but their nationality verification was still pending as of November 23. Only 530,156 have already had their nationality verified.
Myanmar people are the biggest group of alien workers in Thailand. More than 565,000 have registered with Thai authorities. Also registered are 222,430 Cambodians and 99,019 Laotians.
“Thai workers don’t want to work in the food and fishery sectors because they are wet and smelly places. Employers in the sectors thus need alien workers,” TCC executive Poj Aramwatthananont explained.
He said the food/fishery manufacturing sector could falter if authorities were to force out so many alien workers when employers could not find replacements.
“Manufacturing will be disrupted and customers won’t get delivery of their products as scheduled. That will hurt not just entrepreneurs but also the country’s economy as a whole,” he said.
He said disruption of manufacturing in the food industry would deal a big blow to the country’s agricultural sector, too, as factories would refuse to buy fresh crops during the harvest season.
Atip Bijanonda, who sits on the chamber board, said Thai construction firms also needed alien workers to push their business ahead.
“If a [large] number of alien workers suddenly disappears from the market, many major constructors will very likely refuse to take on more projects next year because they would be concerned about the risk of not being able to submit construction work on time,” he said.
Phumin said the government should extend the deadline for nationality verification.
He also suggested the government allow the registration of more alien workers. He added that a joint panel with representatives from both the government and private sectors should be set up to find sustainable solutions to the country’s labour shortage.
Phumin said if the government did not prepare good measures and still insisted on deporting hundreds of thousands of alien workers, the goal of raising the country’s export growth by five per cent next year would be far-fetched.
The Nation December 14, 2012 1:00 am
The International Air Transport Association (IATA) has announced an upward revision to its industry financial outlook. Airlines this year are expected to return a profit of US$6.7 billion (Bt205 billion), up from the $4.1 billion forecast in October.
This is expected to improve slightly to $8.4 billion in 2013, marginally better than the $7.5 billion forecast in October. Industry net post-tax margin, however, will remain weak at 1.0 per cent in 2012 and 1.3 per cent in 2013.
Improved prospects for 2012 are being driven by strong airline performance in the second and third quarters. Despite high fuel prices and a slowing world economy, airline profits and cash flows held up at levels similar to 2006 when oil prices were about $45 per barrel lower and global growth in gross domestic product was 4.0 per cent.
Historically, when GDP growth has fallen below 2 per cent the airline industry has returned a collective loss.
“With GDP growth close to the ‘stall speed’ of 2.0 per cent and oil at $109.5 per barrel, we expected much weaker performance,” said Tony Tyler, IATA’s director-general and chief executive officer. “But airlines have adjusted to this difficult environment through improving efficiency and restructuring. That is protecting cash flows against weak economic growth and high fuel prices.”
The improved performance is most evident in large airlines, for which earnings before interest, taxes, depreciation and amortisation (EBITDA) averaged between 10 and 15 per cent of revenue in the third quarter of the year.
“It’s a diverging picture. Economies of scale are helping larger airlines to cope much better with the difficult environment than small and medium-sized carriers, which continue to struggle,” Tyler said.
Overall performance has been positively affected by strong passenger traffic growth (5.3 per cent) and a 3-per-cent improvement in yields. Despite the slowing world economy, business travel was supported by more robust international trade in goods and service. This contributed to a positive picture for both passenger volumes and yields.
In sharp contrast, cargo markets have contracted by 2 per cent and cargo yields are down 2 per cent on 2011 levels. Although world trade is still expanding, the pattern of economic growth – concentrated in the emerging markets – has favoured ocean over air freight.
The slight relief in oil prices (at $109.50, down from $110 a barrel in the October forecast) did not translate into relief on the fuel price. Moving in the opposite direction, because of a widening of refinery margins, jet-fuel costs are expected to average $129.50 a barrel, which is a $1.80 increase on the previous forecast.
Asia-Pacific carriers are expected to post a net profit of $3 billion (up $700 million on the October forecast). The region will deliver the largest aggregate profit among the regions while the EBIT margin of 2.9 per cent ranks second behind North America.
It is important to note that the region’s carriers will see the largest absolute fall in profits compared with 2011, when Asia-Pacific airlines returned a profit of $5.4 billion, IATA said. The region is under pressure from weak cargo markets and slower economic growth in China.
“Prospects for 2013 will be largely unchanged from 2012. Net profits are expected to rise to $8.4 billion, leaving the industry with a 1.3-per-cent net profit margin. It is good that we are moving in the right direction, but the year ahead is shaping up to be another tough one for the industry,” Tyler said.
