Exports on target in first 9 months

Exports on target in first 9 months
The Nation (23 October 2007)

Krirk-krai expects $9-bn surplus

The Kingdom's exports jumped 16.1 per cent to US$110.59 billion (Bt3.83 trillion) in the first three quarters of the year, ensuring that the country achieves its export growth target of 12.5 per cent to $145 billion for the entire year.

Exports are expected to grow through to the end of the year despite a slowdown in global economic growth and negative factors, Commerce Minister Krirk-krai Jirapaet said yesterday. In addition, the baht has become more stable.

"Moreover, robust export growth should ensure that the country will attain an estimated $9-billion trade surplus this year," Krirk-krai said.

The average monthly export value in the last quarter should be higher than $12 billion, he said.

Imports grew by only 7.4 per cent to $102 billion in the first nine months, taking the trade surplus to $8.45 billion.

However, the value of exports in September grew only 10.4 per cent year on year to $13.27 billion - lower than the 17.8-per-cent growth to $13.9 billion in August - due to a worldwide slowdown, particularly in major trading partners.

Exports to Japan dropped by 1.3 per cent to $1.46 billion for the first time last month, due to slowing domestic consumption as well as confusion over the implementation of the Japan-Thailand Economic Partnership Agreement (Jtepa).

Krirk-krai said the definite implementation of the Jtepa on November 1 would increase exports to Japan for the remainder of the year. Exports to Japan grew by 10.7 per cent in the first nine months.

Products that saw slower growth in exports to Japan last month include electronic circuits, rubber, radios, television sets and steel.

The Commerce Ministry expects the bilateral trade agreement to boost exports to Japan by 30 per cent to $22.4 billion next year.

Export to the United States dropped for the fifth consecutive month in September, down 6.6 per cent year on year at $1.67 billion, due to troubles in the US economy.

However, exports to new markets surged, including by 79.36 per cent to Eastern Europe, 45.6 per cent to India, 43.5 per cent to Hong Kong, 27.7 per cent to the Middle East and 25.3 per cent to China.

Exports by the agro-industrial sector dropped by 2.3 per cent last month due to the impact of the baht's appreciation earlier in the year, the end of the season for some agricultural products, and non-tariff barriers.

Products that dropped in both value and volume in September include rubber, sugar, and frozen and processed shrimp.

Most industrial exports increased by more than 15 per cent last month, including automobiles, electronic appliances, plastic pellets and plastic products, construction materials, cosmetics, medical products and printed goods.

The value of imports in September was up 7.4 per cent year on year at $11.31 billion, giving the country a trade surplus of $1.96 billion for the month.

Imports were up from last year in all sectors last month - by 10.9 per cent in capital goods, 9.9 per cent in raw materials and semi-manufactured materials, 28.8 per cent in consumer products and 26 per cent in automobile and parts.

However, fuel imports fell by 10.2 per cent in spite of rising oil prices. The country imported 22.4 million barrels of crude oil valued at $1.64 billion in September.

Apiradi Tantraporn, director-general of the Foreign Trade Department, said imports of fuel were expected to increase in both value and volume in the remaining months of the year because of high demand in the world market and skyrocketing oil prices.

Thailand is expected to import about 767,000 barrels of crude per day from October to December, compared with 745,000 barrels per day in September, she said.

Number policy is 'too rigid'

Number policy is 'too rigid'
The Nation (24 October 2007)

Operators request public hearing

Cellular operators have asked the national regulator to revise upcoming regulations governing subscribers' mobile-phone numbers. They say the framework is too rigid.

The operators want the National Telecommunications Commission to hold a public hearing on the regulations.

The commission has approved the regulations, and they will be put into effect soon.

The industry watchdog solicited public opinion about the new rules.

A commission source said Total Access Communication (DTAC) and True Move sought a revision and that Advanced Info Service (AIS) was expected to follow suit.

DTAC disagrees with the statement that telephone numbers are a limited resource and wants it removed.

"Based on international practices, phone numbers are not a scarce resource and can be allocated anytime," it said.

DTAC proposed the regulations be reviewed whenever operators asked and not every five years as stated. It says rules need to be flexible in a fast-changing industry.

It said the commission was slow in granting it additional phone numbers and that this made it difficult to meet market demand and challenge market leader AIS.

AIS has 23 million subscribers and DTAC 14 million. True Move has more than 9 million.

