What`s going in Udon Thani

[akampa]

Thailand's boom: To the northeast, the spoils

By
Paul Carsten and Pairat Temphairojana
| Reuters – 9
hrs ago

<br />

• Email0

• because they don't know who will be in power in a year or two."

  Economic growth in the region reached 40 percent from 2007 to 2011, against
  23 percent for the country and just 17 percent for greater Bangkok.

  Monthly household income rose 40 percent between 2007 and 2011, the biggest
  jump of any Thai region. Interviews with businessmen and investment data
  suggest the trend is continuing.

  The number of private investment projects in the northeast rose 49 percent
  in 2012 from the previous year, with the total amount invested more than
  doubling to $2.3 billion, according to the Bank of Thailand. Much of it is
  concentrated in property - from high-rise condominiums to town houses and
  shopping plazas.

  "The northeast has a large population, a dense population, so the
  income is big," said Naris Cheyklin, chief financial officer of Central
  Pattana Pcl , referring to the one-third of Thailand's
  68 million people who live there.

  In April, Central Pattana (Frankfurt:
  A1XDCF - news) opened a 2.75 billion
  baht ($88.7 million) mall in Ubon Ratchathani, near the southern tip of Laos,
  their third in the region.

  POLITICALLY DRIVEN BOOM

  Politics explains part of what is going on.

  Yingluck's government brought in a nationwide minimum wage of 300 baht ($10)
  a day in January. In some Isaan provinces, that was an increase of 35 percent,
  among the biggest gains in the country, on top of a nationwide 40 percent rise
  in April 2012.

  Many workers, such as those building the 168 Platinum Mall in Udon Thani,
  are happy to return to the northeast for wages that are now on a par with Bangkok's.

  Isaan's "red shirts" are among the staunchest supporters of
  Yingluck's brother, former prime minister Thaksin Shinawatra, who was ousted in
  a 2006 coup but influences policy from self-imposed exile in Dubai.

  While in power from 2001, his populist policies - from virtually free
  healthcare to low-interest loans to the rural poor - made him a hero in Isaan.

  The red shirts formed the core of a movement that paralysed Bangkok
  in April-May 2010 in protest at the government of then Prime Minister Abhisit
  Vejjajiva and the forces that ousted Thaksin - the traditional Bangkok
  elite including top generals, royal advisers, business leaders and old-money
  families.

  Those protests were put down with force, but the red shirts got their
  revenge in the 2011 election and now see the rewards.

  "A lot of the boom is upcountry, and that is politically driven,
  partly, because that's where Thaksin's supporters are," said Wood at CLSA.

  The poverty rate in Thailand fell to 13 percent of the population in 2011
  from 58 percent in 1990, according to the World Bank, but per capita gross
  domestic product in Isaan in 2011 was still less than an eighth of that of
  Bangkok at $1,600 a year, according to the state planning agency, the NESDB.

  That is changing. Government policies have pushed up purchasing power by
  subsidising agricultural products such as rice, tapioca and rubber. Under
  Yingluck's government, farmers have been paid 15,000 baht per tonne of unmilled
  rice, a 50 percent premium over market prices, according to exporters.

  "During the Thaksin and Yingluck era, a lot has been given to Isaan,
  and the amount of money being poured into the region is significantly more than
  previous governments spent," said Ittiphol Treewatanasuwan, mayor of Udon
  Thani, once a U.S. Air Force base for anti-communist operations in Southeast
  Asia.

  Lives are being transformed. Panjaporn Phatanapitoon, general manager of the
  168 Platinum Mall, said people in the northeast were now better educated,
  attitudes were evolving fast and urbanisation would come much more quickly than
  in Bangkok.

  REGIONAL INVESTMENT

  The 2006 coup that toppled Thaksin caused years of unrest, but political
  calm has returned since Yingluck's election win.

  "When we change the politicians, they change the policy. If there are
  more changes to these policies, it will damage the economy," said Uthai
  Uthaisangsuk, a senior vice president at property developer Sansiri Pcl .

