TAT plans to promote domestic tourism

Thawatchai Arunyik, deputy governor for domestic marketing, said the first measure, intra-regional travel, is set to start this week and run until the end of January. People will be encouraged to visit nearby attractions rather than go across regions. That would continue to augment business in communities.
The authority will not focus on already crowded destinations such as Pattaya, Hua Hin and Kanchanaburi.
Four plans are set for next year, as the flooding will have completely disappeared by then. It will begin with cross-region travel by encouraging people from all parts of the country to visit the Central region and Bangkok.

Energy Ministry says no long-term plan to deal with flood

Energy Minister Pichai Naripthaphan has set up a committee to look at immediate issues, such as distributing necessities and boats to flood victims, as well as EM balls to treat filthy water.
Pichai has assigned senior officials to deal only with the flood's impact. For example, the Energy Business Department is looking at the gas station situation, as several of them have closed down.
The Electricity Generating Authority of Thailand (Egat) has been asked to provide adequate power during the flood disaster, while PTT is ensuring supplies of oil, natural gas and cooking gas.
Pichai has not yet asked officials to evaluate the impact of the floods on the energy industry or to prepare necessary measures for preventing flood damage to the industry in the future, the source said.
"The devastating flood is expected to reduce demand for oil, natural gas and electricity, as economic growth will be slower," the source said.
The ministry has not yet made an assessment of the cost of the damage to the industry, he said.

Poor showing for movie industry

Since the flooding hit many provinces, the company has witnessed a 30-to-40-per-cent drop in ticket sales, especially after the temporary closing of 12 branches last week," Jim Patterson, general manager of Paragon Cineplex and IMAX, told The Nation yesterday.
However, the Paragon cineplex, which has not yet been affected by the flood, gained 30 per cent in ticket sales last month over the same month last year. Last week the performance of this branch was also pretty good, he said.
The rise was partly due to the low base in October of last year, when this branch stopped operating because of the political unrest during the red-shirt protest.
At least five movies have postponed their openings from this month. Two are local films - "ATM" and "Meung Ga Gu" (Friends Never Die), deferred indefinitely - while the other three are foreign movies - "Tintin 3D", rescheduled to December 29, and "Immortals" and "Real Steel" to December 1.
The postponements also caused event marketing and promotions to be put off, but business should bounce back in December or early next year, Patterson said.
DBS Vickers Securities reported last week that the temporary closure of Major Cineplex's 12 branches so far because of the floods is affecting 103 of its 373 screens. With this disruption, the company's earnings are expected to be soft through next quarter.
However, Major enjoyed strong traffic at branches outside flooded areas. Box-office receipts for Thai films "30 Kam Lung Jaew" and "Top Secret" have reached Bt60 million and Bt40 million. Attendance upcountry remains strong.
Major's earnings should start recovering in the second quarter of next year, driven by attractive film releases pushed back from the current quarter to the first quarter of next year. However, Major sees a glimmer of hope as the inundation in the Pinklao area receded last week, so it reopened two cineplexes there - the 12-screen standalone branch on Sunday and the 13-screen branch at CentralPlaza Pinklao yesterday.
SF Cinema City has also had temporarily to close four branches with 35 screens at The Square in Nonthaburi's Bang Yai district, Central Ramindra, Central Ladprao and The Mall Bangkae. A source at SF Cinemas said two movies were postponed from this month - "Tower Heist" and "Mid Mile Racing Love".
M Pictures Entertainment, a distributor of films to cinemas and producer of video discs, has suspended the launch of movies and DVDs to early next year because retail outlets in Bangkok and elsewhere in the Central region are affected by the floods while transport is disrupted.
Chief executive officer Padet Hongfa said this crisis might cost the company about 15 per cent in lost sales this quarter. This could force it to lower its revenue target to Bt1 billion from Bt1.1 billion.
The company said it had relocated its head office from Suzuki Avenue Ratchayothin to Charn Issara Tower II on New Phetchaburi Road because of the floods.

TAT, groups hatch tourism rehab plan

The Tourism Council of Thailand (TCT), the Association of Thai Travel Agents (ATTA) and some other key associations will be involved in tomorrow's discussions of the plan, according to TCT vice president Pornthi Hirunkate.
She said the private sector would propose that the authority organise road shows in all key markets including China, Japan, Korea, India, Germany and Australia.
"TAT and operators will go to all targeted countries as part of a Thailand Team to regain tourists' confidence," Pornthi said.
The team will likely kick off its first trip by January.
"Tourism has been dropping since the flooding reached Bangkok last month, and this could continue into the high season. Hotel business in Bangkok has already dropped by 20 per cent, but operators in Phuket, Krabi and Hat Yai have gained as many tourists are flying directly into the southern region," Pornthip said.
Earlier, the TAT said flooding would only reduce international arrivals by 2 per cent.
The private-sector groups and the TAT will also review the overall tourism picture and may revise down the projections for this year.
According to the CNNGo website, the International Flood Evacuation Centre at Bangna Commercial College on Sukhumvit 103 is posting invitations via Twitter, Facebook and various websites to alert foreigners living, studying or travelling in Thailand who need somewhere to stay because of the floods.
TAT also lists hotels offering flood-relief accommodation for both locals and tourists at lowered prices through its website.

NGV station at Rojana

This conventional station, which was closed on Oct 11, gets direct supply from the pipeline. It can distribute 68 tonnes of natural gas a day.
PTT President and CEO Pailin Chuchottaworn said that the company will re-open more stations as soon as possible. After water recedes, PTT will send in experts to inspect the stations. Some 66 stations can be re-opened within 1-2 days while the recovery of 29 stations should take 7 days.
PTT operates 461 NGV stations nationwide.
Together with the re-opening of this station, PTT distributed 500 relief bags to villagers living nearby. It also distributed octane-91 petrol, diesel and cooking gas by truck

Fewer number of closed bank branches

A number of 33 bank branches in Pinklao, Phaholyothin, Lat Phrao and Chaeng Wattana resumed services as of Nov 14, but more branches are closed in Bang Bon, Bang Khunthien and Min Buri districts.According to Bank of Thailand, 551 bank branches in 8 provinces are temporarily closed on the day, down by 42 from Friday. Of total, 289 are located in Bangkok. On the day, 5,432 ATMs were unplugged, down 96 from Friday. Of total, 2,268 are in Bangkok.

As another sign of improvement, the central bank’s clearing office in Ayutthaya, which was closed on Oct 6, would resume service on Nov 15.

Government may take on flood risk protection

The government says it will consider assuming the flood risk of companies affected by the massive inundation after insurers showed reluctance to provide coverage to them."The strategy will help reassure foreign investors that they will have risk protection from natural disasters," Deputy Prime Minister Kittiratt Na-Ranong said yesterday.Insurance companies could decline business from firms in severely swamped provinces - Ayutthaya and Pathum Thani in particular.The government wants to persuade foreign investors, particularly those from Japan, to stay in Thailand.Ensuring insurance coverage is part of the government's post-flood rehabilitation plan.Reinsurers overseas reportedly have refused to accept all risks of companies whose business |is located in such high-risk |zones.When investors are rejected by insurers, they will reconsider their plans to set up plants in Thailand. If they are convinced by the government's measure, they will feel more secure, Kittiratt said, adding that the policy would not require a large budget.The government will also invite water-management experts to draw up a long-term plan so that the country can avoid massive flooding.

Honda urges tax-free imports of car parts

         Honda Automobile (Thailand) wants the government to allow tax-free imports of both parts and finished cars by local manufacturers to alleviate shortages. 

       Around the middle of October, Honda asked the Industry Ministry to consider waiving the import tax for auto parts and finished vehicles. The measure so far has not been approved, while the Thai automotive industry has been disrupted for almost a month. Major carmakers including Toyota, Nissan, Mazda and Isuzu have halted production mainly because of a shortage of parts due to the widespread flooding.

Honda is the only carmaker that has suspended production because its assembly plants have been flooded - its two plants are in Rojana Industrial Estate in Ayutthaya. But even though Toyota's three factories are still safe, they cannot operate normally. The disruption has affected Toyota's production worldwide, as Thailand is a manufacturing base for exported auto parts and vehicles.
Pitak Pruittisarikorn, executive vice president of Honda Automobile (Thailand), said that just as the import of goods such as drinking water, instant noodles and canned fish is necessary during the flood emergency, the import of auto parts and finished vehicles was very important to the Thai automotive industry and its employees.
"The supply chain in the automotive industry is very long and complicated. If auto-parts manufacturers and auto-makers cannot import products, the workers and dealers in this industry will be affected. You can see that other auto-makers currently cannot run their production lines either. The impact has also spread to other countries. This measure would not just help Honda, but the industry as a whole," he said.
Pitak could not assess how long automotive production would be disrupted, as the industry has no more idea than anyone else how long it will take for the flood waters to recede and the damage to be repaired.
He said Honda recently moved some of the vehicles it had parked at a warehouse in Don Mueang Airport and distributed them to dealers nationwide. That was done before the floods hit the airport, as the government asked Honda to move the cars so it could use the warehouse as the centre for distributing goods. The company had parked about 4,000 vehicles at the airport.
However, Honda has stopped distributing the vehicles to its dealers since Thursday, as the flooding on Vibhavadi Road has obstructed transport. Many hundreds of Honda's vehicles remain at the airport, but Pitak believes they will be safe from the flood waters, as the warehouse is more than 1.5 metres higher than the road level.
Pitak said the remaining vehicles would be enough to supply its customers for a month.
Honda has production capacity of 240,000 units per year, or 20,000 units per month. The company's
auto sales during the first nine months of this year were lower than expected because of the short-term disruption from the tsunami in Japan. Honda should post sales volume of 180,000 units for the first nine months of the year but sales right now are lower than they should be. It expects to accelerate its sales during the final three months of the year.