DTAC proposed the commission process additional subscriber number requests within 14 days, including considering the request and notifying the company.

There is no regulation stating how long the commission can take when considering requests.

The company asked the commission to allocate additional phone numbers in accordance with company demand and not in predetermined bundles.

It said companies that received larger number bundles had an advantage over competitors.

The commission has been granting new numbers in blocks of 2 million when companies submitted requests for as many as 3 million.

DTAC also disagrees with the regulation banning cellular operators from assigning phone numbers to unsold SIM cards.

The commission wants to discourage operators from giving away free SIM cards with numbers, because it views this as a waste of numbers.

Business registrations drop 14.5%

Business registrations drop 14.5%
The Nation (23 October 2007)

Due to the recent slowdown in economic growth, new registered businesses dropped 14.5 per cent year on year last month, the Business Development Department reported yesterday.

New registered business numbered 3,309 last month. Of these, 1,414 were registered in Bangkok and 1,895 upcountry. Their combined registered capital was Bt9.56 billion.

Director-general Kanissorn Navanugraha said Siam Kubota Tractor had the highest registered capital last month: Bt1.1 billion.

The three most popular new business were construction contractors at 299, property firms (119) and retail and wholesale construction materials (76).

The department also reported the number of bankrupt companies in Thailand decreased 4.82 per cent year on year last month. Their number stood at 1,265.

Of this amount, 615 companies were located in Bangkok and 650 firms upcountry. The value of registered bankrupt companies totalled Bt11.9 billion last month.

Currently, Thailand has 540,066 registered companies still in operation. The top three businesses operated in the Kingdom are builders, property and other service firms.

SET loses 1.8% on Wall St blues

SET loses 1.8% on Wall St blues
The Nation (23 October 2007)

Regional markets also down sharply, with fears of a US recession growing

Thai shares yesterday plummeted 1.8 per cent on Wall Street and regional stock sell-offs amid anxiety over the risk of a US recession.

On Wall Street, the Dow Jones index tumbled 2.64 per cent on Friday after several major companies, especially in the financial sector, reported soft earnings and showed caution about the profit outlook.

Indonesia's stock market took the hardest blow among its regional peers, down 4.31 per cent. The Philippines' stock market was the second worst, slumping 3.98 per cent, while Hong Kong's Hang Seng Index lost 3.7 per cent and South Korea's Kospi index

fell 3.36 per cent. Other markets dived in a range of 1-3 per cent.

The Indian stock market bucked the trend, gaining 0.30 per cent.

The composite SET Index started the day with a sharp drop and it headed south further to an intra-day trough at 857.66, before recovering slightly to close at 860.09. Turnover was thin at Bt13.66 billion. Foreign investors sold Thai shares with a net position of Bt488.68 million.

Blue-chip stocks were heavily sold yesterday. PTT fell 2.15 per cent to Bt364, PTT Exploration and Production slid 2.47 per cent to Bt158, Thai Oil slumped 2.81 per cent to Bt86.50, Kasikornbank lost 3.68 per cent to Bt78.50 and Banpu dipped 2.05 per cent to Bt382.

Nervousness over the deterioration of the US property market and the credit crunch triggered the selling spree, an analyst at Merchant Partners Securities said.

"Investors are concerned the slowing US economy will also cool down the global economy and that's why they dumped shares across the globe," the analyst said.

Investors sold heavyweight energy and bank stocks to lower the risk of a liquidity shortage after the G-7 meeting issued a stern warning that the sub-prime mortgage woe would impact the world economy next year.

An analyst at Siam City Securities said the Thai stock market's correction could

be ascribed to taking its cue from the sharp fall in Wall Street and the regional stock markets after Caterpillar warned that the US real-estate market was entering into recession and its effect would snowball.

An analyst at DBS Vickers Securities (Thailand) said the SET Index was likely to slump further in the short term, as the US economy might slow more than expected after figures showed a weak property market and a credit squeeze.

"We have to keep an eye on the US Federal Reserve meeting to see if it will maintain the overnight rate at 4.75 per cent," the analyst said.

'How to' advice for investors

'How to' advice for investors
The Nation (23 October 2007)

A World Bank survey shows that an investor generally needs 33 days to start a business in Thailand, compared with two in Australia, three in Canada, four in Belgium and five in Singapore.

