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.