Asean traders urge China to lower taxes

        Asean government officials and traders have called for China to eliminate non-tariff barriers and lower high value-added taxes (VAT) to promote trade and economic growth under the China-Asean Free Trade Agreement.

        During the eighth China-Asean Expo and the opening of the China-Asean Business and Investment Summit last week in Nanning, capital of southern China's Guanxi region, Malaysian Prime Minister Najib Razak said in a speech that China needed to relax some regulations and technical barriers to facilitate trade growth. "If technical barriers such as high tariffs in each province and stringent non-tariff barriers were eliminated, trade and investment between both sides should surge amid the slowing down of economic growth in Western countries," he said.

 
China is the biggest trade partner for Asean, while Asean is third for China. From January to August, two-way trade between China and Asean rose 26.6 per cent year on year to US$234.61 billion (Bt7.192 trillion). China's exports to Asean grew by 24.3 per cent to $109.46 billion, while its imports from Asean increased by 28.6 per cent to $125.14 billion.
More than 90 per cent of the goods traded between China and Asean were subject to zero duties. However, China still maintains its VAT at a high 13-17 per cent, while each local government has its own barriers and standards for inspecting imported goods. These complicated and duplicated regulations have hindered trade from Asean.
Phaichit Viboontanasarn, the Thai commercial ambassador to Beijing, said the Kingdom's exports to China would continue to grow on closer cooperation. However, Thai traders have raised many issues, mainly high duties and various import standards. Other issues are the lack of letters of credit for Chinese importers, fake yuan banknotes and strict security for Thai traders wishing to attend the trade fair.
Thai exports to China were forecast to grow by 25 per cent next year, but because of the serious flooding in Thailand, growth might be only 20 per cent.
Tanapong Lertpakakul, managing director of Lalana Premier Co, the Thai producer of Bear balm, who attended the expo, said China had set up stiff barriers to prevent access of imports to its market, despite zero duties under the free-trade pact. He called on the Thai government to talk to the central Chinese government about employing the same regulations for imports and giving the green light to goods purchased from Asean nations.Anchalee Promnart, deputy director-general of the Department of Export Promotion, said Thailand was targeted to achieve at least Bt120 billion in immediate sales during the five days of the expo.
Altogether 122 Thai companies have joined the Pavilion of Commodity Trade Exhibition and Pavilion of Cities of Charm. Those exporters are from five industries - machinery and equipment, electronics and electric appliances, construction materials and kitchenware, agricultural products and foods, and consumer goods and decorative items.

PTT told to take measures to improve pipeline efficiency

Energy Minister Pichai Naripthaphan has instructed PTT to acquire an additional stake in Thai Petroleum Pipeline Co (Thappline) to increase its shareholding in the company to the controlling level, up from the present 33.19 per cent.

This will enable PTT to have the authority to manage Thappline pipelines much more effectively.
He added that if PTT failed to do so, the ministry would allow it to invest Bt15 billion in installing pipelines to deliver oil to the North and Northeast regions. Though the required investment would be massive, it would enhance the country's power security in the long run.
Pichai said the flood crisis would result in significant costs to the energy business, especially Bangchak Petroleum's solar plant in Ayutthaya and other private solar-power operators in flooded provinces.
He added that he had prepared more than 10 measures to help the energy business after the flood recedes and they would be submitted for Cabinet consideration soon.
Pichai said the government had ordered 140 pumps from China worth Bt10 million to drain flooded industrial zones. They can handle a combined 500 cubic metres per hour. The pumps are expected to reach Thailand within 30 days.
The ministry has also considered reducing the burden on the industrial sector for subsidising low-income consumers' electricity costs. It may reduce the units of electricity people can use free of charge to between 50 and 60 per month from the present 90 units.
Somnuek Bamrungsalee, deputy director-general of the Energy Business Department, said the ministry had prepared measures to prevent shortages of jet fuel for airliners. If Thappline's jet-fuel depot in Lam Luk Ka, Pathum Thani, is flooded, trucks will be able to pick up the fuel in Bangkok from Bangchak's depot in Phra Khanong or those of Shell and Chevron in Klong Toei for distribution to Suvarnabhumi Airport.
Direk Lawansiri, chairman of the Energy Regulatory Commission, said it had devised two measures to help flood victims. For household electricity users, it will maintain the present tariff adjustment rate for another eight months. It might also consider extending the schedule under which industries have to pay their electricity bills by six months. This measure might be focused on those with no flood insurance.
The regulator has divided the affected industrial operators into small, medium-sized and large businesses and will seek appropriate measures to help them.

Experts want BOT to maintain key rate to help flood-hit businesses

Major banks and economists share the view that the Bank of Thailand (BOT) should freeze the policy interest rate at 3.5 per cent till the end of this year to help lower the financial and operating costs of businesses that have been affected by the floods.Their comments came before the meeting of the BOT Monetary Policy Committee on Wednesday and on November 30.The pressure on inflation continues and will be higher due to the hoarding of rice, instant noodles and bottled water by Bangkok residents.Dr Charl Kengchon, managing director of Kasikorn Research Centre, told The Nation that the BOT should carefully consider the policy rate in this meeting because inflation, combined with the natural disaster, is a short-term phenomenon and is not a key consideration in increasing the policy rate.The Thai economy is facing a growth slowdown due to the severe flooding, while the rate hike will not benefit growth, he said.The house does not expect the BOT to increase the rate in the next two meetings because the severe flooding would need more time to be resolved, therefore, it is possible that the repurchase rate will remain at 3.5 per cent this year.In case the BOT maintains the rate at 3.5 per cent, flood-affected businesses will not have to worry about higher financial costs from having to borrow additional working capital to repair damaged production plants. On the other hand, if the BOT increases the policy rate, flood-affected businesses will face a higher financial cost and the overall economic growth this year might not meet the target."The hike in policy rate will create worries for the industrial sector, and the central bank is well aware of it. We think the rate will be considered for a hike after the flooding problem is resolved," he said.Charl said that the GDP this year might be lower than the target if the flood situation is not resolved quickly.However, both GDP growth and inflation will accelerate next year from the massive spending by both private and government sectors, especially the investment on infrastructure to save industries from natural disaster.The government must show commitment to investors in industrial zones about rebuilding infrastructure and undertaking measures to save industrial estates from floods.He said it will not be easy for manufacturing plants to relocate to other industrial zones or move to other countries. In general, a manufacturer will not consider moving if the supply chains are not relocating. Flood-affected manufacturers are expected to stay at the same industrial estates and will quickly restart production when the situation returns to normal.Arthid Nanthawithaya, senior executive vice president of Siam Commercial Bank (SCB), also said that the policy rate should not be increased at this time.BOT Governor Prasarn Trairatvorakul said last week that the floods would cost the industrial sector Bt100 billion, or 1 per cent of GDP, while the agricultural sector will be hit by Bt16 billion-Bt20 billion.The GDP forecast would be revised down to reflect the situation, he added.Tak Bunnag, executive vice president of Bank of Ayudhya (BAY), said the central bank should maintain the repurchase rate at 3.5 per cent to ease the financial cost on flood-hit victims.He said the central bank is still monitoring the impact of the European debt crisis on the Thai economy, but the flooding is unlikely to be resolved soon. Internal and external factors would pressure the central bank's decision on the policy rate.Apisak Tantivorawong, president of Krung Thai Bank (KTB), said the BOT would consider the growth of the economy and inflation as key factors in deciding the policy rate. Inflation currently is not high, and the Thai economy has been affected by both the flooding and the global economy.Therefore, the timing is not appropriate for raising the policy rate, he said.

SIemens set to cater to urban growth In emerging Asia

Siemens is bullish on the prospect of its newly created Infrastructure and Cities Sector in Thailand and other emerging markets, expressing confidence that low-carbon features and its financing solution will respond well to the markets' need for sustainable products despite budget limitations.Peter Loescher, president and chief executive officer of the German engineering conglomerate, said emerging markets remained the world's growth engines, based on expectation by the United Nations Conference on Trade and Development (Unctad) that growth in emerging and developing countries will continue at about 6.5 per cent per year. In particular, Asian countries with comparably low debt levels and increasing inter-region trade are driving growth."This is a competitive advantage for Siemens, as already some 30 per cent of our business volume comes from emerging economies. And cities are the very centres of the economies' growth: Experts predict cities worldwide will spend 27 trillion euros [Bt1,143 trillion] on expanding their water, power and transportation systems over the next 25 years," he said.He acknowledged that emerging markets are still poorly equipped to finance such massive investment. Dealing with this is Siemens' "Performance Contracting", an innovative financing solution to help buyers cope with budget limitations and rising energy costs. Under this scheme, customers reimburse Siemens from the ongoing guaranteed energy savings that its renovations produce."When we show how to cut energy costs by 40 per cent at no charge, customers don't hesitate. That's why we've already made 6,500 public buildings worldwide greener - enabling our customers to reduce energy costs by more than €2 billion," he said.Infrastructure and Cities, Siemens' fourth business sector launched on October 1, comprises five divisions: rail systems (rolling stock), mobility and logistics (traffic, transport and logistics management), low and medium voltage (power distribution for utilities and facilities), smart grids (intelligent power grids), and building technologies. It was created on estimates that in the coming years, the global population will surpass 7 billion and a greater number of people will want to live in cities. Today, more than half of the world's population already lives in cities, and this share is forecast to climb to 60 per cent within 20 years, an increase of 1.4 billion urban residents.Cities throughout the world will have to invest massively in expanding their infrastructures. The market for urban investments addressed by Siemens currently totals about €300 billion a year. It plans for the sector's Centres of Competence in London, Asia and the United States to conduct research for new urban solutions and tailor special packages of Siemens products.Loescher expects solid growth rates for all areas from power generation and transmission to healthcare to sustainable urban and industrial infrastructures."Climate change will make environmental technologies the leading industry of the 21st century. At Siemens, green, energyefficient solutions are already generating onethird of our total revenue. And this share is increasing every day."We see two other megatrends: shifting demographics and increasing urbanisation. That's why we have just recently added our new, fourth sector, Infrastructure and Cities. The city market is a €300billion business opportunity, andBy setting up our new sector we want to intensify our efforts in order to tap this important market and further drive growth."In line with economic expansion in Asia, Siemens has enjoyed strong growth in the region. During the first nine months of this year, the company witnessed 39percent growth in orders, and this convinced Loescher that Siemens has the right products on offer.In Thailand, the company markets a complete range of products, with a fast-increasing share of green, energy-efficient solutions. In the coming years, Siemens hopes to be involved in improving the country's infrastructure in a sustainable way, particularly with rail, water and energy solutions."In energy, we predict smart grids as a major future trend in Thailand. We've just set up a new division for smart grids - bringing together smart energy distribution and smart consumption and thus creating totally new solutions. As you know, wind-power projects are also in the pipeline."When it comes to water, our main focus is on wastewater solutions for industrial plants. The first water project we implemented, at Khon Kaen Brewery, became a reference site in Southeast Asia. And over the last couple of years, our water business in Thailand has more than doubled. We aim to further grow this business - the preconditions are very good, as we have a strong order backlog for water solutions in Thailand," he said.

