Thailand's Real Economic Sector Begins To Feel Effects Of Us Crisis

[Jai Dee]

Finance Minister: SET plunges 56%

The Minister of Finance revealed the value of Thai stock market has nosedived by more than half following the global economic crises.

Minister of Finance Mr. Suchart Thada-Thamrongvech said on Sunday (November 2) the prevailing global economic crisis has caused less global financial liquidity. He said that the Thai stock market’s value plunged more than half, or about 56 per cent, from around 900 points to a mere about 400 points, in line with global stock exchanges. People who held such assets as stocks and property felt poorer. It has resulted in less consumption and investment.

Regarding exports which accounted for around 65 per cent of the nation’s total income, Mr. Suchart said the sector next year was expected grow only 10 per cent, a relatively low rate compared with this year's anticipated growth at around 25 per cent. So, the government would help solve the problem by providing sufficient liquidity in the local economy in the short term. The government would also extend full protection for people’s savings accounts by additional three years.

In addition, the Minister of Finance said the government would shore up private sector’s confidence towards Thai economy by increasing the state expenses in a bid to add more money in the economy.

Source: National News Bureau of Thailand - 03 November 2008

[FBN]

Finance Minister: SET plunges 56%

The Minister of Finance revealed the value of Thai stock market has nosedived by more than half following the global economic crises.

Minister of Finance Mr. Suchart Thada-Thamrongvech said on Sunday (November 2) the prevailing global economic crisis has caused less global financial liquidity. He said that the Thai stock market's value plunged more than half, or about 56 per cent, from around 900 points to a mere about 400 points, in line with global stock exchanges. People who held such assets as stocks and property felt poorer. It has resulted in less consumption and investment.

Regarding exports which accounted for around 65 per cent of the nation's total income, Mr. Suchart said the sector next year was expected grow only 10 per cent, a relatively low rate compared with this year's anticipated growth at around 25 per cent. So, the government would help solve the problem by providing sufficient liquidity in the local economy in the short term. The government would also extend full protection for people's savings accounts by additional three years.

In addition, the Minister of Finance said the government would shore up private sector's confidence towards Thai economy by increasing the state expenses in a bid to add more money in the economy.

Source: National News Bureau of Thailand - 03 November 2008

There is nothing that is new...

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt.

People must again learn to work, instead of living on public assistance."

Marcus Tullius Cicero, ca. 55BC

[ray23]

Hotel Industry to Rely on Thais as Foreign Tourists Decrease

UPDATE : 3 November 2008

The hotel and lodging business is turning to Thai consumers to boost sales at the end of the year as foreign tourists have decreased by 20 to 50 percent due to the effects of the world financial crisis and concerns about the political situation in Thailand.

Thai tourists have become the main target for hotel business owners as the impact from the world economic crisis and concerns about the domestic political situation have caused room reservations by foreigners to decrease by 20 to 50 percent.

Tempong Yoowittaya, Managing Director of Lima Coco Resort Group, said large hotels are reporting that foreign tourists have cancelled reservations by around 30 to 50 percent due to the world financial crisis.

Many hotels now have to rely on reservations from Thai customers rather than foreign tourists.

As for the Lima Coco Resort on Koh Samed, rooms are almost fully booked for the end of the year, mostly by Thai customers. During slow economic times like this, many Thai tourists find going to Koh Samed more economic than going to islands in the South as it is not far from Bangkok and easy to get to.

Hotels in the North have been affected as well. Boriboon Klinpatumwan, Assistant Sales Manager of Girang Health Village Hotel in Mae-Rim District in Chiang Mai, said that negative factors have caused Chiang Mai to lose 20 percent of its tourists. Therefore, the hotel has had to promote itself to Thai customers instead of foreigners by organizing packages to draw customers, like health programs.

Erwan Ma-e, Executive of Ibis Erawan Hotel Group, with hotels in Phuket, Pattaya, and Bangkok, predicts that in the last quarter of the year, Thai customers will help business plans achieve their initial goals.

In the previous period, there was a more than a 20 percent decrease in hotel guests.

Thai tourists, who are the hope of hotel business owners, said that spending money for traveling during the end of the year is necessary. Though the economy is slow and packaged tours, as well as room rates, have increased by ten percent, if a family plans well, there should be no problems. They also believe that traveling to other places will help them to escape political tension in Bangkok. Moreover, the decreasing price of oil has helped to cut costs in traveling.

The government has also pushed forward projects to boost sales from tourism in the end of the year. After the 14th "Thais Travel Thailand" and "World Travel 2008" event, the Tourism of Thailand will hold another major event to boost tourism from November 28 to 30, by the name of "Amazing Thailand Big Sales."

[Loptr]

i am more concerned why my lovely euro is worth 6-8 baht less in conversion according to a few months ago !!!

