5% growth now seen as achievable

The Nation (28 November 2007)

Fiscal Office expects 4% inflation

The Finance Ministry is optimistic that real economic growth will be 5 per cent next year, although it will be accompanied by a higher inflation rate of 4 per cent.

"The Finance Ministry upgraded its economic growth projection to 4.5 per cent this year after higher-than-expected export growth last month," Fiscal Policy Office director-general Pannee Sathavarodom said yesterday.

She told a press conference the office had upped its projection to 4.5-per-cent economic growth for this year, from the 3.8 to 4.3 per cent it forecast in August.

Real growth in gross domestic product (GDP) last year was 5 per cent.

Pannee said export growth in US dollars of 26.7 per cent year on year last month and a higher rate of budget disbursement would contribute to increased economic growth.

The office predicts that export growth for the full year will be 15.7 per cent in dollar terms, while export volume will expand 6.4 per cent this year.

She said the government could disburse 93.9 per cent of the previous fiscal year's budget, higher than the target of 93 per cent of planned expenditure of Bt1.57 trillion.

Higher government spending has offset a slowdown in private investment and household consumption.

Private investment is expected to expand only 0.2 per cent this year, while household consumption is projected to rise 1.2 per cent. Consumer and investor confidence has been shaken by political uncertainty, Pannee said.

She expressed optimism about the economic outlook for next year. She said her office forecast growth in a range between 4.5 and 5.5 per cent.

Public investment will be a key driver of growth next year, which will also boost private investment. Public investment is expected to expand by 5.4 per cent and government consumption to rise at the same rate.

Household consumption is expected to rise by 2.5 per cent, while private investment could increase by 5.3 per cent. However, private investment and consumption will still be moderate, Pannee added.

Due to high oil prices, headline inflation is expected to rise to 4 per cent next - up from 2.2 per cent this year. The office made an assumption that the average Dubai crude oil price will rise to US$83 (Bt2,808) per barrel next year, from an estimated average of $67.80 this year.
The current-account surplus is expected to fall to 3.3 per cent of GDP, from an estimated 5 per cent this year.

Export volume is expected to expand 5.5 per cent next year - against 6.4 per cent this year - due to the slowdown of the world economy.

Pannee, however, believes the Kingdom's diversified export markets will cushion the economic slowdown in the United States. Exports to the Middle East are expected to offset a slowdown to the US, she said.

Exports in dollar terms are expected to expand 10.7 per cent next year, down from 15.7 per cent this year, while import volume is predicted to grow 5.8 per cent - up from 3.5 per cent this year.

The office estimates that the combined economies of 14 major trade partners will expand 3.8 per cent next year, down from a projected 4.1 per cent this year.

Meanwhile, the baht is expected to move up from 34.60 per dollar this year to 33.80 next year.
The projection for the policy interest rate is unchanged - at 3.25 per cent until the end of this year.

Public and private investment are key

The Nation (28 November 2007)

Is Thailand at the bottom of the down cycle, and can it thus look forward to a domestic demand-led recovery next year after the December 23 election?

It looks increasingly so. But the story is not all rosy. Consumption remains wobbly from the political instability of the past two years. Investment will be the key factor.

"To expect a swift pick-up in household spending is probably too optimistic a proposition," said Frederic Neumann, an economist at Hong Kong Shanghai Banking in Hong Kong in his report entitled "Time to Turn Bullish", published yesterday.

"For this, the electorate appears too traumatised by the turbulent political events over the past two years. In fact, consumer confidence continues to deteriorate even if signs are emerging that the political gridlock is beginning to dissolve. Moreover, low wage growth and rising inflation will keep a lid on private consumption."

The current government of Surayud Chulanont hopes to stimulate consumption by allowing salaries of civil servants and state-enterprise employees to rise 4 per cent. The daily minimum wage of Thai workers will also increase nationwide between Bt1 and Bt7. This in turn will put more purchasing power into consumers' pockets at a time when prices of consumer products and energy and transport costs have been on a sharp upward trend.