Financial assistance sought as floods hit industries hard

A government panel, tasked with rehabilitating the business community, expects the floods to shave off the country's gross domestic production growth forecast by 1-1.7 percentage points this year. Help is being sought from commercial banks for financial assistance.A government panel, tasked with rehabilitating the business community, expects the floods to shave off the country’s gross domestic production growth forecast by 1-1.7 percentage points this year. Help is being sought from commercial banks for financial assistance.The Business and Industrial Rehabilitation of the Flood Aftermath Committee, chaired by Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong today brainstormed for urgent measures to rehabilitate businesses affected by the heavy floods.Finance Minister Thirachai Phuvanatnaranubala, Industry Minister Wannarat Charnnukul and Bank of Thailand Governor Prasarn Triratvorakul attended the meeting.After the meeting, Thirachai said thatt the committee had considered 3 urgent measures including efforts to protect unaffected industrial estates from floods and to help companies cope with the losses.The Finance Ministry will hold talks with commercial banks and state-owned banks like Export-Import Bank of Thailand and Small and Medium Enterprise Development Bank of Thailand, for relaxation in debt repayments. It will also consider regulatory amendments to facilitate borrowing.According to central bank governor Prasarn, industries located in Rojana Industrial park, Saha Rattana Nakorn Industrial Estate, Hi-Tech Industrial Estate, Bang Kradi Industrial Estate and Nava Nakorn Industrial Estate owe a combined amount of Bt60 billion, or 0.75 per cent of total outstanding loans. Of total, 56 per cent belongs to Thai banks and the rest by foreign banks.The Business and Industrial Rehabilitation of the Flood Aftermath Committee, chaired by Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong today brainstormed for urgent measures to rehabilitate businesses affected by the heavy floods.Finance Minister Thirachai Phuvanatnaranubala, Industry Minister Wannarat Charnnukul and Bank of Thailand Governor Prasarn Triratvorakul attended the meeting.After the meeting, Thirachai said thatt the committee had considered 3 urgent measures including efforts to protect unaffected industrial estates from floods and to help companies cope with the losses.The Finance Ministry will hold talks with commercial banks and state-owned banks like Export-Import Bank of Thailand and Small and Medium Enterprise Development Bank of Thailand, for relaxation in debt repayments. It will also consider regulatory amendments to facilitate borrowing.According to central bank governor Prasarn, industries located in Rojana Industrial park, Saha Rattana Nakorn Industrial Estate, Hi-Tech Industrial Estate, Bang Kradi Industrial Estate and Nava Nakorn Industrial Estate owe a combined amount of Bt60 billion, or 0.75 per cent of total outstanding loans. Of total, 56 per cent belongs to Thai banks and the rest by foreign banks.

Mugen in vios03

Asia Stocks Rebound From 2 Year Low as Europe Seeks Solution to Crisis

Asian stocks rebounded from their lowest level since May 2010 as banks rallied amid speculation that European leaders may find a way to tame the region’s credit crisis.Sumitomo Mitsui Financial Group Inc. (8316), Japan’s No. 2 bank by market value, advanced 2 percent in Tokyo after the European Central Bank was said to be considering restarting covered-bond purchases and further measures to ease monetary conditions. Canon Inc. (7751), the camera maker which depends on Europe for about a third of its sales, rose 2.1 percent. BHP Billiton Ltd. (BHP), the world’s biggest mining company and Australia’s largest oil producer, jumped 2.3 percent in Sydney after crude and copper prices advanced.“Speculation that Europe may take additional monetary easing measures will likely boost shares” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.The MSCI Asia Pacific Index climbed 1.5 percent to 110.65 as of 9:30 a.m. in Tokyo, its first advance in four days. The measure slumped 7.1 percent last week, the most in almost three years, as concern grew that the global economy is heading for a recession. The declines drove the index into a so-called bear market after falling more than 20 percent from a May 2 high.Japan’s Nikkei 225 (NKY) Stock Average rose 1.7 percent in Tokyo. South Korea’s Kospi Index jumped 3.4 percent. Australia’s S&P/ASX 200 Index gained 2.2 percent in Sydney. New Zealand’s NZX 50 Index added 1.1 percent in Wellington.

Thai Stock Decline Stokes Exporter Opposition to Yingluck Wage Policy

The biggest drop in Thailand’s main stock index since 2008 prompted brokerages, fund managers and the bourse to call on Prime Minister Yingluck Shinawatra’s two- month-old government to alter plans to raise the minimum wage.The Federation of Thai Capital Market Organizations, a six- member grouping that includes the Stock Exchange of Thailand and Association of Investment Management Companies, urged policy makers to review any measures that would hurt exporters. The SET Index fell the most among Asian benchmark gauges yesterday, declining 5.7 percent, the biggest drop since Oct. 27, 2008.The sell-off “might bring some more common sense into the equation,” said Terry Weir, chief financial officer of Hana Microelectronics Pcl (HANA), Thailand’s biggest publicly traded semiconductor packager, which fell 6.1 percent. “If the minimum wage goes up far quicker than the productivity increase, then of course that will have a negative impact on our profits and on our competitiveness.”Concern that Europe’s debt crisis and a weakening U.S. recovery will slow exports, which account for about 60 percent of the economy, have contributed to a sell-off in Thailand’s equities and currency this month. Government plans to boost the minimum wage and purchase rice at guaranteed prices have added to investor uncertainty, said Kongkiat Opaswongkarn, chief executive officer of Asia Plus Securities Pcl. Reserve Ammunition“The government should reserve some ammunition for some hard times going forward,” said Kongkiat, who heads Thailand’s third-biggest brokerage. “They have been spending and spending and I’m afraid they probably never realized how long the global slowdown is going to last.”In 2009, the year after Lehman Brothers Holdings Inc. collapsed, Thailand’s economy contracted 2.3 percent as overseas sales shrunk 14 percent. Last year growth reached 7.8 percent, the fastest pace since 1995, as exports climbed 19 percent. The central bank expects gross domestic product to increase 4.1 percent in 2011 and 4.2 percent next year.“With the global economic slowdown, Thai exports will be affected,” the Federation of Thai Market Organizations said in a statement yesterday. “We would like to urge the government to review any policies that will affect production costs. That includes attempts to raise minimum wages. The hike in wages during this economic slowdown may accelerate layoffs by manufacturers.” Growth OutlookGovernor Prasarn Trairatvorakul said in a Sept. 24 interview that the Bank of Thailand may cut its economic growth projections as the global recovery falters, signaling there may be less scope for interest rates to rise further. The central bank raised its key rate for a seventh straight meeting last month, citing inflation risks posed by the government’s plan to raise wages and support rice prices.The minimum wage policy “is not exactly a fiscal boost” and “looks more like a transfer from one sector to another,” Santitarn Sathirathai, a Singapore-based analyst at Credit Suisse Group AG, said by phone. The government “might see this policy backfire because it actually hinders growth and may cause social problems as well because people are getting laid off.”Deputy Prime Minister Kittiratt Na-Ranong, who oversees economic policy, said the government would proceed with policies to strengthen domestic demand because the country has already “wasted much time” attempting to reduce its reliance on exports. Higher wages will “create more spending” and “increase productivity,” he said. Shift in Demand“Export-related businesses may face a difficult time because they rely on global markets,” Kittiratt, who is also commerce minister, told reporters in Bangkok yesterday. “When our policies are effective, many businesses that rely on local demand will have a good chance to benefit from stronger purchasing power because the balance is changing.”The government expects to spend as much as 400 billion baht ($13 billion) on the rice-price guarantee program, which will run from Oct. 7 until Feb. 29, deputy government spokeswoman Anuttama Amornvivat said Sept 13. Funding for the rice program isn’t included in the government’s budget deficit estimate of 350 billion baht for the fiscal year starting Oct. 1, Kittiratt said in a Sept. 12 interview.In July elections, Yingluck’s Pheu Thai party won 153 of 195 seats in the north and northeast, where incomes are about a third of those in Bangkok. That helped her to win a parliamentary majority for the first time since her brother Thaksin Shinawatra was ousted in a 2006 military coup.“Fears have overwhelmed the Thai stock market,” Petcharat Powattanasatien, the head of Kasikorn Asset Management Co., the nation’s largest money manager, with $22 billion of assets, said yesterday. “Fundamental analysis is unlikely to be justified as long as the problem in Europe and the U.S. remains unresolved.”

