The Thai Economy Is In Crisis

[bingobongo]

Foreign investor confidence is expected to nosedive after the National Legislative Assembly (NLA) yesterday approved significantly tighter restrictions on foreign businesses operating in Thailand.

http://www.bangkokpost.com/News/09Aug2007_news01.php

Can somebody confirm this as the link (also directly with BKK Post) doesn't work...?

LaoPo

Tighter curbs on foreign business

Investors predicted to vote with their feet

MONGKOL BANGPRAPA & PHUSADEE ARUNMAS

Foreign investor confidence is expected to nosedive after the National Legislative Assembly (NLA) yesterday approved significantly tighter restrictions on foreign businesses operating in Thailand. The NLA, in a surprise move, rebelled against the government draft of the Foreign Business Act (FBA) and instead approved by a 76 to 64 vote tougher amendments that significantly expand the definition of foreign companies under business restrictions.

The move, a clear setback to Commerce Minister Krirkkrai Jirapaet and the government, could have huge implications for the Thai economy and future foreign investment, analysts said.

The FBA is the legal framework that defines what sectors are prohibited from foreign businesses operating in Thailand.

The current FBA defines a company as foreign if 50% or more of its shares are held by foreigners. The government draft would expand the definition to include firms where 50% or more of the voting rights are held by foreigners.

But NLA members argued that the government draft did little to close existing loopholes, and added a clause that defines a company as coming under the FBA if foreigners hold the authority to appoint or dismiss directors or the right to set a firm's strategy or direction.

The tougher amendments also include a requirement to look at chain shareholdings, or shares held by a ladder of companies, to determine ultimate ownership and prevent nominee shareholding by firms registered as Thai but controlled by foreigners.

The new clause could potentially result in tens of thousands of companies being reclassified to fall under the FBA restrictions.

The NLA later agreed 134 to three to allow a parliamentary committee to reframe the wording of the FBA draft to comply with the approved amendments.

NLA chairman Meechai Ruchupan said given the vote, the definition under the FBA would not be changed. Only the wording and details on implementation of the law would be adjusted by the committee.

Mr Krirkkrai pledged to review the three lists that define the business sectors under the FBA as well as the treatment of existing firms that could now be held in violation of the tougher rules.

The FBA outlines three lists that define the sectors that are subject to the law. List One, which includes media, land trading and agriculture, is prohibited outright to foreign companies. List Two which includes weapons manufacturing, land transport, mining and handicrafts, is restricted to up to 75% foreign ownership with cabinet approval. Companies in List Three, which deals with services and professional occupations, can be up to 100% foreign-owned with approval from the Commerce Ministry.

''It's uncertain how long the review will take. And I think it's also too early to say what the impact on investment will be,'' Mr Krirkkrai said.

He defended the government draft as seeking a balance between the need to protect domestic industries while still attracting foreign investment.

NLA members voting for the tougher amendments insisted the changes would help lead to better enforcement and compliance with the spirit of the law.

''Without expanding the definition, we will see repeat mistakes such as the case of Kularb Kaew. A lack of clarity will also just lead to loopholes for foreigners to exploit,'' said NLA member Somchai Sakulsurarat.

''To say that writing a clear law will result in foreigners cutting their investment or leaving the country, I think, is just a poor excuse.''

Kularb Kaew is the holding company that was used by Singapore's Temasek Holdings in last year's takeover of telecom giant Shin Corp. Kularb Kaew is currently under criminal investigation for serving as an illegal nominee for Temasek.

Another assembly member, Kamnoon Sitthisamarn, agreed that failure to clearly define what was a foreign company would only lead to further evasion.

''If we are afraid of deterring foreign investment, then we should review the FBA lists to see what sectors genuinely need protection. This would be easier and would not open the loopholes that are exploited to this day,'' he said.

NLA member Pattara Khumphitak noted that the popular resort island of Samui was dominated by foreign investors, despite legal restrictions on foreign land ownership.

''That foreigners can come and control Thai land is due to weaknesses in the law. Thais sell their land and buy cars, but in the end, we are only employees to others in our own country,'' he said.

Borwornsak Uwanno, another NLA member, said the FBA represented a compromise between nationalism and the country's economic interests.