But do not expect too much on the consumption side. The key to reviving domestic growth next year should be investment, both public spending and private investment.

"But investment should swing into full force next year after long underperformance. Political stabilisation, low interest rates, and pent-up demand are likely to fuel the rebound in business expenditure. At the same time, the next government, of whatever colour, looks set to raise spending on infrastructure, providing an added boost to fixed capital formation," Neumann said.
MR Pridiyathorn Devakula, former BOT governor and now an economic adviser to the Chart Thai Party, said on Monday that since the new coalition government was likely to stay around for one-and-a-half years, it would likely invest heavily - at least Bt160 billion - on 11 mega-projects, in order to stimulate growth.

He said believes the coalition government will be short-lived because two-thirds of the members of Parliament are somehow linked to the 111 former executives of the defunct Thai Rak Thai Party who have been banned from politics for five years. The major political agenda of the new government will be to push for legislation granting amnesty to those 111 politicians, after which there will be an attempt to rock the boat in order to call a snap election.

Finance Minister Chalongphob Sussangkarn has indicated that companies - particularly in the auto industry - whose investment will be in about US$500 million (Bt16.92 billion), have started submitting applications to the Board of Investment for investment promotional privileges. In Southeast Asia, no other countries match Thailand in the development of the auto industry, because companies like Ford and Honda have made commitments to invest further in Thailand.
Evidence of private-sector recovery can be seen in last month's statistics. While exports jumped 27.7 per cent year on year to $14.52 billion, imports also surged 20.2 per cent to $13.02 billion, DBS Research reported on Monday. The high-growth figures for imports, which are mostly capital goods, reflect a recovery in the manufacturing sector going forward as industries restock their capital goods for production.

Thailand's trade surplus, which stood at $9.9 billion in the first 10 months of the year, will narrow next year with a fall of net exports as imports rises. But Neumann expects that a rebound in both public and private investment will step in to offset the narrowing trade gap.
"We therefore look for growth to accelerate to 5 per cent in 2008, from roughly 4 per cent this year. Perhaps not the bullish scenario that the country is accustomed to, but still reason enough to turn optimistic," he said.

Big push for LG mobiles

The Nation (28 November 2007)

LG Electronics (Thailand) will spend US$10 million (Bt338 million) next year on marketing its mobile phones, with the hope of doubling its share of the Thai handset market to 8 per cent.

Taweechok Lalitsasivimol, senior manager for the mobile-phone business, yesterday said the company expected to sell 600,000 mobile phones this year and about 1 million next year.

The South Korean-based electronics company also launched a new model yesterday: the LG Viewty, featuring a 5-mega-pixel digital camera. The handset is priced at Bt17,900.

Deputy managing director Alongkorn Chujit said LG planned to sell 10,000 LG Viewty units per month. The target group is affluent tech geeks.

Next year, LG Electronics will roll out more than 40 new mobile-phone models in Thailand, he said.

He believes licences to operate third-generation (3G) broadband wireless spectra will also be awarded in Thailand next year, further boosting sales growth for 3G-capable mobiles.

TOT tells companies to deliver numbers

Bangkok Post (28 November 2007)

The TOT board of directors wants contractors to finish the long-delayed addition of 565,000 telephone numbers and 220,000 broadband connections before the term of the military-appointed government expires.

Col Natee Sukolrat, a board spokesman, said Ericsson and Siemens were supposed to have delivered the 565,000 new numbers in August last year but could not finish on time.

The two companies won the contract in 2005 in an electronic auction with a combined price of 5.799 billion baht.

The project was divided into three zones with Siemens winning Zone 1 covering Bangkok and the northeastern provinces at 2.036 billion baht. Ericsson won Zone 2 (central and southern provinces) at 1.893 billion and Zone 3 (northern and eastern provinces) at 1.870 billion baht.

Col Natee said the board would try to push the two suppliers to deliver the project within the term of the current government so that TOT could determine the fine for late delivery.

The broadband expansion project is being undertaken by Huawei of China.