Euro-zone fears: Markets in tailspin

The Stock Exchange of Thailand yesterday lost as much as 9.42 per cent, which triggered a technical trading halt. In its 36-year history, the exchange’s circuit breaker has been thrown only twice before – in 2001 after the terrorist attack in the United States and in 2006 after the launch of capital controls.At yesterday’s close, the SET Index had rebounded to 904.06 points for a narrower loss of 54.10 points, or 5.65 per cent.Yesterday was the third day of dramatic tumbles on the Bangkok bourse sparked by concerns over the US and European economies, which are major markets for Thai exports. On Thursday, the Stock Exchange of Thailand Composite Index lost 3.79 per cent to 990.59 points and on Friday it lost a further 3.27 per cent to 958.16 points.The three days of losses, representing a plunge of 11.1 per cent, has wiped Bt1.02 trillion off the market’s capitalisation, bringing it down to Bt7.4 trillion.After yesterday’s panic selling of Thai stocks, the Federation of Thai Capital Market Organisations (Fetco) proposed the establishment of a Vayupak 3 Fund worth about Bt100 billion and a review of the government’s populist measures (details, page 2A).“Establishing a Vayupak Fund 3 will help to develop the capital market in the long term,” said Fetco president Paiboon Nalinthrangkurn. “The government will earn money through its reduction of holdings in state enterprises while investors will be able to buy stocks at bargain prices.Stock focuses include Thai Airways International, MCOT and PTT. The fund size could be Bt100 billion, similar to that of Vayupak 1 and 2.”Fetco is of the view that global market volatility will remain for some time, without collective action to end the cri sis and with clear signs that both the United States and Europe lack weapons to boost the economy.According to Securities Analysts’ Association secretary-general Sombat Narawutthichai, 170 Thai stocks are now trading below their fundamentals. The association is now in the process of revising its end-of-year SET Index forecast, given that euro-zone factors have become worse over the past two months. Earlier, some securities houses expected the index to end the year at 1,200 points.Fetco’s proposal for the establishment of a support fund was flatly rejected by Deputy Prime Minister Kittiratt Na-Ranong – a former president of the stock exchange. He said on the sidelines of a seminar yesterday that the government had no policy to bail out the market.He said yesterday’s Thai-market plunge looked frightening because of narrower losses on the first two days, compared with the losses of other Asian bourses. However, he said the plunge offered a good opportunity for buyers.SET president Charamporn Jotikasthira said after discussions with brokerage houses that yesterday’s market fall made the Thai bourse’s loss equal to those in Indonesia and the Philippines. In the past five days, Indonesia and the Philippines have lost 11.6 per cent and 13.6 per cent of market value respectively.He insisted that short-selling had not contributed to the tumble.Foreigners remained net sellers yesterday, with a net-sell position of Bt3.03 billion, as they left emerging markets and returned to dollar assets. So far this month, the net sells have exceeded Bt18 billion.The baht also plunged below 31 to the US dollar yesterday, to 31.17, the weakest level since January 31. Gold shed more than $100 per ounce to $1,532.72.Oil prices also fell to a seven-month low, on bets Europe’s sovereign-debt crisis would cut fuel demand. Crude for November delivery on the New York Mercantile Exchange fell as much as $2.74 to $77.11 a barrel, the lowest price since August 9, and was at $79.31 at 10.24am London time. Oil is down 13 per cent this year in New York.A senior broker at Jefferies Bache in London, Christopher Bellew – who correctly predicted Brent wouldn’t exceed $120 this summer – said that short-term panic could briefly push Brent below $100, but growth in Chinese demand was likely to prevent prices falling through the floor.World stock markets remained volatile yesterday as investors grew increasingly convinced that Greece would default on its debts – an event that economists say has the potential to worsen the global downturn.Global panic was sparked by default fears that originated from a string of bad news following the International Monetary Fund’s meeting last weekend. The Group of 20 expressed worries over the absence of a solution to ease the European debt crisis and big-time investor George Soros mentioned that the world was slipping into recession and the euro-zone debt crisis was now more severe than the US economic malaise.The most frightening news came from IMF managing director Christine Lagarde, who said the fund’s $384-billion lending chest might not be enough to meet all loan requests if the global economy worsened.According to polls released in Sunday editions of Greek newspapers To Paron and Proto Thema, most Greeks expect the country won’t be able to avoid defaulting on its public debt.Lagarde yesterday met with Greek Finance Minister Evangelos Venizelos in Washington. They discussed the terms under which the IMF mission would return to Athens to undertake a fifth review of Greece’s economic programme – most likely this coming week.To soothe markets, German Chancellor Angela Merkel said euro-region leaders must erect a firewall around Greece.Greece has yet to secure a second international bail-out amid questions about its ability to satisfy the terms for aid. Venizelos this month announced a raft of new measures including pension and wage cuts as well as a sweeping property tax to ensure the nation meets 2011 targets to qualify for a sixth loan payment in October under its first May 2010 financing package.Transport came to a standstill in the Greek capital yesterday as unions staged the latest series of 24-hour strikes against the government’s austerity drive, leading to long queues on the streets of Athens as commuters drove to work, according to Deutsche Presse-Agentur.

Decision on Dtac 3G network

 CAT Telecom chief executive officer Jirayuth Rungsrithong said a decision is near on whether Total Access Communications (DTAC)'s concession allows it to upgrade its existing network to 3G technology.
But it remains unclear whether this is so. DTAC, which operates under a concession from CAT, has been waiting since 2008 for the agency's consent to upgrade its network to 3G-High Speed Packet Access (HSPA) technology to provide commercial 3G-850 MHz service. So far, CAT has granted DTAC permission to do so only on a non-commercial basis.
Jirayuth said CAT would consult again the Office of the Attorney-General on whether DTAC is allowed to upgrade its network, this time with the added request that the Office reply promptly.
CAT first consulted the Office on this matter on April 22. The Office replied on September 12 that it had declined to make a decision on the matter.
The Office reply cited a May resolution by the National Telecommunications Commission (NTC) that DTAC is entitled under its concession, subject to the telecom law, to apply for an NTC permit to upgrade to HSPA technology. The NTC board therefore permitted DTAC to use radio communications equipment at its 1,200 base stations to facilitate the upgrade, and ruled that it was DTAC's duty to inform CAT of this. It was in accordance with this NTC resolution, the Office said in its reply, that it refrained from issuing an opinion on CAT's request on behalf of DTAC.
After receiving the Office reply last week, Jirayuth told ICT Minister Group Captain Anudith Nakornthap that while the reply "indicates" that DTAC can upgrade the network, CAT would re-submit its request to the Office of the Attorney-General. Jirayuth declined to specify when the request would be re-submitted, however.
CAT has also asked DTAC to clarify whether its current 3G-850 MHz service is offered on a commercial basis. DTAC has yet to reply.
DTAC launched the 3G-HSPA service on 850MHz in Bangkok on August 16, despite being told by CAT to wait for the Office to reply on the matter. The second-largest cellular operator said it had to press ahead with the launch or risk losing premium data customers to Advanced Info Service and Real Move.
Real Move, a subsidiary of True Corp, has launched a 3G-850 MHz service in partnership with CAT.
In January, CAT signed deals with True subsidiaries Real Move and Real Future, paving the way for collaborations to provide 3G-HSPA services. As part of these deals, Real Future will procure HSPA equipment for CAT to provide 3G capacity on a wholesale basis to interested firms. CAT will also wholesale 3G capacity to Real Move, which will provide retail services for 14.5 years.
The Office replied to the ICT Ministry in July that these CAT-True deals are not subject to the 1992 Public-Private Joint Venture Act.
The ministry consulted the Office on the matter after questions were raised about their legitimacy, including whether the deals must be in compliance with the public-private joint venture law.

Bank of Thailand Governor Prasarn warns against complacency on Asean integration

"There are dangers in allowing such an important issue to remain vague," Prasarn Trairatvorakul, governor of the Bank of Thailand, said recently.
Many point to the lack of awareness among businesses of the likely consequences for them when the AEC approaches in 2015 and that Asean integration could spawn risks and opportunity losses.
Some may argue that big companies and banks in Thailand have already seized opportunities by establishing footholds in the 10 Asean countries. Some examples are Charoen Pokphand Group, Banpu, Indorama Ventures and Bangkok Bank.
However, SMEs, which account for 99.6 per cent of all businesses in the country, may not thoroughly realise what will be coming down the pike with the wave of AEC liberalisation and when it will be materialised, as they are usually busy struggling with hectic day-to-day operations.
"One of the greatest risks that may arise is not from the AEC itself, but from ensuring that businesses and stakeholders understand what exactly is at stake," Prasarn said during the Sasin Update Talk-Reunion 2011 on the "Asean Economic Community 2015: Opportunities or Threats?
"The greatest threat is remaining complacent and not preparing for these changes," he said.
Authorities ought to paint a picture about what could be expected from the AEC so preparations can be made in time for plausible gains and challenges, he said.
The AEC is designed around five main pillars -- free trade in goods, free trade in services, free flow of skilled labour, free flow of investment, and freer flow of capital.
Many opportunities will be presented by the AEC. With about 600 million people in this regional community, demand for goods and services will explode. Then, mass production for economies of scale will likely follow and bring production costs down, said Arin Jira, deputy secretary-general of the Federation of Thai Industries (FTI).
Through integration, the region's bargaining power with trading partners will increase, he said.
After the AEC takes shape, huge flows of trade, services, investment and workers are anticipated to flow across Asean countries' boundaries - much bigger than the already large flows at present.
According to the FTI, the gross domestic product of the 10 Asean countries combined reaches US$2 trillion, about 5.4 times that of Thailand. Asean's foreign direct investment totals $50 billion, of which about 60 per cent comes from China. International trade touches $2 trillion while international tourists to these countries number 6.5 million, second only to France in the world.
"It's really important to think regionally in several dimensions. [One is] in terms of your market. What country you are in. What's your demographics," said Sethaput Suthiwartnarueput, a well-known economist and visiting professor at Chulalongkorn University's Sasin Graduate Institute of Business Administration.
Sourcing of inputs and branding are also among the critical issues for businesses to think about, he said.
Discrepancies in materials, regional laws, rules and regulations have to be sorted out to lessen the difficulties in mobilising trade, services, people, investment and capital among countries. More than that, joint ventures and many more foreign business partners will most likely penetrate all member countries, including Thailand, and gear up competition as high as they can everywhere from manufacturing and tourism to the capital markets.
Foreign investors would likely welcome the AEC and grab its future to pave the way to gain access to other larger markets like China and India, said Mathew Verghis, lead economist at the World Bank.
Member-country workers in most professions will be able to move freely among the member countries. However, the language used for communicating among nations may delay skill development or even act as a major obstacle for some.
Arin said Thailand should change its education system to one with a greater concentration on foreign languages especially English. Government assistance is also required to help boost the private sector's competitiveness.
This is seen as the only way of communicating among people in the 10 Asean nations. With extensive job training and English-language skills, Thai workers could be equipped with higher professional and language capabilities, and then earn higher income and enhance their purchasing power when fiercer competition through the AEC really comes.