  Sansiri is developing two $127 million condominium projects in Khon Kaen,
  240 miles (380 km) northeast of Bangkok,
  in 2013 and plans a third for $35 million in 2014.

  "At least five years and then we'll get something done," Uthai said,
  highlighting the need for a high-speed train and further infrastructure.

  Now such plans are in hand, given impetus by floods that devastated the
  industrial central region, near Bangkok,
  in late 2011.

  "Logistics providers and consumer products are moving upcountry because
  of the floods," said Patan Somburanasin, general manager of TPARK, a
  logistics company and subsidiary of TICON Industrial Connection Pcl , which is
  investing up to 2 billion baht in a 79-acre logistics park in the northeastern
  city of Khon Kaen.

  Isaan should also profit as factories and distribution centres move in ahead
  of an EU-style ASEAN Economic Community (AEC) planned by the Association of
  Southeast Asian Nations (ASEAN) from late 2015 or 2016.

  The AEC's East-West corridor, a motorway and infrastructure route for trade,
  will stretch from Vietnam's
  Danang port through Laos,
  Thailand and Myanmar
  to the Andaman Sea,
  cutting through the centre of the northeast and its commercial hub of Khon
  Kaen.

  That will support Thailand's
  ambitions to position itself as a gateway to China
  via road and rail links through Laos,
  itself seeing dramatic economic change.

  The infrastructure programme and the urbanisation it will foster, if the
  plan goes ahead, will support Thai growth into the future, Credit Suisse (NYSE:
  CS - news) said in a report, raising
  its estimate of trend GDP growth in 2014 to 2018 to between 4.5 and 5.0 percent
  from 4.2 percent.

  No wonder, then, that Thai manufacturers such as CP All Pcl , Thai Beverage
  Pcl and Siam Cement (Frankfurt: 136006
  - news) , plus foreign
  firms with Thai plants such as Panasonic Corp (Other OTC: PCRFF - news) , Kraft Foods Group
  Inc and Fraser and Neave Ltd (SES: F99.SI - news) are gravitating
  towards the northeast.

  "If you look at all the corporates, every single large cap out there,
  they don't talk about Bangkok any
  more. They talk about provincials," said Patrick Chang, head of ASEAN
  equity for BNP Paribas Investment Partners. "The sexy stuff is the
  provincial urbanisation and the way it impacts consumption." ($1 = 31
  baht)

  (Additional reporting by Pisit Changplayngam and Apornrath Phoonphongphiphat
  in Bangkok; Editing by Alan
  Raybould, Jason Szep and Nick Macfie)

• mmm really!

  
  

Edited June 16, 2013 by akampa

[daboyz1]

I didn't realize Thaksin wrote for Reuters.

[swissie]

AND WHAT DOES IT ALL MEAN TO RETIRED FARANGS IN THAILAND ?

It means that in a few years, Thailand will not be a cheap place to retire anymore.

I am just amazed, how many farangs are in complete denial of it all (even some that have 20 to 25 years of statistical life-expectancy ahead of them.) Those depending on fixed monthly pension-money will soon be in for a rude awakening, especially after having invested the bulk of their liquid assets in Thai-real-estate, that they don't even own in their name.

A harbinger for things to come: Look at the situation that (especially) affects British-Nationals already: Many based their retirement in Thailand on an exchange rate of 70 Bht to the pound. And now?

Of what ingredients is the cocktail made of that will bring much grief to many expats here:

- An ever strenghtening Thai-Baht.

- Inflation, officially 3.5 %, actually close to 10 %.

- Eventually the financial requirements for Retirement-visas and Marriage-visas will be "adjusted upward" to reflect the increased cost of living (doubled?)

Mass-Exodus of farangs in the offing? Go where? Will be hard to pack a 2 million-Bht-House into a container and move it to Europe.