But he warned that the impact of the changes would be far-reaching for the economy, and suggested that major changes be made to the restricted lists to minimise the potential damage to investor confidence.

Others cautioned that the decision would have an immediate impact on investor sentiment.

Korn Chatikavanij, deputy secretary-general of the Democrat party, criticised the NLA move as ill-conceived.

''The question that has never been answered is to what ends are these amendments being made. There has never been any explanation as to how the Thai public and economy will benefit from the amendments,'' he said.

Mr Korn, a long-time investment banker, said the Democrats would ''definitely'' reevaluate the law if they were in the next government.

''What should be done is to rethink what sectors should be included under the law, before moving to reclassify the definition of foreign companies,'' he said.

''I'm wary of protectionist measures that at the end of the day continue to benefit vested interests as opposed to the general public.''

Jit Firatranont, a spokesman for the NLA commerce committee and a director of the Thai Chamber of Commerce, also criticised the ''extreme application'' of the law.

''This will have a considerable impact on the investment climate. New investors will definitely be reviewing their strategy in Thailand,'' he said.

''High-technology companies, or firms with well-established international brands, will also have to think carefully about whether they would be willing to invest if they have to cede control.''

One prominent lawyer was even more blunt, saying the ramifications to the Thai economy would be massive. ''Nearly all the companies listed on the Stock Exchange of Thailand could potentially fall under the management control rule,'' he said. ''It's negative for the country and a massive step backwards. Other countries are opening up to foreign investment while we are going in the other direction.''

http://www.bangkokpost.com/090807_News/09Aug2007_news01.php

Edited August 9, 2007 by bingobongo

[LaoPo]

So, am I right to conclude that the NLA is above the law and surpasses the -interim- government ?

If anybody has a different view I would like to hear why or why not.

LaoPo

[highdiver]

So, am I right to conclude that the NLA is above the law and surpasses the -interim- government ?

If anybody has a different view I would like to hear why or why not.

LaoPo

rhe NLA is not above the law. but yes it surpasses te govermant. any govermant.

the NLa is the legislative body. that defnes and legistlates the law.

[highdiver]

the boys in green should get back in their tanks and go south to focus on the worsening insurgency and stay out of politics and economic affairs......well done junta, well done....

maybe LOS should export lollipops and toy unicorns, right highdiver?

Tighter curbs on foreign business

Investors predicted to vote with their feet

Foreign investor confidence is expected to nosedive after the National Legislative Assembly (NLA) yesterday approved significantly tighter restrictions on foreign businesses operating in Thailand.

http://www.bangkokpost.com/News/09Aug2007_news01.php

I see you've set aside this special time to humiliate yourself in public.

[Old Man River]

Korn Chatikavanij, deputy secretary-general of the Democrat party, criticised the NLA move as ill-conceived.

''The question that has never been answered is to what ends are these amendments being made. There has never been any explanation as to how the Thai public and economy will benefit from the amendments,'' he said.

Mr Korn, a long-time investment banker, said the Democrats would ''definitely'' reevaluate the law if they were in the next government.

''What should be done is to rethink what sectors should be included under the law, before moving to reclassify the definition of foreign companies,'' he said.

''I'm wary of protectionist measures that at the end of the day continue to benefit vested interests as opposed to the general public.''

http://www.bangkokpost.com/090807_News/09Aug2007_news01.php[/size]

People on other threads ask why am I so pro Democrat in the next election. It is because the Demo's have a real chance at overturning some of the economic related crap that this government is putting in place thinking they are doing the right thing but not having the experience to know the difference between the right thing and the wrong thing.

[bingobongo]

Investors' fears drag SET down

Worry law will be ultra-protective

http://www.nationmultimedia.com/2007/08/10...ss_30044437.php

[Mid]

sevens ....................................

[Steely Dan]

Investors' fears drag SET down

Worry law will be ultra-protective

http://www.nationmultimedia.com/2007/08/10...ss_30044437.php

Am I correct in assuming that those who argued that the rise in the SET demonstrated the strength of the Thai economy will now take note of it's fall and conclude the economy is going down the tubes?