Asia-Pacific airlines are expected to see net profits grow by $200 million to $3.2 billion in 2013. While this is the second-highest absolute profit among the regions, EBIT margins for Asia-Pacific airlines are expected to grow significantly to 4.7 per cent (the strongest among the regions).
Economies in this region remain the most dynamic and the deterioration in cargo markets is expected to come to an end in 2013.
December 14, 2012 1:00 am
The government will issue guidelines within the next two months on a policy to promote generation of electricity from Napier grass, Energy Minister Pongsak Ruktapongpisal said yesterday.
Napier grass, originally from Africa, is also known as Uganda grass or elephant grass for being a favourite food of elephants.
Speaking on the sidelines of the “Green Energy Forum: A Balancing Act for Sustainability” held by Krungthep Turakij, Pongsak said Germany had developed 7,000 power stations fuelled by Napier grass that provided 7,000 megawatts, and Thailand could match that production.
The ministry will provide a “feed-in tariff” subsidy of Bt4.50 per kilowatt-hour (unit) for a period of 25 years to power plants that use as feedstock Napier grass supplied by local communities. This grass can be grown in many parts of Thailand, especially in areas currently used as sugar-cane and tapioca plantations in the Northeast and Central regions, provided they are situated not too far from the power grid, he said.
Pongsak said alternative energy currently contributed merely 1 per cent of Thailand’s electricity production, and Napier grass would contribute a significant chunk of the target to increase the contribution of alternative energy to 25 per cent within 10 years.
“Concerning energy security, we are currently depending on natural gas for as much as 67 per cent [of power-generation needs]. Seven new records of peak power loads occurred during the past year, which prompted a call to save energy. While our installed capacity is 32,000MW, the power demand peaked in May at 26,774MW, leaving a power reserve gap of only 16 per cent,” he said.
Pongsak said that if electricity-use growth rates remained at the current level, there could be power-supply issues in the next two years. Investors have often asked him about the government’s plan to boost electricity capacity.
He said the government would negotiate with Myanmar to pursue the 7,000MW Salawin hydropower project as well as putting more emphasis on biomass and biogas, including electricity production from Napier grass.
Considering the Bt6.50-per-unit subsidy for solar farms, promoting more solar plants will place an heavy burden on the public in terms of higher electricity costs, the minister said.
Nevertheless, Pongsak said he discussed with Prime Minister Yingluck Shinawatra two weeks ago a plan to offer financial incentives to “off-grid” solar-cell projects for factories or households that produce solar energy for their own use without selling it to the national power grid, such as rooftop solar-cell installations.
Praipol Koomsup, a prominent energy economist from Thammasat University, told the seminar that unless there was a breakthrough in technology, Thailand was certainly poised to import more energy and depend more on the natural resources of neighbouring countries. Meanwhile, the environmental impacts of some of these power projects in neighbouring nations remain in doubt, such as the Hongsa Lignite and Xayaburi hydroelectric projects in Laos, he said.
“Actually, energy efficiency is the best alternative to fossil fuel. In many cases, energy-efficient projects provide higher returns than renewable energy and investment in new power plants: They offer more than a 10-per-cent rate of return, or above 20 per cent in some projects.”
Praipol said the most important thing was to see that energy prices reflect the real costs, especially in the case of cooking gas. The government should allow prices to rise closer to the real costs in the world markets.
“Instead of continuing to suppress energy prices and mislead the people that energy is cheap, the government should make cooking gas the first example,” he said.
Citing the United States’ Energy Education Act, PTT chief executive Pailin Chuchottaworn said consumers should be educated not only about their rights but also their responsibility regarding energy, which they need to conserve for the next generation.
Phichai Tinsuntisook, chairman of the Renewable Energy Industry Club of the Federation of Thai Industries, said about half of the alternative energy that the government targets for the country to use within 10 years were oil-related, such as biodiesel and gasohol. Meanwhile 38.5 per cent is thermal power such as that used in cement plants, which is hard to verify. That leaves only a small portion for such sources as wind, solar, biomass, biogas and waste-to-energy projects.
He urged the government to provide more support to biomass and biogas projects, which offer the highest benefit to the country, since they do not rely much on import and foreign investment.
“Our green energy is ailing, and it needs doctors,” Phichai said.