As said above, what really strikes me is the fact that the vast majority of farangs, (even "low-budget-farangs"), don't want to be bothered with such "trivialities".

They may have adopted part of Thai-thingking: "Tomorrow is far away, why should I think about tomorrow".

Cheers.

[MobileContent]

AND WHAT DOES IT ALL MEAN TO RETIRED FARANGS IN THAILAND ?

It means that in a few years, Thailand will not be a cheap place to retire anymore.

I am just amazed, how many farangs are in complete denial of it all (even some that have 20 to 25 years of statistical life-expectancy ahead of them.) Those depending on fixed monthly pension-money will soon be in for a rude awakening, especially after having invested the bulk of their liquid assets in Thai-real-estate, that they don't even own in their name.

A harbinger for things to come: Look at the situation that (especially) affects British-Nationals already: Many based their retirement in Thailand on an exchange rate of 70 Bht to the pound. And now?

Of what ingredients is the cocktail made of that will bring much grief to many expats here:

- An ever strenghtening Thai-Baht.

- Inflation, officially 3.5 %, actually close to 10 %.

- Eventually the financial requirements for Retirement-visas and Marriage-visas will be "adjusted upward" to reflect the increased cost of living (doubled?)

Mass-Exodus of farangs in the offing? Go where? Will be hard to pack a 2 million-Bht-House into a container and move it to Europe.

As said above, what really strikes me is the fact that the vast majority of farangs, (even "low-budget-farangs"), don't want to be bothered with such "trivialities".

They may have adopted part of Thai-thingking: "Tomorrow is far away, why should I think about tomorrow".

Cheers.

Udon really doesn't have a high number of retirees. May be a couple of thousands retirees. The Pound was in 2005 around 70 Baht so that's almost 8 years ago so for the people of Isaan its good news but for the couple of old aged farangs on pension, they might have to return home or expire poor in Isaan.

Edited June 16, 2013 by MobileContent

[diggledunc]

AND WHAT DOES IT ALL MEAN TO RETIRED FARANGS IN THAILAND ?

It means that in a few years, Thailand will not be a cheap place to retire anymore.

I am just amazed, how many farangs are in complete denial of it all (even some that have 20 to 25 years of statistical life-expectancy ahead of them.) Those depending on fixed monthly pension-money will soon be in for a rude awakening, especially after having invested the bulk of their liquid assets in Thai-real-estate, that they don't even own in their name.

A harbinger for things to come: Look at the situation that (especially) affects British-Nationals already: Many based their retirement in Thailand on an exchange rate of 70 Bht to the pound. And now?

Of what ingredients is the cocktail made of that will bring much grief to many expats here:

- An ever strenghtening Thai-Baht.

- Inflation, officially 3.5 %, actually close to 10 %.

- Eventually the financial requirements for Retirement-visas and Marriage-visas will be "adjusted upward" to reflect the increased cost of living (doubled?)

Mass-Exodus of farangs in the offing? Go where? Will be hard to pack a 2 million-Bht-House into a container and move it to Europe.

As said above, what really strikes me is the fact that the vast majority of farangs, (even "low-budget-farangs"), don't want to be bothered with such "trivialities".

They may have adopted part of Thai-thingking: "Tomorrow is far away, why should I think about tomorrow".

Cheers.

Udon really doesn't have a high number of retirees. May be a couple of thousands retirees. The Pound was in 2005 around 70 Baht so that's almost 8 years ago so for the people of Isaan its good news but for the couple of old aged farangs on pension, they might have to return home or expire poor in Isaan.

Good morning Mobile Content

We were having a chat about this last week at the watering hole in Song Dao. I had a look on the BKK bank exchange rates for June 10th 2013 and 9 years before in 2004. If I remember correctly £ -35%, $ -25%, Euro and Danish krone -18% but Aus$ +3-4%. Holders of the £ have been hit a lot but other nationalities have fared differently.

If the financial requirements were uprated as mentioned before this may cause much more of a problem than day to day living.

