NTC sticks to 3-digit prefixes for overseas calls

NTC sticks to 3-digit prefixes for overseas calls
The Nation (19 October 2007)

The national telecom operator decided yesterday to continue promoting three-digit phone numbers for international connections and approved the allocation of new international-call numbers.

The decision followed a meeting last week between the National Telecommunications Commission (NTC) and private operators, which devised two options to pave the way for a further opening up of the international-call market. One is to continue granting the three-digit numbers to applicants for international-call licences and the other is to switch instead to four-digit numbers to solve the shortage of existing numbers for such calls. NTC deputy secretary-general Takorn Tantasit said the board had approved the plan to allocate the numbers from 102 to 109 as new international-call prefixes, to be granted to future applicants for licences. It also approved the allocation of the existing 006 prefix to True International Communications and the 004 prefix to DTAC Network. The watchdog granted licences to both companies early this year but had yet to give them the numbers to offer the service, given that it has only 004 and 006 left in hand. CAT Telecom gave back its 004 prefix to the NTC last week and the licensing body has continued urging TOT to return 002 and 003 for reallocation as international-call prefixes. The NTC is likely to grant the 102 number to TT&T to provide an international-call service under its licence. Meanwhile, the three major cellular operators - Advanced Info Service, Total Access Communication and True Move - together recently asked the NTC to impose the interconnection-charge regulations on holders of type-1 Voice over Internet Protocol (VoIP) licences. The type-1 licence is for applicants without a network. The three operators found that some VoIP licensees had dumped the call traffic to their networks via TOT's international gateway. Therefore they feel that such licensees should share the interconnection fees with them. The interconnection regulations require all telecom operators with large networks to fairly share voice and data revenues between two networks involved in a call. This is to discourage them from dumping traffics to each other's networks. Before complaining to the NTC, the three cellular operators had asked TOT to look into the matter. However, the state agency refused to do so. Takorn said the NTC would look into the matter.

TrueMoney expands bill-payment service

TrueMoney expands bill-payment service
The Nation (19 October 2007)

Customers of TrueMoney's partners can now pay their True Group, utility and other bills at "TrueMoney Express" payment counters.

The partners are VCD/DVD rental store chain Tsutaya (Thailand), Double A paper maker Advance Agro and prepaid top-up service provider Electronics Payment Network (Thailand). The service will be available at 10,000 outlets countrywide by year-end, double the current figure of 5,000, TrueMoney president Adhiruth Thothaveesansuk said yesterday. The partners do not expect to earn much from franchising the new service but consider it as a complement to their main business. Besides looking for products at their shops, visitors can also settle their bills there. Tsutaya has 260 branches nationwide serving 2.4 million member families, while Double A covers the country with 1,111 stores. TrueMoney Express aims not to be in direct competition with the similar Counter Service of agriculture conglomerate Charoen Pokphand, which is the founder of True Corp, but to get closer to and present another choice for True customers. An estimated 2.5 million of cellular operator True Move's 9 million subscribers use TrueMoney to pay bills from their mobile phones. TrueMoney expects to generate Bt1.2 billion in fee income from transactions worth Bt10 billion this year.

Funds returned to government

Funds returned to government
The Nation (19 October 2007)

The 50 state enterprises remitted a total of Bt86 billion in revenue to the state in fiscal 2007 ended September 30, says the State Enterprise Policy Office.

The remittance is up 11.6 per cent from the previous fiscal year. Areepong Bhoocha-oom, director-general of the State Enterprise Policy Office, said the remittance was expected to rise to Bt98.65 billion this fiscal year. Among all state enterprises, those in the energy sector contributed the highest portion, worth Bt36.3 billion, followed by those in the service/commerce sector and the financial sector. The latter two remitted Bt12.8 billion and Bt9.4 billion, respectively. Leading the way was the Electricity Generating Authority of Thailand with Bt20 billion, Bt4.3 billion above target. Trailing closely were the Government Lottery Office, which remitted Bt12.7 billion, and PTT with Bt8 billion. At the end of last month, 17 large-sized state enterprises had reimbursed Bt168 billion or 52.73 per cent of their combined budget investment of Bt318.8 billion. It is expected that at the end of December, the reimbursement will increase to Bt226.7 billion or 68 per cent.

Innovation through clustering

Innovation through clustering
The Nation (19 October 2007)

The Industry Ministry of France has promoted its competitiveness clusters in Thailand in order to boost collaboration in terms of innovation and business between Thai and French operators.

