Kingdom a long way from 1997, yet more shocks may loom: Thai analysis

[webfact]

ANALYSIS
Kingdom a long way from 1997, yet more shocks may loom
Thanong Khanthong
The Nation



BANGKOK: -- Sixteen years after the baht's devaluation on July 2, 1997, Thailand appears to have regained its footing. Yet ample risks to economic and financial stability remain because of the volatility of capital flows and a deteriorating trade account.

Over the past three or four months, Thailand has lost a chunk of its foreign-exchange reserves in a hurry. According to the Bank of Thailand's website, as of June 21, the central bank's forex reserves stood at US$172.6 billion (Bt5.348 trillion) - down $10 billion from February's $182 billion.

During this time, the baht exchange rate has gone through sharp fluctuations. The Thai unit hit Bt28.55 against the US dollar in April before weakening to Bt31.05. A Bt3 fluctuation over a period of three months reflects the enormous risks associated with the forex market.

Thailand's foreign-exchange reserves are also under pressure from the deteriorating external account. In the first five months of this year, Thailand experienced two months of current-account surplus of a combined $3 billion and three months of deficit of a combined $6.6 billion. Overall, the country posted a current-account deficit of more than $3 billion in those five months. This explains why money is flowing out of the country.

Most people believe that the hangover from the 1997 financial crisis has completely gone. The way forward for Thailand is to gain prosperity from expanding trade and exports, from rising disposable incomes of the people, and from the relative strength of the country's competitiveness as the centre of the ASEAN region.

Finance Minister Kittiratt Na-Ranong has even predicted that gross domestic product, now Bt13 trillion, would hit Bt100 trillion by the time the government has completed its mega-infrastructure investment over the next seven years or so. But a closer look at the economic structure shows that Thailand is vulnerable to another shock.

First, foreign investors account for a chunk of ownership in the stock market. Jarumporn Chotikasthira, president of the Stock Exchange of Thailand, has said foreign interests hold about 35-38 per cent of Thai equities, the size of which is equal to the country's GDP.

SET vulnerable

This makes the Thai equity market vulnerable to a sudden outflow in the event that foreign investors sell off their holdings in a big way to meet their redemptions in their home markets.

Second, foreign investors are major shareholders in the Thai banking system, holding roughly 60 per cent. This also poses systemic risk in the event of an abrupt change of their policy. Banking systems in the Western world are heavily undercapitalized, posing a systemic threat to the global economy.

Third, foreign investors hold Bt900 billion in the Thai bond market, according to the Thai Bond Market Association. Their buying into Thai bonds or selling them off has a huge impact on the baht exchange-rate.

Fourth, as a result of Thailand's obligations under the International Monetary Fund, policy has been relaxed to allow foreigners to own land in Thailand. Last year Sriracha Charoenpanich, the Ombudsman, reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security.

Finally, Thailand's household debt has risen dramatically. Dr Prasarn Trairatvorakul, the governor of the Bank of Thailand, has expressed grave concern over the current level of household debt - Bt8.8 trillion, equal to about 78 per cent of GDP. The big jump in household debt can be attributed to the easy-money policy of the government, which has encouraged Thais to borrow to purchase homes, cars and other items.

As the economy slows in line with the global recession, Thailand will be vulnerable to further shocks because the households have saddled themselves with debt, which will hinder domestic consumption. The government's plan of major infrastructure investment and heavy-handed deficit spending on populist policies will also threaten to raise the public debt, now under 50 per cent of GDP, to 70 per cent if it is not careful enough, according to a recent comment by MR Pridiyathorn Devakula, a former finance minister and former central bank governor.


-- The Nation 2013-07-02

[topt]

"reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security."

Is this for real or some sort of selective reporting? Presumably this is land owned by corporations etc under BOI schemes - but really a third???

[Tatsujin]

"reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security."

Is this for real or some sort of selective reporting? Presumably this is land owned by corporations etc under BOI schemes - but really a third???

First I've heard about it . . . so I can go buy land now? lol

What they really mean probably is that the land was paid for by foreigners, but still owned by Thai's.

[asiamaster]

Any idea how many Thais cashed in on their stocks and sent it to offshore accounts at a healthy exchange rate?

