Thailand Risks Chronic Trade Deficit

[george]

Thailand risks chronic trade deficit

BANGKOK: -- Thailand may need to import up to a billion litres of diesel oil a month, causing the country's trade deficit to worsen, unless the government deals with the increased demand for fuel, according to sources in the Energy Ministry.

Thailand’s imports of refined oil are expected to increase next month as some of the local refineries have had to halt production for their annual repair and maintenance.

The ministry is considering measures to help ease the trade deficit as a result of higher imports of diesel, the source said.

“The government’s attempt to curb diesel prices and maintain economic growth is good in the short-run. But if it continues in long-run it will distort local oil consumption,” the source said.

In the past four months, Thailand had imported 462 million litres of diesel, an increase of nearly twenty percent compared to the same period last year. The value of the diesel imports were worth more than six billion baht, an increase of more than twenty percent.

“There is already a problem as some local refineries need to export gasoline ad import diesel to accommodate the growing demand,” according to the source.

With no new refinery or investment to increase capacity by 2009, Thailand might have to import more than a billion litres of diesel a month worth tens of billions of baht.

“There has been an increase in the number of pickups. This means the government’s efforts to cap diesel prices has encouraged Thais to use pickups,” said the source.

To solve the trade deficit the government should allow the diesel prices to be fixed by the market mechanism as well as attempt to curb local diesel consumption, he said.

The local supply of refined oil is unlikely to meet the local demand over the next few years unless new refineries are built, according to the president of the petroleum giant PTT, Prasert Bunsumpan.

PTT has no plans to construct a new plant, with a capacity of more than 200,000 barrels a day, because it requires hundreds of billions of baht of investment, he said.

A new plant would need a refining margin of US$6 a barrel for more than ten years to break-even. So, the construction of a plant would not be worth the investment unless the government granted a major investment concession.

--TNA 2005-05-30

[danintrang]

I'm going to open a bicycle shop...

[george]

Cabinet to consider bond issue

BANGKOK: -- The Thai cabinet is expected to consider a proposed bond issue worth 85 billion baht to ease the financial burden on the State Oil Fund of the government’s oil subsidies at its meeting on Tuesday, according to the Energy Minster Viset Choopiban.

The proposed bond issue is expected to raise more than 87 billion baht to help offset the cost of the Oil Fund’s oil subsidies.

The five-year bond will be issued in lots of Bt20 billion each.

The government's new campaign to encourage people to save energy will also be discussed, he said.

The new campaign to be launched on Wednesady (1 June) will start with all Thais turning off their lights for five minutes.

After three months, government officials will estimate the savings as a result of the energy-conservation campaign.

--TNA 2005-05-30

[danintrang]

Cabinet to consider bond issue 

The new campaign to be launched on Wednesady (1 June) will start with all Thais turning off their lights for five minutes.

--TNA 2005-05-30

<{POST_SNAPBACK}>

Turn off the light for 5mn could be fun, but will cost more energy by turning it on again after 5 mn. In this case, not doing nothing will save energy.... What about education??????

[RDN]

I'm going to open a bicycle shop...

<{POST_SNAPBACK}>

I'm going to open a "locking petrol filler cap" shop.

And a syphon hose shop.

[stumonster]

Cabinet to consider bond issue 

The five-year bond will be issued in lots of Bt20 billion each.

and I might put a for sale sign on the brooklyn bridge.

how many weeks ago was mr 't' talking up his wonderful economy - even though everyone knew about the fuel subsidy crisis - creative accounting will not make it go away.

[RDN]

...The proposed bond issue is expected to raise more than 87 billion baht....

The five-year bond will be issued in lots of Bt20 billion each...

<{POST_SNAPBACK}>

So there will be be 4 of these bonds available to the first 4 people with a spare 20 billion?

Billions, millions, gazillions - it's only money.

[ovenman]

So there will be be 4 of these bonds available to the first 4 people with a spare 20 billion?