During his visit to Bangkok, Alain Griot, head of the Technological Partnership Department and the Innovation and Competitiveness Department, said foreign companies joining these clusters would be able to improve their innovation efficiency and create more value-added products. "Our main goal in setting up these clusters is to encourage companies to build collaborative innovation projects, not to support commercial activities for our members," Griot said. The French government has already set up 71 clusters, which include emerging technological sectors such as nanotechnology, biotechnology and microelectronics, traditional industries and agricultural sectors. The government gives support not only to large companies but also small and medium-sized enterprises. For example, there are 46 funded projects in the biotechnological sector, of which 27 are by small and medium-sized operators. "We try to convince foreign firms to take part in these clusters and they will be granted the same benefits as we give to French companies," Griot said. The government also gives favourable tax treatment to young innovative enterprises which start operation in less than eight years and spend at least 15 percent of total income on research and development. They must be qualified as SMEs in the European Commission sense, meaning they must have no more than 250 employees, their turnover rate must be less than 40 million euros (Bt1.8 billion) and their assets must be worth less than 27 million euros. Griot said the government had announced an increase in its spending on research and development by 2010 from 2.2 percent of the country's gross domestic product to 3 percent. He said the government approved 1.5 billion euros to support projects in the clusters and promote industrial R&D during 2006-2008. However, the clusters are financed by the government, local authorities and members. He said operating costs for the clusters were worth between 250,000 euros to 700,000 euros per annum, depending on the size of the grouping.

Political stability key to revival, say firms

Political stability key to revival, say firms
The Nation (19 October 2007)

The business sector believes political stability is more likely to be achieved in the second or third quarters of next year and remains the most crucial factor for companies, together with the baht level and diesel prices. In a poll by the Centre for Economic and Business Forecasting at the University of the Thai Chamber of Commerce, 92.6 per cent of those surveyed expected political instability would remain for a short time. "They believed that politics would not become stable soon after the general election but would improve in the second and third quarters," Wachira Khuntaweetep, an economist at the centre, said yesterday. However, respondents mostly believed the business and economic picture would improve after the election, scheduled for December 23. Although 32.4 per cent of those surveyed plan to expand capacity in the future, improving from 4.8 per cent of those who are now expanding, most of them - 67.4 per cent - have decided to maintain existing capacity. The expansion expectations of respondents were also influenced by the current diesel price and economic conditions, while business performance and sales are expected to improve significantly in the second quarter next year. The private sector continues to adopt sales promotions and price strategies to lift sales in this year's fourth quarter amid continuing concern about the sluggish economy. According to the poll, the private sector - particularly the service sector - believes that its performance and sales will be worse in the fourth quarter this year, as costs will increase. Small companies will be worst hit. Director Thanawat Polwichai said the centre projected economic growth this year of 4.2 per cent, thanks to 14.1-per-cent growth in exports. The economy is forecast to expand by 4.6 per cent next year, when business confidence picks up and government spending accelerates in the second half. "Economic growth could exceed 5 per cent next year if the new government is stable, accelerating mega-project investments, boosting domestic demand and keeping export markets," he said. However, a crude-oil price increase would dampen the economy next year as it is expected to reach US$80 (Bt2,760) per barrel at the Dubai market, before gradually declining to an average of $70 in the first half of 2008.

Companies told to gear for accounting standard

Companies told to gear for accounting standard
The Nation (19 October 2007)

The full implementation of International Accounting Standard (IAS) 39 in Thailand, expected in 2010, will put pressure on the earnings of banks and companies that are party to contractual financial instruments, PriceWaterHouseCoopers ABAS partner Nangnoi Charoenthaveesub said yesterday. IAS39 requires all financial assets and financial liabilities, including derivatives, to be recognised on the balance sheet when the entity becomes party to the contractual provisions of the instrument. It focuses on the evaluation of financial instruments, specifying the circle of use of fair value as the criterion of evaluation. Current accounting standards in Thailand do not require companies to realise or even disclose any financial instruments in which they are involved on their balance sheets. "We expect that the full version of the IAS39 will be implemented in Thailand in 2010 and all financial institutions and companies will have to comply with it. The Bank of Thailand's version of IAS39 will be revoked as it is only part of the full IAS39. Other countries to implement IAS39 in the same year as Thailand are South Korea, Japan and Malaysia," she told a press conference. Although the full version of IAS39 will place additional burden on companies, it will be good for the future as their balance sheets will more closely reflect reality and foreigners will accept that Thai companies' balance sheets are transparent and credible, said Nangnoi. IAS39 is one of 28 accounting practices being amended by Thailand's Federation of Accounting Professions to align with international accounting standards. All are currently under review by the relevant parties. The other 27 accounting practices involve switching from the use of historical cost to fair value as the criterion of evaluation. The adoption of the amended accounting practices by all industries is unavoidable as they have to comply with international accounting principles, Nangnoi said. "Executives should monitor, study and prepare human-resource and operation systems, particularly computers, for the new accounting standards," she added.

