Top Story of the Week: Thailand cuts taxes to boost investment in flooded areas
Thai exports are expected to pick up in the second quarter, rising 9.8% over the same period a year earlier after contracting 1.6% in the first quarter. Full-year 2012 exports are seen rising by 13.7-17.5% and totalling between US$260-268 billion.
If the private sector can adjust to the new 300-baht-a-day minimum wage and if there are no major floods, exports may rise at least 15.5% and total about $264 billion. Aat Pisanwanich, director of the Center for International Trade Studies of the University of the Thai Chamber of Commerce, said the strong export figures are the result of flood recovery and generally positive conditions.
Thailand will cooperate closely with neighbouring countries to step up border controls against smuggling as part of a four-year plan to stamp out trade in counterfeit goods in the region.
The Asean Working Group on Intellectual Property Cooperation has agreed to increase awareness of IP rights and suppress violations in the region from 2012-15.
Pajchima Tanasanti, director-general of the Intellectual Property Department of the Thai Commerce Ministry, said Thailand and other countries would stringently inspect cross-border shipments at checkpoints. Member states will also share information and increase interaction among customs officials as part of preparations for full integration under the Asean Economic Community in three years.
The outlook for Thailand's local and foreign government bond ratings is stable thanks to moderate risk profiles despite a series of crises, says Moody's Investors Service.
The ratings are now at "Baa1".
Moody’s said in a statement released late April 16 that the ratings are based on moderate levels of economic and institutional strength, a high degree of government financial strength, and a low-to-moderate susceptibility to event risk.
Industry Minister M.R. Pongsvas Svasti has reassured the US ambassador to Thailand that Thailand is ready for the Asean Economic Community due to take shape in 2015.
"The Industrial Estate Authority of Thailand already has plans to set up four industrial parks along the borders to help promote trade and investment, which are part of the government's plan for Thailand to become the hub of Asean," said M.R. Pongsvas after meeting US ambassador Kristie Kenney.
He said the estates near bordering countries will serve businesses in the food, garment and furniture sectors that will benefit from unskilled labour from neighbouring countries.
Reconstruction of flood-damaged areas and substantial policy stimulus will drive a rebound in Thailand’s economic growth in 2012, said the Asian Development Bank (ADB). The ADB projected Thai economy to recover from last year’s marginal 0.1 per cent to 5.5 per cent this year, said Dr Luxmon Attapich, the ADB’s senior economist.
The Cabinet has during yesterday’s meeting decided to complete the implementation of the THB 15,000 salary base for civil servants with a bachelor’s degree by January 2014 as well as adjust salaries of other types of employees upwards .
The minimum salary of civil servants with bachelor’s degrees will be raised to THB13,300 in January 2013 and to THB15,000 in 2014.
The top 10 listed property firms saw presales worth more than Bt40 billion in the first quarter of the year thanks to the return of demand for homes that was suspended during the fourth quarter of last year because of the floods.
This is about 60 per cent of total market value in metropolitan Bangkok of about Bt70 billion in the first quarter. Property-market observers said they had expected demand to return in the second half, but it had recovered faster than estimated.
BOI gave a green light to the latest measure to encourage new investment projects in flood-affected districts. The new measure is aimed at attracting new investors as well as urging the current ones to expand their investments, especially in Pathum Thani and Ayuthaya provinces.
M.R. Pongsavas Svasti, the Minister of Industry, revealed after a BOI board meeting chaired by Deputy Prime Minister and Minister of Commerce Kittirat na Ranong, that the committee had approved tax incentive packages for investment projects in the flood affected areas with a view to encouraging both new and existing investors to continue making investments in BOI-promoted industrial estates or zones in Pathum Thani and Ayuthaya. Eligible applicants shall be those eligible for corporate tax exemption.
Thailand’s Consumer Price Index (CPI) stood at 114.3 in March, an increase of 3.45 per cent compared to the same period last year, Yanyong Phuangrach, Permanent Secretary for Commerce said on Tuesday. It is considered a slight increase as the economy is recovering and reflected a sound economy as a result of the government’s economic stimulus measures and the commerce ministry’s measures to watch over the prices of necessities.
The Consumer Price Index in the first three months was up 3.39 per cent, compared to the same period in the previous year, while the March CPI was 0.59 per cent higher compared to the previous month due to food and beverage prices rising by 0.66 per cent in parallel with higher prices of eggs, dairy products and fresh fruit.
A leading researcher has predicted that the new daily minimum wage will help boost the economic growth by at least 0.5%. The University of the Thai Chamber of Commerce (UTCC)’s Center for Economic and Business Forecasting Director Thanavath Pholvichai said that the new 300-baht minimum wage, which will come into effect on April 1st, will benefit 3.5-5 million wage earners in Bangkok, Phuket and four other provinces.
