Business operators have warned the government that its Creative Economy policy will likely fail unless it is better defined.
A clearer definition of the creative economy is key to the policy's successful implementation, said Dusit Nontanakorn, chairman of the Thai Chamber of Commerce.
"I am concerned that people do not understand what the creative economy is. Relevant government agencies should make it clear among themselves and deliver the same message to the public,"said Mr Dusit.
The government should also speed up budget allocation to enable developing small and medium operators to produce more creative products, he said.
"The government needs to change its mindset to have a creative mind and to be more forward looking," said Mr Dusit."They have to encourage the private sector to do something different from their mainstream business."
"Instead of trying to manipulate everything including the price, the government should act as a facilitator. How can the private sector survive by adding value to the products if the government still controls prices?"
The government's aims are too lofty and unrealistic, said Santi Vilassakdanont, chairman of the Federation of Thai Industries. It has set its sights on raising revenue contributions from creative industries in the service sector to 1.8 trillion baht by 2012, or at least 20% of the country's gross domestic product, from 10% or 900 billion today.
"I think it would take at least 10 years to achieve that level. To firmly establish a brand we need roughly a decade,"said Mr Santi.
Agricultural products, for example rice and rubber, as well as some industrial sectors such as garment and footwear could increase by 50% if more creativity is used to reposition them in the international market, Mr Santi said.
Financial support is crucial for the creative industry to flourish, said Jaruek Kaljareuk, the president of the Federation of the National Film Association of Thailand
"There is no doubt about the quality of Thai personnel and craftsmanship,or that we can produce movies with Hollywood standards. What we really need is funding from the government,"he said.
Kantana group, which Mr Jaruek owns,produced the animated movie, Kan Kluay, which has gained an international reputation.
The government also needs to work as a facilitator and coordinator for business operators, said Shellhut Entertainment Co.
"We have so many jigsaws that need the government's help to put them together, and transform policies into actions faster as competition has risen from countries like India and China,"said the company's executive producer and director Jirayuth Chausanachoti.
Monday, August 31, 2009
Thursday, August 27, 2009
China Hosting Major Roundtable on Commodity Development in Asia
The downturn in the global economy has hit Asia hardest because of its reliance on the industrial manuafacturing sector, which has also predominantly further exposed weak links in the region's agricultural commodities sector.
In the past, with rising regional and global demand for exports, many Asian countries experienced rapid growth in both sectors, but lately with the international financial crisis, ongoing hikes in food prices and emerging ventures for bio-energy, the commodities sector has for a significant period now, performed unsteadily.
To focus on some of the critical issues and to shift momentum that's essential to jump-starting the commodities sector in Asia, the Amsterdam-based Common Fund for Commodities (CFC), an international financial institution established by the United Nations, is holding its annual Round Table Meeting (RTM) on Commodity Development, specially designated for the Asia-Pacific region, 17-20 August in Nanning, China.
So far, in the Asia-Pacific region, the Common Fund has financed nearly 70 commodity projects with a total commitment of USD 170 million in various sectors, including jute, tea, coffee, cocoa, sorghum and others.
The RTM is organised with the kind assistance of the Government of P.R.China, an influential member of the Common Fund for Commodities, and the Guangxi Zhung Autonomous Region.
Mr. Zhu Hong, deputy director general, International Trade and Economic Affairs Department in the Ministry of Commerce, said, "The Chinese government strongly supports the Common Fund for Commodities, and it's a great privilage to have this year's RTM in China."
"We hope that hosting this roundtable in Nanning will contribute to the establishment of a platform, whereby countries in Asia can discuss commodity related issues of common concern," added Mr, Zhu, who is also China's governor is the Common Fund.
Amb. Ali Mchumo, managing director of the Common Fund for Commodities, said, "We are grateful that China is the venue of the 2009 RTM. This is a very important meeting for this region at this time, because Asia-Pacific is a key constituency within the Fund's membership,"
Amb. Mchumo noted that China as a member country has successfully demonstrated that it's possible to implement a balanced, sustainable development modek, whereby a strong commodities sector can contribute directly to economic growth and innovation in other sectors of the country's rapidly expanding economy.
"China stands out symbolically, as a powerful example to other CFC developing and least developed member-countries. With its robust economy, China also has a great deal to offer in its emerging role as a reliable leader in development-related techinical assistance and South-South co-operation," Amb. Mchumo said. "Indeed, as economic policy experts have recently noted, if the global economy is to regain its confidence and resilience, the scenario is that China will be leading the forward charge," he added.
Still, even with its strong and effective policy for self-reliance, massive investments in rural development and a revitalised agricultural economy, arguably China is still a developing country. But in just a few years, China has managed, through steady economic prosperity to post remarkable outcomes in overal poverty reduction rates, due to the emergence of vibrant internal and regional markets; and a thriving consumer base for both domestic agricultural and manafactured goods and services.
Attending the meeting in Nanning, will be senior Chinese officials in the Department of Foreign Aid, the Department of International Trade & Economic Affairs within the Ministry of Commerce, the agricultural Trade Promotion Centre (MoA) and various government officials from Guangxi Zhuang Autonomous Region. Top policy makers and senior representatives from international and regional institutions based in Asia, such as UN Economic and Social Commission for Asia-Pacific (ESCAP), UNDP-China, ASEAN, INFOFISH, and ICRISAT have been invited, as well as national delegates from CFC member-states.