Billions, millions, gazillions - it's only money.

Perhaps they can throw in a complimentary Thailand Elite Card with each bond purchased?

[samran]

The bloke is piss!ng the economy up against the wall, little by little.

Thailand is a massively distorted economy, with all sorts of taxes and subsidies causing perverse incentives. In this case, subsidising oil is creating a trade deficit.

Save up your money people, there is an economic crash coming, and there will be bargains aplenty in the resulting fire sale.

[chownah]

.........Save up your money people, there is an economic crash coming, and there will be bargains aplenty in the resulting fire sale.

<{POST_SNAPBACK}>

So......this is a good thing?

[maerim]

So......this is a good thing?

It will be for a very small minority, the vast majority will end up miserable when the bills come in.

[samran]

.........Save up your money people, there is an economic crash coming, and there will be bargains aplenty in the resulting fire sale.

<{POST_SNAPBACK}>

So......this is a good thing?

<{POST_SNAPBACK}>

Yep Chownah,

Its going to be a wonderful thing. Collapsing industry, people out of work, empty office blocks....gonna be a ball.

[mnoorsapl]

Cabinet to consider bond issue 

The new campaign to be launched on Wednesady (1 June) will start with all Thais turning off their lights for five minutes.

--TNA 2005-05-30

<{POST_SNAPBACK}>

why not switch off the light when you go to sleep.

[samran]

Cabinet to consider bond issue 

The new campaign to be launched on Wednesady (1 June) will start with all Thais turning off their lights for five minutes.

--TNA 2005-05-30

<{POST_SNAPBACK}>

why not switch off the light when you go to sleep.

<{POST_SNAPBACK}>

its micky mouse economics.

They should have proper electricity pricing mechnaisms. If consumers paid the actual price for energy they would cut down their usage.

[chownah]

Cabinet to consider bond issue 

The new campaign to be launched on Wednesady (1 June) will start with all Thais turning off their lights for five minutes.

--TNA 2005-05-30

<{POST_SNAPBACK}>

why not switch off the light when you go to sleep.

<{POST_SNAPBACK}>

its micky mouse economics.

They should have proper electricity pricing mechnaisms. If consumers paid the actual price for energy they would cut down their usage.

<{POST_SNAPBACK}>

Really!!!! I agree!!!! Let's raise the price...then the poor won't be able to use any and the rich can use more and there will still be some left over...or maybe not....

[samran]

Really!!!!  I agree!!!!  Let's raise the price...then the poor won't be able to use any and the rich can use more and there will still be some left over...or maybe not....

<{POST_SNAPBACK}>

Proper pricing mechanisms include things like Public Service Obligations (PSO).

A PSO means that the first units of electrictity used each month would be extremly cheap. It is easy enough to estimate what the average amount of electricity the average poor person uses, price accordingly, so they are not worse off. It is done in most developed nations, especially after privatisation. A PSO is usually enforced by the government regulator.

For people who use more electricity, they expodentially pay more.

Do prices get passed on to consumers? It depends on whether the producer can bear it. But not always. But the way things stand at the moment in Thailand, their is very little welfare for the poor man in the street, but plenty of corporate welfare to big business via the creation of private monopolies which aren't adequately regulated.

As I said before, prices in Thailand are so distorted by ad-hoc subsidies and tariffs that they create perverse incentives, that do little good for anyone.

Small imported fuel efficient cars attract a higher tarriff than locally made pickups....so everyone goes to by a pickup, which pollute more, which cause more road damage etc etc.

The government wants people the save energy? How about taxing car parking spaces in central Bangkok and creating more park and rides? It will make people think twice when choosing between a car and a train/bus. Creating price signals to the market are a h3ll of a lot more effective than 2-bit campaigns to turn off the aircon at lunch time.

So, there you go Chownah....trendy left wing policies that on the face of it intend to help the poor (tariffs, subsidies) often end up hurting them most.

Edited May 31, 2005 by samran