Google opens Thailand office

Giant search-engine service provider and creator of the Android smart-phone platform, Google, has opened a local office in Thailand.
The move reflects a commitment by Google to focus on the Thai market.
The American multinational, which is based at Mountain View in California, hosts a variety of Internet-based services and products and generates revenue mainly from advertising.
Along with the opening of its first office here, Google has announced the appointment of Ariya Banomyong, 38, as its first country head for Thailand. Having taken his new post on July 1 this year, Ariya will oversee Google's sales and business-development operations in this country.
Google's aims in Thailand are to encourage local businesses to go online successfully and to raise online-advertising spending in the Thai market from the current level of only 0.3 per cent of total advertising spending to a level closer to that in countries like the United States and the United Kingdom, which have a well- developed Internet infrastructure and where online-advertising spending is 30 to 50 per cent of total ad spending.
Ariya comes from 10 years' experience in the telecom business with True Corporation, where his last position was chief commercial officer of True Corporation's Convergence. His experience will serve Google's mission of dealing with Thailand's Internet market, which is seeing a convergence of fixed-line and mobile Internet usage.
"It is the same passion for me in working with Google," he said. "I desire to be the pioneer to help the company settle down in the Thai market - the same as I did with Orange when it brought its business to Thailand with True Corporation more than 10 years ago."
He said the beauty of his new position with Google Thailand was that it allowed him to join one of the largest technology companies in the world, while still being a pioneering leader in his home country as a new market for Google.
Thailand has around 25 million Internet users, which means more than 30 per cent of the total population are online. About 40 per cent of these users access the Internet via mobile devices. Importantly, these people are using search services every day. Of all the counties in Southeast Asia, Thailand has the highest number of searches - 55 million per day.
Ariya said the number of mobile-Internet users in Thailand was expanding rapidly, having grown three-fold in 2009 and 2010 to represent about 40 per cent of all Internet users. Every day, three out of every five Thai smart-phone users employs a search service. This figure is higher than that in many developed countries, including the US, the UK, Germany and Australia. And the most important key word of these mobile searches is "restaurant".
"Through their search behaviour, these people are obviously telling us what products and services they are looking for. Our mission is to help businesses to utilise and benefit from this searching," he said.
This gives the Thai market big potential for Google, with huge opportunities for the search-engine leader to capture. Currently, the country's total annual spending on advertising amounts to around Bt100 billion. Less than 1 per cent of this goes to online advertising, leaving more than 99 per cent of the total as Ariya's potential market - and he is, after all, representing the biggest player in the global online-advertising field.
"We don't see other players in online advertising as direct competitors because the market is very big. We all have opportunities to capture the business of those not-yet-online, and I will do my best for Google," he said.
Ariya said his priority was setting up a local team of 10 to 20 people by next year to oversee marketing, sales and operations. Then, the company will offer more products and services to local businesses. Google sees its main role as that of an assistant, helping Thai businesses - both large and small- and medium-sized enterprises - to go online and benefit from Google's products and services.
"A priority job is to educate the Thai market, including agencies, business partners and corporate customers, on how to go online successfully and what they will then find by way of products and services from Google that can bring them continued success online. For large corporations we will use a one-on-one approach, while for 300,000 SMEs in Thailand, we will assist them through marketing activities like the recently launched 'Go Online' campaign."
Ariya said he had spent about three months, involving several interviews, in the course of his appointment as Google's country manger for Thailand. After starting the job on July 1, he spent time in training at Google's operations Australia and Singapore, learning more about Google's products and services and its corporate culture. In the course of his introduction to his new company, he met Google's executive chairman and former chief executive Eric Schmidt.

SET to forward plan on listing of exchange

The Stock Exchange of Thailand (SET) will forward its demutualisation plan to the government while confirming that it has an option that does not include selling shares to the public.

Previously, Commerce Minister Kittiratt Na Ranong said he did not agree with the plan, signalling that it might be scrapped.
Meanwhile, SET President Charamporn Jotikasthira said last week that he had not had a chance to talk with either Kittiratt, who is also deputy
prime minister and head of the economic team, or Finance Minister Thirachai Phuvanatnaranubala on the fate of the plan.
He added that following the Thai capital development plan, the SET was slated to become a private company, selling its shares to the public and then listing the shares on the stock market.
"However, it depends on whether the government will follow the plan or not," said Charamporn.
He said that there were |many options for the demutua-|lisation of the exchange as either a listed or non-listed company. Listing would increase the com-petitiveness of the SET, as it |could raise funds for expansion. |But if the decision is made not to select the listing option, it would use its retained earnings for expansion.
Charamporn said there was no stipulation in law for SET reform. But under the plan under consideration by the Office of the Council of State, the SET would be required to sell its shares to the public. The law specifies that the market has to be liberalised and its monopoly abandoned. The goal is to increase the efficiency and flexibility of the exchange in response to competition.
He said the SET was now developing its new automated information and technology system and expects it to be operational next July.
The finance minister has called a meeting today of the economic monitoring committee, which comprises representatives from the SET, the Federation of Thai Capital Market Organisations, the Board of Trade and the Federation of Thai Industries.
The committee will discuss the economic situation both globally and domestically.

Stocks, gold up

After losing 10 per cent since August 5, the SET Index gained 1.86 points or 0.18 per cent on turnover of Bt30.3 billion.
"The market had given up ground in the past four trading days," a stock analyst said.
Gold closed at US$1,782.50-$1,783.50 an ounce in Hong Kong, down from its record high above $1,800. Volatility led to 14 adjustments in domestic prices, which resulted in an increase of Bt500 per baht weight.
Bullion closed at Bt25,400, down slightly from the intraday peak of Bt25,500.

SET follows Wall Street rebound

The Stock Exchange of Thailand yesterday rebounded after an overnight rally on Wall Street as the US Federal Reserve pledged to keep its interest rate at a record low to revive the flagging economic recovery in the United States.
Gold for immediate delivery rose to US$1,764 an ounce while Thailand's Gold Traders Association adjusted the price of domestic gold bar eight times for an aggregate decline of Bt200 per baht weight to Bt24,900.
Oil rebounded from a 10-month low in the New York Mercantile Exchange, with crude for September delivery advancing 4 per cent to $82.43 a barrel.

After two days of sharp falls on a downgrading of the US sovereign debt by Standard & Poor's, the SET Index bounced back 1.69 per cent, or 17.67 points, to close at 1,060.21 points. Trading turnover was Bt35.3 billion. Combining with net sellers of Thai stocks worth Bt1.79 billion yesterday, foreign investors' selling totalled Bt13.75 billion from the beginning of this month.
On Tuesday, the US Dow Jones Industrial Average recovered nearly 4 per cent after the Fed indicated it would keep its target rate for overnight loans between banks at a record low of between zero and 0.25 per cent at least through mid-2013 and use other tools as appropriate.
The Federal Open Market Committee's decision represents the biggest effort since last November to jolt the US economy and revive confidence after S&P lowered the US credit rating last week.
The dollar continued its weakening versus the majority of its most traded peers as the Fed said growth was "considerably slower" than it expected, according to Bloomberg.
The baht was trading at 29.90 per US dollar as of 5:33pm, with the strongest level of 29.81/29.83 per dollar.
"The baht is still volatile from external factors. Despite the Fed's low-rate pledge, investors think the measure is not aggressive enough and does not give a big surprise to the market," said a currency trader at CIMB Thai Bank.
"We saw a Tuesday rally on Wall Street as investors are expecting a better return on equities," the trader said.

Thai Oil

         Taiwanese Ministry of Economic Affairs has ordered Formosa Petrochemical to shut down its 540kbd refinery in Mailioa for safety checks following the 7th fire in the past one year. The latest fire took place on 30 July at a propylene production unit. As a result, Formosa declared a force majeure on its oil product exports in August. Formosa also put on hold its August crude supply from Saudi Arabia and Kuwait. The shutdown is expected to take 2 weeks for the repairs to be carried out.
Comment:
           This is positive for TOP as Formosa is a major exporter of diesel and gasoline (these 2 products account for 60% of TOP's refinery output). The shutdown would cut off the export portion from the refiner this month. However, the extra strength of diesel prices should be short-lived as supply shortfall by Formosa could be offset by higher exports from Japan and South Korea.

          For aromatics (mainly Paraxylene (PX)), margins should be bullish for the short-term as one of the three aromatic units has already shut down since 18 May. Market is now taking a wait-and-see stand on how long the complex will be shut. In conclusion, we expect diesel, gasoline, and aromatic margins to rise in the short-term. TOP is our top pick for energy sector.

Gold glItters amid bleak US outlook, sliding dollar

Renewed demand by central banks worldwide including the Bank of Thailand amid signs of a declining US economy and dollar depreciation pushed global and domestic gold prices to a new high.
Spot gold in Singapore peaked at US$1,670.85 an ounce, prompting Thailand's Gold Traders Association to raise domestic reference prices four times yesterday. Bullion in Thailand was last sold at Bt23,450 per baht weight, while ornaments went for Bt23,850. Domestic gold prices were raised by Bt550 per baht weight yesterday. In a month, it rose by $170 per ounce. At $1,700, domestic gold price will hit Bt24,000 per baht weight.


