PM delivers policy statement
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Thailand and Cambodia on Wednesday informally agreed to step up cooperation between their security forces to ensure peace along their shared border, 2nd Army Region Commander Lt Gen Thawatchai Samutsakorn said. That was the unofficial result of the three-hour Thai-Cambodian Regional Border Committee (RBC) meeting held in Nakhon Ratchasima province. No agreement on a specific topic was signed at the meeting, Lt Gen Thawatchai said after leading the Thai delegation in the RBC talks with the Cambodian delegation.
However, they did also agree informally to cooperate in improving the quality of life of people living along the border and to jointly tackle the drug trafficking problem. There would be more sharing of security intelligence information and joint border patrols to curb drug trafficking and the other crime along the Thai-Cambodian border, he said. With the ultimate goal of improving bilateral relations, it was also agreed to step up cooperation in other areas of development such as public health, agriculture, tourism, education and cultural exchanges.
Thailand's export base has become more diversified over the past decade, focusing on the Asia-Pacific region and the Middle East, thanks to their emerging economies.
Kampon Adireksombat, senior economist of Tisco Securities, said that since 2000, Thai exporters had become less dependent on the economies of the United States and the European Union. Exports to the US accounted for only 10.3 per cent of Thailand's exports in 2010, compared with 21.3 per cent in 2000, while the portion of exports to the EU had shrunk from 16.3 per cent to 11.2 per cent. Meanwhile, five markets in Asean accounted for 22.7 per cent, China 11 per cent, and the Middle East 4.9 per cent of total exports in 2010, a substantial increase from 19.3, 4.1 and 3 per cent respectively a decade ago.
Manufacturing has become a more complex process and is highly dependent on international supply chains. The tsunami and the earthquake in Japan in March illustrated how disruptions in the international supply chain can adversely impact global and regional trade. Therefore, Tisco Securities has examined indirect trade linkages to gauge how sluggish growth in the G-2 (the US and China) would affect Thai exports.
Defense & Security
The Southern Border Provinces Administration Centre has opened hotline 1342 for people who want to follow up the situation, SBPAC secretary-general Panu Uthairat said on Wednesday.
Mr Panu said that by dialing this number the people can get updated information on insurgency-related incidents and casualties as well as various legal cases to prevent confusion caused by rumours or lies. On Oct 1 the SBPAC will take over from the Prime Minister's Office the responsibility for paying reparations for people affected by violent incidents, he said.
Biomass and solar power will be major renewable-energy contributors to the national electricity grid by 2022, said Krairit Nilkuha, director-general of the Department of Alternative Energy Development and Efficiency.
At the "Energy Symposium 2011", held by the Institute of Industrial Energy under the Federation of Thai Industries, Krairit said the department was reviewing the structure of renewable-energy contribution to the country's electricity grid by 2022. The Energy Ministry recently announced a policy to increase the contribution of renewable energy to 25 per cent from the current target of 20 per cent by 2022. It expects to submit the revised structure soon. "The revised structure is yet to be finalised, but I can say roughly that the proportion of biomass and solar power will be increased from the current Power Development Plan [PDP]. We're working on the new proportion," he said. Krairit said Thailand had abundant agricultural resources for generating biomass energy, while solar power was gaining more interest from investors. Communities are able to generate electricity from agricultural products or waste and sell it to the power grid.
In 2022, the Energy Ministry targets generating 500 megawatts of electricity from solar power. However, proposals with a combined capacity of 3000 MW for such kind of power submitted to the ministry. Hence, it is possible for the country to have solar power generation of more than 200 MW by 2022. Wind power has the potential to generate 1,200MW by 2022 if the government allows investors to enter potential areas for establishing wind turbines, he added.
The National Energy Policy Committee (NEPC), under Thailand's Energy Policy and Planning Office, will hold its first meeting in the new Pheu Thai Party-led administration on Friday to discuss new energy measures, reports Thai news agency TNA.
Newly-appointed Thai Energy Minister Pichai Naripthaphan told reporters on Thursday that measures to be raised at the meeting include those aimed at easing people's costs of living through the suspension of fees levied on premium and regular petroleum (benzene 91 and 95), as well as on diesel for the state oil fund for a certain period of time.
Pichai said that his ministry will implement the new measures as soon as possible although it will reduce earnings to the state oil fund by 3-4 billion baht (US$100.038-133.38 million) a month, which is to be later financially compensated by government loans. He noted that the new government will, however, rely the least on the loans to limit incurring public debts.
