3 Things that will make your relationship successful in Thailand

[ray23]

Well I would say this is about as straight talk as I have seen. But if he wouldn't start now having local business knowledge and his current position I don't think I would give it a try. This is as good as time as any to ask this question you guys who do invest here. What are the factors you will look for before putting up that hard earned cash. There will be opportunities in a enviornment like this, there is also good ways to lose you money in don't know what you are doing.

Surviving the rough times

As challenges mount, deputy finance minister assures the fundamentals remain strong

Chiratas Nivatpumin

``Actually, it's not the poor who are suffering. Agricultural prices are likely to remain stable as demand worldwide remains strong. The upper class is also okay. It's the middle class that is being hardest hit [by inflation],'' says Mr Pradit.

There's no point in pretending otherwise. Even the deputy finance minister, as experienced a businessman as any in the current cabinet, would think twice before starting a new investment in today's uncertain environment.

"If I were a businessman now, and a newcomer to Thailand? Yes, I would probably freeze my investment plans," admitted Pradit Pataraprasit, the deputy finance minister and head of the Ruam Jai Thai Chart Pattana party.

"On the other hand, if you are already in Thailand, then there's plenty of opportunity for expansion."

Soaring oil prices, rising inflation and a slowing global economy certainly have increased business risks and put pressure on profit margins over the past several months.

But for Mr Pradit, the greatest threat to investor confidence is self-inflicted.

"Actually, political tensions shouldn't affect the investment projects that have already been committed. But for those investors who haven't yet started, well, [uncertainties] will lead to missed opportunities," he said.

"My greater concern is tourism, particularly at the high end. Political tensions will lead some to just stay away."

Political tensions have escalated in recent weeks as members of the People's Alliance for Democracy have set up a micro-community outside of the United Nations Conference Centre to clamour for the government to step down.

At the same time, unrest among labour unions, truckers and farmers has also grown in reaction to high fuel and food prices.

Mr Pradit said the government was committed to taking steps at easing the pain felt by the public, and bristled at suggestions that the Samak Sundaravej government had been slow to act over the past several months.

"The Finance Ministry will do what it has to do to help the public. Of course, we must balance this with the need to maintain fiscal discipline."

The government this year has raised tax deductions for individual taxpayers, reduced tax rates for listed companies and slashed charges for property transactions. Cost of living increases have also been approved for civil service and state enterprise workers.

"Actually, it's not the poor who are suffering. Agricultural prices are likely to remain stable as demand worldwide remains strong," Mr Pradit said, and cited reports from the state-owned Bank for Agriculture and Agricultural Co-operatives showing that debt repayments had increased in recent months.

"The upper class is also okay. It's the middle class that is being hardest hit [by inflation.]"

But Mr Pradit admitted that moves to raise salaries and reduce taxes offered only modest relief against oil prices that have doubled over the past year.

"The public frankly needs to change their lifestyle, and accept the need to conserve energy. The government simply can't do it all," he said.

Pessimism aside, Thailand's economic fundamentals are strong, with tax revenues exceeding targets for the year to date and economic growth a surprisingly strong 6% in the first quarter.

Mr Pradit said second-quarter growth would fall due to inflation, political uncertainties and weaker confidence, but insisted that the economy's fundamental strengths remained unchanged.

Economic ministers, meanwhile, met every two weeks to brainstorm new measures to offer short-term relief for those most in need, as well as consider longer-term, structural reforms necessary to help the economy adjust to a world of permanently high oil prices.

"We need to accept reality. If oil prices rise to $200 per barrel, we need to accept the situation and deal with the consequences," Mr Pradit said.

The government has announced plans to sharply increase the use of ethanol and biofuels to help reduce the country's demand for oil. Natural gas is also being heavily promoted as an alternative fuel for motorists and transport operators.

Mr Pradit said temporary subsidies to help the poorest segments of the country were another option.

But authorities must ensure that aid actually goes to those genuinely in need.

"The Blue Flag programme was well-intentioned, but you see people in Mercedes-Benzes driving up and buying goods," Mr Pradit said, referring to the Commerce Ministry's programme to offer low-cost foods to the public.

At the Finance Ministry, Mr Pradit oversees two major tax departments, the Revenue Department and the Customs Department, as well as state-owned specialised banks.

"For the state banks, we're focusing on improving their service quality and adherence to international standards," said Mr Pradit, a former director of several prominent private banks and financial institutions before joining politics a decade ago.

"Profits at the Government Housing Bank, for instance, may decline with the adoption of the IAS 39 accounting standard or BIS capital rules, but it's a positive step for the future."

Mr Pradit said the public service accounting system also needed to be applied, so that policy-directed operations were separated in the balance sheet to give policymakers a better view of the costs of public programmes compared with core operations.

"Public banks have a responsibility to carry out public policy, but they need to understand their position and capabilities," he said.

"The SME Bank is there to support community enterprises, not speculate on structured notes. We're using an MRI machine to examine [these banks]. It's not just an X-ray machine anymore."