[highdiver]

why is the SeT going down?

nothing to do with Thailand or the goverment of the amnedment to the FBA

it going down all over and the whole world is running for cash.

credit worries crunched stock markets today, yanking the TSX and Dow into losses of more than 200 points.

News that French bank BNP Paribas is freezing three funds that have struggled amid U.S. mortgage market concerns reignited fears over credit market erosion, which had rippling effect on Bay Street.

Moves by central bankers to keep credit markets from seizing up only intensified anxiety. The European Central Bank's US$130-billion offer of overnight funds to banks at a bargain rate of four per cent was intended to calm investors, but Wall Street saw the step as confirmation of the seriousness of the situation.

The U.S. Federal Reserve added $24 billion to the banking system, and the Bank of Canada, without being specific, said it will provide liquidity to support the stability of the Canadian financial system and the continued functioning of financial markets."

rumours surfaced that German state bank WestLB -- already a focus of investor interest due to losses in its own trading business in the first quarter -- and its US asset management unit Brightwater were exposed to US subprime mortgage crisis.

You will have to let this crisis run its course. History shows you can't solve something by simply putting out a statement. This has to unwind itself and until it does, investors are going to keep selling.

The selling will only stop, when investors decide stocks are so low that buyers start stepping up again, recognising a bargain.

[Mid]

why is the SeT going down?

nothing to do with Thailand or the goverment of the amnedment to the FBA

it going down all over and the whole world is running for cash.

credit worries crunched stock markets today, yanking the TSX and Dow into losses of more than 200 points.

News that French bank BNP Paribas is freezing three funds that have struggled amid U.S. mortgage market concerns reignited fears over credit market erosion, which had rippling effect on Bay Street.

Moves by central bankers to keep credit markets from seizing up only intensified anxiety. The European Central Bank's US$130-billion offer of overnight funds to banks at a bargain rate of four per cent was intended to calm investors, but Wall Street saw the step as confirmation of the seriousness of the situation.

The U.S. Federal Reserve added $24 billion to the banking system, and the Bank of Canada, without being specific, said it will provide liquidity to support the stability of the Canadian financial system and the continued functioning of financial markets."

rumours surfaced that German state bank WestLB -- already a focus of investor interest due to losses in its own trading business in the first quarter -- and its US asset management unit Brightwater were exposed to US subprime mortgage crisis.

You will have to let this crisis run its course. History shows you can't solve something by simply putting out a statement. This has to unwind itself and until it does, investors are going to keep selling.

The selling will only stop, when investors decide stocks are so low that buyers start stepping up again, recognising a bargain.

there is no crisis is your manta , please make a note of it for future reference .

[Jai Dee]

Government should draft foreign exchange management strategy, NLA

Members of the National Legislative Assembly said the Bank of Thailand failed in currency management and gave a list of recommendations on how the baht could be more effectively managed.

Dr Ammar Siamwalla, NLA member and acting president of Thailand Development Research Institute said the central bank has allowed the baht to float out of control, resulting in the appreciation to the extent of hurting all sectors of the economy.

The country’s leading economist commented that the BoT should not adhere too orthodoxly to the monetary policy of keeping a lid on inflation.

Rather, the central bank should balance its policy by paying more attention to exchange rate and using its reserve to buy dollars through more bond issue. In doing so, the bank could also resort to interest rate cut as another instrument to manage the capital flow.

Dr. Ammar also proposed that the government develop a clear strategy on foreign exchange policy that will be applied as a framework, instead of giving the central bank a free hand to interfere in exchange rate on a daily basis like it is now.

Khunying Chada Wattanasiritham, former president of the Thai Bankers Association and an NLA member suggested the government enforce tax on short-term, speculative capital inflow. This will be a measure to encourage long-term investment capital.

But a strong baht is not all that bad, she said, noting that it makes capital goods import cheaper.

Mr Pramon Sutheewong, president of the Thai Chamber of Commerce said he wanted to see the Bank of Thailand acting swiftly to interfere in the currency whenever there’s drastic movement and only when needed.

He also suggested the government form a panel of experts to review foreign exchange policy and measures to manage the exchange mechanism.

In response to these comments, Finance Minister Chalongphob Sussangkarn said the influx of capital flow to the tune of billions of US dollars in the month of July alone complicated the government’s task of managing the currency.