As petroleum reserves are fast being depleted in Southeast Asia, PTT Plc is urging the new government to speed up talks concerning overlapping claims with neighbouring countries and open a new round of petroleum concession bids in Thailand.
Pailin Chuchottaworn, who will become president and chief executive of PTT next month, said the overlapping offshore areas between Thailand and Cambodia where natural resources are shared equally are one source that could replenish reserves for another 10 years. Thailand also has overlapping petroleum claims with Vietnam that represent another potential supply, said Dr Pailin, now acting president of IRPC and chief operating officer for upstream and gas business of PTT.
Addressing the Thai-Japanese Association yesterday, Dr Pailin said Indonesia was now running out of gas and had become a petroleum importer after years of exports. "Brunei will soon face the same fate. The Gulf of Thailand only has reserves for another 12 years," he noted. To address the issue, Dr Pailin said the government should open a new round of petroleum concessions as existing concessions expire in five years. Petroleum investment typically takes four to five years for development lead time, he added.
Thailand is a massive petroleum importer and it is projected to spend US$2 trillion this year, up from $1.8 trillion last year, accounting for 20% of the country's gross domestic product. In 2010, energy consumption in Thailand was 1.6 million barrels per day of oil equivalent, he said. Energy intensity in Thailand is more than 1% of GDP, which is high compared to 0.4% to 0.6% in Japan. "We need to secure energy for the country, partly by having a national strategic petroleum reserve," he said, pointing out population growth over the next 30 years means global energy consumption will continue to surge.
Coal has emerged as the next |possible main fuel for generating electricity when natural gas |runs out, since the prospects |for atomic energy have dimmed after a nuclear power plant in Japan was critically damaged in March.
"If nuclear power will have to be deferred for at least three years, coal is a choice," Thawat Vadjanapornsithi, deputy governor for corporate social responsibility at the Electricity Generating Authority of Thailand (Egat), said last week. According to Thailand's 15-year power development plan (2008-22), 1 gigawatt from each of five nuclear power plants was expected to be loaded into the grid, while 15-16 coal power plants were set for construction. "Given the country's current energy situation, we have few options for energy for electricity generation in the future," Thawat said.
The country can continue producing electricity by using gas as fuel, or it can use both gas and coal, or it could construct nuclear power plants. However, for nuclear power, the country will need three consecutive governments to support it, as nuclear plants require 10-12 years to develop. Equipment and technology need to be procured in advance while construction of the facility will take about six to eight years.
The economy could continue expanding this year while facing challenges going forward on four fronts - global economic uncertainty, domestic inflationary pressure, capital flow fluctuations and fiscal policy direction - the Bank of Thailand governor said recently. "Likely slowdowns in the G-3, especially the United States and Europe, could lead to a global economic slowdown and impact through international trade on Asia including Thailand," Prasarn Trairatvorakul said. He was speaking on "See the latter-half economy through the BOT Governor" at Chulalongkorn University. The central bank has maintained its forecast for economic expansion at 4.1 per cent for this year.
Thailand's inflation has been accelerated by domestic consumption, interest rates - which are not at a high level - and production costs. Production costs remain a concern even after the fall in the prices of oil and commodities. Inflation expectations were still high due to anticipation of higher future prices of products and services as the economy heats up. "Given the growing economy and inflation acceleration, monetary policy needs to play a role to help prevent overheating", and monetary policy-makers have chosen the path of gradual rate normalisation to help sustain the economic drivers.
Due to the lame G-3 recovery, more foreign capital will likely shift to Asia, which could strengthen regional currencies. The baht may fluctuate in two ways, depending on the market in each period. Fiscal policies should aim at expenses with optimal benefit while fiscal discipline should be adhered to. Fiscal reform should be undertaken to bring a stable balance to state revenues and expenditures. Both state agencies and the central bank have the same target - sustainable economic growth, he added.
The Bank of Thailand raised its benchmark interest rate Wednesday to stem inflationary pressures despite growing economic uncertainty in Europe and the U.S., but suggested the upward cycle may soon end as the rate is now near normal levels. The central bank's Monetary Policy Committee lifted its one-day repo rate by 0.25 percentage point to 3.50%, bringing to 2.25 percentage points the total increase in the rate since it started its monetary tightening cycle last July, Assistant Gov. Paiboon Kittisrikangwan said at a media conference. Five committee members voted in favor of the increase, while two pushed for no change.