The roundtable meeting in Nanning will address key aspects associated with production, processing, diversification and trade in agricultural and mineral commodities. And while the central theme of the meeting, is the role of commodities in economic development, substantial policy presentations on underlying issues and problems facing global commodity development are on the agenda.
Given the scope of the current international financial situation, an elaborate review of potential innovative policy solutions for individual commodity sectors will be considered, as well as other top priority issues such as the global food crisis, regional outlook for the integration of Asian economies, partnership opportunities for South-South co-operation, and lessons from China's model development strategy.
For additional information, please visit www.common-fund.org.
The Common Fund for Commodities-www.common-fund.org-is a 107-member state international financial institution based in Amsterdam, The Netherlands. The Fund's specific mandate is to support developing countries that are commodity dependent to improve and diversify commodilies production and trade.
In the past, with rising regional and global demand for exports, many Asian countries experienced rapid growth in both sectors, but lately with the international financial crisis, ongoing hikes in food prices and emerging ventures for bio-energy, the commodities sector has for a significant period now, performed unsteadily.
To focus on some of the critical issues and to shift momentum that's essential to jump-starting the commodities sector in Asia, the Amsterdam-based Common Fund for Commodities (CFC), an international financial institution established by the United Nations, is holding its annual Round Table Meeting (RTM) on Commodity Development, specially designated for the Asia-Pacific region, 17-20 August in Nanning, China.
So far, in the Asia-Pacific region, the Common Fund has financed nearly 70 commodity projects with a total commitment of USD 170 million in various sectors, including jute, tea, coffee, cocoa, sorghum and others.
The RTM is organised with the kind assistance of the Government of P.R.China, an influential member of the Common Fund for Commodities, and the Guangxi Zhung Autonomous Region.
Mr. Zhu Hong, deputy director general, International Trade and Economic Affairs Department in the Ministry of Commerce, said, "The Chinese government strongly supports the Common Fund for Commodities, and it's a great privilage to have this year's RTM in China."
"We hope that hosting this roundtable in Nanning will contribute to the establishment of a platform, whereby countries in Asia can discuss commodity related issues of common concern," added Mr, Zhu, who is also China's governor is the Common Fund.
Amb. Ali Mchumo, managing director of the Common Fund for Commodities, said, "We are grateful that China is the venue of the 2009 RTM. This is a very important meeting for this region at this time, because Asia-Pacific is a key constituency within the Fund's membership,"
Amb. Mchumo noted that China as a member country has successfully demonstrated that it's possible to implement a balanced, sustainable development modek, whereby a strong commodities sector can contribute directly to economic growth and innovation in other sectors of the country's rapidly expanding economy.
"China stands out symbolically, as a powerful example to other CFC developing and least developed member-countries. With its robust economy, China also has a great deal to offer in its emerging role as a reliable leader in development-related techinical assistance and South-South co-operation," Amb. Mchumo said. "Indeed, as economic policy experts have recently noted, if the global economy is to regain its confidence and resilience, the scenario is that China will be leading the forward charge," he added.
Still, even with its strong and effective policy for self-reliance, massive investments in rural development and a revitalised agricultural economy, arguably China is still a developing country. But in just a few years, China has managed, through steady economic prosperity to post remarkable outcomes in overal poverty reduction rates, due to the emergence of vibrant internal and regional markets; and a thriving consumer base for both domestic agricultural and manafactured goods and services.
Attending the meeting in Nanning, will be senior Chinese officials in the Department of Foreign Aid, the Department of International Trade & Economic Affairs within the Ministry of Commerce, the agricultural Trade Promotion Centre (MoA) and various government officials from Guangxi Zhuang Autonomous Region. Top policy makers and senior representatives from international and regional institutions based in Asia, such as UN Economic and Social Commission for Asia-Pacific (ESCAP), UNDP-China, ASEAN, INFOFISH, and ICRISAT have been invited, as well as national delegates from CFC member-states.
The roundtable meeting in Nanning will address key aspects associated with production, processing, diversification and trade in agricultural and mineral commodities. And while the central theme of the meeting, is the role of commodities in economic development, substantial policy presentations on underlying issues and problems facing global commodity development are on the agenda.
Given the scope of the current international financial situation, an elaborate review of potential innovative policy solutions for individual commodity sectors will be considered, as well as other top priority issues such as the global food crisis, regional outlook for the integration of Asian economies, partnership opportunities for South-South co-operation, and lessons from China's model development strategy.
For additional information, please visit www.common-fund.org.
The Common Fund for Commodities-www.common-fund.org-is a 107-member state international financial institution based in Amsterdam, The Netherlands. The Fund's specific mandate is to support developing countries that are commodity dependent to improve and diversify commodilies production and trade.
India takes steps to boost exports
India yesterday announced a new foreign trade policy combining fiscal incentives and procedural reforms to counter a trend of declining exports.
