IMF to Cut Global Growth Forecasts

IMF to Cut Global Growth Forecasts
The Wall Street Journal (10 October 2007)

BERLIN -- The International Monetary Fund will cut its 2008 growth outlook for all major economies in its World Economic Outlook report due next week, a person with access to the IMF report said Tuesday.In its report, which follows its previous update in July that took place ahead of global financial market turmoil, the Washington-based fund now forecasts world economic growth of 4.8% for 2008, compared with the 5.2% forecast in July, according to the person.The IMF has already said the recent global credit squeeze caused by the meltdown of risky U.S. mortgage loans has heightened risks to the global economy. Monday, IMF Managing Director Rodrigo de Rato said the dollar is undervalued in the aftermath of the U.S. subprime lending meltdown as well as the U.S. Federal Reserve interest rate cut and that recent financial turbulence has brought a "change of scenario" after several years of strong global economic growth.In its outlook report, the IMF will cut its forecast for U.S. growth to 1.9% from 2.8% previously, while forecasting Canada's real gross domestic product to grow 2.3% next year, compared with 2.8% previously forecast, according to the person familiar with the report.The euro-zone economy is expected to grow less strongly than previously forecast, by 2.1% in 2008, compared with 2.5%. Europe's largest economy Germany should see 2.0% growth in 2008, down from the previous 2.4% forecast. France should also see 2.0% growth next year, compared with the 2.3% predicted previously. The IMF also forecasts China's economy will grow by 10.0% in 2008, down from the previous 10.5% forecast. The IMF's lower forecasts will also come as finance ministers and central bankers of the Group of Seven leading industrial nations meet in Washington for talks next week where they are expected to address the issue of foreign currencies, including the weak dollar. Some euro-zone officials say the strength of the euro makes it more difficult for the 13-member strong bloc to compete with U.S. and Chinese goods. The euro recently hit a new record against the dollar and the yen.

AIS sees lower Q3 earnings on seasonal factors

AIS sees lower Q3 earnings on seasonal factors
The Business Times (10 October 2007)

(BANGKOK) Advanced Info Service (AIS), Thailand's top mobile phone operator, said yesterday that it expected lower third-quarter earnings than in the previous two quarters as mobile phone use dropped in the rainy season. Upturn up ahead: AIS expects Q4 performance to improve due to more spending with elections in Dec 'Our third-quarter performance should be the lowest for this year as demand was seasonally low in the rainy season,' company president Wichian Mektrakarn told reporters. But the fourth-quarter performance should improve due to more spending during the election campaign,' he said, referring to a general election scheduled for Dec 23. AIS, one-fifth owned by Singapore Telecommunications Ltd, reported a 3.66 billion baht (S$172.5 million) net profit in the second quarter and a first-half net profit of 7.65 billion baht, down 23 per cent. It is due to announce third-quarter earnings next month, and 20 analysts polled by Reuters Estimates forecast a 2007 net profit of 17.06 billion baht, up 5 per cent from 2006. Full-year operating profits will also drop from last year after the weak first half, which was hit by higher costs and fierce competition, Mr Wichian said. AIS, which has about 50 per cent of the domestic mobile market, has raised tariffs for new customers gradually, signalling the end of an industry price war, analysts said. It has about 23 million subscribers now and aims to keep a 50 per cent share of the Thai mobile phone market, Mr Wichian said. The company, which started up 17 years ago, has said it expects 5 million net new subscribers this year, up from 3.1 million last year. It had 3.2 million net additions in the first half of this year. Thailand has more than 46 million mobile users, or about 70 phones per 100 people, compared with around 80 in Malaysia and more than 100 in Singapore. The Thai penetration rate is expected to reach 80 per cent in the next few years, analysts said. The company will also seek more licences to operate international gateways, fixed-line services and WiMax, a technology which provides long-distance wireless Internet access to home computers and mobile phones, Mr Wichian said. It has said it plans to spend 20 billion baht on expanding its network, excluding 3G, in 2008. It expects to invest an initial US$500-600 million in third-generation (3G) mobile services and to get a 3G licence early next year. AIS is 43 per cent owned by Shin Corp, controlled by Singapore's Temasek Holdings since the family of ousted premier and Shin founder Thaksin Shinawatra sold its controlling stake in the conglomerate in January 2006. After the sale, AIS was hit by a small boycott of Shin goods and services by people angered at the family's tax-free deal and a probe into whether Temasek's US$3.8 billion takeover broke laws limiting foreign ownership of Thai firms. Shares in AIS, valued at around US$8.9 billion, were up 1.05 per cent at 96.50 baht at the midday break, when the overall market was up 0.16 per cent. -- Reuters

Pinthongta faces ASC charges

Pinthongta faces ASC charges
Bangkok Post (10 October 2007)