There is blanket guarantee for all banks deposits in Thailand, valid 3 years (and not for only! 100000 EUR)

But you don't care .. so why bother ?

Thai politics abound in opportunistic decision reversals. Should the politicians need some extra money for more profitable use (for them) I wouldn't be surprised to learn about an on-the-spot decree that might annihilate any benefit of this "unlimited guarantee" on bank deposits.

Trust come (and go) by experience.

If you love your lovely Euro, why the hel_l don't you go back and put up with the conditions there, don't critisise Thailand and exploit it/

Uhh, please look up the term "xenophobic" in your Thai-to-English dictionary Somchai...

[dumball]

ray23 , does the promotion of 'Big sale Thailand ' mean Thais will actually reduce the price of anything ? Cum-on , just like their egos (face) , they only know how to inflate not deflate .

[johnwills]

ray23 , does the promotion of 'Big sale Thailand ' mean Thais will actually reduce the price of anything ? Cum-on , just like their egos (face) , they only know how to inflate not deflate .

Went to buy some speakers from Hardware House last week, noticed they had a sale section and after rummaging through found some that looked ideal. However, after listening to them they failed to meet my requirements, funny thing was that the sale price was actually more expensive then the listed price in the catalogue. So much for finding a bargain.

[TAWP]

If you wanna sell out your stock you mark some signs with 50-70% off and then let the price remain. People might still fall for it, so...

[Jai Dee]

Double standard for solution approach

There has been no doubt the approach of solutions of 1997 “Tom Yum Kung” financial crisis and 2008 “Hamburger” crisis was double standard, according to Deputy Prime Minister Dr. Olarn Chaipravat.

The prevailing Hamburger crisis erupted in 2006 from eruption of the US’ subprime, the credit available for people with relatively poor credit records.

The subprime mortgage crisis is an ongoing financial crisis characterized by contracted liquidity in the global credit markets and banking systems triggered by the failure of mortgage companies, investment firms and government sponsored enterprises which had invested heavily in subprime mortgages.

The crisis, which has roots in the closing years of the 20th century but has become more apparent throughout 2007 and 2008, has passed through various stages exposing pervasive weaknesses in the global financial system and regulatory framework.

The crisis began with the bursting of the US housing bubble and high default rates on "subprime" and adjustable rate mortgages (ARM), beginning in approximately 2005–2006.

One of the major mistakes during Tom Yum Kung’s 1997 financial crisis, according to Dr. Olarn, was the instruction by the International Monetary Fund (IMF)’s officials to close down all poor performance Thai financial institutions, especially the closure of 56 local finance companies which have caused social problems accordingly.

Authorities at the time said that the US-dominated IMF sent its relatively inexperienced officials to supervise Thailand which sought its financial assistance.

Since then, Dr. Olarn, a former Bank of Thailand’s scholarship awarded staff, the world’s financial markets have tried to avoid closure of financial institutions.

The prevailing Hamburger crisis, he said, prompted Western authorities to inject financial liquidity to sustain their financial institutions as the US administration mistakenly handled the situation when it decided repeat 1997’s mistake via allowing Lehman Brothers, the American fourth largest investment banker, collapsed.

Consequently, the Western governments changed their attitudes with concerted efforts to shore up investors’ and general public’s confidence by temporarily stepping in to be major shareholders in large financial institutions throughout Europe and the US.

The main reason was for Washington to sustain confidence among Asian central bankers, including China, Japan, and Thailand, not to switch their assets holdings from US dollar denominated assets to other non-US dollars assets.

Hamburger VS Tom Yum Kung crises

Meanwhile, Kasikorn Research Centre points out that various parties are worried on untowards impacts of prevailing global financial crises against Thai economy.

It was witnessed by the SET index’s noseding by a record about 50% at the moment compared with its peak in October 2007 as foreign investors kept being net sellers of the Thai stocks.

Baht has already weakened around nine per cent so far this year, from its peak in March. The situation was further aggravated by uncertainty in local politics which could be dragged on. These factors would adversely affect Thai economy in the future, resulting in less-than-normal efficiency of the Thai Government’s fiscal tools.

The prevailing global financial crises are comparable to Tom Yum Kung crisis in 1997 in terms of nosediving of stock exchanges’ indices, outflow of foreign funds, depreciation of baht, and rattling business sectors’ confidence towards economy.

Looking in details, the so-called Hamburger crisis differed from 1997’s Tom Yun Kung crisis in various aspects.

Differences of 2008’s Hamburger VS 1997’s Tom Yung Kung crises

 Causes differed  Prevailing crisis erupted from problem of the US subprime, credit for US home buyers with relatively low credibility which has expanded to other credits which adversely affected American financial institutions’ performances, leading to lack of credibility of all concerned to financial institutions. This resulted in financial institutions’ liquidity crunch worldwide.