Hit by the global economic downturn,India's exports have dropped by more than 30% since January. Labour-intensive sectors like textiles or gems and jewellery have been hit hard with thousands of job losses reported.
Commerce and Industry Minister Anand Sharma announced a host of measures as part of the new five-year trade policy.
"The immediate objective of this policy is to arrest and reverse the declining trend of exports and to provide additional support, especially to sectors which have been badly hit by recession in the developed world," he said.
The minister said India wanted to achieve annual export growth of 15% in the 2010-11 financial year with an annual export target of $200 billion by the end of the year, which finishes March 31,2011.
Sharma said in the final three years of the trade policy's period, the country was expected to return to 25% annual export growth.
India's merchandise exports for 2008-09 grew by a mere 3.4% year-onyear and, valued at $168.7 billion, fell far short of their $200-billion target.
The long-term policy objective is to double India's share in global trade by 2020 from its 2008 share of 1.64%.
To meet this objective, the government would pass a mix of measures, including fiscal incentives, institutional changes,procedural rationalisation and efforts for enhanced market access across the world, Sharma said.
Export-related infrastructure would be improved, transaction costs lowered,a constant credit flow ensured and full refunds would be provided of all indirect taxes and levies to encourage exports,he said.
Sharma said the policy aimed to give a special thrust to labour-intensive sectors that had seen job losses in the wake of the recession, such as textiles,leather and handicrafts.
The trade minister said the recently signed free trade pact with South Korea and a similar agreement with the Association of Southeast Asian Nations, which was expected to come into force January 2010, would help boost exports.
Sharma also said India remained committed to a successful end to the Doha round, the latest round of World Trade Organisation talks.
"We are in favour of establishing a rule-based, fair and equitable global multilateral trading regime which has development as its core objective,"Sharma said.
"However, it must respond to the aspirations of millions of people of the developing world."
India is scheduled to host an informal meeting of trade ministers from at least 30 countries in New Delhi on September 3 and 4 in efforts to take forward the stalled Doha talks.
Hit by the global economic downturn,India's exports have dropped by more than 30% since January. Labour-intensive sectors like textiles or gems and jewellery have been hit hard with thousands of job losses reported.
Commerce and Industry Minister Anand Sharma announced a host of measures as part of the new five-year trade policy.
"The immediate objective of this policy is to arrest and reverse the declining trend of exports and to provide additional support, especially to sectors which have been badly hit by recession in the developed world," he said.
The minister said India wanted to achieve annual export growth of 15% in the 2010-11 financial year with an annual export target of $200 billion by the end of the year, which finishes March 31,2011.
Sharma said in the final three years of the trade policy's period, the country was expected to return to 25% annual export growth.
India's merchandise exports for 2008-09 grew by a mere 3.4% year-onyear and, valued at $168.7 billion, fell far short of their $200-billion target.
The long-term policy objective is to double India's share in global trade by 2020 from its 2008 share of 1.64%.
To meet this objective, the government would pass a mix of measures, including fiscal incentives, institutional changes,procedural rationalisation and efforts for enhanced market access across the world, Sharma said.
Export-related infrastructure would be improved, transaction costs lowered,a constant credit flow ensured and full refunds would be provided of all indirect taxes and levies to encourage exports,he said.
Sharma said the policy aimed to give a special thrust to labour-intensive sectors that had seen job losses in the wake of the recession, such as textiles,leather and handicrafts.
The trade minister said the recently signed free trade pact with South Korea and a similar agreement with the Association of Southeast Asian Nations, which was expected to come into force January 2010, would help boost exports.
Sharma also said India remained committed to a successful end to the Doha round, the latest round of World Trade Organisation talks.
"We are in favour of establishing a rule-based, fair and equitable global multilateral trading regime which has development as its core objective,"Sharma said.
"However, it must respond to the aspirations of millions of people of the developing world."
India is scheduled to host an informal meeting of trade ministers from at least 30 countries in New Delhi on September 3 and 4 in efforts to take forward the stalled Doha talks.
Incentives reviewed to attract HQs
The government is reviewing investment incentives to make Thailand more attractive as a location for regional headquarters than its neighbours.
Prime Minister Abhisit Vejjajiva announced the initiative - without providing details of new privileges - while presiding over ExxonMobil's celebration of the sixth anniversary of its Bangkok Business Support Centre.
The unit runs the oil group's administrative functions such as payroll, training and retail business support for AsiaPacific. The centre's staff have increased over six years from 600 to 2,000.
ExxonMobil was the first company to gain Board of Investment (BoI) privileges under the regional operating service (ROS) establishment scheme, which assists with work permits and import duty on machinery.
Hiranya Suchinai, an adviser to the BoI, hopes to see more companies being attracted by enhanced privileges to build their regional centres in Thailand.
Last year,20 projects worth 1.06 billion baht sought privileges to set up regional offices here. In the first seven months of 2009, BoI has received nine requests with a value of 161 million baht.
Daniel Lyons, chairman of the board of directors, said ExxonMobil had chosen Bangkok for its backup office for business in Southeast Asia because of the country's infrastructure and the company's long experience of operating here.
But the company has no plans to expand its business in Thailand, largely because Esso (Thailand) Plc, Exxon's Thai unit, is unsure of the outlook for the oil refinery and petrochemical industry in the second half of the year, he said.