The government’s top priority is to stabilise the currency in the domestic market and it recognises that the gap in currency value between the domestic and offshore market remains problematic issue. Dr. Chalongphob acknowledged the country’s urgent needs for a variety of new instruments to manage the currency over the next few years.

The Stock Exchange of Thailand president Patareeya Benjapolchai said to address the currency problem, the authorities should relax rules to facilitate more offshore investment activities by institutional investors.

In addition, Thailand must develop the stock market so that it grows to become an active platform with much larger trading volume, she said, noting that the Thai stock market accounts for merely 80 per cent of GDP, compared to many countries whose stock exchanges are twice or three times the size of their economies.

Source: TNA - 10 August 2007

[Steely Dan]

there is no crisis is your manta , please make a note of it for future reference .

Do I detect progress? The lifecycle of a bear market. Complacency, Denial, Fear, Anger, Despair, Scapegoatism. Although as a foreigner living in Thailand I get the feeling sometimes the current government has jumped straight to scapegoatism.

[Mid]

meanwhile ,

AGRICULTURE / SUGAR PRICE SLUMP

Sugar fund seeks 20 billion baht as debts mount

YUTHANA PRAIWAN

The state-managed sugar fund may seek another 20 billion baht in loans from the Bank for Agriculture and Agricultural Co-operatives to support planters and millers who face financial losses from a sugar price slump and lower income from exports due to the strong baht.

snip

bangkokpost.net

[RichardEllis]

there is no crisis is your manta , please make a note of it for future reference .

Do I detect progress? The lifecycle of a bear market. Complacency, Denial, Fear, Anger, Despair, Scapegoatism. Although as a foreigner living in Thailand I get the feeling sometimes the current government has jumped straight to scapegoatism.

Only a short jump away from xenophobia - where they have always been

Rich

[highdiver]

why is the SeT going down?

nothing to do with Thailand or the goverment of the amnedment to the FBA

it going down all over and the whole world is running for cash.

credit worries crunched stock markets today, yanking the TSX and Dow into losses of more than 200 points.

News that French bank BNP Paribas is freezing three funds that have struggled amid U.S. mortgage market concerns reignited fears over credit market erosion, which had rippling effect on Bay Street.

Moves by central bankers to keep credit markets from seizing up only intensified anxiety. The European Central Bank's US$130-billion offer of overnight funds to banks at a bargain rate of four per cent was intended to calm investors, but Wall Street saw the step as confirmation of the seriousness of the situation.

The U.S. Federal Reserve added $24 billion to the banking system, and the Bank of Canada, without being specific, said it will provide liquidity to support the stability of the Canadian financial system and the continued functioning of financial markets."

rumours surfaced that German state bank WestLB -- already a focus of investor interest due to losses in its own trading business in the first quarter -- and its US asset management unit Brightwater were exposed to US subprime mortgage crisis.

You will have to let this crisis run its course. History shows you can't solve something by simply putting out a statement. This has to unwind itself and until it does, investors are going to keep selling.

The selling will only stop, when investors decide stocks are so low that buyers start stepping up again, recognising a bargain.

there is no crisis is your manta , please make a note of it for future reference .

I wish I could buy you for what you're worth and sell you for what you think you're worth

[midas]

why is the SeT going down?

nothing to do with Thailand or the goverment of the amnedment to the FBA

How can you possibly make such a naive statement ?

What have personally interviewed every market participant

on the SET yesterday and today to ask them why they sold - give me a break !

[Mid]

I wish I could buy you for what you're worth and sell you for what you think you're worth

edit to add quote

Edited August 10, 2007 by Mid

[highdiver]

why is the SeT going down?

nothing to do with Thailand or the goverment of the amnedment to the FBA

How can you possibly make such a naive statement ?

What have personally interviewed every market participant

on the SET yesterday and today to ask them why they sold - give me a break !

oh how can I

lets see the stock market in the US takes a nose dive

all the European markets follow

all the asian markets are in red.