TOT board to discuss turnaround strategy

TOT board to discuss turnaround strategy
Bangkok Post (19 October 2007)

The TOT board is scheduled to meet today with the president and other top executives to discuss the state telecom enterprise's turnaround strategy before proposing it to Tris Ratings, which will assess and forward the plan to the Finance Ministry, TOT's main shareholder. Acting president Kittipong Taemeyapradit said that all board directors except for chairman Gen Saprang Kalayanamitr, who is abroad, would attend what he called a brainstorming session for the turnaround strategy. It plans to wrap up the plan and forward it to Tris next month. This is the company's first meeting since Tris, the ministry's consultant, told TOT to formulate a turnaround plan. The matter is urgent so the board wanted to hear comments and views from all executives before drafting the strategy, Mr Kittipong said. ''We want to hear from them how they can generate revenue, from existing or new services, and how to cut expenditures,'' he said.
The turnaround strategy would act as a guideline for management from 2007 to 2011, he said. However, it could be adjusted according to market conditions, he added. Under Tris's recommendation, TOT should submit a qualitative plan by next month, while a quantitative plan has been submitted every three months. Tris also recommended that the qualitative plan should not take into account external factors that would affect TOT's revenue. These included regulations and politics. Tris believed it was more important to assess TOT's potential based on its own organisation, Mr Kittipong said. Even so, he added, it could hardly be denied that uncontrollable external factors have weakened TOT's status. TOT was corporatised in July 2002 to prepare for open competition and a stock market listing, which has since been postponed indefinitely. But five years on, it has underperformed the booming local telecom sector. Revenues fell for three consecutive years after it was switched from a state enterprise to a public company. In 2004, TOT earned 76.9 billion baht with 11.42 billion baht in profit. But in 2005, its revenues fell to 76 billion with a profit of 6.7 billion. In 2006, revenue was 75.76 billion baht and profit improved slightly to 6.98 billion baht. This year, TOT's first-half revenues fell sharply to 25.94 billion baht with a mere 2.8 billion baht in profit.

SET expected to reach 970 by July 2008

SET expected to reach 970 by July 2008
Bangkok Post (19 October 2007)

Citi sees political stability as the key The Stock Exchange of Thailand could reach 970 points by July 2008 once political uncertainties are settled, according to Citigroup. The US financial services giant is bullish on the Thai market and recommends investors overweigh the energy and banking sectors. Nithi Wanikpun, director and head of research in Thailand for Citi Investment Research, said the price-to-earnings ratio of the Thai market at 12 times was below the regional average of 15. Earnings growth in 2008 was expected to pick up to 15%, he said. Foreign investment interest had also picked up, with inflows of $3 billion last week. Mr Nithi said there were several positive factors that would drive Thai shares to rise over the next 12 months, led by the prospects of increased political stability following the December elections. He said investors should monitor the application process for party candidates in mid-November. After the Dec 23 election, the next milestone would be the Senate elections in January and the formation of the next government by March. Mr Nithi said the appointment of General Anupong Paochinda as the new army chief, and his statements vowing no new military intervention in the political process, had also helped confidence. ''We believe the appointment is positive for the market and should help brighten up the path to full democracy in Thailand,'' Mr Nithi said. He said that at a recent Citi roadshow in the US and Europe, investors also were interested in the country's ability to withstand a new global economic shock. Mr Nithi said structural reforms for the Thai banking system and low corporate debt would help the economy withstand a global downturn. Citi Investment Research meanwhile projects the baht to further appreciate against the US dollar due to the strong current account surplus. Mr Nithi said it was possible that the new government would scrap the 30% reserve requirement on capital inflows, noting that Democrat Party leader Abhisit Vejjajiva had already pledged to do so to help restore foreign investor confidence. The Bank of Thailand announced the 30% reserve requirement on inflows in mid-December to reduce short-term capital movements and slow the appreciation of the currency. Mr Nithi said a stronger baht was not necessarily negative for Thailand, as it would help reduce costs for imported oil. Foreign direct investment meanwhile remained strong in the auto, electronics and petrochemical sectors, he said. Citi Investment Research tracks 45 stocks on the SET representing 90% of total market capitalisation. The brokerage house recommends investors focus on the energy and banking sectors, lead by PTT Plc, PTT Chemical, Bangkok Bank, Krung Thai Bank and cellular phone leader Advanced Info Service.

