Thaksin's Victory Favorable To Economic Growth

[george]

Thaksin's victory favorable to economic growth: S&P

BANGKOK: -- Thai Prime Minister Thaksin Shinawatra's victory in the general election will increase his mandate that can be favorable to the country's economic growth, the Standard & Poor's Rating Services has said.

"The likely election result provides Thaksin with a strong mandate. Use of this mandate to enact meaningful structural reformcould improve the country's growth prospects," said a press release issued by the Standard & Poor's Rating Services on Monday morning.

An exit polling result showed that the Thai Rak Thai Party led by Thaksin secured an overwhelming majority of 399 seats of the 500-member lower house of parliament on Sunday's general election. The official counting result will come out late Monday.

"As the first Thai prime minister to both complete a full term and win re-election, Thaksin has proven to be a highly effective leader by historical standards," Philippe Sachs, the Singapore-based Standard & Poor's credit analyst, was quoted by the press release as saying.

Standard & Poor's believed that the Thaksin administration would continue to advocate pro-growth policies.

It noted that Thailand could become more competitive and attract more investors if the Thaksin government, leveraging his political clout, could achieve a combination of several reforms.

These include efforts in accelerating the resolution of insolvent companies, enhancing corporate governance, improving thelegal framework, introducing more competition into the domestic market, reforming the education system, and further consolidation of fiscal balances.

However, Standard & Poor's also warned that further concentration of power and reduction in institutional checks and balances could increase the propensity for corruption, miscalculation and policy mistakes.

Winning more than 350 seats in the parliament, Thaksin and his government is able to block any efforts to launch a non-confident debate in parliament. Critics are also afraid that the government can amend the Constitution as its will.

During the four years with Thaksin in office, Thailand has successfully recovered from the financial crisis of 1997 and the Thai economic reached a 6.7 percent growth rate, topping in southeastern Asia. Enditem 　

--Agencies 2005-02-07

[george]

Thai Stocks Rise to 1-Year High on Optimism for Thaksin Victory

BANGKOK: -- -- Thailand's benchmark SET Index rose to a one-year high as Prime Minister Thaksin Shinawatra headed for a second term with a stronger mandate to push through asset sales and increase spending on roads, railways and ports.

The index rose as much as 1.1 percent, led by Advanced Info Service Pcl and Shin Corp., both controlled by Thaksin's family. His Thai Rak Thai party may have won 80 percent of the House of Representatives, according to an exit poll yesterday by Bangkok- based Suan Dusit Rajabhat University.

Thaksin, 55, may have increased his grip on power enough to push through sales of state assets such as Electricity Generating Authority of Thailand, the nation's biggest electricity producer. The prime minister plans to spend 1.5 trillion baht ($39 billion) in the next five years on infrastructure, boosting an economy that grew an average of 6.5 percent in the past two years.

``Global investors will be heartened by the political stability a second term brings, particularly those who want to invest in Thailand's infrastructure,'' said Tom Murphy, who helps manage the equivalent of $500 million at Deutsche Bank AG in Sydney. ``Thailand needs long-term foreign capital, and political stability is directly related to the cost of'' that.

The SET was up 0.8 percent to 725.12 at the 12:30 p.m. break in Bangkok, set for its highest close since Feb. 20, 2004.

Construction

Shares of construction contractors and building-materials makers rose. Italian-Thai Development Pcl, Thailand's largest contractor, surged 0.60 baht, or 5 percent, to 12.50. The company is helping build power plants and a new international airport in Bangkok. Siam Cement Pcl, the nation's largest cement maker, rose 4 baht, or 1.6 percent, to 262.

The government began to focus on construction spending to help boost the economy during Thaksin's first term, after lifting consumer spending in the countryside.

In 2001, Thaksin gave 1 million baht ($26,000) in loans to each of the nation's 76,000 villages. Thais have used the money to purchase goods from televisions to lottery tickets.

``The fact he has been able to boost domestic demand in Thailand, which in the past has been export dependent, is quite significant,'' said Isaho Nakasho, who manages $40 million in Asia excluding Japan at Fuji Investment Management Co. in Tokyo. ``Still, debt is on the increase in Thailand so it's important to steer policies very carefully.''

The rural policies have resulted in a 34 percent surge in household borrowing since Thaksin came to power.

Mandate

``Such a strong mandate will give him power to fast-track privatization, telecom reforms and spend buckets of money on building new roads,'' said Vikas Kawatra, head of institutional broking at Kim Eng Securities (Thailand) Pcl, the country's biggest broker. It's ``very positive for his own stocks, contractors and domestic economy stories.''

Advanced Info, Thailand's biggest mobile-phone operator, is trying to expand and switch from a revenue-sharing system with the government based on fixed percentage payments. The shares rose 1.8 percent to 114 baht. Shin Corp., the holding company for Thaksin's companies, gained 2.2 percent to 46.50 baht.

The Nation newspaper, which had an unofficial vote count on its Web site, said today that Thaksin's party took 364 seats, or 73 percent of the total. The university poll suggested Thaksin will win as many as 399 seats. Unofficial results may be available today.

``The magnitude of the win was resounding,'' said Rajeev Gupta, who helps manage $300 million as director of Asia-Pacific equities at Basis Capital Pty in Sydney. ``Domestic-oriented stock ideas like financials and construction should fare well.'

Asset Sales

Thaksin told reporters yesterday that the government will ``definitely this year'' sell assets.

State asset sales include CAT Telecom Pcl. Thailand's biggest provider of international phone services plans to sell shares to overseas and domestic investors as early as July, CAT President Witit Sujjapong said on Jan. 24. CAT has put off the sale since 2002 because the government failed to establish a telecom regulator, set up in August after a four-year delay.

Thaksin last March scrapped plans to raise $1.8 billion from the sale of Electricity Generating after employees protested.

``Privatization he should push at full steam,'' said Piyasvasti Amranand, chairman of Bangkok-based Kasikorn Asset Management Co., which invests the equivalent of $3.9 billion. ``Otherwise, we'll end up like China, where they have shortages of certain infrastructure.''

--Bloomberg.com 2005-02-06