I think it safe to assume that the SET is following the world trading.

if you assume that the SET is going down because of the FBA amendement then any connection between your reality and mine is purely coincidental

[samran]

Its the world markets affecting the SET. People unwinding their carry trade positions. The forces pushing down the SET and pulling out their money are the same ones which have made the Australian dollar drop a few cents in the past few days and have pushed the Aussie stock market down 4% this morning.

All in all though, my humble portfolio is still doing well. My managed funds of blue chip Thai shares are are up 30% YOY and my individual investments are up 28% since April (as of this morning). There is still good value on the SET...

We also just plonked down another $1000 into the SET a couple of days ago too.

Having said that, a bourse does not maketh an economy.

[midas]

why is the SeT going down?

nothing to do with Thailand or the goverment of the amnedment to the FBA

How can you possibly make such a naive statement ?

What have personally interviewed every market participant

on the SET yesterday and today to ask them why they sold - give me a break !

oh how can I

lets see the stock market in the US takes a nose dive

all the European markets follow

all the asian markets are in red.

I think it safe to assume that the SET is following the world trading.

if you assume that the SET is going down because of the FBA amendement then any connection between your reality and mine is purely coincidental

Have you considered the possibility that it went down for mixed reasons

or you so sure that it went down ONLY because of what happened in the US and Europe ?

If you believe that the n YES MOST CERTAINLY " any connection between your reality and mine is purely coincidental "

[Jai Dee]

Public expresses concern over unemployment rate

Director of the Center for Economic and Business Forecasting (CEBF), Thai Chamber of Commerce University the Thanawat Polwichai (ธนวรรธน์ พลวิชัย) discloses that consumer confidence index in July dropped from 76.8 in June to 75.8, adding that it is the ninth month that all consumer confidence indexes have fallen.

The main cause of the reduction of consumer confidence index attributed to the baht appreciation which plays a pivotal role in the export sector. The report has set in motion public concerns over unemployment rate.

The signal indicating that the consumer confidence index will increase has yet been shown, hoping that signs of improvement will become more obvious after the election, Mr. Thanawat says.

Source: Thai National News Bureau Public Relations Department - 10 August 2007

[highdiver]

why is the SeT going down?

nothing to do with Thailand or the goverment of the amnedment to the FBA

How can you possibly make such a naive statement ?

What have personally interviewed every market participant

on the SET yesterday and today to ask them why they sold - give me a break !

oh how can I

lets see the stock market in the US takes a nose dive

all the European markets follow

all the asian markets are in red.

I think it safe to assume that the SET is following the world trading.

if you assume that the SET is going down because of the FBA amendement then any connection between your reality and mine is purely coincidental

Have you considered the possibility that it went down for mixed reasons

or you so sure that it went down ONLY because of what happened in the US and Europe ?

If you believe that the n YES MOST CERTAINLY " any connection between your reality and mine is purely coincidental "

i thought about it again. and you might be right.

some investors were so alarmed by the "dooms day brigade postson Thai visa reading the FBA.. that they decided to pull out..

As for reality... i wne and checked it

Asian stocks join global slide

http://www.bangkokpost.com/breaking_news/b...s.php?id=120776

SET falls 2.7% on US jitters

http://www.bangkokpost.com/breaking_news/b...s.php?id=120774

BANGKOK, Aug 10 (Reuters) - Thailand's benchmark stock

index <.SETI> was down 21.90 points, or 2.7 percent, at 789.93

points at 0301 GMT on Friday, caught up in the rout of global

markets sparked by a flare up of credit worries.

Bangkok's fall followed a 2.4 percent drop on Thursday

after BNP Paribas <BNPP.PA> froze funds worth $2.2 billion due

to the U.S. sub-prime mortage woes.

I guess i was wrong to assume that deo all the above and the SET must be foing down for a reason only known to you.

[midas]

i thought about it again. and you might be right.

some investors were so alarmed by the "dooms day brigade postson Thai visa reading the FBA.. that they decided to pull out..

I guess i was wrong to assume that deo all the above and the SET must be foing down for a reason only known to you.