Changes in rules could lead to volatile corporate earnings

Changes in rules could lead to volatile corporate earnings
Bangkok Post (19 October 2007)

New accounting standards to take effect in the near future will allow balance sheets to better reflect cash flows, but they could increase costs and cause earnings to fluctuate, according to PricewaterhouseCoopers. Nangnoi Charoentaveesub, a PWC partner, said the Federation of Accounting Professions, the supervisory body for accounting in Thailand, was now holding public hearings on the new accounting standards. The new standards include guidelines regarding how to treat deferred income tax, employee benefits, government grants and intangible assets. The deferred income tax rules stipulated guidelines on how companies book provisions as expenditures. The standard on employee benefits would call for companies to book retirement compensation as expenditures in the balance sheet, as opposed to the existing practice of booking them when companies actually pay the sum. Local firms must also calculate goodwill, licence and R&D expenditures in their accounts. Items would reflect a firm's future cash flow in a discount for calculations of present value. ''These new accounting standards will increase the use of fair value as a base of calculations and improve disclosure. In addition, they call for more disclosure. But company balance sheets will be much more complex,'' Ms Nangnoi said. The association had yet to set a timeframe for the implementation of the standards, she added. Ms Nangnoi said local firms should prepare to adopt newly introduced standards that focus on the fair value of investment in property, agriculture, share-based payment for personnel, insurance contracts and the exploration and evaluation of mineral resources. ''For agricultural businesses, for instance, firms need to book cash flow from their crops or livestock even if they have not been sold. It is difficult yet to calculate a fair value for their assets,'' she said. New standards on share-based value call for firms to book employee stock options on their annual balance sheets instead of on exercise dates. The standard on insurance contracts would help insurers' balance sheets reflect future liabilities and cashflow, she added. Unakorn Phruithithada, another PWC partner, said the balance sheets of local businesses could be volatile in light of new accounting standard IAS 39, which calls for firms to calculate all financial items from cashflow based on fair value. In addition, it calls for firms to book derivative contracts based on mark-to-market prices.

Leading economic indicator up in Sept

Leading economic indicator up in Sept
The Business Times (19 October 2007)

Report shows no impending economic collapse but analysts expect slow growth this quarter and next

(WASHINGTON) The index of leading US economic indicators rose in September as stock prices climbed and fewer Americans lost their jobs, a private report shows. The Conference Board's gauge rose 0.3 per cent, as forecast, after a 0.8 per cent August decrease that was larger than previously estimated, the New York-based group said yesterday. The measure points to the direction of the economy over the next three to six months. Stocks turned in the biggest September advance since 1998 after the Federal Reserve cut interest rates to sustain the expansion as sub-prime lending collapsed. The report reinforces forecasts that the housing slump will not tip the economy into recession even as growth is likely to slow. The report 'isn't sending a message of impending economic collapse, but it's not a strong message either', said Joshua Shapiro, chief US economist at Maria Fiorini Ramirez Inc, a New York forecasting firm.
'We are going to see pretty painfully slow growth this quarter and next,' he said. Mr Shapiro accurately forecast the increase. The index was forecast to rise 0.3 per cent following a previously reported 0.6 per cent drop in August, according to the median of 62 economists' projections in a Bloomberg News survey. Estimates ranged from a 0.3 per cent decline to a 0.6 per cent gain. The revised decline in August was the biggest since September 2001. The Fed on Sept 18 lowered its benchmark interest rate by a half point to 4.75 per cent, the first cut in four years, lifting the Standard & Poor's 500 almost 3 per cent that day. The S&P averaged 1,497.1 in September, up from 1,454.6 in August. Stocks rose to a record this month. The rise in the S&P index added 0.11 percentage point to leading indicators. Stock prices rose to a record this month. A gain in the Reuters/University of Michigan consumer expectations gauge added 0.01 percentage point. Seven of the 10 economic indicators that make up the index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, supplier delivery times and factory hours. The Conference Board estimates money supply, new orders for consumer goods and orders for non- defence capital goods. Money supply adjusted for inflation, which has the biggest weighting in the index, contributed 0.08 percentage point. Building permits subtracted 0.2 percentage point from the leading indicators index. Permits, a sign of future construction, fell 7.3 per cent to a 1.226 million pace, the lowest since 1995. Economists still expect declining home prices and tougher lending standards to weigh on consumer spending this quarter. -- Bloomberg