The Assets Scrutiny Committee will file criminal charges against Pinthongta Shinawatra for her refusal to testify about the Shin Corp share case after being allowed to postpone the process three times, ASC spokesman Sak Korsaengruang said yesterday. The move came after Ms Pinthongta yesterday submitted a written letter refusing to give a statement to the ASC's sub-panel investigating the Shin Corp deal with Singapore's Temasek. Ms Pinthongta had asked the ASC three times to postpone her testimony before she submitted the letter yesterday. Mr Sak said Ms Pinthongta's refusal to give a statement to the ASC violated the anti-corruption law, which stipulates imprisonment of up to six months and a fine of up to 60,000 baht. The ASC will proceed on Monday to file criminal charges against her, said Mr Sak, also a member of the sub-panel. In the letter handed in by Ms Pinthongta, she said it would be unacceptable for her as a daughter to give testimony in a case which could bring about negative consequences for her parents. She also wanted to avoid any mistaken statements caused by her lack of familiarity with the process. She cited in the letter her constitutional right to human dignity based on the rule of law. She also regarded herself as having been treated like a criminal as the ASC had frozen her assets, and thus reserved her constitutional right to protect herself. She added that the ASC's authority granted by the coup makers was no longer effective because it contravened the newly-promulgated constitution. Mr Sak said the team dismissed her objections because her giving testimony would not deprive her of her human rights as she claimed.

Post e-logistics

Post e-logistics
Bangkok Post (10 October 2007)

CAT Telecom and Thailand Post have teamed up to develop and test an intelligent e-logistics system as part of an improved postal service. As part of the project's development, CAT will give about Bt2.7 million to a research team headed by Asst Prof Dr Visit Hirankitti of King Mongkut's Institute of Technology Lat Krabang. Intelligent e-logistics will enable Thailand Post to combine systems for geographical information, radio-frequency identification and artificial intelligence with CAT's Code Division Multiple Access 2000 1-x high-speed cellular network.
Project development began three months ago and is expected to be finished within the next six months. The system is aimed at enabling Thailand Post to track its fleet and parcels on a real-time basis and effectively manage its overall logistics service by reducing transportation time and oil consumption. Thailand Post expects to record a net profit of about Bt1.2 billion this year, the highest since its corporatisation four years ago.

AIS ready to expand into fixed-line services

AIS ready to expand into fixed-line services
Bangkok Post (10 October 2007)

Advanced Info Service (AIS) is spearheading an effort to expand into fixed-based wireless broadband services (WiMax) in 2008 as part of its strategy to become a total telecom service provider. The country's largest mobile-phone operator is on the verge of overhauling its distribution channels to expand its reach in provincial and rural markets. It is also revamping its outlets to cater for new applications from the third-generation mobile services expected to arrive next year. ''We are now ready to move ahead on our fixed-mobile convergence business after facing hardship in the past two years,'' said president Wichian Mektrakarn said yesterday.
''Our corporate situation had already passed its floor. Our image is now a politics-free company,'' he said yesterday at ceremonies on the 17th anniversary of the company founded by deposed prime minister Thaksin Shinawatra. However, Mr Wichian admitted that AIS was still likely to miss its profit target this year for the second year, due largely to the cellular price war in the second quarter and higher operating costs. The company's revenue target would be maintained.
AIS now has 23 million subscribers. It projects revenue of 90 billion baht this year. Chief executive Vikrom Sriprataks said the new WiMax service, to be operated by subsidiary Super Broadband Network Co, would enable AIS to expand into wireless broadband including high-speed internet, voice over Internet Protocol (VoIP) and IP television. He said the company would rent a fibre-optic network from the Electricity Generating Authority of Thailand (Egat) to provide the wireless broadband services, which are expected to be commercially viable next year. It plans to hire a media firms to provide content and applications for the WiMax-based services. Superbroadband Network holds a fixed-wireless network licence from the National Telecommunications Commission (NTC). It is also required to apply for a frequency licence from the NTC to provide WiMax services. AIS will propose the new investment plan at the company's shareholders' meeting for approval next week.Mr Vikrom said Superbroadband Network would focus on the wholesale market while Advanced Datanetwork Communications Co, the IPTV arm of AIS, would focus on the retail segment,. AIS recently restructured its business functions by separating into three divisions: fixed-line under Advanced Datanetwork Communications and Superbroadband Network; mobile phone and 3G services under AIS and AWN; and solutions under AIN Globalcom and M-Pay Co. Shares of AIS (ADVANC) closed yesterday on the Stock Exchange of Thailand at 98 baht, up 2.50, in trade worth 429.7 million baht.