 Both the SET index’s nosedving and weakening baht resulted from foreign investors’ attempting to sell of their holdings in Thai assets to boost liquidity in dollars. The phenomenon repeated throughout the region.

 The 1997’s Tom Yung Kung crisis resulted from bubble burst from excessive speculation in Thai real estate sector and the Thai stocks after foreign creditors lacked of confidence of Thailand’s foreign debt repayments under fixed exchange rate system at the time.

 Their lack of confidence towards the country resulted in outflow of foreign funds from the nation and an anticipation the Thai authorities having to let baht to depreciate to reflect the real fundamentals of Thai economy.

 So the 1997’s Tom Yum Kung crisis caused by problems in the local economy. While the Thai economy was adversely affected from prevailing Hamburger crisis through global financial mechanism which has been facing credit crunch. Every Asian nation has been facing capital flights and looking for liquidity in dollars.  Sizes of impacts differed  After baht was being floated in July 1997, the Thai currency has significantly and swiftly depreciated from 25.75 baht a dollar in June 1997 to 53 baht in January 1998. The Thai economy faced with severe difficulty, including collapse of financial institutions and depression of the economy.  It has resulted in the then Financial Institutions Rehabilitation Fund, under the Bank of Thailand and was later changed to Financial Institutions Development Fund (FIDF), having to bear a big burden amounting to some 1.4 trillion baht or accounting for 30% of the country’s gross domestic product (GDP) in 1997.  Whereas Thai economy face recession during 1997 and 1998. It shrank 1.4% in 1997 and a record 10.5% in 1998.

 For prevailing Hamburger crisis, the Kasikorn Research Centre assessed that although the crises have amplified throughout the world and Thai economy would be inevitably shunning from sluggishness in its exports, the Thai economy is expected to be limitedly affected.

 This is based on the fact that Thai commercial banks invested in foreign financial instruments at a mere about 1.7% of their total assets. In addition, their positions have been much improving from the past. The country’s external position was relatively stable, witnessing from ratio of foreign exchanges compared with Thailand’s short term debts at around 4.1 times as of July 2008.

 So, the Thai economy is anticipated to be prepared for the prevailing crisis and will not face recession as in 1997.

 Based on the International Monetary Fund (IMF), damages from prevailing Hamburger crisis is expected to be about 1.4 trillion dollar, accounting for about 10% of the US economy in 2007, relatively low compared with FIDF’s bearing about 1.4 trillion baht, account for around 30% of Thai GDP in 1997.

Source: National News Bureau of Thailand - 04 November 2008

[ray23]

ray23 , does the promotion of 'Big sale Thailand ' mean Thais will actually reduce the price of anything ? Cum-on , just like their egos (face) , they only know how to inflate not deflate .

Got me.

But the Thai' that could use the five star Hotels probably won't notice much. The Thai's that are losing thier jobs won't be spending for vacations. My view Thai's will tighten their belts just like everyone o else. I saw nothing about cost being reduced. So staff will be.

[northernlights]

I cant say that I wouldnt worry about my euros but I am not shaking yet. I understand that everything is more expensive than a couple of months ago. but mostly I worry about thais who have quite big bank loan and everybody understand what happend if they will left without stable job. I think that they need every money to pay their houses, cars, mototbikes etc.... too many people have spent too much money too short time ......... they diddnt worried future when they take bank loan ! That happend everywhere ... Thailand, Europe, USA ... among those people will start bad times. Property prices will sink down and then it will be hard to got back money. Even you would give up everything still you have to pay bank loan long time ! This kind of bad scenario could happend for everyone !

But something good could happend also ..... predators time is coming soon ... I mean that soon is time when is possible to buy properties from people who have money problems. It is sad that somebody lost money but it just happend that way. Somebody are winner and somebody are loser. Money newer lost it just change owner. Once I heard quite good metaphora " if every money in the world would divide for every people that way that everyone would got same amount .... what happend .... peoples are equal ? yes but not long time ! Soon somebody have lost his money and somebody have collected more money what he got !

I think it would be middle class which would lost mostly money in Thailand. They just leart to live sweet life ! Rice farmers will live same way than years before .... they have not so much money but they have food and home .... basicly quite security life.

What we.. farangs ... could do ? If we have money which search home why not invest in Thailand .... buy land ... house cheaper than before. Easy to find people work ! We dont have to care if currency change a little bit. Later everything is possible to sell again but more expensive. If we could offer work for people it would be important for people near our houses. Then every people will win something. Actually I want support my neighbours to offer job for them and buying some food straight from producers and I dont care if I pay couple baths more. One thing what I scared mostly is that we start to separate too much.... we would live inside big fences... live like in the golden prison ! It is not worth of life anymore then have to think about how to move bones away with good weather !