Even though the US debt deal was passed on Tuesday, investors across the globe were bearish over the torpid second half as US consumers have zipped up their wallets and the government moved to cut more spending. Consumer spending dropped, while data show a high unemployment rate and the slowest US manufacturing growth in two years. Gold again is seen as a safe haven for investors.
Asian equity markets including the Stock Exchange of Thailand's slumped as traders switched their attention from the US debt deal to the weakening global economic outlook and fears of fresh sovereign debt contagion in the eurozone.
UBS raised its one-month gold forecast to $1,725 an ounce from $1,575, and three-month forecast to $1,850 from $1,600. Eugen Weinberg, an analyst at Commerzbank, said in a Bloomberg Television interview from Frankfurt that central banks would need to buy "several hundred" metric tonnes of gold a year.
The Bank of Thailand showed that its gold reserves reached 133.2 tonnes as of June. As of July 22, Thailand was sitting on international reserves of $185.9 billion. London-based World Gold Council data showed that the Bank of Thailand, after maintaining gold reserves at 84 tonnes from 2004-10, bought 15.6 tonnes in July last year and 9.3 tonnes in March of this year.
In the first five months of this year, central banks added 155 tonnes valued at about $8.18 billion, which doubled the amount bought in all of 2010, World Gold Council data show.
According to data from the International Monetary Fund (IMF), the Bank of Korea bought 25 tonnes from June-July to lift reserves to 39.4 tonnes. Kazakhstan's holdings also increased by 3.1 tonnes to 70.4 tonnes in June.

GH Bank raises fixed-deposit rates

The fixed rate on deposits below Bt3 million for three months stays at 2.25 per cent while that for deposits over Bt3 million for the same period is 2.50 per cent. The current deposit rate rises to 0.50 per cent from 0.25 per cent.
The minimum lending rate went up by 25 basis points to 7.125 per cent from 6.875 per cent.
Mother's Day treat
Bangkok Metro, operator of the capital's MRT subway system, is waiving fares for all mothers riding its trains with their children on Mother's Day, August 12.
To be eligible for the free ride, the mothers and their children must identify themselves at ticket booths and get coupons. The free ride is given only to mothers, while their children are subject to normal fares.
Overseas-call drive
TOT will focus more on promoting its Net Call Internet-based overseas-call service in the near future to expand its customer base, senior executive vice president Morakot Tienmontri said yesterday.
TOT targets overseas-call revenue of about Bt1 billion this year, of which Bt220 million will be from its 008 service.
Yesterday it cut the 008 rate on calls to Hong Kong or Canada to Bt2 per minute from Bt3 to increase competition. The promotional rate will last for three months. It has expanded its call destinations to 229 countries from 153.
Storm impact slight
Tropical Storm Nock-Ten, which caused little flooding in 10 provinces in the Northeast, will have had only a small impact on rice production, affecting 160,000 rai (25,600 hectares) of the total 62 million rai of rice plantation in the country.
Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said yesterday that Thai rice production was expected to reach the highest rate in many years at 25 million tonnes of paddy rice.
The short-term flooding will not destroy production. In fact, it has benefited many plantation areas. However, if the water cannot be drained quickly, it may cause more losses, he said.
Promotions lure most
Sixty-three per cent of Thais are attracted by retail promotional offers when it comes to grocery shopping, according to Nielsen's latest "ShopperTrends" report.
The report also found that while value is in focus, consumers were more loyal to both brands and stores than in 2008. When asked how promotions affected their supermarket/hypermarket shopping, 24 per cent of Thai shoppers said they only bought on promotion when they like the brand (up from 16 per cent in 2008). This increase in loyalty also extends to stores: nearly three-quarters (73 per cent) of shoppers claimed that they always went to the same stores, up from 63 per cent in 2008 and 69 per cent in 2009.
Hypermarkets continued to be the favourite primary shopping channel, with 92 per cent saying they visited in the past four weeks,
S 11 offers bike loans
S 11 Group Co has emerged as a new provider of motorcycle hire-purchase loans, with backed by local and foreign investors.
With Land & Houses Retail Bank's financial support, the group expects to cash in on robust demand that pushed motorcycle sales beyond 1 million units in the first half of this year. S 11 Group will focus its business in Bangkok and peripheral areas. Samart Jiradamrong, managing director and CEO, said he did not have a market-share target.

Concerns in US economy spark new chaos

The price was adjusted by Bt400 at the opening and Bt50 each at the three subsequent increases.
The Stock Exchange of Thailand also moved downward in tandem with other Asian bourses, on growing investor concern of the global economic health.
As the morning session ended, the SET index dropped 13.03 points or 1.14 per cent to 1,126.58. Yesterday, rating agencies warned the US may be downgraded and an unexpected decline in consumer spending increased concern that growth in the world's largest economy is faltering.

Even though the US's debt deal was passed last night, investors were concerned over the torpid second half as US consumers have zipped up their wallets and the government moved to cut more spending. Consumer spending dropped, while data shows high unemployment rate and the slowest US manufacturing growth in two years.


Upon the agreement to raise the US debt ceiling and reduce government spending, International Monetary Fund Managing Director Christine Lagarde welcomed the move as this will reduce a major uncertainty and bolster US fiscal credibility, hence good for both the US and global economy.
"Raising the debt ceiling means a severe economic disruption has been avoided, and the accompanying deficit reduction deal is an important step toward fiscal consolidation. Given the fragility of recovery, the planned spending cuts are appropriately phased and not overly frontloaded so as not to undermine growth.

CIMB launches global bond fund

Rated "AAA" by Standard & Poor's, FTIF Templeton Global Bond Fund focuses on investment-grade government debts worldwide in over 20 currencies.
The Thai fund's unit trusts will be available during July 25-August 11 through CIMB Thai Bank's branches. Minimum investment is Bt5,000.

Power Buy sets aside Bt1 bn for new stores, renovation project

Power Buy, Thailand's leading retailer of electronic appliances and information-technology products, will this year invest about Bt1 billion to set up new stores and renovate existing ones.
About Bt700 million will be allocated to new stores, and Bt300 million will be spent on renovating 13 existing Power Buy outlets.
Suthisarn Chirathivat, president of Power Buy, a branch of Central Retail Corporation, said it would open 18 new stores by the end of this year.
"We have already opened four new Power Buy stores, including in Hua Hin, which is our first standalone outlet. Occupying total retail space of about Bt2,500 square metres, the Hua Hin store was officially opened in January," he said. Suthisarn said new Power Buy outlets would be opened this year in Sukhapiban 3, Bang Na kilometre 7, CentralPlaza Lat Phrao, CentralPlaza Rama IX, and Lampang. He said it was the biggest expansion of Power Buy outlets in five years.
The company currently operates about 60 Power Buy outlets, mainly in HomeWorks, Thai Watsadu, and Central Department Stores.
Suthisarn said the overall IT and consumer-electronics market was anticipated to grow by 15-20 per cent this year, according to GfK research agency. The growth is being driven by political stability and a good rebound of the overall Thai economy. However, some concerns remain, including inflation and increasing prices of oil and commodities.
Power Buy sales grew by about 10 per cent to Bt10 billion in 2009, and by 15 per cent to Bt13 billion last year. The company expects its sales to increase by another 20 per cent to Bt16.3 billion this year, based on performance in the first six months.
The company has set its marketing budget at more than Bt60 million for promotions and special privileges such as discounts of up to 30 per cent.
Power Buy yesterday joined forces with electronic-appliances manufacturers of more than 200 world-class brands for "Power Buy Expo 2011".
Power Buy Expo 2011 runs until July 31 at Hall 103-104 of Bitec Bang Na, with total space of more than 12,000sqm to welcome 400,000 shoppers. The company expects sales of Bt450 million at the event.

Used car sales expected to grow

Jaturont Komolmis, senior vice president of Grand Prix International, a local publisher of auto magazines, and chairman of the organising committee of the Bangkok Used Car and Supercar Show, said demand for used cars had increased in each of the past three years. Sales jumped 15 per cent in 2009 and 20 per cent last year. Another 25-per-cent increase is anticipated for this year.
"Car ownership in Thailand is at the ratio of nine persons per car, which is the highest in Asean and fourth in Asia after Japan, China, India and South Korea," Jaturont said.
He said that in the United States, the ownership ratio was 3.8 per car.
Thailand is a production hub for vehicles, supplying both the domestic and export markets. About 2 million cars are targeted to be produced locally this year, increasing to 2.5 million units by 2014.
Jaturont said Thailand was the world's 14th-largest car producer.
He said the used-car market would continue to grow as second-hand vehicles changed hands more quickly than new ones.
The average price of a used car is about Bt500,000, much cheaper than a new vehicle, for which prices average around Bt1 million.
"We have found that owners of new cars keep them for an average of four or five years before trading them in. Used cars change hands every one and a half to two years.
"Based on this, demand for used cars can be four to five times as high as for new cars."
Jaturont said there were more than 2 million new graduates every year, many of them entering the workforce right away.
"From our survey, cars will be the first items first-jobbers choose to buy once they are earning a salary, as they want to make life more convenient."
He said this was quite different from developed markets, where more than 50 per cent of first-jobbers make buying a house their first priority. Cars have become less important in many developed markets with good mass-transport systems.
The third Bangkok Used Car and Supercar Show kicked off yesterday and will be held until July 31 at Challenger 2-3, Impact Muang Thong Thani.
The auto extravaganza features more than 10,000 pre-owned and imported cars, with prices ranging from Bt200,000 to Bt10 million. The company is confident that the fair will be a great success, targeting 30 per cent more sales than at last year's event.