Edited July 2, 2013 by asiamaster

[Naam]

Thailand has lost a chunk of its foreign-exchange reserves in a hurry. According to the Bank of Thailand's website, as of June 21, the central bank's forex reserves stood at US$172.6 billion (Bt5.348 trillion) - down $10 billion from February's $182 billion.

hmmmm... 5.5% = chunk?

[Ianatlarge]

Just my 2c worth (and that is what it is worth)—another financial analysis, because financial analysts always get it right (pardon my cynicism). Is it bad to have a sizeable % of the local stock market owned by foreigners, or does that provide a measure of stability? I don't see how land ownership by foreigners (most likely corps, not people) imperils "Thailand's social security". Household debt, well, maybe, but it depends how the debt is spent and how well it is serviced. Currency fluctuation, currencies fluctuate, and the baht has seemed to do no more than move above and below 30 to the usa—no great swings. I am unpanicked by the immediate future, though maybe I should be.

[Naam]

Any idea how many Thais cashed in on their stocks and sent it to offshore accounts at a healthy exchange rate?

any idea how difficult it is for a Thai to send money, generated in Thailand, offshore? no? i thought as much!

[BlackJack]

its laundered through the casino's

[roiethome]

I would like to see the Baht go back to 60 against Sterling, and I am sure a lot of others would too

[bonobo]

Except for household debt, all of Thailand's potential troubles , at least according to the finance minister, are due to those pesky foreigners.

[Card]

"reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security."

Is this for real or some sort of selective reporting? Presumably this is land owned by corporations etc under BOI schemes - but really a third???

First I've heard about it . . . so I can go buy land now? lol

What they really mean probably is that the land was paid for by foreigners, but still owned by Thai's.

You mean leased?

[Card]

Except for household debt, all of Thailand's potential troubles , at least according to the finance minister, are due to those pesky foreigners.

And part of household debt is due to those pesky foreigners making their products tempting for Thais to buy.

Edited July 2, 2013 by Card

[Tatsujin]

"reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security."

Is this for real or some sort of selective reporting? Presumably this is land owned by corporations etc under BOI schemes - but really a third???

First I've heard about it . . . so I can go buy land now? lol

What they really mean probably is that the land was paid for by foreigners, but still owned by Thai's.

You mean leased?

Whatever you want to call it, for most foreigners here, you "can't" buy or own land unless it's through some backdoor fashion or paid off someone to make the paperwork . . . I think they are way exaggerating things to make the uneducated Thai's fear the pesky foreigners coming in and taking over. The same old nationalistic bullshit we hear all the time.

[Card]

"reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security."

Is this for real or some sort of selective reporting? Presumably this is land owned by corporations etc under BOI schemes - but really a third???

First I've heard about it . . . so I can go buy land now? lol

What they really mean probably is that the land was paid for by foreigners, but still owned by Thai's.

You mean leased?

Whatever you want to call it, for most foreigners here, you "can't" buy or own land unless it's through some backdoor fashion or paid off someone to make the paperwork . . . I think they are way exaggerating things to make the uneducated Thai's fear the pesky foreigners coming in and taking over. The same old nationalistic bullshit we hear all the time.

Actually I think it's one of the few national policies that they have got right. Without that security, big corporations from the US, China and Europe would buy up everything in sight for food, fuel and property to speculate on rising prices. The small land owners would soon be priced out of the market.

[Tatsujin]

Whatever you want to call it, for most foreigners here, you "can't" buy or own land unless it's through some backdoor fashion or paid off someone to make the paperwork . . . I think they are way exaggerating things to make the uneducated Thai's fear the pesky foreigners coming in and taking over. The same old nationalistic bullshit we hear all the time.

Actually I think it's one of the few national policies that they have got right. Without that security, big corporations from the US, China and Europe would buy up everything in sight for food, fuel and property to speculate on rising prices. The small land owners would soon be priced out of the market.

Yes, far better for those extremely wealthy elite here to own it all instead and rent it back out to the farmers.

[Card]

Whatever you want to call it, for most foreigners here, you "can't" buy or own land unless it's through some backdoor fashion or paid off someone to make the paperwork . . . I think they are way exaggerating things to make the uneducated Thai's fear the pesky foreigners coming in and taking over. The same old nationalistic bullshit we hear all the time.