The Nation December 14, 2012 1:00 am
Kasikorn Research Centre (KResearch) says exports will bounce back to play the role of a key driver of economic growth in 2013, with the positive effect of rising private consumption having peaked this year.
Domestic consumption will slow down next year after the end of spending stimulus measures by the government.
Consumers will now have to repay their mortgages and instalment loans for many years, said the centre.
Meanwhile, private investment is expected to expand slowly next year, because huge investments were seen in the first half of 2012 during the post-flood recovery period.
Wiwan Tharahirunchote, executive chairman of KResearch, said high spending as a result of the government’s measures would increase non-performing loans, but the actual figure would not be worryingly high.
The global economy is expected to recover gradually, especially in China, which will return to stable growth and help drive Thai exports to grow 12.5 per cent worldwide, against just 4 per cent this year, said Pimonwan Mahujchari-yawong, deputy managing director of the research house.
More than 50 per cent of |Thai exports are accounted for by shipments to Asean and China.
Demand and prices for rubber will rebound, helping it to be a sunrise industry next year, said Pimonwan.
However, overall productivity is a challenge for businesses, with Thailand lagging Singapore by six times and Malaysia by 2.2 times in this regard, she said.
Even though the export outlook is bright, businesses should focus more on increasing productivity to achieve sustainable economic growth, she added.
The coming into force of the Asean Economic Community in 2015 will be a powerful economic driver for Thai exports, but companies should also consider emerging markets, such as the BRIC countries of Brazil, Russia, India and China and the “next eleven” emerging economies, said Pimonwan.
These 11 markets – the Asean countries of Indonesia, the Philippines and Vietnam, plus Mexico, South Korea, Turkey, Bangladesh, Egypt, Iran, Nigeria and Pakistan – are expected to |provide major export opportunities.
Excluding the three Asean nations and South Korea from the list, the other markets account for just 7 per cent of Thai exports, but they have high purchasing power and demand for consumer products and home appliances, which exporters should strive to tap, she added.
KResearch said inflation next year could rise to 3.3 per cent from 3 per cent in 2012 because of the higher wage costs, reduced energy subsidies and the new fuel adjustment tariff, or Ft, rate.
However, such a rise is not seen as a barrier to economic expansion, it said.
US FEDERAL RESERVES
December 14, 2012 1:00 am
The Bank of Thailand expects the US Federal Reserve’s fourth round of quantitative easing (QE4) to boost liquidity in money markets, which could prompt more capital to flow into Asia.
Prasarn Trairatvorakul, BOT governor, said the central bank was assessing the likely impacts from the expected higher capital levels and possible flow of funds into Asia.
“We have not seen the minutes of the US meeting. Earlier, the Fed limited the amount to purchase only mortgages, as it needed to help the property sector.
“This round’s purchase is extended to the US government, as money-market rates need to be maintained, and this will help stimulate employment,” Prasarn said.
He said QE4, which was an unexpected additional measure, could be a result of the Fed’s additional duty to help ease the unemployment situation in the United States.
“The central bank’s duty is to oversee monetary stability. It [the Fed] has an additional fiscal burden.
“Actually, fiscal measures should be used in this situation. But the Fed has to take care of this, as there could be limited tools at its disposal.
“Thus the Fed has to use non-traditional monetary policy through money-printing,” Prasarn said.
Regarding the BOT’s money-market supervision, he insisted he would not move against the market mechanism unless absolutely necessary, because of its high financial costs.
stepping back to |lessen volatility
In the past two or three years when money markets have |been through periods of high volatility, most central banks have limited intervention to lessening such volatility, to allow the business |sector to make its own adjustments.
Prasarn said the levels of capital movement into each country depended not only on interest rates, but also on the particular country’s economic fundamentals.
THE NATION December 13, 2012 1:00 am
The Revenue Department is planning to collect tax from the grey market, e-commerce and the sale of Buddha amulets to compensate for lost income resulting from next year’s reduction in the rate of corporate income tax.
Satit Rungkasiri, director-general of the department, said yesterday that it also planned to bring about 200,000 of those currently outside the payment system into tax collection next year.
Some 350,000 companies and individuals are currently not subject to tax collection, according to the National Statistical Office.
Businesses currently avoiding tax payment include grey-market services such as independent importers of luxury cars, e-commerce operators, dealers in Buddha amulets, and businesses with unusual tax refunds, Satit said.
There will be a system in place to inspect the input and output value-added tax of corporates, he said.