Banks to continue with strong earnings

Local banks' strong Q2 2011 earnings underpinned by higher net interest margin (NIM), strong insurance premiums and well-contained costs should allow them to leverage the economic turnaround.
Earnings momentum is expected to be sustained, or even better for the rest of this year on back of sustained economic momentum and improve political climate.
Most analysts believe the Thai central bank will not raise its policy rate much higher than the current 3.25 per cent, while banks are unlikely to raise their deposit rates aggressively. This should contribute to improvement in their NIM in the following quarters. Robust loan growth will also help boost NIM and
fee incomes. Hence, second half 2011 earnings are expected to be stronger than that of the first half's.
Improving NIM
Higher net interest margin (NIM) both year-on-year (yoy) and quarter-on-quartor (qoq). All banks showed higher NIM yoy and qoq, except for Bank of Ayudhya (BAY), which saw a slight qoq dip. On average, NIM improved 13 basis point (bp) qoq and 20 bp yoy.
KTB showed the highest yoy improvement while TMB recorded the strongest qoq increase.
Basically, yields on banks' earning assets rose faster than costs on interest-bearing liabilities as banks did not raise rates for savings, which account for about 40 per cent, or more of their deposit portfolios. Meanwhile, they raised lending rates by 25 bp across the board.
With competition for deposits declining following the recent central bank policy rate hike, banks' NIM should be even better in the second half of this year than the first half.
Asset quality improved
Non-performing loans (NPL) ratios dropped for most banks. Given improved economic conditions, NPL ratios have declined. As the economy is expected to grow 4.5% this year, NPLs should slide further and
pose no concerns for the banking sector over the next couple of years. As a result, banks have room to lower their provisions.
Fee income still strong
Aggregate fee income rose 9 per cent yoy and 1 per cent qoq. Despite banks' lowering of provincial transfer fees and ATM withdrawal fees in Q1 2011, fee income was still considered very robust. Banks' fee income should grow by 10 per cent this year and next year.
Costs under control
Cost-to-income ratio averaged 45 per cent in the Q2 2011, down from 50 per cent in Q2 2010. Banks' aggressive branch and ATM network expansions over the past few years are likely to cool down, hence this ratio should start to decline. Lower cost-to-income ratios should help strengthen banks' profitability.
Banks aggregate earnings forecasts should rise by 2-3 per cent for the calendar year 2011-13, according to CIMB Securities (Thailand).
Siam Commercial Bank (SCB) and Krung Thai Bank (KTB) are CIMB Securities (Thailand)'s top picks. SCB is expected to be a foreign investor favourite in the banking sector, while KTB is likely to be domestic investors' pick among the banking stocks. The stronger-than-expected Q2 2011 results are likely to lead to brokers' earnings upgrades and a solid earnings outlook should be a catalyst for banks' share prices.

BOT says govt measures increase inflationary risks

       The comments fuelled market expectations of higher inflation and more interest-rate hikes after the central bank slightly raised its core-inflation forecasts for 2011 and 2012 yesterday.
"Inflationary risk is higher than the risk to economic growth," said BOT Assistant Governor Paiboon Kittisrikangwan.
The panel yesterday revised upwards its forecast for core inflation to 2.4 per cent this year from the previous forecast of 2.3 per cent. Next year's estimate was also raised to 2.3 per cent from an earlier projection of 2.1 per cent. The monetary authorities cited the likelihood of rising inflationary pressure in the second half of the year due to increased pass-through of costs to consumers and rising pressure on demand amid robust domestic growth.
The MPC is maintaining its forecasts for headline inflation and economic growth. Headline inflation is estimated at 3.9 per cent this year and 3.2 per cent next year. Thailand's economy is expected to grow 4.1 per cent this year and 4.2 per cent in 2012.
The committee expects Thailand to see more economic momentum in the latter half of this year than in the second quarter, Paiboon said, citing the likelihood of higher exports after the supply disruption from Japan's crisis.
It also expects increases in private investment and private consumption on the back of accommodative interest rates and satisfactory loan expansion.
The estimates for inflation and next year's growth rate do not take into account the incoming government's policies, Paiboon said.
"If the state's policies are clearer, forecasts could be revised," he said.
The new government's pledge for an increase in minimum wages has a direct impact on production costs. If wages rise sharply and are not in line with the level of labour productivity, that will have a large impact on inflation, Paiboon said. Additional economic stimulus measures could add to inflationary pressure, he added.
Currently, inflationary pressure remains high because of continued investment and consumption and pass-through of rising costs to product prices.
"Even though the policy rate has been raised continuously from last year, the real interest rate remains negative," he said. Roughly, the real interest rate equals the policy rate minus consensus-expected inflation on average for a year.
Other issues being monitored include global economic expansion, domestic economic stability, future fiscal policy and household debt.

CAT puts brakes on DTAC 3G

      He added that DTAC's clinching of a permit last month from the National Telecommunications Commission (NTC) to install and use a 3G wireless broadband network did not mean DTAC could go ahead with its stated plan to launch it in August. The cellular operator needs to wait for the Office of the Attorney-General to inform CAT if DTAC can launch 3G commercial services under a CAT concession, he said.
A source from DTAC complained that CAT had kept the firm waiting for more than two years for the nod to launch 3G commercial services. The source added that if the OAG gave DTAC the okay, CAT might try to delay the plan further. CAT has allowed DTAC to launch 3G services on a trial basis.
Advanced Info Service is expected to launch commercial 3G services next week, while CAT soft-launched its own commercial 3G services this week.
On Thursday, DTAC announced that it would commercially launch 3G wireless broadband services in Bangkok in mid-August. The launch will be based on an NTC permit.
DTAC has earmarked Bt1.2 billion for the two-phase network upgrade this year using 1,220 base stations. It has completed the initial upgrade in Bangkok of 400 stations at a cost of Bt350 million. The addition of 800 more sites to cover all of Bangkok and 20 other provinces is expected to be completed this year.
DTAC also plans to increase the number of 3G base stations to 2,000 in 2012, which will cost Bt750 million for an additional 780 base stations in 40 provinces. If its board approves this third phase, it is ex

Tisco expects last rate hike in August

The policy rate was raised 25 basis points to 3.25 per cent on July 13.
Tisco supported its view by saying that inflation pressure remains high due to continued demand growth. It expected the core inflation (excluding volatile food and energy prices) to peak in the next few months.
However, Tisco said that the new government's policies would send limited impacts to the gross domestic product. The policies should also boost inflation largely next year, but not this year. As such, it is convinced that the rate hike in August would be the last this year.

THAI resumes normal operations to Japan

"THAI has resumed all its regularly operated services on routes from Bangkok to five airports in Japan, back to the same level served prior to the Great East Japan Earthquake on March 11. Passenger traffic to and from Japan is regaining normal levels," said Pandit Chanapai, THAI executive vice president of commercial.
Beginning November 16, THAI will operate three additional flights per week on the route Bangkok-Osaka (Kansai) v.v. utilising the retrofitted Boeing 777-300 aircraft. With the introduction of these three additional flights, THAI will operate a total of 17 flights per week to Osaka (Kansai), making it more convenient for passengers with flight connections to Europe.
The winter traffic programme will also reflect adjustments to flight scheduling for easier connections into Phuket.

Fitch rates TMB funds on 'strong capacity' to meet

Both are money-market funds managed by TMB Asset Management Co (TMBAM).
The ratings reflect the funds' strong capacity to achieve their investment objectives of preserving principal and providing shareholder liquidity through limiting credit, market and liquidity risk, Fitch said.
The main rating drivers are the credit quality, diversification, and liquidity of the funds' portfolios and the capabilities and resources of TMBAM as an investment adviser, it said.
As of June 30, TMBTM and TMBMF had about Bt16.9 billion and Bt14.3 billion, respectively, in total assets under management.


Both funds pursue their objectives by investing in high-quality short-term debt securities, including those of the Thai government and the Bank of Thailand, time deposits, bills of exchange, promissory notes, and repurchase agreements.
Consistent with Fitch's "AAAmmf(tha)" investment guidelines, TMBTM and TMBMF maintain high credit quality by investing exclusively in securities rated "F1(tha)" or "F1+(tha)" - with a minimum 50 per cent in the latter - by Fitch or comparable credit quality according to other rating agencies.
In keeping with the same guidelines, the funds limit their exposure to individual obligors and counter-parties. As of June 30, both funds' portfolio credit factor, which is a risk-weighted measure of the credit quality and maturity profile of the funds' portfolio securities, met Fitch's "AAAmmf(tha)" investment guidelines of 1.50 or less.
The funds seek to limit their interest-rate exposure by limiting weighted average maturity to reset date (WAMr) to 60 days, consistent with Fitch's guidelines. Although the funds do not set a limit on weighted average final maturity (WAMf), all of their investments are in fixed-rate securities resulting in similar levels between their WAMr and WAMf.
As of June 30, TMBTM's and TMBMF's WAMr was 44 and 56 days, respectively. The funds' overall maturity profiles are currently consistent with Fitch's investment guidelines of 397-day maximum maturity limit for financial institution, corporate and fixed rate-government securities.
The funds' additional investment restrictions are aimed at maintaining sufficient levels of daily and weekly liquidity to meet investors' redemption requests. In line with Fitch's investment guidelines applicable to money market funds in Thailand, the funds invest at least 15 per cent of total assets in securities maturing overnight or other qualified assets and at least 30 per cent in securities maturing within seven business days or other qualified assets.
The funds have fully met these liquidity requirements over the past 12 months, the agency said.

Two securities houses fined by SET

In a statement, the exchange said KT Zmico is fined Bt510,000 for providing incentives to marketing officers despite the absence of advice to clients or transaction orders. Two marketing officers were also put on probation. KGI Securities is also fined Bt300,000 for a similar reason and its three marketing officers are put on probation.
Both companies clarified that they did not intend to breach the rules and promised to adhere to the rules.