"Oil stock gains in the first half helped us [to improve results], but in the latter half, with the global economic recovery outlook being gloomy, we are uncertain of the business direction and unable to estimate," said Mongkonnimit Ueachoetkun, public relations manager for Esso Thailand.
Shares of ESSO closed yesterday on the Stock Exchange of Thailand at 7.35 baht, down 20 satang, in trade worth 105.65 million baht.
Prime Minister Abhisit Vejjajiva announced the initiative - without providing details of new privileges - while presiding over ExxonMobil's celebration of the sixth anniversary of its Bangkok Business Support Centre.
The unit runs the oil group's administrative functions such as payroll, training and retail business support for AsiaPacific. The centre's staff have increased over six years from 600 to 2,000.
ExxonMobil was the first company to gain Board of Investment (BoI) privileges under the regional operating service (ROS) establishment scheme, which assists with work permits and import duty on machinery.
Hiranya Suchinai, an adviser to the BoI, hopes to see more companies being attracted by enhanced privileges to build their regional centres in Thailand.
Last year,20 projects worth 1.06 billion baht sought privileges to set up regional offices here. In the first seven months of 2009, BoI has received nine requests with a value of 161 million baht.
Daniel Lyons, chairman of the board of directors, said ExxonMobil had chosen Bangkok for its backup office for business in Southeast Asia because of the country's infrastructure and the company's long experience of operating here.
But the company has no plans to expand its business in Thailand, largely because Esso (Thailand) Plc, Exxon's Thai unit, is unsure of the outlook for the oil refinery and petrochemical industry in the second half of the year, he said.
"Oil stock gains in the first half helped us [to improve results], but in the latter half, with the global economic recovery outlook being gloomy, we are uncertain of the business direction and unable to estimate," said Mongkonnimit Ueachoetkun, public relations manager for Esso Thailand.
Shares of ESSO closed yesterday on the Stock Exchange of Thailand at 7.35 baht, down 20 satang, in trade worth 105.65 million baht.
DECREASE IN CASSAVA OUTPUT SEEN
Cassava production is forecast to drop 7.74 per cent to 27.75 million tonnes next year, due to farmers turning more to fuel crops that bring higher prices, especially sugar cane.
Cassava was planted on 8.29 million rai of land last year, but that is expected to decrease 6.15 per cent to 7.78 million rai.
Of total cassava production, only 2.5 million tonnes will be used to produce ethanol, while the rest will go towards the manufacture of tapioca chips for export and as a pet-food ingredient for the local market.
Many factors have hurt production, including insects, lower rainfall, reduced yield per rai and a flow of cassava from neighbouring countries under the Asean Free Trade Area.
"The drop in production will halt the industry's growth, because there will not be enough raw material for the manufacture of tapioca flour," said Thai Tapioca Trade Association (TTTA) president Seree Denworalak.
As a result, the tapioca-products industry, including flour, starch and chips, will see flat export growth or only a slight drop next year. For instance, the association predicts this year's export of 2.14 million tonnes of tapioca flour will decline to 2 million tonnes next year. Domestic consumption of the product is forecast at 1 million tonnes next year, same as this year.
Seree said the yield per rai for cassava is also forecast to drop 1.68 per cent to 3.56 tonne per rai. The farm price for cassava is quoted at Bt1.60 to Bt1.80 per kilogram.
"The government's guaranteed price is suitable for supporting industry growth and farmers," he said, adding that at that price, exporters could maintain their export competitiveness.
Moreover, cassava growers spend Bt1.28 to produce a kilogram, down from Bt1.46 in the previous harvest season. The drop in the production cost has been in line with a lower oil price.
The TTTA has called for the government to control plant diseases and educate farmers about good strain selection.
Seree said the cassava price could reach Bt2 a kilogram late in the harvest season if the widespread problem of insects was not solved.
Cassava was planted on 8.29 million rai of land last year, but that is expected to decrease 6.15 per cent to 7.78 million rai.
Of total cassava production, only 2.5 million tonnes will be used to produce ethanol, while the rest will go towards the manufacture of tapioca chips for export and as a pet-food ingredient for the local market.
Many factors have hurt production, including insects, lower rainfall, reduced yield per rai and a flow of cassava from neighbouring countries under the Asean Free Trade Area.
"The drop in production will halt the industry's growth, because there will not be enough raw material for the manufacture of tapioca flour," said Thai Tapioca Trade Association (TTTA) president Seree Denworalak.
As a result, the tapioca-products industry, including flour, starch and chips, will see flat export growth or only a slight drop next year. For instance, the association predicts this year's export of 2.14 million tonnes of tapioca flour will decline to 2 million tonnes next year. Domestic consumption of the product is forecast at 1 million tonnes next year, same as this year.
Seree said the yield per rai for cassava is also forecast to drop 1.68 per cent to 3.56 tonne per rai. The farm price for cassava is quoted at Bt1.60 to Bt1.80 per kilogram.
"The government's guaranteed price is suitable for supporting industry growth and farmers," he said, adding that at that price, exporters could maintain their export competitiveness.