A 0.25 percentage-point increase had been forecast by seven economists surveyed by Dow Jones Newswires, while one had predicted no change. The Bank of Thailand has repeatedly warned that price pressures are the biggest threat to the economy. There are concerns that populist policies proposed by the new government-including a hefty minimum wage increase-could further fan inflation.
Facing an uncertain global economic outlook, the government will focus on strengthening the domestic economy, particularly boosting incomes for farmers and labourers, Deputy Prime Minister and Commerce Minister Kittirat na Ranong said yesterday.
Speaking at an event titled "New direction of Thai economy stepping to new decade", held to mark the Commerce Ministry's 91st anniversary yesterday, Kittirat said implementing measures to strengthen the local economy would be a top priority for the government. Thailand's economy relies too much on exports, the minister said, adding that GDP should be restructured in the near future to derive 50 per cent from exports and 50 per cent from domestic output.
Kittirat did not give a time frame for achieving this ratio, but said the Asean Economic Community (AEC), which is scheduled to take effect in 2015, would become a major driver of Thailand's domestic growth. Policies to boost farm incomes, in particular the planned rice-pledging scheme and the government's promise to increase the daily minimum wage to Bt300, would also drive growth, the minister said.
Thailand has been upgraded from a lower-middle income economy to an upper-middle income economy, with a GNI per capita of US $ 4.210. The World bank stresses Thailand to avoid the middle income trap and pay attention to raising the productivity of manufacturing, agriculture and services sectors. Thailand's economy has grown steadily for nearly a decade and poverty has been reduced. Despite last year's unrest, the country grew over 7%.
The new government of Yingluck Shinawatra is determined to push ahead with populist programme, such as increase in minimum wage of ($10) a day, this would mean an increase of 90% in some provinces. Economists warn this could trigger higher inflation and hurt small businesses. These firms say they would not be helped much by a cut in corporate tax from 30% to 23%. The world bank upgrade is seen as an opportunity for Thailand to show investors that despite the political turmoil of 2010, it has achieved economic stability. Economists say inflation remains high and the new government challenges will be increasing people's income and holding down the cost of living.
Food & Agriculture
The Commerce Ministry will propose that the new National Rice Policy Committee be set up soon to prepare for the resumption of the price-pledging project and consider releasing stockpiled rice.
The ministry's permanent secretary Yanyong Phuangrach said the new board should be set up promptly to plan for the upcoming rice-harvest season, as the government had announced that it would start the rice pledging in November. Normally, the National Rice Policy Committee is chaired by the prime minister. The board faces a major task in drafting plans for implementation of the rice policy involving price guarantees, pledging, and release of stocks.
Once the board is set up, it will be able to set budgets and conditions for rice-pledging. So far, the government has only announced that the pledged price for paddy white rice will be Bt15,000 a tonne, and Bt20,000 for paddy jasmine rice. However, it has not yet set the prices of Pathum rice and sticky rice. It will also consider whether to use the same conditions of the rice-guarantee project for farmers to join the pledging project. The Commerce Ministry will also cooperate with the Agriculture and Science ministries to survey rice plantations to ensure accurate figures on plantation area and expected production.
Health & Life Sciences
US-based science company DuPont has chosen Thailand for its first innovation centre in Asean, reflecting the aim to expand further in what is one of the fastest-growing regions in the world. DuPont early this year announced that it targeted tripling the revenue generated within Asean from the current US$1 billion (about Bt30 billion) within a decade.
Executive vice president Mark Vergnano yesterday said DuPont a decade ago was focused more on developing technology at its headquarters in the US. Five years ago, its focus turned to China, which has brought success for the company in Asia, while in the past three years, it has poured money for investment into Eastern Europe. Now, DuPont has placed more emphasis on Southeast Asia because of the region's fast-growing economy as well as population.
Thailand, which is the company's biggest market in Asean, has been selected for its first innovation centre in the region. From now on, DuPont will invest more in the region and collaborate with its clients closely so that, together with partners, it can co-develop technology to serve market needs, Vergnano said.
Giant search-engine service provider and creator of the Android smart-phone platform, Google, has opened a local office in Thailand. The move reflects a commitment by Google to focus on the Thai market.
The American multinational, which is based at Mountain View in California, hosts a variety of Internet-based services and products and generates revenue mainly from advertising.
Along with the opening of its first office here, Google has announced the appointment of Ariya Banomyong, 38, as its first country manager for Thailand. Having taken his new post on July 1 this year, Ariya will oversee Google's sales and business-development operations in this country. Google's aims in Thailand are to encourage local businesses to go online successfully and to raise online-advertising spending in the Thai market from the current level of only 0.3 per cent of total advertising spending to a level closer to that in countries like the United States and the United Kingdom, which have a well- developed Internet infrastructure and where online-advertising spending is 30 to 50 per cent of total ad spending.
