The Thai Economy Is In Crisis

[Jai Dee]

Thai economy brightens with Constitution Tribunal ruling

The Thai economy looks brighter after the Constitutional Tribunal's decision last week to dissolve four political parties, according to the Kasikorn Research Center.

The leading think tank reported that the tribunal's ruling regarding party dissolutions on May 30 made Thailand's situation at this political juncture become much clearer, although it has yet to be seen how the referendum on the charter draft will affect the overall climate and whether the general election would be held at year-end as scheduled.

The tribunal's decision is considered a very positive factor for private investor confidence and the economic outlook.

KRC projected the economy would clearly recover at the beginning of the third quarter of this year because the private-sector confidence is set to improve, the acceleration of budget disbursements -- particularly in the last quarter of the 2007 fiscal year, interest rate reduction, and state measures to stimulate growth in the property sector.

Kasikorn views these factors as contributing to an economic expansion of around 4-5 per cent in the second half of this year compared with 3-3.5 per cent in the first six months.

However, future political development needs to be monitored because it could have an impact on confidence in the business and household consumer sectors, particularly if a demonstration takes place and turns violent following the tribunal's verdict

KRC said that the inflation rate is likely to edge up in the second half of this year due to higher oil prices.

It projected that the general inflation rate will stay at an average of 2.2-2.5 per cent in the second half of the year compared with 2.1-2.2 per cent in the first half.

Exports in the first quarter of this year grew 18.5 per cent, higher than earlier expected. However, exports are expected to grow more slowly in the second half of the year at 8-10 per cent compared with a 15-17 per cent growth performance in the first half.

The decline in exports stems from the US economic slowdown and the strengthening of the baht.

KRC also forecast the Bank of Thailand would consider decreasing the policy interest rate further to 3-3.25 per cent of by the end of this year.

Source: TNA - 04 June 2007

[ThaiGoon]

Kasikorn analysts predict that Thailand's economy in the second half of 2007 will receive a boost from renewed investor confidence, resulting in a 3.5-4.5 percent growth rate.

6 mths in and with all the data they have , they still want 100 base points spread .........................

I'll go on record for 3% max .

By the way, it's just been reported today that the GDP growth of this year's first quarter is 4.3%. They also expected the economy to improve in the last two quarters of this year.

And Dupont, yeah I'm sure there are two million farang bar owners in Thailand right now and they all will lay off all their Thai empolyees as well.

Edited June 4, 2007 by ThaiGoon

[soundman]

By the way, it's just been reported today that the GDP growth of this year's first quarter is 4.3%. They also expected the economy to improve in the last two quarters of this year.

And Dupont, yeah I'm sure there are two million farang bar owners in Thailand right now and they all will lay off all their Thai empolyees as well.

So - 2 mil bars - 8 employees each on avg. 16 mil bar employees - That'd be the entire female population from 18 - 35.

Soundman.

[ThaiGoon]

By the way, it's just been reported today that the GDP growth of this year's first quarter is 4.3%. They also expected the economy to improve in the last two quarters of this year.

And Dupont, yeah I'm sure there are two million farang bar owners in Thailand right now and they all will lay off all their Thai empolyees as well.

So - 2 mil bars - 8 employees each on avg. 16 mil bar employees - That'd be the entire female population from 18 - 35.

Soundman.

[Jai Dee]

SET up 8.71 points this morning

The Stock Exchange of Thailand (SET) Index opened this morning (Jun 4) at 762.64 points, increasing by 8.71 points, or by 1.16 percent. The market value was about 18,493,000,000 baht.

The top five most active values were as follows.

TOP increased by 4.00 baht to close at 73.00 baht

SCC increased by 10.00 baht to close at 252.00 baht,

PTT increased by 4.00 baht to close at 262.00 baht,

RRC increased by 0.30 baht to close at 19.60 baht, and

KEST increased by 1.80 baht to close at 23.70 baht.

Source: Thai National News Bureau Public Relations Department - 04 June 2007

[highdiver]

criss????? what crisis??

it seesm every dooms day predicition is causing the market to risw even further.

[soundman]

criss????? what crisis??

it seesm every dooms day predicition is causing the market to risw even further.

Just like the strengthening baht... on the back of political uncertainy & weakening economic fundamentals...

Soundman.

[Mid]

it's a day by day proposition at best ,

watch this hit tomorrow ..........................

Chinese shares in sharpest drop in three months

Posted: 04 June 2007 1915 hrs

[ThaiGoon]

it's a day by day proposition at best ,

watch this hit tomorrow ..........................