Govt retrieves currency bill

Govt retrieves currency bill
The Nation (10 October 2007)

After the Cabinet yesterday withdrew for the second time the draft Currency Act from the National Legislative Assembly (NLA) for more revision, the Bank of Thailand said it agreed with the amendments suggested by critics. Assistant governor Suchada Kirakul said the central bank would follow Finance Minister Chalongphob Sussangkarn's policy to revise the provision in the bill that allows the central bank to invest in more channels. Earlier, Chalongphob had withdrawn the bill from the NLA in fear that some NLA members would vote it down. He revised the bill in some details before proposing it to the NLA again last week. This time, critics again warned that Section 16, which allows the central bank to invest in more financial instruments, would be too risky for Thailand's international reserves. According to the current draft, investment channels would be increased to include secured bonds with higher returns in order to maintain international reserves. Sovereign bonds issued by large countries, in which the central bank is allowed by current law to invest, have offered low returns because of short supply but high demand, Suchada said. "How he [Chalongphob] is satisfied, that's it. We have tried to maintain the value of international reserves as required because burying them in a jar produces nothing," she said. The investment-expansion clause to be withdrawn from the bill allows the central bank to invest in various financial instruments issued by international organisations of which the Kingdom is not a member. It also allows the central bank to invest in other secured financial instruments that have been developed largely throughout the world. Suchada said the central bank had "security" as the top priority of its investment policy, followed by liquidity. The new channels are secured financial instruments but provide higher returns than US government bonds. For example, bonds issued by the European Investment Bank are highly rated and also provide relatively high returns, but the central bank cannot put money into this because the Kingdom is not a European country. Suchada said if the central bank obtained higher returns, it could contribute more revenues to the government. This would save taxes from compensating the Financial Institutions Development Fund's burden. Meanwhile, auditors are required to protect the interests of shareholders. The Cabinet yesterday approved a change to the Securities and Exchange Act that will require auditors to inform the Securities and Exchange Commission (SEC) if they suspect that executives of listed firms might have tried to seek personal gain at the expense of shareholders, said deputy government spokesman Chodechai Suwannaporn. The Cabinet also agreed to a Finance Ministry proposal to provide Bt1.5 billion for the creation of an independent insurance regulator. Among the new commissioners are economist Narongchai Akrasenee, former Commerce permanent secretary Karun Kittastaporn and former senior Finance Ministry official Kovit Posayanond. The Cabinet also approved a draft amendment of the Securitisation Act, aimed at promoting asset-backed securities.

BOT told: Scrap 30% measure

BOT told: Scrap 30% measure
The Nation (10 October 2007)

The Public Debt Management Office has suggested the Bank of Thailand revoke its 30-per-cent withholding measure, in order to reduce funding costs on bond issues. Director-general Pongpanu Svetarundra yesterday said the bond curve was currently quite steep, due to a wide gap between the short-term and long-term deposit rates. If the central bank allowed foreigners to invest in the country's bond market, the spread would be narrower, and this would lower funding costs on bond offerings. "As the 30-per-cent reserve requirement is a temporary measure, using it for one year is enough," he said. "However, a decision on the issue depends on the Bank of Thailand, mainly because it's the monetary policy-maker." Pongpanu said the country's economy was expected to improve after the December 23 general election. A new government would possibly expand government investment, particularly on infrastructure mega-projects, so the Public Debt Management Office is preparing for fund mobilisation. The office will consider raising funds from several sources, including the domestic money and bond markets and foreign financial institutions. He said the Finance Ministry was still in the process of negotiating with the Japan Bank of International Cooperation to finance the Purple Line mass-transit system. The deal is expected to be complete later this month. Meanwhile, the Public Debt Management Office has appointed Bangkok Bank as the sales agent for government saving bonds with a three-year maturity during fiscal 2008. The bonds have a combined value of Bt6 billion. The Finance Ministry will also issue government bonds with five to 20 years' maturity this year. The proceeds will fund the budget deficit for the current fiscal year, which began on October 1. Pongpanu said the ministry's bond-issue schedule would be subject to auction every two months. Five-year, 10-year and 15- to 20-year bonds will be issued, with a total value of Bt80 billion, Bt60 to Bt80 billion and Bt20 to Bt30 billion, respectively. With interest rates remaining low, government bonds will attract investors. Moreover, he believes the country's policy interest rate is still on a downward trend.

AIS set to miss target

AIS set to miss target
The Nation (10 October 2007)


Leading cellular operator Advanced Info Service (AIS) is unlikely to meet its profit target this year, due mainly to the declining economy and intensifying competition. President Wichian Mektrakarn declined to specify the profit target this year but did say the situation would be better next year after the general election. "Our net profit is expected to reach the floor this year, so it will be better next year," he said. He noted that despite the predicted profit drop, the company was confident it would maintain its revenue market share of 50 per cent both this year and next. "We expect about Bt90 billion in revenue this year," he said. AIS posted total revenue of Bt46.5 billion for a net profit of Bt7.6 billion in the first half. Last year, it recorded Bt92.4 billion in revenue for a net profit of Bt16.25 billion. AIS currently has about 23 million subscribers out of more than 40 million mobile-phone users in Thailand. Wichian said AIS had spent heavily this year on a marketing campaign to retain its subscription base amid fierce competition. AIS's business group includes retail broadband-Internet provider Advanced Datanetwork Communication and international-call operator Advanced International Network, as well as Advanced Wireless Network, which has been set up to apply for a third-generation broadband cellular-service licence from the National Telecommunications Commission. AIS also has the Super Broadband Network, which is interested in applying for a licence to operate a Wi-Max broadband-Internet service.