Oil price plunge spurs hope in Thailand

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Oil price plunge spurs hope
ACHARA DEEBOONMEE,
SOMLUCK SRIMALEE
THE NATION

GOVT HAS OPPORTUNITY TO INVEST IN INFRACTURE: BANDID

BANGKOK: -- THAILAND'S economic prospects are on the up this year and beyond thanks to plunging oil prices, but much depends on the government's capability to make full use of the windfall, a former central banker said last week.

"Assuming that the oil price is sustained at US$50 per barrel throughout the year, there's a turnaround potential. It's now up to the government's ability to leverage this opportunity," Bandid Nijathaworn, former deputy governor, said in an interview.

Dubai crude oil last week fell below $50 per barrel, the lowest since 2005. It has plunged by nearly 50 per cent from last year's peak of $108.01 in June.

Bandid, president and CEO of the Thai Institute of Directors, shared the view of global analysts that the crash in crude will give a much-needed boost to Asia's oil-guzzling economies and will provide governments a "golden opportunity" to implement crucial structural reforms.

Fitch Ratings believes that most major Asian economies - including China, Japan, South Korea and Thailand - will see an effective overall income boost from sustained lower oil prices. Thailand's import bill surpassed Bt1.4 trillion in 2012, equivalent to more than 10 per cent of gross domestic product.

Bandid said the chance for a reversal after three years of slowing growth is huge. If the oil savings can be channelled into needy projects, mainly infrastructure and utilities, Thailand would be more attractive to local and foreign investors in the years ahead.

This is crucial since many new investment destinations are emerging and attracting both Thai and foreign companies.

"The best technology is more affordable, but the deployment rate is low in Thailand due to the poor quality of supporting infrastructure," he said.

"What the government could do is come up with the right and balanced combination of policies. Go ahead with a model mega project in a transparent way, to assure everyone that all changes are possible."

Circumstances are totally different from last year, when the economy managed to expand only 0.5 per cent on low export growth, low private investment, low domestic consumption and political uncertainty.

Cheap oil would help Thailand ride likely storms this year, even when the US rate hike triggers a return of investment to the US and sparks an increase in global interest rates.

The low economic growth base would ensure that the economy could expand by 4-5 per cent. On the plus side, the "oil repricing" would help even when the Thai economy faces some unfavourable waves in light of the possible exit of Greece from the eurozone, the crisis in Russia and defaults in some emerging markets.

Only favourable economic policies that enhance Thailand's competitiveness will reassure companies, which have so far been reluctant to invest due to concerns over political instability and the reform process.

However, besides the will to channel the saved money to mega projects, the government also needs to beware of some associated risks. Agricultural product prices tend to fall in tandem with oil prices and this will force the government to help low-income earners. Besides subsidies, there are other policies that will create jobs or there is training.

"This will be a way to reduce the income gap between middle-income people, who will benefit from lower oil prices, and low-income earners who stand to lose," he added.

Source: http://www.nationmultimedia.com/business/Oil-price-plunge-spurs-hope-30251685.html


-- The Nation 2015-01-12

[BSJ]

With lower oil prices huge numbers of people will have more disposable income, purchases will increase so demand for commodities will increase and the Aussie $ will rebound. Ye har, that's what I've been waiting for! Oh sorry, this is about Thailand....I got a little excited there!

[DKUNPUTAF713]

Just keep hoping.

[ezzra]

And will be the headlines when oil prices will go up?

'Oil prices rise dashed any hope for Thailand?'

[dcutman]

"Assuming that the oil price is sustained at US$50 per barrel throughout the year.

What are the chances of this happening?

There is going to be a major reduction in oil production very soon in the middle east. They might want to keep pumping, but storage has already become a huge issue.

[Balance]

With lower oil prices huge numbers of people will have more disposable income, purchases will increase so demand for commodities will increase and the Aussie $ will rebound. Ye har, that's what I've been waiting for! Oh sorry, this is about Thailand....I got a little excited there!

You are assuming that the price of gas fall with the lower oil prices. Right now, the price of gas in the U.S. is about half of what it is in Thailand. I don't think there are any plans here to pass savings onto consumers.

[rickirs]

"much depends on the government's capability to make full use of the windfall"

Unfortunately, the Prayut government is the government of "IF" - IF it does this or IF it does that.

Apart from forming committees and making roadmaps, the government has not since it was created last September done anything innovative to help the Thai economy. Prayut is running out of relief programs started by the Yingluck administration and populist programs created by the Thaksin administration.

But there's hope. Maybe Prayut will declare a "Citizen's Day" and roll out his tanks and guns for play time.

[kurnell]

I have made the most of the cheap oil prices by stocking up on fuel at my apartment.

[Bkungbank]

Crude oil where the gas of LPG and NGV came from since below US 50 per barrel but givernment increase gas prices, not making any sense?

[JOC]

Forget all the nice words!!

We want to see the low worldmarket prices transformed into much lower prices at the pump!!

[JOC]

I have made the most of the cheap oil prices by stocking up on fuel at my apartment.

Can I pay you a visit??

[kurnell]

I have made the most of the cheap oil prices by stocking up on fuel at my apartment.

Can I pay you a visit??Butane-Lighter-Gas-Refill-and-Lighter-Fluid.jpg

Bring beer and sausages

[slapout]

''hope is eternal'', but will the thai and other governments make the proper decisions regarding spending, taxes, improvements, etc? its a crap shoot as to improvement for the common folk of the world, but if history repeats itself, i will not hold my breath for all the hope to bear fruit for us common folk.