He said that the higher rate is translated into an average revenue rise of 60 baht per day or 1,800 baht per month. Accordingly, there should be an addition of 7-9 billion baht of cash circulating in the economy each month, or around 70 billion baht each year. Under such circumstances, Mr. Thanavath forecasted that Thai GDP will consequently grow by 0.5-0.6 percent.
The Energy Ministry is preparing for the possible temporary closure of the strategically important Strait of Hormuz in the Middle East, and is confident it will be able to handle such an eventuality after developing an emergency plan with a number of key organisations.
An emergency one-day exercise simulating events that could occur in the event of such a closure was held by the Office of Planning and Strategy of the Permanent Secretary Office at the beginning of the month.
The office had previously prepared guidelines that were implemented in the face of the energy crisis in 2009. That was a cooperative venture between Thailand and the International Energy Agency (IEA) to initiate a joint emergency response exercise.
Thai Minister of Energy Arak Chonlatanon is currently on a business trip in the United States. During his first stop in Washington, DC, last week, from April 11 to 13, Minister Chonlatanon had meetings with, among others, Deputy Secretary of Energy Daniel B. Poneman and Under Secretary of State for Economic Growth, Energy and the Environment Robert D. Hormats. The meetings aimed at enhancing the existing energy cooperation and exploring new opportunities between Thailand and the United States both at the government and private sector levels. While in DC, Minister Arak also met with Enernoc, Inc., Washington Utilities and Transportation Commission (WUTC) and Federal Energy Regulatory Commission (FERC).
Disaster and Flood Recovery
The government is setting up a new agency to improve communication with the public during flood crises.
Prime Minister Yingluck Shinawatra ordered the creation of the body at a Water and Flood Resources Management Committee meeting yesterday. Committee member Anond Snidwongs said Ms Yingluck wants the so-called flood information centre to consist of officials from agencies including the royal irrigation, water resources and meteorological departments. They will gather and analyse flood information and relay it to the public in an easy-to-understand manner to keep people informed and prepared.
Following the earthquake measuring 8.9 on the Richter scale which struck near the island of Sumatra, Indonesia on 11 April, the Thai government took timely disaster prevention measures. Some newspapers reported that the Thai government passed the crucial test by managing to alert thousands after the tremors occurred. As the resulting waves from the earthquake that reached Thailand’s shores did not pose a threat, the Thai National Disaster Warning Center (NDWC) lifted the tsunami warning and evacuation alert approximately five hours after the initial warning.
American and Thai military leaders will discuss a plan to use U-Tapao airport in Rayong province as a regional disaster relief centre, a military source said.
The source at the Supreme Command headquarters said Supreme Commander Thanasak Patimaprakorn and Royal Thai Navy commander Surasak Runroengrom would visit the United States at the invitation of the Pentagon and the US Navy from tomorrow until April 21.
The source said Adm Surasak would visit the US Navy to discuss a plan to use U-Tapao airport as a regional disaster mitigation centre. It will be the first time in 19 years that Thailand's navy chief has visited the US Navy, the source said.
As a serious attempt to crack down on copycat goods, the Commerce Ministry aims to increase the penalties, through both imprisonment and fines, for traders in illegal products.
The amendment to the Copyright Act will allow fines for illegal goods on an item-by-item basis instead of the current fines of between Bt100,000 and Bt600,000. Those convicted could also face jail terms of between six months and four years. In addition, the imprisonment will not wait for suspending jail anymore.
The move is aimed at eliminating the trade in counterfeit products. The Intellectual Property Department will propose the amendment to the Cabinet soon, Deputy Commerce Minister Poom Sarapol said yesterday.
Prime Minister Yingluck Shinawatra will undertake a six-day trip to China and Japan this week.
The prime minister will leave for China tomorrow to make an official visit and then head straight to Japan on Thursday to attend the Mekong-Japan Summit, according to the official itinerary. Yingluck and her entourage will leave Suvarnabhumi Airport tomorrow for Beijing.
Thai Prime Minister Yingluck Shinawatra will visit China 17-20 April at the invitation of Chinese Premier Wen Jiabao. She is expected to sign a five-year memorandum of understanding (MOU) with China on strategic cooperation from 2012-2016 during her trip to Beijing. The visit aims to strenthen relations between the two countries, elevating to strategic trade partnership, and to discuss further on the wide-ranging cooperation projects including a high-speed railway, water management, renewable energy and flood prevention projects. The Thai government has set a goal to increase bilateral trade currently stand at US$ 65 billion to US$100 billion by 2015 and US$120 billion by 2016.
Fugitive former prime minister Thaksin Shinawatra has again told his supporters he will set foot in his homeland as soon as the political situation returns to normal, which he believes will be soon.
Thaksin made the assertion after he took part in a bai sri su kwan well-wishing ceremony at Wat That Luang in Vientiane on Thursday morning amid very tight security provided by local authorities and red guards of the United Front for Democracy against Dictatorship (UDD).