Actually I think it's one of the few national policies that they have got right. Without that security, big corporations from the US, China and Europe would buy up everything in sight for food, fuel and property to speculate on rising prices. The small land owners would soon be priced out of the market.

Yes, far better for those extremely wealthy elite here to own it all instead and rent it back out to the farmers.

yes, I agree.

[virtualtraveller]

Correction: A third of all land is owned by Thais who have conned foreigners into parting with them money on the false understanding they are landlords.

[Card]

Correction: A third of all land is owned by Thais who have conned foreigners into parting with them money on the false understanding they are landlords.

So it is never the foreigner's fault for being gullible then?

Edited July 2, 2013 by Card

[hellodolly]

"reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security."

Is this for real or some sort of selective reporting? Presumably this is land owned by corporations etc under BOI schemes - but really a third???

Is my mother in law's social security check of 500 baht a month in danger?

[topt]

"reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security."

Is this for real or some sort of selective reporting? Presumably this is land owned by corporations etc under BOI schemes - but really a third???

Is my mother in law's social security check of 500 baht a month in danger?

Depends if the house falls down....

[hellodolly]

Well it will be interesting to see if the new Benja Louicharoen, Deputy Finance Minister can make a difference. I wonder if he will take a position on lying for or against.

[Halion]

All this country has is land and a once pristine coastline. It's single biggest export was rice and that has been dommed by an ignorant avaristic bunch of cowboys who refer to themselves as politicians.

Thailand has a large agricultural base which has also gone into decline at least on the internation market owing to the prolific use of agro chemicals of which many are banned in Europe and the US. Many of those used far exceed the maximum concentration levels set by international standards.

The local population consumes a very high level of toxins for vegtable produce.The livestock industries are highly unproductive and also subject to unscrupulous use of chemical agent for growth. The fishing industry also operates in a non sustaianble manner

There is no Oil, Gas, Mineral wealth of any substance. The vast majority of industry and technology here is foreign investment and without that they would all be riding on bullock carts.

The Environmental Agency is a sham has little or no impact on the toxic materials released into soil.water and air, and the list goes on and on.

This country and their culture of ignorance and isolation shoots itself in the foot every time it acts with a nationalistic pride and an intellect that has no real substance outside personal greed

The blame for all of this lies squarely on thier own doorstep propogated by their own actions or lack of same. It is time to turn the finger round and look at themselves and stop blaming others for their own greed and incompotence.

They alone,resulting from a lack of structure, controls, education and sound governance are destroying this country internaly for the benifit of a few parasitic individuals who think that this country is their playground for their own personal wealth and power. Rather pathetic.

[kblaze]

The 1/3 of all land being owned by foreigners was not substantiated when questioned...as far as I remember when it came up last year. Browsing some news sites discussing the claim, I found someone claiming that Thailand covers about about 514,000 square kilometres, or 320 million rai. Of this, 120 million rai is private land, 55 million settlement land, 30 million government land and 115 million rai is earmarked as forest land. So yeah...xenophobia

[Naam]

card:

Actually I think it's one of the few national policies that they have got right. Without that security, big corporations from the US, China and Europe would buy up everything in sight for food, fuel and property to speculate on rising prices. The small land owners would soon be priced out of the market.

why would small landowners, who per definition own land, be soon "priced out" pray tell?

[Card]

card:

Actually I think it's one of the few national policies that they have got right. Without that security, big corporations from the US, China and Europe would buy up everything in sight for food, fuel and property to speculate on rising prices. The small land owners would soon be priced out of the market.

why would small landowners, who per definition own land, be soon "priced out" pray tell?

What usually happens is that small landowners and farmers are offered a price they can't refuse and/or pressured one way or another to sell up if their farms or plots are worth having by those who can afford it, have connections or are ruthless enough. The price they get may be attractive but is often less than it is truly worth or soon becomes. This all comes as a result of large multinationals increasing the value of land through large scale farming of cash crops and/or food commodities for export, whose value is speculated on international exchanges. It goes on all over the world and is particularly problematic lately with food speculation. You not heard yet?

Edited July 2, 2013 by Card

[MAJIC]

Correction: A third of all land is owned by Thais who have conned foreigners into parting with them money on the false understanding they are landlords.

So it is never the foreigner's fault for being gullible then?

