Government urged to stimulate local growth

Bangkok Post (19 December 2007)

The new government must move quickly to stimulate the domestic economy to help business operators, said Santi Vilassakdanont, the chairman of the Federation of Thai Industries.

The FTI estimated that domestic consumption expanded by only 1-2% this year, and made a minor contribution to the Thai economy. He urged the next government to concentrate on stimulating local consumption.

''The programme should be focusing on promoting new investments in order to increase liquidity in the Thai economy,'' Mr Santi said yesterday.

Political stability would be a key factor in promoting investment in the country, he said, as industrialists are reluctant to expand even though their capacity utilisation rates are as high 90%.

He said the industrial confidence index had risen slightly to 82.3 points in November from 81.9 the previous month, driven by hopes that the political environment would stabilise.

Further investment in petrochemical expansion on the Eastern Seaboard and in megaprojects would improve the investment climate and stimulate consumption, he said.

The Board of Investment (BoI) has granted investment privileges for 1,241 projects worth 662 billion baht in the first 11 months of this year.

The FTI predicted that growth in the industrial sector in 2008 would be on par with 2007 at 7% if GDP grows by 4.5% to 5%.

However, industrialists will still face the challenge of high oil prices and other fuel costs.

Although the domestic market has stalled, the export sector is forecast to expand by 16% to US$150.5 billion in 2007 and is projected to grow by 10-12.5% to reach between $165.6 billion and $169.4 billion in 2008.

Reflecting slow local demand were auto sales, where exports outpaced local sales for the first time, said Surapong Paisitpatnapong, a spokesman for the FTI's automotive industry club.

Revenue from car and motorcycle exports in the first 11 months of the year was 433.89 billion baht, up 25.63% from 345.38 billion baht in the same period a year earlier.

Mr Surapong said export revenue next year would continue to outpace domestic sales value.
Total car production in the first 11 months of this year expanded by 7.85% to 1.18 million units from 1.10 million units last year.