Both in UK and US things seem to be changing. If we get decent growth rates at the end of the 2nd quarter and US QE does finish we have already seen in the last month what a difference that can make. I honestly think Christine LeGarde's comments from IMF were the most salient when a few weeks ago she was warning that if next year western financial markets show any sign of a return to normality and interest rates are or are rumoured to be under review the south east Asian should be prepared for massive capital outflows.

[swissie]

I was addressing the longer term outlook and not what will happen in the next 2 quarters,

Cheers.

[diggledunc]

I was addressing the longer term outlook and not what will happen in the next 2 quarters,

Cheers.

I agree with all your comments swissie.

What I was really trying to say was that although I agree with your longer term outlook maybe what has happened has been extreme with some of the exchange rates. Cause I suppose Thailand strengthening over years since 1997-98 but also since 2007 other countries like UK in particular weakening.

My comment re the two quarters was that perhaps with good or better growth figures and no QE that we might start to come back somewhat from an extreme position and this will help to ameliorate the effect of a more expensive Thailand in the near years to come. The inevitability of what you say is there though and will not go away.

I see many UK farangs here who I am sure have done exactly what you refer to based their retirement on 70Baht.

I hope for all of us rich or poor I am right and things at least short term will get better for us all. I don't think this is a place for an old farang with no money.

[Shaunduhpostman]

AND WHAT DOES IT ALL MEAN TO RETIRED FARANGS IN THAILAND ?

It means that in a few years, Thailand will not be a cheap place to retire anymore.

I am just amazed, how many farangs are in complete denial of it all (even some that have 20 to 25 years of statistical life-expectancy ahead of them.) Those depending on fixed monthly pension-money will soon be in for a rude awakening, especially after having invested the bulk of their liquid assets in Thai-real-estate, that they don't even own in their name.

A harbinger for things to come: Look at the situation that (especially) affects British-Nationals already: Many based their retirement in Thailand on an exchange rate of 70 Bht to the pound. And now?

Of what ingredients is the cocktail made of that will bring much grief to many expats here:

- An ever strenghtening Thai-Baht.

- Inflation, officially 3.5 %, actually close to 10 %.

- Eventually the financial requirements for Retirement-visas and Marriage-visas will be "adjusted upward" to reflect the increased cost of living (doubled?)

Mass-Exodus of farangs in the offing? Go where? Will be hard to pack a 2 million-Bht-House into a container and move it to Europe.

As said above, what really strikes me is the fact that the vast majority of farangs, (even "low-budget-farangs"), don't want to be bothered with such "trivialities".

They may have adopted part of Thai-thingking: "Tomorrow is far away, why should I think about tomorrow".

Cheers.

I'm by no means an economist or even particularly astute on these matters, and your general premiss does not seem unlikely by any stretch, but with respect I'd like to ask where you get off talking about an ever strengthening baht. That seems to suggest we are on some eternal uptrend in the strength of the baht. That uptrend will end and any number of situations could cause that sooner than later. There are too many volatile and complex elements and weaknesses underlying the economic progress we see everywhere in our host country for me to see a kind of long straight road to European levels of prosperity . There is still much instability in Thailand and Asia in general that could slow the pace of development or even stop it dead in its tracks. One example I can think of off hand would be how the country is still heavily dependent on agriculture, yet the government seems to be playing some very dangerous poker with their rice buying scheme, which seems to many to be aimed at completely destroying that whole market if its aimed at anything at all other than short sighted self-interested gains for the Thaksins and a few others. The apparent heedlessness of all that and an apparent heedlessness embedded in the culture does not bode well for Thailand becoming a powerhouse in the next decade. At any point someone with power and influence will be tolerated to do whatever they like to whatever has been previously accomplished and twist it all to their own selfish benefit. Thailand has come very far since the 1997 crisis, but it was the same story 1997, and if you were here then I'm sure you recall that things became undone for a number of years. I have seen little that suggests any lessons were learned from that time, particularly from the Thaksin crowd whose modus operandi was to just ignore the whole crisis happened at all and continue throwing more credit around. I myself am more concerned about the effect of the rug being pulled out from under us as it was in 1997 than this place becoming a first world country right under my nose while I was sabai sabai.