However, at the other end of the scale, starting up a business requires 141 days in Venezuela, 152 days in Brazil and 694 days - nearly two years - in Suriname.

This measure is, of course, simply the formal end of what is a much longer process, which may begin with market surveys and involve everything from considering joint ventures to hiring an office or shop and giving it a coat of paint.

To help foreigners chart a course through the legal and financial minefields in the process of starting up in Thailand is a new "how to" book entitled "How to Establish a Successful Business in Thailand". Author Philip Wylie said the book was for anyone - including Thais - who is considering investing in Thailand or starting a business here. "It is intended to serve every type of business person, including overseers, investors, managers, partners in a joint venture or company directors," he says.

Much of the 258-page book concerns legal procedures that potential investors must follow and general information they must know to make a success of a new venture. For instance, how and where they can register a company and the fact that foreigners cannot own land in Thailand but can lease it for as long as 30 years.

Most of the advice is in the form of tips for people considering starting a business from scratch or those buying an existing business or operating a franchised business. It is not for multinational companies, which can be expected to have their own professional advisers.

In a way, it is a compilation of facts that are rarely found in printed form. It is based on a survey of successful business people, lists the most common pitfalls and explains how to avoid them.

Foreigners are advised to hire a broker if they are about to buy an existing business from its original owner. This will help them evaluate the business and provide a simple exit if it proves to be unfavourable. However, they are warned that brokers usually charge high prices.

There are items of commonplace concern, like how to appoint a Thai partner.

"The personal qualities of your Thai partner are much more important than academic qualifications, experience or management skills, all of which can be easily acquired or learned. Don't forget that your partner also needs to advise you on matters of Thai culture and customs. At the same time you may have to impart your own business knowledge in a way that does not appear condescending."

Among other things, investors are advised to focus largely on employees.

"Hiring Thai workers is much easier than firing them. Many businesses develop a family atmosphere among the staff, so that any conflict usually affects office morale. In many businesses, inadequate employees survive through the support of their more competent colleagues."

Included in the book are important websites for more information and telephone numbers of key state agencies. Importantly, the author lists locations that have proved the most popular among expatriates. Where else but Phuket, Pattaya and Chiang Mai?

Ad spending in Q3 boosts profit

Ad spending in Q3 boosts profit
The Nation (24 October 2007)

The media and publishing sector's third-quarter net profit is expected to surge 8.5 per cent year on year on the back of higher advertising spending.

Ayudhya Securities said in a statement that six media and publishing companies under its coverage would report a combined third-quarter net profit of Bt1.26 billion, up from Bt1.16 billion in the same period last year. The broker estimated that total advertising spending in the period rose 3.7 per cent year on year and 6.7 per cent quarter on quarter to Bt23.52 billion.

The main drivers were cinema and newspaper advertising, with 118 per cent and 7.7 per cent year-on-year growth, respectively. However, magazine and radio advertising are expected to decline 12 per cent and 4.2 per cent year on year, respectively.

Spending on television commercials is expected to grow 1.2 per cent year on year and 9.4 per cent quarter on quarter to Bt13.88 billion, thanks to higher billing at TITV with the delay in the government's plan to turn it into a public television station.

GMM Media is expected to be the best performer. The broker estimated that GMM Media's quarterly net profit would rise 133 per cent year on year, from Bt18 million to Bt42 million.

GMM Grammy is predicted to see a 60.27-per-cent rise, from a Bt73-million net profit in last year's third quarter to Bt117 million this year.

The solid earnings can be ascribed to a recovery in income from its music and concert business and a decline in operating costs.

BEC World, operator of Channel 3, is expected to post a third-quarter net profit of Bt586 million, up 37.3 per cent year on year.

Worldpoint Entertainment is expected to see year-on-year growth of 9.1 per cent in its third-quarter net profit, from Bt66 million to Bt72 million.

At the other end of the scale, Ayudhya Securities predicts cinema operator the Major Cineplex Group's third-quarter net profit will slump 26 per cent year on year to Bt140 million.

MCOT is expected to do the same camp as Major Cineplex. The Channel 9 operator is expected to show a 28.29-per-cent year-on-year decline in its third-quarter net profit, from Bt390 million to Bt304 million.

One Kim Eng Securities (Thailand) analyst was optimistic that advertising spending in the final quarter would improve on the back of advertising from the general election and the high season.