Since when has gullible been an excuse for ripping someone off? if that were true,it would be a get out of Jail free card,for all the crooks in the world!

[KRS1]

All this country has is land and a once pristine coastline. It's single biggest export was rice and that has been dommed by an ignorant avaristic bunch of cowboys who refer to themselves as politicians.

Thailand has a large agricultural base which has also gone into decline at least on the internation market owing to the prolific use of agro chemicals of which many are banned in Europe and the US. Many of those used far exceed the maximum concentration levels set by international standards.

The local population consumes a very high level of toxins for vegtable produce.The livestock industries are highly unproductive and also subject to unscrupulous use of chemical agent for growth. The fishing industry also operates in a non sustaianble manner

There is no Oil, Gas, Mineral wealth of any substance. The vast majority of industry and technology here is foreign investment and without that they would all be riding on bullock carts.

The Environmental Agency is a sham has little or no impact on the toxic materials released into soil.water and air, and the list goes on and on.

This country and their culture of ignorance and isolation shoots itself in the foot every time it acts with a nationalistic pride and an intellect that has no real substance outside personal greed

The blame for all of this lies squarely on thier own doorstep propogated by their own actions or lack of same. It is time to turn the finger round and look at themselves and stop blaming others for their own greed and incompotence.

They alone,resulting from a lack of structure, controls, education and sound governance are destroying this country internaly for the benifit of a few parasitic individuals who think that this country is their playground for their own personal wealth and power. Rather pathetic.

I cannot begin to tell you in just how many ways you are absolutely incorrect...Your post is the epitome of the ignorant Farang full of rage and blinded in Thailand.

1)The Thai pork and chicken industries are major exporters worldwide.

2)The fishing industry, is maintained by MANY fish farms all over the country.

3)The oil reserves located in the gulf of Thailand are VERY large, they are in pockets.

4) US pork imports to Thailand are being challenged do to use of hormones that are banned in Thailand.

5) Environmental agencies are a sham worldwide, they're just there to suggest things...look at oil producers worldwide, they often pay fines because they know its worth it to pay them and keep operations going.

There is no culture of ignorance in Thailand, education is revered, but the world language is English so of course English speaking countries have an advantage since most of the worlds science, history and so forth are mainly documented in English. But you take these same Thai students and you put them in an environment where they can understand everything being taught to them in a native language and they will run circles around Western kids,. Thailand has a culture of respect for elders and respect for those around them, even rude Farangs that they have had to come to put up with also.

Personal greed as you say, you grow up with nothing but literally the dirt under your feet and you try to make it like a lot of these poor Thai people. You will struggle and will get a taste of how hard life really is for them.

Politicians are the same the world over, in Thailand you call it corruption in the West it's called a political donation.

The inability to perceive another's lack of opportunity, misfortune and circumstances is indeed 'rather pathetic'...and a blatant example of Western Ethnocentrism.

Edited July 2, 2013 by KRS1

[chiang mai]

Correction: A third of all land is owned by Thais who have conned foreigners into parting with them money on the false understanding they are landlords.

Link and proof else it's untrue.

[Card]

Correction: A third of all land is owned by Thais who have conned foreigners into parting with them money on the false understanding they are landlords.

So it is never the foreigner's fault for being gullible then?

Since when has gullible been an excuse for ripping someone off? if that were true,it would be a get out of Jail free card,for all the crooks in the world!

OMG being gullible is THE reason for being ripped off.

[Lancelot]

"reported that about one-third of land in Thailand amounting to 100 million rai (16 million hectares) was in the hands of foreigners. This posed a risk to Thailand's social security."

Is this for real or some sort of selective reporting? Presumably this is land owned by corporations etc under BOI schemes - but really a third???

First I've heard about it . . . so I can go buy land now? lol

What they really mean probably is that the land was paid for by foreigners, but still owned by Thai's.

You mean leased?

Whatever you want to call it, for most foreigners here, you "can't" buy or own land unless it's through some backdoor fashion or paid off someone to make the paperwork . . . I think they are way exaggerating things to make the uneducated Thai's fear the pesky foreigners coming in and taking over. The same old nationalistic bullshit we hear all the time.

No, this "Foreigners buying land" is a clear and present danger. Farangs are hauling huge chunks of Thailand abroad- one suitcase at a time

Oh those pesky checked bag fees