Chinese shares in sharpest drop in three months

Posted: 04 June 2007 1915 hrs

Yeah, thanks to this, the SET rose more than two percent today.

Aand a few days ago when the chinese stocks dropped by about ten %, the SET also rose more than two %.

http://www.nationmultimedia.com/breakingne...newsid=30035977

Thai shares close at a new one-year high

Thai share prices soared 2.21 per cent Monday to a fresh one-year high as sentiment remained positive after Thai judges last week dissolved ousted premier Thaksin Shinawatra's party, dealers said.

They said foreign inflows also partly shifted from the volatile Chinese market, helping push Thai stocks to finish in line with other regional bourses.

"watch this hit tomorrow"

Edited June 4, 2007 by ThaiGoon

[bingobongo]

more reality.....even national Thai GDP is expected to go negative.....

GLOOMY OUTLOOK

Saha suffers first slump in 60 yrs

Strong currency, consumer sentiment take toll on sales

The group is the country's largest manufacturing and trading conglomerate.

"This is the first time in our history we have put a minus figure in our sales-growth column," group chairman Boonsithi Chokwatana said.

While many academics and government officials project gross domestic product growth of about 4 per cent this year, from a merchant's point of view I would say GDP will be negative," Boonsithi said.

http://www.nationmultimedia.com/2007/06/05...ss_30035996.php

[cclub75]

One striking quote from Saha boss is :

"''The economic situation is worse than the 1997 financial crisis because ordinary people have been directly affected,'' said Boonsithi Chokwatana, the group's chairman."

http://www.bangkokpost.com/Business/05Jun2007_biz36.php

Here we have the illustration of the "paradox" of the thai economy.

On one hand, an export sector that continues to boom, despite the THB increase, and represents now 60 % of GDP. On the another hand, a local situation that is worsening.

Margins are under pressure, due to the currency problem and some higher costs (energy). Investment and consumption are going south.

Taxes revenues are decreasing.

Who benefit from the exports ? Apparently not the people at grass root level. Nor the state's coffers.

Such a divergence could be a bad sign.

[Mid]

it's a day by day proposition at best ,

watch this hit tomorrow ..........................

Chinese shares in sharpest drop in three months

Posted: 04 June 2007 1915 hrs

Yeah, thanks to this, the SET rose more than two percent today.

Aand a few days ago when the chinese stocks dropped by about ten %, the SET also rose more than two %.

http://www.nationmultimedia.com/breakingne...newsid=30035977

Thai shares close at a new one-year high

Thai share prices soared 2.21 per cent Monday to a fresh one-year high as sentiment remained positive after Thai judges last week dissolved ousted premier Thaksin Shinawatra's party, dealers said.

They said foreign inflows also partly shifted from the volatile Chinese market, helping push Thai stocks to finish in line with other regional bourses.

"watch this hit tomorrow"

[ThaiGoon]

Oooooh a one percent or so drop today after a rise of more than 2 percent yesterday and the day before.

[Old Man River]

One striking quote from Saha boss is :

"''The economic situation is worse than the 1997 financial crisis because ordinary people have been directly affected,'' said Boonsithi Chokwatana, the group's chairman."

http://www.bangkokpost.com/Business/05Jun2007_biz36.php

Here we have the illustration of the "paradox" of the thai economy.

On one hand, an export sector that continues to boom, despite the THB increase, and represents now 60 % of GDP. On the another hand, a local situation that is worsening.

Margins are under pressure, due to the currency problem and some higher costs (energy). Investment and consumption are going south.

Taxes revenues are decreasing.

Who benefit from the exports ? Apparently not the people at grass root level. Nor the state's coffers.

Such a divergence could be a bad sign.

This is pretty much my take as well. I hope for a turnaround, but I just don't see it. The biggest export sector has normally been the electronics sector, with a good bit of this being MNC assembly operations. The stronger THB doesn't impact sales of these companies as much since they often ship to sister companies abroad, who then onsell the product. While these assembly operations keep a number of people employed and pay local taxes, their value added impact on the local economy isn't as great as if it were agricultural exports where all the value added was Thai produced. Hence, exports can remain relatively strong, but the benefit isn't felt as much at the grass root level.

The biggest problem, as you point out, is that investment and consumption are going south. The government is trying to offset this by spending as rapidly as possible, but historically this has been and remains a slow process. Local companies are not going to invest unless they see a reason to increase production capacity and long term foreign investors now see neighboring countries more investor friendly.

The turnaround in post 1997 was export driven based on the then weak THB. This time they don't have the benefit of the weak THB and as expected we have seen several local industries fade.