He added that some types of business and individuals that avoid paying full tax, as well as those in sectors with good performance such as automobiles, hotels, restaurants, financial institutions and insurance firms, would be targeted more closely for tax collection.
“We will seriously collect tax from those who should pay the full rate, and we will not wait for their tax submissions from now on,” he said at yesterday’s “International Tax Dialogue Conference” in Bangkok.
Satit also said the flow of investment from developed economies to developing countries in the region had prompted the department to consider more protection measures to prevent tax avoidance from profit transfers from high- to lower-tax countries.
“The department will closely monitor businesses that have a high opportunity to avoid tax payment, especially big corporates and multinational companies who control many subsidiaries and have a high profit, together with wholly owned companies that report a high deficit as well as their subsidiaries established in countries without tax collection. After inspection, the department collects about Bt300 million to Bt400 million from such companies,” said the agency head.
The department reported that the number of large corporates and their subsidiaries was in the region of 3,400-3,500 companies, accounting for 50 per cent of the value of corporate-tax income.
Meanwhile, total tax collection during the first two months of the current fiscal year, October and November, was 25-26 per cent above target, and 8 per cent higher than in the same period last year.
The agency targets tax collection expanding by 9 per cent to Bt1.774 trillion during the fiscal year, taking into account predicted economic growth.
THE NATION December 13, 2012 1:00 am
The governor of the Reserve Bank of Australia, Glenn Stevens, said the Bank of Thailand was one of many central banks in emerging economies in the past 12 years that had successfully adopted inflation targeting to achieve price stability.
Speaking at the BOT’s third Policy Forum on the occasion of the Thai central bank’s 70th anniversary, he said the Kingdom boasted an impressive record of price stability under this framework. A high level of transparency has ensured that financial-market participants understand the framework, and view it as credible. Moreover, price stability has not come at the cost of subdued economic growth, with output expanding at a brisk pace in the 2000s.
Stevens said inflation targeting was not for everyone, and the Thai experience illustrated that when done well, it can enhance economic outcomes.
“If there were any thought that controlling inflation over a two- or three-year horizon was ‘enough’, we have been well and truly disabused of that by experience over the past half-decade. Price stability doesn’t guarantee financial stability.”
He said the key challenges to achieving financial stability were monetary targeting, exchange-rate targeting and price stability. Hence many of the adopters shared a desire to strengthen the credibility of their policy frameworks. “As the initial adopters came to have a measure of success in combining reasonable growth with low inflation, other countries were attracted to the model.”
He said one obvious consideration was that the central banks, in managing their own balance sheets, needed to assess and manage risk across a wider and much larger pool of assets.
Gone are the comfortable days of holding a modest portfolio of bonds issued by the home government that were seen as of undoubted credit quality. Central bank portfolios today have more risk.
To date in the major countries, this has worked well in the sense that long-term yields on core portfolios have come down to the lowest levels in half a century or more. Large profits have been remitted to governments. But at some point, those yields will surely have to rise, Stevens said.
Large central-bank balance sheets carrying sizeable risk is hardly news around Asia.
The Bank of Thailand has made an excellent contribution to the international discussion here, having recently held a joint conference with the Bank for International Settlements on central-bank balance sheets and the challenges ahead, he said.
The difference is that in Asia, the risks arise from holding foreign-currency assets, which have been accumulated as a result of exchange-rate management. There is obviously valuation risk on such holdings.
There is also often a negative carry on such assets as yields on the Asian domestic obligations, which in effect fund foreign holdings, are typically higher than those in the major countries. In effect, the citizens of Asia continue to provide, through their official reserves, very large loans to major-country governments at yields below those that could be earned by deploying that capital at home in the region.
In addition, Stevens believes that the economies of China and the United States are continuing to grow and are able to help support growth in Asia. Even though the US is facing the “fiscal cliff”, the mortgage situation there has improved and so has domestic consumption.
However, he does not think the Chinese economy can continue to grow at the 10-per-cent level over the next few years.
THE NATION December 13, 2012 1:00 am
True Corp and CAT Telecom must wait for the Council of State’s opinion on whether their service partnership is subject to the 1992 State-Private Joint Venture Act before they can amend their contracts to satisfy the telecom regulator.
True and CAT had agreed to a cooperative arrangement to provide third-generation cellular service on the 850-megahertz spectrum. But in June, the National Broadcasting and Telecommunications Commission ordered them jointly to amend the contracts to bring them into compliance with the Frequency Allocation Law.