TOT, AIS strike roaming deal

This deal should help AIS expand its 3G service so it can compete with True Corp, which has partnered with CAT Telecom.
A TOT source said both sides had agreed on the matter and were waiting for the deal to take effect soon. TOT apparently sent the draft contract to AIS as soon as it looked like Pheu Thai was going to take over the country's reins. Party leader Yingluck Shinawatra is the former president of AIS.
Negotiations for this deal have been going on since last year. The source said that under this deal, TOT would initially allow 60,000 AIS customers to use its 3G network in Greater Bangkok for data roaming, while AIS will allow 200,000 TOT customers voice access and 10,000 customers for data services.


Under the deal, both sides are allowed to provide roaming access to a million customers each.
AIS will pay TOT a roaming fee of 85 satang for each megabyte downloaded, while TOT will pay AIS a promotional rate of 60 satang per minute for subscribers using the AIS network for voice service, Bt1 per SMS and 85 satang per megabyte of data downloaded.
The TOT source added that AIS initially wanted to charge a roaming fee of Bt1.10 per minute, but later agreed to bring it down to the promotional rate. AIS will also give TOT 30 per cent of the revenue it earns from subscribers using the TOT network for roaming access.
The TOT source said this deal was not exclusively for AIS, but AIS had the right to ask TOT to refuse other telecom firms.
AIS wants its subscribers to use the TOT network for roaming access in order to ease the burden on its 3G-900 MHz network, which is serving voice and data services to more than 30 million customers. However, partners that provide the 3G service on TOT's existing network are against the deal because they are concerned AIS would compete with them to acquire customers.
AIS is also interested in partnering with TOT to provide 3G services on TOT's soon-to-be set up nationwide 3G network.

Pheu Thai to go for revamp of energy policy

The end to Oil Fund levies on three fuel products marks the beginning of the Pheu Thai government's revamping of energy pricing, including ex-refinery prices, and possible exploitation of petroleum royalties, Energy Ministry and Government House sources said.
"The party made it clear that it will control the Energy Ministry. The minister is someone proficient in energy affairs and he will overhaul the energy price structure, particularly gasoline prices, for fairness to consumers particularly the grassroots who contributed massive votes to the party," said the Energy Ministry source who asked not to be named.
Ending contributions from fuel product sales to the Oil Fund could be implemented immediately, with the endorsement of the National Energy Council chaired by the prime minister, he said.
The Oil Fund levies are Bt7.50 per litre for 95-octane petrol, Bt6.70 for 91-octane petrol and Bt1.27 for diesel.
The levy for gasohol 95 with 10-per-cent ethanol content is Bt2.40 and for gasohol 91 with similar ethanol content is Bt0.10. The fund subsidises Bt1.30 and Bt13.50 per litre for gasohol 95 with ethanol blends of 20 and 85 per cent.


The decision to scrap contributions from the two petrol products will not hurt the Oil Fund much. Based on daily consumption of 7 million to 8 million litres of 91-octane, and 100,000 litres of 95-octane, the fund would lose only about Bt60 million a day from the decision.
It would also be giving up Bt67.3 million by scrapping the diesel contribution, based on a daily consumption of 53 million litres.
The government's decision will leave intact the levies on gasohol 95 and gasohol 91 with combined daily consumption of 10 million to 12 million litres. The Oil Fund - due to the stiff subsidies for diesel and gas - is saddled with Bt1.13 billion debts.
"The party originally wanted to please motorcyclists with the campaign to end the Oil Fund. However, that would require a new mechanism as the Oil Fund is still needed to subsidise cooking gas and other products like gasohol E85," the source said.
Over 10 million motorcycles nationwide are running on regular or premium petrol.
Part of the overhaul would be a change in the ex-refinery price, which now references the Singapore price. To attract investment in refineries, the government allows refineries to add to the Singapore price the cost of transporting oil from Singapore, even though there was no such transaction. Without the extra cost, the ex-refinery prices would be lower and so would pump prices.
Besides the new pricing formulas, an oil stock is part of the plan for energy security, which is in line with the International Energy Agency's recommendations. Such stocks are used in countries without a mechanism like the Oil Fund to stabilise prices. For instance, the IEA earlier this month released 60 million barrels of its stock to ease global demand, and this effectively reduced global oil prices.
The oil reserve depots would be part of the Land Bridge project in the South, which was part of Pheu Thai's election platform, the source added.
Krairit Nilkuha, director-general of the Alternative Energy Development and Efficiency Department, said the loss could be addressed by the Energy Conservation Fund, which accumulates Bt4 billion to Bt5 billion annually through the contribution of 25 satang per litre from various fuel products.
Royalty income from petroleum concessions, worth nearly Bt50 billion per year, could be used to cover the Oil Fund's support of alternative fuels like gasohol E20, E85 and liquefied petroleum gas, which is much lower.
"I'm convinced that the promotion under the 15-year alternative energy development plan [2008-2022] would remain and this requires further subsidies," he said.
In the US, petroleum concession holders are required to remit 10 per cent of output to the government. The government then resorts to the stock at times of high global prices, or sells it to make profits.
The Government House source said no legal amendment is needed if royalties would be used for this purpose. Under the Fiscal Reserve Act, that could be done only with the approval of the finance minister, with a clear set of spending plans.
Then the royalty income now parked at the Mineral Fuels Department would be exploited. However, such a change would give the spending mandate to the department's chief or the related ministry's permanent secretary, and the off-balance spending would not be subject to parliamentary scrutiny. For the sake of transparency, a new committee may be set up to manage the fund.

Strong baht policy

A treasurer at Bangkok Bank said that the appreciation could continue in line with regional movement. The appreciation is guaranteed after Pheu Thai prime minister-elect Yingluck Shinawatra promised to let market mechanism rule.
He expected the baht to move in the range of 30.20-30 today.

Thai Airways chief seeks fewer regulations

Thai Airways International president Piyasvasti Amranand said at a seminar yesterday on furthering the country's economy and society under the new government that he would like to urge the incoming administration to bring peace to the country and ease any conflict among the people.
The government will have to resolve corruption, which has affected the confidence of foreign investors in Thailand. THAI, which is listed in the local stock market, is quite sensitive to these issues.

"The new elected government should reduce regulations that have obstructed state-run enterprises such as Thai Airways from doing business effectively. Those regulations were created along with the government's concern about any corruption that might be conducted by executives of those state-run enterprises," Piyasvasti said.
"The government then adopted many regulations for the prevention of any corrupt activities, which have made Thai Airways run its airline business inefficiently. It will, however, allow outside people to interfere and do the corruption themselves," he noted.
Piyasvasti said the airline business had suffered a heavy impact from last year's political unrest and massive rallies, which caused many foreign tourists to cancel their trips to Thailand. The airline industry has also been hit severely by volcanic eruptions, which have affected its flying routes.
The company has also been affected by higher operational costs due to the increase of the price of fuel by almost 40 per cent in the first six months of this year compared with the same period last year.
The airline is in a highly competitive industry, mainly with other leading airlines from around the world because of aviation liberalisation. It has also less profit margin and is quite sensitive to any political conflict, which has had an impact on the confidence of foreign travellers considering visits to Thailand.
"About 90 per cent of Thai Airways revenue is from international routes, and the remaining 10 per cent from domestic routes. About 70 per cent of foreign tourists have the intention of direct visits to Thailand, while the other 30 per cent use Thailand as a transit point to other countries.
"If the government manages the country peacefully with no political conflict, which has had an impact on the confidence of foreign tourists, our Thai Airways business will benefit," Piyasvasti said.
Chanin Vongkusolkit, chief executive officer of Banpu, said the new government should not implement policies that will shock the economy. He explained that the economic fundamentals were sound because of high international reserves, relatively low inflation and manageable public debts. Past governments have done well in managing the economy, and growth could continue. No sign of trouble has emerged, he said.
"Capital flew out of the country because of worries about the political situation. [But we should see] capital flow back after the election, as the prime minister-designate has promised national reconciliation," he said.
Suvit Maesincee, an academic at the Sasin Institute for Global Affairs, suggested the new government should ensure less political conflict and much more political stability. Winning a majority of votes should enable the government to manage the country better. Thailand's competitiveness has been adversely affected by political conflicts over the past five to six years, he said.
The country's global market share increased only slightly - from 1.15 per cent in 2004 to 1.36 per cent in 2009 - while China's jumped from 0.76 per cent to 10.75 per cent, and Indonesia succeeded in increasing its export share from 0.85 per cent to 1.04 per cent in the same period.

SET sees foreign capital

The market's record daily value without any help from big-lot transactions is a shade higher at Bt63.116 billion, registered in September 2010 when the court unlocked suspended industrial projects at Map Ta Phut in Rayong.
The highest-ever daily transaction value is Bt75 billion, but that included the big-lot transaction when the Shinawatra family sold its stake in Shin Corp for Bt73 billion back in 2006.
Yesterday's huge turnover pushed the Stock Exchange of Thailand Index up by 48.80 points, a 4.69-per-cent rise, to 1,090.28 points.
The landslide poll victory by the opposition Pheu Thai Party convinced investors that Thailand would soon welcome in a new government, while some returned to the market after gains in overseas markets last week due to Greece's success in tapping a new loan facility from the International Monetary Fund.
"The Thai market performed extraordinarily yesterday, reflecting the strong confi?dence of foreign investors. The election on Sunday was com?pleted peacefully, and the majority win will pave the way for quick government formation," said Patteera Dilokrungthirapop, CEO of DBS Vickers Securities (Thailand) and president of the Association of Securities Companies.
HSBC Thailand chief mar?kets strategist Parson Singha said the election result had been better than expected for investors, driving the SET Index up and strengthening the baht.
The baht gained 0.34 per cent to 30.46 against the US dollar as of 5.30pm yesterday, because of the capital inflow into the stock market as well as the dollar weakening against the euro. "Investor confidence is on the rise as no violence is expected [following the election]," Parson said.
Investors turned their atten?tion to stocks linked directly or indirectly to the Shinawatra family, as Yingluck Shinawatra, the sister of ousted prime minister Thaksin Shinawatra, is tipped to become the next prime minister.