[swissie]

AND WHAT DOES IT ALL MEAN TO RETIRED FARANGS IN THAILAND ?

It means that in a few years, Thailand will not be a cheap place to retire anymore.

I am just amazed, how many farangs are in complete denial of it all (even some that have 20 to 25 years of statistical life-expectancy ahead of them.) Those depending on fixed monthly pension-money will soon be in for a rude awakening, especially after having invested the bulk of their liquid assets in Thai-real-estate, that they don't even own in their name.

A harbinger for things to come: Look at the situation that (especially) affects British-Nationals already: Many based their retirement in Thailand on an exchange rate of 70 Bht to the pound. And now?

Of what ingredients is the cocktail made of that will bring much grief to many expats here:

- An ever strenghtening Thai-Baht.

- Inflation, officially 3.5 %, actually close to 10 %.

- Eventually the financial requirements for Retirement-visas and Marriage-visas will be "adjusted upward" to reflect the increased cost of living (doubled?)

Mass-Exodus of farangs in the offing? Go where? Will be hard to pack a 2 million-Bht-House into a container and move it to Europe.

As said above, what really strikes me is the fact that the vast majority of farangs, (even "low-budget-farangs"), don't want to be bothered with such "trivialities".

They may have adopted part of Thai-thingking: "Tomorrow is far away, why should I think about tomorrow".

Cheers.

I'm by no means an economist or even particularly astute on these matters, and your general premiss does not seem unlikely by any stretch, but with respect I'd like to ask where you get off talking about an ever strengthening baht. That seems to suggest we are on some eternal uptrend in the strength of the baht. That uptrend will end and any number of situations could cause that sooner than later. There are too many volatile and complex elements and weaknesses underlying the economic progress we see everywhere in our host country for me to see a kind of long straight road to European levels of prosperity . There is still much instability in Thailand and Asia in general that could slow the pace of development or even stop it dead in its tracks. One example I can think of off hand would be how the country is still heavily dependent on agriculture, yet the government seems to be playing some very dangerous poker with their rice buying scheme, which seems to many to be aimed at completely destroying that whole market if its aimed at anything at all other than short sighted self-interested gains for the Thaksins and a few others. The apparent heedlessness of all that and an apparent heedlessness embedded in the culture does not bode well for Thailand becoming a powerhouse in the next decade. At any point someone with power and influence will be tolerated to do whatever they like to whatever has been previously accomplished and twist it all to their own selfish benefit. Thailand has come very far since the 1997 crisis, but it was the same story 1997, and if you were here then I'm sure you recall that things became undone for a number of years. I have seen little that suggests any lessons were learned from that time, particularly from the Thaksin crowd whose modus operandi was to just ignore the whole crisis happened at all and continue throwing more credit around. I myself am more concerned about the effect of the rug being pulled out from under us as it was in 1997 than this place becoming a first world country right under my nose while I was sabai sabai.

I agree, that there was a lot of money been thrown around (borrowed overseas) and "bubbles" are becoming visible. Rice-scheme etc etc. Any bubble bursting will set the Thai-Bht back. But only in the short or mid-term.

Longer-term to me the outlook remains unchanged:

- Impressive Economic Growth-Rates will continue throughout Asia, especially as long as the Chinese Locomotive is rolling along.

- On the other hand, in Europe it is considered a success, if growth-rates remain somewhat in positive territory and not drop below zero.

Given that (and more), the prospects of farangs in Thailand, depending on fixed monthly money-transfers from Europe and with a life-expectancy of 10 or more years, looks less than promising to me.

I hope that I am wrong.

Cheers.

[NCC1701A]

We could be looking at a massive global deflationary event. It will be interesting to see how Thailand weathers that.