A clearer political situation will also boost domestic consumption next year, and this will be a boon to the media and publishing sector, although some may feel the pinch from implementation of television ratings and curbs on the advertising of snack foods during children's television programmes, the analyst said.

The broker is bullish on the sector in expectation of higher advertising spending propelled by increasing consumer confidence.

Sub-prime rescue bid will do more harm than good

Sub-prime rescue bid will do more harm than good
The Business Times (23 October 2007)

IT pains me to say this, but this time former Federal Reserve chairman Alan Greenspan is right about US housing. Mr Greenspan was wrong in 2004, when he sang the praises of adjustable-rate mortgages. He was wrong in 2005, when he dismissed the idea that there was a national housing bubble, suggesting that at most there was some 'froth' in the market. He was wrong last autumn, when he suggested that the worst of the housing slump was behind us. (Housing starts have fallen 30 per cent since then.) But his latest pronouncement - that the market rescue plan being pushed by US Treasury Secretary Henry Paulson is likely to make things worse rather than better - looks all too accurate.

To understand why, we need to talk about the nature of the mess. First of all, there was indeed a huge national housing bubble. What even those of us who realised that there was a bubble didn't appreciate, however, was how much of a threat the bursting of that bubble would pose to financial markets. Today, when a bank makes a home loan, it doesn't hold on to it. Instead, it quickly sells the mortgage off to financial engineers, who chop up, repackage and resell home loans pretty much the way supermarkets chop up, repackage and resell meat. It's a business model that depends on trust. You don't know anything about the cows that contributed body parts to your package of ground beef, so you have to trust the supermarket when it assures you that the beef is USDA prime.

You don't know anything about the sub-prime mortgage loans that were sliced, diced and pureed to produce that mortgage-backed security, so you have to trust the seller - and the rating agency - when they assure you that it's an AAA investment. But in the case of housing-related investments, investors' trust was betrayed. Supposedly safe investments suddenly turned into junk bonds when the housing bubble burst. High profits reported by hedge funds - profits that were reflected in huge payments to the fund managers - turn out to have been based on wishful thinking.

Thus, when two hedge funds run by Ralph Cioffi of Bear Stearns imploded last summer, it came as a huge shock to many investors, and helped trigger a market panic. But a recent BusinessWeek report shows that the funds were a disaster waiting to happen. The funds borrowed huge amounts, and invested the proceeds in questionable mortgage-backed securities. Even worse, 'more than 60 per cent of their net worth was tied up in exotic securities whose reported value was estimated by Cioffi's own team'. We're profitable because we say we are - just trust us.

That hasn't ever caused problems, has it? Stories like this have led to a crisis of confidence. The current yield on one-month US government bills is only 3.41 per cent, an amazingly low number, and a sign that people are parking their money in government debt because they don't trust private borrowers. And the result is a shortage of liquidity that is greatly damaging the economy.

Which brings us to the rescue plan proposed by a group of large banks, with Mr Paulson's backing. Right now, the bleeding edge of the crisis in confidence involves worries that there may be large losses hidden inside so-called 'structured investment vehicles' - basically hedge funds that borrow from the public and invest the proceeds in mortgage-backed securities.

The new plan would create a 'super-fund', the Master Liquidity Enhancement Conduit, which would seek to restore confidence by, um, borrowing from the public and investing the proceeds in mortgage-backed securities. The plan, in other words, looks like an attempt to solve the problem with smoke and mirrors.

That might work if there was no good reason for investors to be worried. But in this case, investors have very good reasons to worry: the bursting of the housing bubble means that someone, somewhere, has to accept several trillion dollars in losses. A significant part of these losses will fall on mortgage-backed securities. And given this reality, the 'conduit' looks like a really bad idea.

I'd put it like this: Investors aren't putting their money to work because they don't know where the bad debts are. And when investors need clarity, the last thing you want to be doing is pumping out more smoke. Mr Greenspan's take, expressed in an interview with the magazine Emerging Markets, seems broadly similar. 'If you believe some form of artificial non-market force is propping up the market,' he said, 'you don't believe the market price has exhausted itself.' Translated: This rescue scheme could be seen as an attempt to hide the bad debts everyone knows are out there, and as a result could delay any return of trust to the markets.