Moreover, cassava growers spend Bt1.28 to produce a kilogram, down from Bt1.46 in the previous harvest season. The drop in the production cost has been in line with a lower oil price.
The TTTA has called for the government to control plant diseases and educate farmers about good strain selection.
Seree said the cassava price could reach Bt2 a kilogram late in the harvest season if the widespread problem of insects was not solved.
Ample stock may cut China orders
Despite several improving economic indicators, the Finance Ministry has warned that China might import less from the world once it has stocked up again on the goods and materials it needs, resulting in a drop in Thai exports.
"We have two alternative assumptions about the current stage of economic conditions in China: that it is fully refilling its inventory; or that its economy recovery is decelerating," Finance Ministry spokesman Ekniti Nitithanprapas said yesterday.
The ministry was surprised by a sharp drop in the Kingdom's exports to China last month following a number of months of improvement. Exports fell by 21.6 per cent year on year, against a contraction of only 3.6 per cent in June.
China may have imported more previously, as it took advantage of cheap goods such as electronics parts, said Ekniti. Now, however, it may be stocking up on raw materials and intermediate products. The alternative explanation is the momentum of economic recovery driven by a huge stimulus package may be decelerating.
In a separate development, the Chinese government on Wednesday said it planned to curb overcapacity in the key industries of steel and cement. It will also increase "guidance" over parts of the coal, glass and power industries, the State Council said on its website.
Controls on stock and bond sales by companies in targeted sectors will be strengthened, it said. Asian stocks fell yesterday, dragging the MSCI Asia Pacific Index to a one-week low after China said it might curb steel and cement production, and Esprit Holdings - the Hong Kong-based clothing and accessories giant - reported a lower profit.
The signal from China is it is not confident about the pace of the global economic recovery.
However, Ekniti remains upbeat about the potential of the Chinese economy, saying it had contributed much to the recent improvement of the Asian economy.
Another promising market is India, where Thailand's exports last month expanded 4.7 per cent year on year, he said.
Ekniti said Asia could decouple from the United States, due to high savings among corporate firms and households. Increasing trade in the region will eventually turn people into final consumers.
Fiscal Policy Office director-general Somchai Sujjapongse said several economic indicators last month suggested further improvement in the Thai economy, which rose 2.3 per cent in the second quarter from the previous three months.
He predicted gross domestic product would contract by 2-3 per cent in the third quarter and expand by 2-3 per cent in the final quarter.
Yesterday, the International Monetary Fund said in a statement that the Kingdom's economic contraction this year would be limited to 3 per cent, as the government was increasing spending to counter falling exports.
Consumer spending in July rose from June, Somchai said, pointing to the collection of value-added tax, which increased on a seasonally adjusted basis by 7.3 per cent month on month.
While VAT collection contracted 11.4 per cent year on year, he said the month-on-month movement was a sign of economic recovery. Public spending also contributed to the fledgling recovery, as budget disbursement for capital spending jumped 61.6 per cent year on year to Bt30.1 billion, while routine disbursement rose 18.2 per cent to Bt164 billion.
Sales of passenger cars in July rose by 2.4 per cent from June, although they contracted 9.1 per cent from July 2008. Private investment also showed signs of improving, as imports of capital goods last month rose 6.2 per cent from June.
However, the recovery in private investment is still fragile and requires government investment to lead it, said Somchai. He expects that public investment in the "Strong Thailand" stimulus package to lead to a "crowding in" of private investment. He expects the economy will expand by 2-3 per cent in the fourth quarter after contracting by 7.1 per cent and 4.9 per cent in the first and second quarters, respectively.
Although the government is running a fiscal deficit, the public debt-to-GDP ratio was 43 per cent in June, a moderate level by international standards. Foreign reserves stood at US$12 billion (Bt410 billion), indicating economic stability, Somchai added.
"We have two alternative assumptions about the current stage of economic conditions in China: that it is fully refilling its inventory; or that its economy recovery is decelerating," Finance Ministry spokesman Ekniti Nitithanprapas said yesterday.
The ministry was surprised by a sharp drop in the Kingdom's exports to China last month following a number of months of improvement. Exports fell by 21.6 per cent year on year, against a contraction of only 3.6 per cent in June.
China may have imported more previously, as it took advantage of cheap goods such as electronics parts, said Ekniti. Now, however, it may be stocking up on raw materials and intermediate products. The alternative explanation is the momentum of economic recovery driven by a huge stimulus package may be decelerating.
In a separate development, the Chinese government on Wednesday said it planned to curb overcapacity in the key industries of steel and cement. It will also increase "guidance" over parts of the coal, glass and power industries, the State Council said on its website.
Controls on stock and bond sales by companies in targeted sectors will be strengthened, it said. Asian stocks fell yesterday, dragging the MSCI Asia Pacific Index to a one-week low after China said it might curb steel and cement production, and Esprit Holdings - the Hong Kong-based clothing and accessories giant - reported a lower profit.
The signal from China is it is not confident about the pace of the global economic recovery.
However, Ekniti remains upbeat about the potential of the Chinese economy, saying it had contributed much to the recent improvement of the Asian economy.
Another promising market is India, where Thailand's exports last month expanded 4.7 per cent year on year, he said.