CAT chief executive officer Kitisak Sriprasert said yesterday that if the Council of State rules that the contracts are subject to the joint-venture law, they would need Cabinet approval. In that case, CAT and True would amend the contracts to comply with both the joint-venture law and the Frequency Allocation Law at the same time.
CAT would soon consult with the Council of State on the matter, he added.
The NBTC ordered CAT and True to amend six items in the contracts after its panel found that these items breached the Frequency Allocation Law. Consequently both signed a memorandum of understanding on December 4 to amend the contracts.
Kitisak said CAT had advised the NBTC about the Council of State wrinkle. While waiting for the council’s conclusion, True will be able to continue offering its 3G-850MHz service under the contracts, he added.
CAT and True subsidiaries Real Future and Real Move signed the 3G service partnership deals in January 2011, which see BFKT Thailand of Real Future leasing 3G network equipment to CAT to generate bandwidth for wholesale and resale. The state agency has already sold wholesale the bandwidth to Real Move, which has provided the service under the TrueMove H brand. The company has more than 3 million subscribers.
In a separate matter, the CAT board yesterday approved bonuses for officials at 4.1 times their monthly salaries, based on the positive revenue outlook this year. In the first 11 months, total revenue, including from concessions, stood at Bt43.309 billion with net profit of Bt11.325 billion.
CAT owns the concessions of TrueMove, Digital Phone Co, and Total Access Communication. However, the concessions of the first two will end next September.
Starting in 2014, CAT and TOT will also have to pass their concession revenue to the NBTC, which will transfer the funds to the state, as stipulated by the Frequency Allocation Law.
THE NATION December 13, 2012 1:00 am
The Federation of Thai Capital Market Organisations will hold discussions with capital-market agencies about aiming their 2013 business plans at the upcoming Asean Economic Community.
“Next year’s plan is to have transparency. We will touch bases with agencies related to capital markets to hear about their ideas and directions,” Fetco chairman Paiboon Nalinthrangkurn said yesterday.
“Thai companies have not invested in other countries seriously, while those from Malaysia and Singapore have entered the Thai capital markets,” he said.
Fetco wants to ensure that listed companies, the Securities and Exchange Commission and other securities-company associations are all going in the same direction.
A central agency should be set up to gather information on Asean countries, which will be useful for research. This would help save research costs for securities houses, Paiboon said.
Officials will also be asked to help reduce the expenses of Fetco’s members through tax deductions if additional research is required.
Usually, industry research enjoys a deduction of two times the costs incurred.
Fetco plans to push for the privatisation of state enterprises next year, which could expand the Thai capital markets and attract more foreign investors, and also to push a proposal for making provident funds compulsory, as some listed companies do not have provident funds for their employees yet.
Last year Fetco acted as a centre for forwarding the private sector’s proposals to public agencies and also joined forces with the government to organise seven or eight roadshows. Next year’s roadshows are expected to be similar to this year’s.
Fetco will provide investors and its members more financial knowledge with clear practices and key performance indicators.
The permanent secretary of the Finance Ministry has been appointed as chairman for providing financial knowledge, Paiboon said.
THE NATION December 12, 2012 1:00 am
Thai Lifestyle Products Federation (TLPF) is urging the government to set up a fund for helping out small and medium-sized enterprises (SMEs) that have been severely hurt by the Bt300-minimum wage scheme. So far, more than 100 small firms have had to close down due to higher costs.
The federation said it expected up to 100 SMEs to go out of business every year if the government failed to offer any assistance.
Thailand’s export of lifestyle products is only expected to increase by 2 per cent this year mainly due to the global economic crisis, which diluted the export value of lifestyle products by 50 per cent. The federation predicts the value of total export of lifestyle products to reach about US$3 billion or between Bt90 billion and Bt100 billion this year. Next year’s export of lifestyle products is expected to rise by another 3 per cent, though if the government does not step in to help, the export might drop by 3 per cent in 2013.
Supat Sriwannavit, TLPF president, said local producers of lifestyle products have been severely impacted by the minimum-wage scheme introduced by the government, which will be applied throughout the Kingdom from January 1, because this measure has increased their production costs.
The wage hike, in addition to the euro-zone crisis and the recession in the United States, has forced more than 100 SMEs out of a total of 3,000 to shut down.