OK we can agree do disagree and we will get BINGOBONGO to adjudicate

[stumonster]

also sharply down at the end of the days trade in Australia , with further falls expected next week - thailand will be the same

$53bn wiped off stock exchange

August 10, 2007

THE stock market posted its biggest one-day fall in six years today following falls on Wall Street still spooked by the rout in the US sub-prime mortgage sector.

http://www.theaustralian.news.com.au/story...50-1702,00.html

[LaoPo]

Thailand reports 33 factory closures, 9,496 laid off

Aug 10, 2007, 2:55 GMT

Bangkok - Thirty-three Thai factories went bankrupt during the first half of 2007, resulting in 9,496 labourers being laid off, media reports said Friday.

The Labour Ministry has put another 196 businesses 'under watch' for immediate closure in the coming months, The Nation newspaper said.

Among the largest factories to close their doors during the first six months of the year was Silp South East Asia Import Export, a sportswear manufacturer that has been forced to lay off more than 4,000 labourers.

Silp South East Asia's management claimed that it could no longer compete in the garment export sector with countries such as Vietnam and China.

Although Thailand's exports grew 18 per cent in value during the first half of this year, the increases were primarily in higher-tech sectors such as automotive, electronics and electrical appliances.

Lower-tech, labour-intensive industries such as textiles and shoes have lost competitiveness because of a 19-per-cent appreciation of the baht currency against the dollar since January 2006 and higher labour costs compared with rivals such as Vietnam.

DPA

LaoPo

[bingobongo]

more reality, just for you highdiver.......

Thailand : Survey paints grim picture of economy

August 10, 2007

The latest study by the University of the Thai Chamber Of Commerce shows that strong bhat, high fuel prices and closure of companies have led to loss of competitive edge in the international market.

http://www.fibre2fashion.com/news/daily-te...x?news_id=39090

[LaoPo]

more reality, just for you highdiver.......

Thailand : Survey paints grim picture of economy

August 10, 2007

The latest study by the University of the Thai Chamber Of Commerce shows that strong bhat, high fuel prices and closure of companies have led to loss of competitive edge in the international market.

http://www.fibre2fashion.com/news/daily-te...x?news_id=39090

Come on you Gents, let's not attack fellow members but stick to the facts, whether someone sees the Thai economy more rosy than the other or not.

Let's try to write and comment as Gentlemen....please.

When this topic started they may or may not have been a 'Thai crisis in progress' but the world wide situation is changing dramatically at the moment and will influence Thai economy, one way or another.

The fact that labor intensive industries are suffering real bad because (amongst other reasons) of the expensive Baht is a fact and more factories are forced to close down.

That's particularly very sad for the laid-off workers and their families.

It remains to be seen whether Thai Agriculture (more than 50% of Thai Labor workers) will be hurt as well, but IF that happens Thailand will be in deep trouble...real deep!

And, again: Thai laborers and their families will be hurt most.

LaoPo

[Mid]

It remains to be seen whether Thai Agriculture (more than 50% of Thai Labor workers) will be hurt as well

Post #1303

[LaoPo]

It remains to be seen whether Thai Agriculture (more than 50% of Thai Labor workers) will be hurt as well

Post #1303

Yes, that's about sugar.

Sugar, worldwide, is suffering and in real bad shape; a friend of mine is the UK's largest sugar buyer and he knows all in and outs [about world sugar prices] but sugar in LOS is just a -small- part of Agriculture in LOS and let's hope Agriculture as a whole is in better shape than the sugar industry.

Interesting link about [Thai] sugar:

http://world-trade-organization.suite101.c...sugar_exporters

LaoPo

Edited August 10, 2007 by LaoPo

[Old Man River]

more reality, just for you highdiver.......

Thailand : Survey paints grim picture of economy

August 10, 2007

The latest study by the University of the Thai Chamber Of Commerce shows that strong bhat, high fuel prices and closure of companies have led to loss of competitive edge in the international market.

http://www.fibre2fashion.com/news/daily-te...x?news_id=39090

It is kind of a funny article in that, as written, it doesn't make any sense. Saying that closure of companies leads to a loss of competitive edge is bassackwards. Closures are due to losses in competitive edge, they don't cause losses in competitive edge. Probably another bad translation.

Note, this loss in competitive edge is being felt by those companies in what has long been termed "sunset" industries in Thailand. These are industries that have in the past relied on cheap labor and weak currencies. Now that both are no longer the case, closures have been expected.