Ekniti said Asia could decouple from the United States, due to high savings among corporate firms and households. Increasing trade in the region will eventually turn people into final consumers.
Fiscal Policy Office director-general Somchai Sujjapongse said several economic indicators last month suggested further improvement in the Thai economy, which rose 2.3 per cent in the second quarter from the previous three months.
He predicted gross domestic product would contract by 2-3 per cent in the third quarter and expand by 2-3 per cent in the final quarter.
Yesterday, the International Monetary Fund said in a statement that the Kingdom's economic contraction this year would be limited to 3 per cent, as the government was increasing spending to counter falling exports.
Consumer spending in July rose from June, Somchai said, pointing to the collection of value-added tax, which increased on a seasonally adjusted basis by 7.3 per cent month on month.
While VAT collection contracted 11.4 per cent year on year, he said the month-on-month movement was a sign of economic recovery. Public spending also contributed to the fledgling recovery, as budget disbursement for capital spending jumped 61.6 per cent year on year to Bt30.1 billion, while routine disbursement rose 18.2 per cent to Bt164 billion.
Sales of passenger cars in July rose by 2.4 per cent from June, although they contracted 9.1 per cent from July 2008. Private investment also showed signs of improving, as imports of capital goods last month rose 6.2 per cent from June.
However, the recovery in private investment is still fragile and requires government investment to lead it, said Somchai. He expects that public investment in the "Strong Thailand" stimulus package to lead to a "crowding in" of private investment. He expects the economy will expand by 2-3 per cent in the fourth quarter after contracting by 7.1 per cent and 4.9 per cent in the first and second quarters, respectively.
Although the government is running a fiscal deficit, the public debt-to-GDP ratio was 43 per cent in June, a moderate level by international standards. Foreign reserves stood at US$12 billion (Bt410 billion), indicating economic stability, Somchai added.
SECOND ROUND OF GAINS FOR EXPORTERS
Another 12,500 products falling under free-trade agreements with five trading partners will be subject to zero tariff rates come January in the second phase of import-duty reduction.
Tariff elimination comes under the FTAs signed by the Kingdom with Australia, New Zealand, Japan as well as those agreed under Asean with China and South Korea.
When implementing a zero-tariff regime, the FTAs will boost the country's export competitiveness and lead to more market access.
Nuntawan Sakuntanaga, director-general of the Trade Negotiations Department, said yesterday that a wide variety of products - including smoked fish, frozen squid, non-alcoholic drinks, plastic goods, tyres, refrigerators, washing machines, tapioca flour, synthetic fibres, spectacle lenses and copper sheeting - would benefit from zero tariffs from January 1, 2010.
"Thai exporters should focus more on exporting to these five markets," she said.
The implementation of the Thailand-Australia FTA in 2005 has resulted in the elimination of tariffs covering some 5,344 products.
Another 529 products will come under the zero-tariff scheme next year, including tyres, rubber gloves, air-conditioner parts, car radios and auto parts.
However, taxes on another 239 products under the commitment will not be eliminated until after next year.
The Thailand-New Zealand FTA was also agreed in 2005, under which 7,237 products were targeted for tariff elimination. The import duties on 6,058 products have already been eliminated, and another 518 products will come under the scheme next year.
Nuntawan said the Japan-Thailand Economic Partnership Agreement had already cut tariffs to zero on 7,230 products out of a total of 9,055. However, products including smoked fish, frozen squid, food products and non-alcoholic drinks will not be subject to the zero rate until next year.
The FTA under the Asean scheme with China has already eliminated tariffs on 3,906 products from the agreed total of 7,605. The two sides are committed to cutting tariffs to zero on another 2,660 products next year. These include tapioca flour, plastic products and spectacle lenses.
The Asean-South Korea FTA, which was signed this year, allows both sides to benefit from zero tariffs on 1,836 products from the total commitment of 11,703 items.
It will eliminate tariffs on another 8,961 products next year, including crude oil, sugar, tyres and copper sheeting.
Tariff elimination comes under the FTAs signed by the Kingdom with Australia, New Zealand, Japan as well as those agreed under Asean with China and South Korea.
When implementing a zero-tariff regime, the FTAs will boost the country's export competitiveness and lead to more market access.
Nuntawan Sakuntanaga, director-general of the Trade Negotiations Department, said yesterday that a wide variety of products - including smoked fish, frozen squid, non-alcoholic drinks, plastic goods, tyres, refrigerators, washing machines, tapioca flour, synthetic fibres, spectacle lenses and copper sheeting - would benefit from zero tariffs from January 1, 2010.
"Thai exporters should focus more on exporting to these five markets," she said.
The implementation of the Thailand-Australia FTA in 2005 has resulted in the elimination of tariffs covering some 5,344 products.
Another 529 products will come under the zero-tariff scheme next year, including tyres, rubber gloves, air-conditioner parts, car radios and auto parts.
However, taxes on another 239 products under the commitment will not be eliminated until after next year.
The Thailand-New Zealand FTA was also agreed in 2005, under which 7,237 products were targeted for tariff elimination. The import duties on 6,058 products have already been eliminated, and another 518 products will come under the scheme next year.