INBrief : DTAC network contract

INBrief : DTAC network contract
Bangkok Post (24 October 2007)

COMMUNICATIONS : Nokia Siemens Networks has received a fixed-network contract from DTAC Network, the wholly owned international direct dialling (IDD) subsidiary of DTAC, the country's second-largest mobile operator.

The contract extends Nokia Siemens Networks' role as the sole supplier for both wireless and fixed-line equipment for the company. DTAC Network received a licence to operate IDD voice services in February of this year.

Fuel sales dip as costs rise

Fuel sales dip as costs rise
Bangkok Post (24 October 2007)

Petroleum consumption in the first nine months dropped by 1.4% due to high oil prices, but alternative fuels recorded strong growth.

Metta Bunturngsuk, director-general of the Department of Energy Business, said that from January to September this year, total consumption averaged 115 million litres per day, down 1.4% from 116.5 million litres in the same period last year.

Fuel oil usage fell by 36% _ the highest drop among petroleum products _ to 11.4 million litres from 17.8 million, followed by premium petrol, which dropped by 21.6% to 3.3 million litres a day from 4.1 million.

The Electricity Generating Authority of Thailand has cut its use of fuel oil for electricity generation, replacing it with cheaper and cleaner natural gas.

Alternative fuels recorded high growth in every category.

Diesel B5, a mix of 5% biofuel and 95% high-speed diesel, grew by 1,334% to 1.25 million litres a day from 88,000 litres a year earlier.

The use of natural gas for vehicles (NGV) averaged 800,000 litres of oil equivalent per day, up from 300,000 litres. Gasohol 91 consumption was 500,000 litres a day, up from 200,000 litres. Gasohol 95 use totalled 3.8 million litres a day, up 17% from 3.2 million litres.

The high growth of tourism to Thailand pushed jet fuel consumption to 13.4 million litres a day, up 10% from 12.2 million litres a day in the first nine months of last year. Price subsidies for cooking gas through the Oil Fund pushed usage to 9.7 million kilogrammes a day, up 11.1% from 8.7 million kg last year.

High oil prices put 2008 GDP growth at risk

High oil prices put 2008 GDP growth at risk
Bangkok Post (24 October 2007)

High oil prices and a volatile baht will add to economic risks in 2008, according to Bandid Nijthaworn, a deputy governor for the Bank of Thailand.

The trend of a weakening US dollar could put upward pressure on regional currencies and cause volatility.

In addition, he said, the world oil price has risen rapidly since earlier this month and could push up product prices, hurting economic growth.

However, foreign capital inflows have so far been within the central bank's expectations, Dr Bandid noted.

The central bank, meanwhile, said in the October issue of its quarterly Inflation Report that foreign capital flows had returned to emerging markets in September as the dollar depreciated due to the US sub-prime mortgage downturn.

The US Federal Reserve's interest rate cut by half a percentage point last month reinforced the dollar's weakening trend.

''The volatility of the dollar against the euro and Japanese yen is expected to intensify as the euro tends to strengthen in line with [Europe's] strong economic growth. And the yen is likely to continue to be volatile because it has been heavily used by investors in carry trade in the past,'' the report said.

Investors averted possible losses from sub-prime problems in emerging markets by shifting funds to dollar-denominated assets in July.

The nominal effective exchange rate, which compares the baht to currencies in other trade competitors and partners on a trade-weighted basis, strengthened by 0.7% in the third from the second quarter.

''The baht weakened against the euro and yen [in the third quarter], although it appreciated against the dollar and most regional currencies,'' the report said. The real effective exchange rate, which removes inflation, strengthened 0.2% in the third from the second quarter.

The central bank has increased its average 2007 oil price assumptions (West Texas Intermediate) to $78 from $76 per barrel in its base case as crude prices rose on recent tension between Iraq and Turkey. The bank's base case calls for the oil price to increase to $84 per barrel in 2008.

The central bank predicted that the oil price, in the worst case, would average $80 per barrel in 2007 and $94 per barrel in 2008.

Based on this assumption, the central bank has revised its economic growth forecast for this year to a range of 4.3% to 4.8% from 4-5% earlier, and has maintained the forecast for 2008 at between 4.5% and 6%.

The central bank forecast headline inflation in a range from 1.8% to 2.3% in 2007 and 1.5% to 2.8% in 2008. It estimated core inflation, which excludes food and energy, at 0.8% to 1.3% in 2007 and 1-2% next year.