Col Natee dismissed an earlier report that TOT had decided to fine Siemens 320 million baht and Ericsson 440 million for the late delivery, reasoning that the amounts could not be determined until the work was completed.

The project had been delayed for 400 days, he said, adding that the two suppliers would face a fine of 0.1% of the project value per day.

The suppliers claimed flooding in several parts of the country, and the unrest in the South were major factors that delayed the construction, he said.

But Col Natee admitted that the delay was also due to expansion beyond the original terms of the contract.

Thaksin faces up to 26 years in jail

Bangkok Post (27 November 2007)

Four criminal charges to be pressed by ASCThe Assets Scrutiny Committee will, in two weeks, press four criminal charges against deposed prime minister Thaksin Shinawatra for abuse of authority when he was in power, which could land him in jail for 26 years if he is found guilty. The four charges announced by the ASC yesterday relate to Mr Thaksin's alleged illegal concealment of his share holdings in Shin Corp and his administration allegedly having favoured his company's telecoms businesses.

ASC secretary Kaewsan Atipho said the sub-committees looking into Mr Thaksin's alleged abuse of authority were basing the charges on four cases.

Under the process, the ASC will file the criminal charges with the Attorney-General's Office, which is responsible for taking the cases to court. This would take about two weeks, said Mr Kaewsan.

In the first case, Mr Thaksin allegedly failed to declare to the National Counter Corruption Commission his total Shin Corp shareholdings while in office.

The alleged stake holding concealment also led to the second charge related to the sale of Shin Corp shares by his family to Singapore-based Temasek Holdings.

The ASC has already frozen 66 billion out of the 73 billion baht that Mr Thaksin's family netted from the Shin Corp sale.

In the third case, Mr Thaksin allegedly ordered the issuance of a cabinet resolution in 2003 to convert the mobile-phone operators' concession fee into excise tax that caused about 40 billion baht in damage to two state enterprises, TOT Plc and CAT Telecom Plc.

In the fourth case, the ASC sub-panel found Mr Thaksin allegedly ordered the Export and Import Bank to lend a 900-million-baht soft loan, out of a total of four billion baht, to the Burmese government to improve its infrastructure and telecom sector in 2004. This came with the condition that the Burmese government purchase materials from Shin Corp, said Mr Kaewsan.

After the loan agreement, Burma reportedly contracted Shin Corp's subsidiary, Shin Satellite, to be a major supplier to its 600-million-baht broadband satellite telecoms project.

Altogether, the four charges would make Mr Thaksin liable to a maximum 26 years in jail.

Mr Kaewsan said ASC sub-panels are still investigating three more cases to see whether they can be linked to any abuse of authority by Mr Thaksin.

''Information is being gathered on the three cases from all the officials involved. Up to now there is no evidence linked to Pol Lt-Col Thaksin,'' he said.

One of the three cases involves the reduction in revenue sharing of pre-paid mobile phone services between TOT and private mobile phone operators to 20% from 25%, causing the TOT some 70 billion baht in financial damage.

Another case concerns a contract between Advanced Info Service (AIS) and the TOT that was changed during the Thaksin administration, obliging the TOT, instead of private operators, to bear 25% of mobile phone roaming service costs, costing the TOT 13 billion baht for the contract's term.

The third case is related to the amendment of Shin Satellite's concession which allowed Shin Corp to cut its stake in the firm from 51% to the minimum 40%. The change was seen as an attempt to help foreign investors avoid laws limiting foreign shareholdings in telecom firms to 49%.

The share holding restructuring was allegedly carried out to raise funds for Shin Satellite to launch iPSTAR, the world's largest broadband satellite, for commercial purposes. This was considered to breach a concession contract requiring the firm to launch Thaicom 4, a basic communications satellite.

The ASC sub-panels are questioning people involved in the cases and gathering related evidence.

High baht cuts fund's return from overseas

The Nation (27 November 2007)

Returns from investments in foreign markets have been marginalised by the appreciation of the baht, says Somkiat Chayasriwong, chairman of the Government Permanent Employee Registered Provident Fund (GPEF).