Nuntawan said the Japan-Thailand Economic Partnership Agreement had already cut tariffs to zero on 7,230 products out of a total of 9,055. However, products including smoked fish, frozen squid, food products and non-alcoholic drinks will not be subject to the zero rate until next year.
The FTA under the Asean scheme with China has already eliminated tariffs on 3,906 products from the agreed total of 7,605. The two sides are committed to cutting tariffs to zero on another 2,660 products next year. These include tapioca flour, plastic products and spectacle lenses.
The Asean-South Korea FTA, which was signed this year, allows both sides to benefit from zero tariffs on 1,836 products from the total commitment of 11,703 items.
It will eliminate tariffs on another 8,961 products next year, including crude oil, sugar, tyres and copper sheeting.
Groups seek expanded privileges
Three real estate associations have urged the Board of Investment (BoI) to expand privileges now granted only to developers of BoI homes in Zone 1 to Zone 2 covering major provinces, and to allow a mix of unit prices in a single condominium.
The BoI Home policy offers tax benefits to developers of low-priced housing. Under a new regulation that took effect on June 10, the minimum number of units in a project was reduced to 50 from 150.
As well, the minimum space of a condominium unit was reduced to 28 square metres from 31, and the maximum unit price was raised to 1 million baht from 600,000. Townhouses and detached houses must have minimum usable area of 70 sq m and a maximum price of 1.2 million baht. All rules apply to Zone 1 in Bangkok and adjacent provinces.
Issara Boonyong, president of the Housing Business Association, said the incentives should be extended to Zone 2 where living and construction costs are almost the same as in Zone 1. Zone 2 covers 12 provinces, five of which have high land costs. They include Phuket,Chon Buri, Chachoengsao, Rayong and Ayutthaya, as some are industrial provinces and some are tourism destinations.
Atip Bijanonda, president of the Thai Condominium Association, suggested the BoI allow condominiums to have units that meet its pricing conditions,as well as higher-priced units.
Currently, only detached housing and townhouse estates can offer units priced above the BoI maximum, along with units that meet the regulations."If the Industry Minister approves the changes in two conditions, the number of new BoI units applying each year would reach 20,000 as he has targeted," he said.
In the 16 years since the policy took effect, Mr Issara said applications had fallen significantly from 17,000 units in the first year because few developers could meet the conditions.
Industry Minister Charnchai Chairungruang favours the changes and plans to propose them to the cabinet.
Since the BoI changed its conditions in June, it has received 25 applications as of Aug 14, up from five in the same period last year, with 8,690 units.
Preuksa Real Estate Plc, the country's second-largest developer, has proposed 17 townhouse and single house projects while Supalai Plc seeks incentives for one condominium. Supalai plans one more project, if mixed prices are allowed.
The BoI Home approval process takes around 40 days.
The BoI Home policy offers tax benefits to developers of low-priced housing. Under a new regulation that took effect on June 10, the minimum number of units in a project was reduced to 50 from 150.
As well, the minimum space of a condominium unit was reduced to 28 square metres from 31, and the maximum unit price was raised to 1 million baht from 600,000. Townhouses and detached houses must have minimum usable area of 70 sq m and a maximum price of 1.2 million baht. All rules apply to Zone 1 in Bangkok and adjacent provinces.
Issara Boonyong, president of the Housing Business Association, said the incentives should be extended to Zone 2 where living and construction costs are almost the same as in Zone 1. Zone 2 covers 12 provinces, five of which have high land costs. They include Phuket,Chon Buri, Chachoengsao, Rayong and Ayutthaya, as some are industrial provinces and some are tourism destinations.
Atip Bijanonda, president of the Thai Condominium Association, suggested the BoI allow condominiums to have units that meet its pricing conditions,as well as higher-priced units.
Currently, only detached housing and townhouse estates can offer units priced above the BoI maximum, along with units that meet the regulations."If the Industry Minister approves the changes in two conditions, the number of new BoI units applying each year would reach 20,000 as he has targeted," he said.
In the 16 years since the policy took effect, Mr Issara said applications had fallen significantly from 17,000 units in the first year because few developers could meet the conditions.
Industry Minister Charnchai Chairungruang favours the changes and plans to propose them to the cabinet.
Since the BoI changed its conditions in June, it has received 25 applications as of Aug 14, up from five in the same period last year, with 8,690 units.
Preuksa Real Estate Plc, the country's second-largest developer, has proposed 17 townhouse and single house projects while Supalai Plc seeks incentives for one condominium. Supalai plans one more project, if mixed prices are allowed.
The BoI Home approval process takes around 40 days.
Wednesday, August 26, 2009
VN, INDIA FRANCHISES SIGNED
The Pizze Company, the leader in the local pizza-restaurant market, has expanded its business to Vietnam and India, in line with plans announcd earlier this year.
General manager Andrew Holman yesterday said the company had signed agreements with local investors in Vietnam and India to establish The Pizza Company restaurants as franchise operations.
"We expect to have the first pizza restaurant in vietnam by the end of this year. In India, we're not sure that we will have the first branch operating this year, because the world economic slowdown has affected investment there," he said.