Microsoft Thailand is gearing up for a direct entrance to the Thai consumer market, with a plan to launch products and services to individual consumers, including xBox, Kinect, Internet services and an online market place.
The company expects that expansion out of its existing corporate markets and into the new consumer territory will lead it to double its growth rate in the next three years. Microsoft Thailand's managing director Birathon Kasemsri na Ayudhaya said his company would follow the global direction of Microsoft Corporation, and expand its business footprint in Thailand to focus more on the consumer market, which was characterised by huge spending.
Under the plan, the company plans to bring its flagship consumer products like X-Box and Kinect, as well as potentially popular products like Windows Phone, to sell directly to Thai consumers. However, in order to successfully bring products and services to the consumer market, it needs to prepare infrastructure, including establishment of an online service platform and market place for Thais. "Thailand is the only country that is being allowed to increase its number of staff, because the consumerisation trend in Thailand is very strong when compared to the other countries in the Asia-Pacific region. The consumer market is a new ocean from which Microsoft will source revenue that will drive our revenue growth," he said.
Thailand's new government unveiled a revised plan for the country's high-speed train network on Tuesday, prioritising domestic rail expansion over an ambitious regional connectivity plan being spearheaded by China.
Prime Minister Yingluck Shinawatra announced during her inaugural policy speech to parliament that three routes would be constructed linking Bangkok with urban centres in the north, northeast and upper south. The plan differs from that of the previous Democrat Party-led government, which wanted one high-speed line connecting Bangkok with Nong Khai province bordering Laos, some 615 km (382 miles) away, followed by a second line stretching 980 km south of the capital to Padang Basar at the Malaysian border.
Supoj Sablorm, permanent secretary of Thailand's Transport Ministry, said the original plan had been modified to cover more of the country and the proposed links to Laos and Malaysia would be revisited at a later stage. He said the first line would be to Nakhon Ratchasima, 260 km northeast of Bangkok, and the Puea Thai Party-led government was in no rush to extend it to Nong Khai because China's construction of a high-speed railway through Laos had been delayed beyond 2014.
Boeing (NYSE: BA) and Thai Airways International (THAI) have finalized a firm order for six 777-300 Extended Range (ER) airplanes.
The order completes an agreement to purchase Boeing 777-300ERs announced during the Paris Air Show in June. At list prices, the order is valued at $1.7 billion.
"These additional Boeing 777-300ERs will support our commitment to expanding market presence while delivering profitable growth," said Piyasvasti Amranand, president of THAI. "The 777-300ER sets the standard for twin-aisle reliability because Boeing continuously incorporates new technology and innovations into the airplane to improve operating cost and airplane performance. And, with a wider and more spacious cabin, the Boeing 777-300ER is preferred by passengers in every class."
THAI currently operates nearly every 777 model produced, including the 777-200, 777-200ER, 777-300 and 777-300ER. In addition, THAI Cargo became the first carrier in Southeast Asia to utilize the 777 Freighter.
Thailand's auto sales in July totaled 72,902 units, an increase of 3.76 per cent from the previous month and an 11 per cent increase year-on-year, according to Surapong Paisitpattanapong, auto industry spokesman for the Federation of Thai Industries (FTI).
Auto sales took an upturn in July due to the robust domestic economy and automakers were able to resume production at full capacity, so more cars could be delivered to customers.
Moreover, compact cars attracted a new group of customers. In the first seven months of this year, total auto sales reached 504,914 units, a 19.5 per cent increase year-on-year.
Prime Minister Yingluck Shinawatra voiced confidence that she would pass all the tests thrown at her as she rose to defend her government's policies on the last day of the debate yesterday.
In delivering her closing statement, Ms Yingluck defended the government's policies, much criticised by the opposition, saying they were not just words designed to entice voters. "There is no reason an elected government will be dishonest to the people. We will honour our pledges," she said. She conceded the Pheu Thai-led government would face obstacles including budget limitations and legal constraints. Over the past three days, opposition MPs led by those in the Democrat Party have lined up to attack government policies, being especially heavily critical of the promised wage hikes and tablet computers for students.