The only way out of this is for people to spend, but you can't force people to spend. Consumer spending is based on perception that times are going to be good and when the perception is the opposite with no relief in sight, consumers only buy the staples they need to live on. Thailand is in for rough economic times for the next several years and at present, I don't see any way out of it.

[bingobongo]

once the euphoria of last week subsides, reality will return.....

Economy likely to contract this year, says leading businessman

Boonyasith Chokwattana, chairman of the Sahaphat Group, said although the political situation had improved, most entrepreneurs shared a common view that the country's economy would not expand this year.

"Throughout the past 10-20 years, I have never seen the economy worse than it it now.

http://etna.mcot.net/query.php?nid=29749

[ThaiGoon]

http://www.nationmultimedia.com/2007/06/06...ss_30036104.php

AUTO INDUSTRY

Excise tax cut boosts eco-cars

Car-makers back Cabinet decision

Carmakers hailed yesterday's Cabinet decision to slash excise tax for small cars from 30 per cent to 17 per cent, saying the move will boost the production of fuel-efficient cars in Thailand.

Asian Honda Motor's senior vice president Adisak Rohitasun said the decision confirmed the government's dedication to promoting fuel-saving cars, with the excise tax now low enough to make the eco-car project materialise.

"Considering the tax rate, this project will be kick-started, sooner or later," he said.

Thai Automotive Institute director Wallop Tiasiri said that if the rate had been higher, the project would definitely not take shape. Now carmakers are waiting for other incentives from the Board of Investment.

"At this rate, I believe that only a few companies which are really active in the car market would invest in the project," Wallop noted.

The eco-car project is expected to bring in tens of billions in new investment. Six Japanese auto companies, including Toyota, Nissan, Honda and Mitsubishi, have shown interest in joining the scheme. Officials who asked not to be named said Honda, Mitsubishi and Suzuki were expected to apply for Board of Investment incentives to make eco-cars.

[Maestro]

excise tax for small cars

Excise tax. It is a tax on top of all other taxes. Internationally, generally considered a “sin” tax and levied on alcohol and tobacco products. In Thailand, it is also used as a “luxury” tax, levied on massage parlours, spas, motor cars, mobile telephone calls, and probably a number of other items considered as unnecessary luxuries.

Where can I find a complete list of items on which excise tax is applied in Thailand, and the rate of tax per item?

--

Maestro

[ThaiGoon]

I don't know.

[ray23]

Well you can add a motorcycle above 200CC for sure.

It's really a double whammy first you pay the in import duty and then you can up to 80K baht to register it.

I still don't see the economy to be great in Thailand for the average Thai in Issan where I live. But actions like this make me believe there is hope.

P.S . do a Goggle search on Thai import duties and you might find what you are looking for

Edited June 6, 2007 by ray23

[mumbu]

Yields are in inverse proportion to the price of bonds. In other words, investors wanted lower price and higher return on government bonds. Put it simply: investors are no longer interested in financing Thai government debt.

Thailand Scraps Bond Sale After Yields Surge, Central Bank Says

By David Yong

June 6 (Bloomberg) -- Bank of Thailand canceled a scheduled 5 billion baht ($152.4 million) bond sale today because investors demanded too high a yield at the auction, the bank said.

The government scrapped the sale of debt maturing in 2024 after yields surged to 4.9 percent, Yanyong Damrongsiri, a central bank spokesman said in a phone interview from Bangkok. The securities yielded 4.555 percent at the previous sale on May 29 and 4.169 percent at an auction on May 23.

The central bank manages debt auctions on behalf of the government.

To contact the reporter on this story: David Yong in Kuala Lumpur at [email protected] .

Last Updated: June 6, 2007 03:02 EDT

[ThaiGoon]

Yields are in inverse proportion to the price of bonds. In other words, investors wanted lower price and higher return on government bonds. Put it simply: investors are no longer interested in financing Thai government debt.

Thailand Scraps Bond Sale After Yields Surge, Central Bank Says

By David Yong

June 6 (Bloomberg) -- Bank of Thailand canceled a scheduled 5 billion baht ($152.4 million) bond sale today because investors demanded too high a yield at the auction, the bank said.

The government scrapped the sale of debt maturing in 2024 after yields surged to 4.9 percent, Yanyong Damrongsiri, a central bank spokesman said in a phone interview from Bangkok. The securities yielded 4.555 percent at the previous sale on May 29 and 4.169 percent at an auction on May 23.

The central bank manages debt auctions on behalf of the government.

To contact the reporter on this story: David Yong in Kuala Lumpur at [email protected] .