“Most SME entrepreneurs need to make adjustments by boosting product value and maintaining exports to major markets, including EU and the US. They also need to start looking for new potential markets, such as the Middle East, Hong Kong, and Asean, especially Malaysia, which grew by 15.97 per cent in 2011,” Supat said.
The federation is also planning to coordinate with the Export-Import Bank and the Commerce Ministry’s Department of Export Promotion in order to integrate both public and private sectors so SMEs have easier access to loans at low interest and relaxed conditions.
Jiraboon Vidhayasingha, secretary-general of TLPF, said the government needed to introduce measures, such as setting up a fund worth Bt2 billion in order to help SMEs that have been hit by negative factors.
Sirichai Lertsirimit, president of the Thai Gifts Premiums & Decorative Association, said local manufacturers of gifts and home decorative products had burdened by a 40-per-cent increase in the cost of labour thanks to the minimum-wage scheme, which has only been introduced in some provinces so far. However, he said, that once the scheme gets implemented across the Kingdom, their costs will rise by 70 per cent.
“All business entrepreneurs need to be cautious about their expenditure and cost-down measure should be introduced for their manufacturing process. They should encourage consumers to buy products made locally, as well as seek new potential markets like Japan, China and other Asean countries. At present, Asean accounts for more than 30 per cent of total export of gifts and home-decorative products, while another 50 per cent is sent to Europe,” he said.
THE NATION December 12, 2012 1:00 am
Executives of the three telecom firms that won slots on the 2.1-gigahertz spectrum picked up their licences from the National Broadcasting and Telecommunications Commission yesterday, setting in motion the coming of the full third-generation cellular era in Thailand.
Among them were Advanced Info Service (AIS) vice chairman Somprasong Boonyachai, Total Access Communication (DTAC) chief executive officer Jon Eddy Abdullah and True Corp CEO Suphachai Chearavanont.
“Today is a very good day for Thailand and Thai consumers. Under the leadership of the NBTC and the ICT Ministry, Thailand now charges ahead,” Abdullah said.
The three bid winners have already requested from the watchdog a combined 20 million mobile-phone numbers with the 091 prefix for providing the 3G service during the first year.
The NBTC, which is considering the companies’ requests, is likely to allocate the numbers in March, as they are expected to launch the 3G service in April. The fee is Bt1 per number per month.
The three winners in the commission’s 2.1GHz spectrum auction held in October are AIS’s Advanced Wireless Network, DTAC subsidiary DTAC Network, and True Corp’s Real Future.
Advanced Wireless was expected to request 10 million 3G numbers from the watchdog.
NBTC chairman Thares Punsri signed the 2.1GHz spectrum licences and telecom business licences yesterday, enabling the three firms to operate this type of business. Both types of licence have a 15-year term, starting from December 7.
Thares added that next year the NBTC would focus on the plan to auction the 1,800-megahertz spectrum for the provision of fourth-generation service.
Meanwhile, NBTC secretary-general Takorn Tantasit said the 3G licence holders had to comply strictly with key conditions attached to the licences.
The first of these is the requirement that they establish networks covering 50 per cent of the population within two years of obtaining the licences, rising to 80 per cent of the population in the following two years.
Second, the companies have to comply with regulations governing the speed of their mobile data transmission, and third, they must comply with standards governing telecom service quality.
The other key requirement is that they must each set voice and data service tariffs at a rate 15 per cent lower than the average fees of all operators in the market on December 7. The NBTC is calculating the benchmark price for the three companies.
Takorn believes that all three licence holders will be able to establish their networks in major cities within a few months and complete coverage of 50 per cent of the population within the first year.
He added that the 3G licence holders also had to comply strictly with the NBTC’s 2006 regulations governing the standard mobile-phone service contract, which prohibit all telecom operators from setting the validity periods in their prepaid service.
If they want to fix the validity periods, they have to seek the watchdog’s permission to do so in advance.
The Central Administrative Court last month declined to issue an injunction as a result of TrueMove’s petition against the NBTC’s order that mobile-phone operators cannot fix the validity periods of their prepaid service and the imposition of daily fines of Bt100,000 until they cancel the periods.
However, the court did accept the TrueMove case into judicial review.
Meanwhile, the NBTC will pass half of the total final up-front fee it gained from the spectrum auction, plus interest, to the Finance Ministry today.
This amounts to Bt22.269 billion and interest of Bt55 million, but Bt40 million will be deducted for the cost of the auction before the sum is passed to the ministry.
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