However, yesterday he announced the fund's overall return on investments in the first nine months of the year was 7.15 per cent, a figure he called "satisfactory". Somkiat was speaking at a seminar marking the GPEF's 10th anniversary.

The fund's total investment portfolio amounts to Bt10.45 billion. Eighty-five per cent is invested in the bond market and 15 per cent in the stock market. Under its investment strategy, only 5 per cent of the fund's assets have been placed in foreign bond and share markets.

"From foreign investments, we've not seen a clear sign of good returns, because the strengthening of the baht has offset returns," he said, adding that the GPEF had not invested in sub-prime collateral debt obligations in the US market.

The GPEF is currently studying new investment strategies, in order to diversify its investments, probably by investing more abroad or more in the property sector, he said. But the decisions will be left to a new GPEF board, and in any case they will place priority on fund stability.

Returns from the GPEF's investments in bonds between January and September grew 48.63 per cent year on year, while its returns from stock-market investments in the same period jumped 51.37 per cent, he said. The fund's overall return was 7.15 per cent. Over the decade it has been in operation, the GPEF's average overall return has been 6.62 per cent per year, compared within inflation of 3.05 per cent and an average bank interest rate of 3.57 per cent.

Somkiat said 161,197 out of 220,000 permanent government employees were members of the fund. "We'll persuade more government employees to participate," he said.

He said under the new Constitution, the government was required to facilitate the establishment of national savings pools for the elderly. If, because of this provision, the new government required private companies to set up new national saving pools, the GPEF would also create a new savings fund of its own.

The GPEF is not a part of the Government Pension Fund (GPF), which manages government-staff savings assets worth more than Bt400 billion.

Provident Fund Association president Pisit Lee-ahtam told the seminar that the GPEF should diversify its investments and look for opportunities in foreign financial markets. He suggested higher-risk investments with higher returns be offered as an option to some GPEF members. Compared with the GPF, which provides benefits for government officials, the GPEF offers fewer benefits to its members, Pisit said.

ING Funds Management managing director Maris Tarab and Finansa Asset Management chief investment officer Monchai Jaturanpinyo, representing the GPEF's two fund managers, told the seminar that the GPEF should invest more in stock, property and foreign markets.

True Move plans to pass DTAC

The Nation (27 November 2007)

Company targets surpassing rival within two years.
True Move has set itself the ambitious target of beating.

Total Access Communication (DTAC) in terms of customer base within the next couple of years.
Chief executive Supachai Chearavanont announced the target yesterday as True Move, the country's third-largest cellular operator that made its debut five years ago, celebrated achieving a subscriber base of more than 12 million. Of the total, 60 per cent are in the provinces.

DTAC has about 16 million subscribers, while Advanced Info Service leads the field with more than 23 million.

DTAC chief commercial officer Thana Thienachariya said his company had focused on revenue more than subscriber numbers.

"If True Move can surpass us in terms of subscriber numbers, it's still okay. If it surpasses us in terms of revenue and profits, my boss might fire me," Thana said.

True Move reported a net profit of Bt213 million for the third quarter, including the one-time gain from change in the useful life of assets. This represented a turnaround from a net loss of Bt122 million in the second quarter.

DTAC posted net profit of Bt1.362 billion in the third quarter.

True Move has capitalised on the group's synergy to quickly build up its market share, especially in the teen segment. True group businesses range from cellular, broadband Internet and pay TV, to wireless payment services.

Supachai said True Move had to work harder if it wants to increase market share in the corporate customer segment.

Next year, True Move has targeted to acquire one-third of the forecast 5 million additional mobile-phone subscriber numbers in the market.

Speaking on a separate issue, Supachai said many foreign telecom operators had approached the firm about a possible strategic partnership deal, given that True Move is the only cellular operator without an overseas partner.

But he said True Move preferred to wait for the National Telecommunications Commission to issue new cellular licences, which would open up new business opportunities, before he starts thinking seriously about a foreign strategic partnership.