Last Updated: June 6, 2007 03:02 EDT

What a load of crap. Pathetic attempt to spin things. The simple truth of the matter is that BoT is not willing to pay 4.9% in yields. That's all. What a load of spin BS.

Edited June 7, 2007 by ThaiGoon

[ThaiGoon]

Hmmm.

Edited June 7, 2007 by ThaiGoon

[soundman]

excise tax for small cars

Excise tax. It is a tax on top of all other taxes. Internationally, generally considered a "sin" tax and levied on alcohol and tobacco products. In Thailand, it is also used as a "luxury" tax, levied on massage parlours, spas, motor cars, mobile telephone calls, and probably a number of other items considered as unnecessary luxuries.

Where can I find a complete list of items on which excise tax is applied in Thailand, and the rate of tax per item?

--

Maestro

I would love to see a table of excise tax rates as well.

From what I understand about motor vehicles, it's considered to be an import tariff (with a variable rate depending on a number of factors such as country of origin, wholesale selling price etc.) rather than an excise tax (which luxory cars such as RR might attract as well). There was some talk of imposing another tax on motor vehicles dependant on the rated output of the engine as well.

Cheers,

Soundman.

[Jai Dee]

The state of political instability concerns the majority of people

The Center for Economic and Business Forecasting of the University of the Thai Chamber of Commerce discloses that the state of political instability concerns the majority of people.

The Deputy Dean of Research Division of the Thai Chamber of Commerce University, Ms. Saowanee Thairungroj (เสาวนีย์ ไทยรุ่งโรจน์) says the university has conducted a research concerning the effect of five factors on entrepreneurs; the five factors include interest rate, exchange rate, fuel prices, political instability and possible sabotage.

63.7% of respondants view the current interest rate has nothing to do with the production cost, while 30% claims that it will lead to an increase. Meanwhile, the appropriate interest rate of loan is suggested to remain at 6.5-7 percent.

The government has been suggested to reduce price of fuel production, increase prices of products, and promote alternative energy.

Over 63.9% of samples have expressed concern over the political situation, while urging the government to quickly revive the national economy.

Source: Thai National News Bureau Public Relations Department - 07 June 2007

[Edonista]

Yields are in inverse proportion to the price of bonds. In other words, investors wanted lower price and higher return on government bonds. Put it simply: investors are no longer interested in financing Thai government debt.

Thailand Scraps Bond Sale After Yields Surge, Central Bank Says

By David Yong

June 6 (Bloomberg) -- Bank of Thailand canceled a scheduled 5 billion baht ($152.4 million) bond sale today because investors demanded too high a yield at the auction, the bank said.

The government scrapped the sale of debt maturing in 2024 after yields surged to 4.9 percent, Yanyong Damrongsiri, a central bank spokesman said in a phone interview from Bangkok. The securities yielded 4.555 percent at the previous sale on May 29 and 4.169 percent at an auction on May 23.

The central bank manages debt auctions on behalf of the government.

To contact the reporter on this story: David Yong in Kuala Lumpur at [email protected] .

Last Updated: June 6, 2007 03:02 EDT

What a load of crap. Pathetic attempt to spin things. The simple truth of the matter is that BoT is not willing to pay 4.9% in yields. That's all. What a load of spin BS.

There's little to laugh about.

Just watch the THAILAND 6.15% BDS 07/07/26 , it fell from its top of 125.5 a few days ago to 116.77 today. I guess the honeymoon between THB bonds and speculators is coming to an abrupt end.

http://datacenter.treasury.erstebank.com/w...ex.html?LANG=en

untitled.bmp

[Mid]

while urging the government to quickly revive the national economy.

something wrong with it ...????

[Jai Dee]

Survey reveals improving political situation but signs of sluggish investment remains

Mr. Thanawat Polvichai, the Director of the University of Thai Chamber of Commerce's Economic and Business Forecasting Center, says even though the political situation is easing, but there are signals of sluggish investment during the third and fourth quarters of this year.

Mr. Thanawat says the center conducted a research on political impacts on investment between June 1st and 5th, and it comprised a sample of 800 business operators. The respondents perceive that the political situation is slightly better following the Constitutional Tribunal’s ruling on the party dissolution case. However, the respondents see that the investment prospect in the third and fourth quarters is still unclear, and it will continue to slow down until the general election will be held.

Most respondents believe the consumption index will be lower, but expect the economy to grow by 4 to 4.5 percent. The salary re-adjustment plan for government officials and the government’s mega-projects will accelerate businesses in one way or another.

Source: Thai National News Bureau Public Relations Department - 07 June 2007

[bingobongo]

Thaigoon, how are the noodles?

reality is painful.......but you will need to face it soon.......