In its election campaign, the Pheu Thai Party pledged to raise the minimum daily wage to 300 baht and boost the entry-level salary of new college graduates with bachelor's degrees to 15,000 baht a month. The debate dragged on to a third day yesterday. It was originally scheduled for just Tuesday and Wednesday. Ms Yingluck stressed that the government's policies were no different to Pheu Thai's campaign pledges. "What is said in the policy statement ... which is to guarantee daily earnings of 300 baht is the same as the campaign promise. "The wording is meant to cover workers in both the state and private sectors," she said. She said the wage hike is a bold policy to alleviate the economic hardship of labourers and assured that the government would provide advice and cooperation to help the private sector.
Privy Council president Prem Tinsulanonda has called on military leaders to do their utmost to uphold and protect the monarchy, Defence Minister Yutthasak Sasiprapa said yesterday.
Gen Yutthasak revealed the statement after he and the leaders of the army, the navy and the air force paid a courtesy call on Gen Prem at his Si Sao Thewes residence before the privy councillor's 91st birthday today. Gen Yutthasak said Gen Prem had asked him and the leaders of the armed forces to ensure the King and Queen are free from worries and cares. He said his relations with military leaders remained healthy. As soldiers, he and the military top brass are happy working together. Speaking about the imminent annual military reshuffle next month, Gen Yutthasak said he would call a meeting next week to consider it.
Gen Yutthasak yesterday also attended a meeting of the Defence Council. It was the first time he has chaired the Defence Council meeting since taking office as defence minister. Defence Ministry spokesman Col Thanathip Sawangsaeng said after the meeting Gen Yutthasak had laid down policies to be implemented within four years. These are protecting the monarchy, backing national reconciliation efforts, staying out of politics, helping end southern unrest, developing the armed forces' capabilities, and strengthening military cooperation with foreign countries.
Democrat Party MPs lodged a petition with Senate Speaker Teeradej Meepian on Thursday seeking the removal of Surapong Tovichakchaikul as foreign minister for allegedly helping former prime minister Thaksin Shinawatra get an entry visa to Japan before officially taking office.
The petition was signed by 130 Democrat MPs. Party list MP Wirat Kalayasiri, head of the Democrat Party's legal affairs office, said Mr Surapong had violated Section 167 of the constitution which states that a cabinet minister can perform his or her duty after being officially appointed by a royal command and taking an oath before His Majesty the King, and after the government has delivered a policy statement to parliament.
Mr Surapong had acted in an official capacity before the government had delivered its policy statement by asking Japan through the Japanese ambassador to Thailand to grant Thaksin a visa to visit Japan. In doing so, the foreign minister had violated Section 167 of the constitution, he said.
Prime Minister Yingluck Shinawatra on Tuesday morning delivered her coalition government's policy statement to parliament.
The joint sitting of senators and members of House of Representatives, chaired by Parliament President and House Speaker Somsak Kiatsuranont, started about 9.15am.
Ms Yingluck announced her Pheu Thai-led government would implement eight points of policy:
1) Urgent policies to be introduced in the first year in office
2) National security
3) Economic policy
4) Social issues and quality of life
5) Natural resources and environment
6) Science and technology, research and innovation
7) Foreign affairs and international economics
8) A policy of good governance.
In reply, acting Democrat Party leader Abhisit Vejjajiva told the parliament that constitutional amendment is not an urgent matter that the government needs to rush through. Mr Abhisit said a recent survey by the private sector showed that even though 20 per cent of the poll respondents backed the plan to alter the charter, another 20 per cent of the respondents opposed it. The former prime minister said the group against it also said they were ready to take to the streets if the plan to amend the constitution is pushed ahead. He warned that the move could lead to critical social division and to possible political conflict, which would affect national security.
Former prime minister Thaksin Shinawatra arrived in Japan yesterday on a high-profile visit that has caused headaches for the government of his younger sister Prime Minister Yingluck Shinawatra, most notably a legal challenge against the foreign minister mounted by the opposition party.
"I'm very happy that I've come to Japan again. I really love to come to Japan," Thaksin told reporters on his arrival. His last visit to the country was in 2008. A subsequent attempt to enter Japan was blocked by the previous Thai government. During his visit, which is scheduled to last until Sunday, Thaksin is to deliver speeches and meet with Japanese politicians and business leaders. He also plans to visit and donate assistance to victims of the devastating earthquake and tsunami that struck the eastern region of the country in March.
The Foreign Correspondents Club of Japan invited him to be the keynote speaker at a luncheon speech in Tokyo today. Thaksin's visit is controversial. The Japanese government had to issue him a special visa, as the country's immigration law prohibits entry to any foreigner convicted of a crime carrying a sentence of more than one year.