OPINION / THAILAND'S ECONOMIC PROBLEMS _ PART I

Hardest hit will be the grassroots

The state of Thailand's economy appears rather worrisome and the near-term prospects do not look promising. The following is the first of a three-part article on the major economic problems and weaknesses[/size]

By CHET CHAOVISIDHA[/size]

On the face of it, the current situation pertaining to the economy of Thailand is not as severe as the 1997 financial meltdown and the economic collapse that followed. But the present predicament seems to be wider in scope. Why? Because in the 1997 crisis the real, financial and external sectors collapsed or were near collapse, and yet the public sector was reasonably strong and able to come to the rescue, pulling the whole economy back up on its feet, albeit with the financial assistance of a certain international financial institution. This time, all four sectors are simultaneously plagued with their own particular ills, some more serious than others, although the degree of severity in each individual sector may not be as great as those associated with the three troubled sectors in the previous 1997 crisis; yet some problems appear to be policy-resistant in nature (as will be elucidated).

See here for full story:

http://www.bangkokpost.com/News/07Jun2007_news22.php

Edited June 7, 2007 by Maestro
Quoted text reduced for copyright reasons.

[Mid]

Aside from this, an increasing number of farm communities has been brought down to earth. They are becoming disillusioned; the realisation has gradually sunk in that they are being reduced to a poverty-stricken and debt-ridden class, in the wake of the departure of the previous administration along with its populist, giveaway policies. They are becoming distraught. All these factors can be seen as a potential incubator for widespread social unrest and political discontent, as already evidenced by the mounting incidence of protests by various local agriculture-related groups _ which can only add to foreign as well as local investment jitters.

credence is lent to this paragraph alone by the controls on movement evident in the N / NE ,

Khun Chet Chaovisidha deserves a hearing ..........................

[LaoPo]

In the real sector, we are confronted with a number of difficulties. The farm sector is stricken with declining income and a corresponding fall in spending. In addition, it is saddled with a huge amount of household debt, a legacy from the consumption-driven growth policy of the previous administration which relied primarily on debt-creation, geared towards the farm sector and the lower middle class.

Aside from this, an increasing number of farm communities has been brought down to earth. They are becoming disillusioned; the realisation has gradually sunk in that they are being reduced to a poverty-stricken and debt-ridden class, in the wake of the departure of the previous administration along with its populist, giveaway policies. They are becoming distraught. All these factors can be seen as a potential incubator for widespread social unrest and political discontent, as already evidenced by the mounting incidence of protests by various local agriculture-related groups _ which can only add to foreign as well as local investment jitters.

The collateral damage associated with household debt has to do with salaried workers in the non-farm sectors, many of whom had previously overextended themselves financially by excessive borrowing and lavish spending.

This bad habit was made possible by the increasingly widespread use of bank and non-bank credit card facilities _ the number of credit cards jumped from 1.6 million to 8.2 million between 2000 and 2005 and to over 10 million in 2007.

These individuals are compelled to languish under constant pressure to meet their monthly interest servicing and partial loan repayments on time. The offshoot is that their workplace productivity and their employers' business performance suffers.

Some household debtors have turned to refinancing their outstanding debts by resorting to new sources of funds, usually at more restrictive terms. This practice is generally deemed undesirable and unsustainable, as there are limited sources of finance available and once these have become exhausted, refinancing must come to an end and the process will reverse itself, with legal proceedings and bankruptcies following suit.

In the manufacturing sector, numerous business units, especially the small and medium-sized, have already felt the impact of the declining overall economic activity and a sizeable number have gone belly up. Many more are expected to follow suit.

Only the large-scale industrial and commercial enterprises have so far managed to endure the currently unfavourable economic conditions and withstand the onslaught of foreign competition.

Very worrying signs that the economical situation is far worse than we thought.

What's frightening is that 50% of Thai Labor force is in agriculture/farming/communities and represents maybe some 60-70 % of the total Thai population...

It means there's a time-bomb ticking in rural Thailand and not a nice one...

The positive news, Thaigoon is feeding us all the time (nothing wrong with that btw...but not very realistic), delivers rosy pictures about the economical situation in Industrial and Commercial enterprises (which are still doing reasonably well) but, I fear, there's much more underlying negative news. The article above shows that...unfortunately.

I really wish Thailand was in better shape...it should be, if one looks to the other 'booming' Far Eastern countries...

But, IMHO, all of the above is caused by the BKK Elite, defending their personal interests/wealth/privileges, like crocs, defending their nests....forgetting and neglecting the needs of the majority of the -poor- Thai population

LaoPo