Paul Kenny, CEO of the Minor Food Group, operator of the Pizza Company, earlier this year said the Company, earlier this year said the company planned to enter India and Vietnam to seek business opportunities in the two big markets.
The company expects the revenue contribution from its foreign operations to reach 40 per cent over the next five years. At present, it stands at 20 per cent.
Holman said The Pizza Company expected India to become one of its biggest foreign markets, like China, where the company now has 18 outlets.
Revenue growth of the Pizza Company restarurants in China is now better than in Thailand, were first half sales grew 8 per cent year on year.
At present, The Pizza Company has 40 restaurants in China, the Middle East and Cambodia. In Thailand, The Pizza Company has 204 branches and expects the number to increase to 208 this year.
The company believes Thailand has the capacity for at least another 50 branches over the next three years, Holman said.
Meanwhile, The Pizza Comapny has launch a new food menu: Italian baked rice, with eight different dishes. Its flagship dishes are pizza and pasta, and Italian baked rice will be its third food segment. It expects baked-rice dishes to attract a sales volume similar to pasta, which now contributes 15 per cent of sales.
The Pizza Company has a 70-per-cent share of the Bt5-billion Italian fast-food-restaurant market. Seventy-five per cent of its revenue comes from pizza.
Holman said that since the company had focused more on pasta menus earlier this year, sales of this kind of food had grown 50 per cent year on year. It expects the same kind of growth from its baked-rice dishes, because Thais are familiar with rice.
"Apart from pizza, I would like to see consumers order baked rice and pasta as additional items," he said.
Although its pasta revenue grew 50 per cent in the first half, The Pizza Company's overall revenue in that period grew only 8 per cent. The company has adjusted its pizza prices in a bid to make them more affordable.
Holman expects the new baked-rice menu to help the comapny generate second-half revenue of Bt150 million to Bt200 million, allowing it to maintain revenue growth of 5-10 per cent.
The company expects the revenue contribution from its foreign operations to reach 40 per cent over the next five years. It now stands at 20 per cent.
General manager Andrew Holman yesterday said the company had signed agreements with local investors in Vietnam and India to establish The Pizza Company restaurants as franchise operations.
"We expect to have the first pizza restaurant in vietnam by the end of this year. In India, we're not sure that we will have the first branch operating this year, because the world economic slowdown has affected investment there," he said.
Paul Kenny, CEO of the Minor Food Group, operator of the Pizza Company, earlier this year said the Company, earlier this year said the company planned to enter India and Vietnam to seek business opportunities in the two big markets.
The company expects the revenue contribution from its foreign operations to reach 40 per cent over the next five years. At present, it stands at 20 per cent.
Holman said The Pizza Company expected India to become one of its biggest foreign markets, like China, where the company now has 18 outlets.
Revenue growth of the Pizza Company restarurants in China is now better than in Thailand, were first half sales grew 8 per cent year on year.
At present, The Pizza Company has 40 restaurants in China, the Middle East and Cambodia. In Thailand, The Pizza Company has 204 branches and expects the number to increase to 208 this year.
The company believes Thailand has the capacity for at least another 50 branches over the next three years, Holman said.
Meanwhile, The Pizza Comapny has launch a new food menu: Italian baked rice, with eight different dishes. Its flagship dishes are pizza and pasta, and Italian baked rice will be its third food segment. It expects baked-rice dishes to attract a sales volume similar to pasta, which now contributes 15 per cent of sales.
The Pizza Company has a 70-per-cent share of the Bt5-billion Italian fast-food-restaurant market. Seventy-five per cent of its revenue comes from pizza.
Holman said that since the company had focused more on pasta menus earlier this year, sales of this kind of food had grown 50 per cent year on year. It expects the same kind of growth from its baked-rice dishes, because Thais are familiar with rice.
"Apart from pizza, I would like to see consumers order baked rice and pasta as additional items," he said.
Although its pasta revenue grew 50 per cent in the first half, The Pizza Company's overall revenue in that period grew only 8 per cent. The company has adjusted its pizza prices in a bid to make them more affordable.
Holman expects the new baked-rice menu to help the comapny generate second-half revenue of Bt150 million to Bt200 million, allowing it to maintain revenue growth of 5-10 per cent.
The company expects the revenue contribution from its foreign operations to reach 40 per cent over the next five years. It now stands at 20 per cent.
CHINA PASSES GERMANY AS TOP EXPORTER: WTO REPORT
China's exports edged ahead of those of the world's largest exporter, Germany, for the first time ever during the first half of 2009, according to World Trade Organisation data released on Tuesday.
Chinese goods exports reached US$521.7 billion (Bt17.8 trillion) over the first six months of the year, while Germany's reached $512.6 billion;
"It is an indication that the two countries are very very close," a WTO economist said, confirming a report in Britain's Financial Times newspaper.
But he said that it was too soon to judge if by the end of the year China will have overtaken Germany as the world's largest exporter of goods over the whole of 2009, and declined to make a prediction.
"It will depend on a number of parameters such as the exchange rate as well as a recovery in certain regions," he added.
Exports from both countries faltered for several months due to the global downturn but have shown hints of a recovery recently.
Germany is currently the world's biggest exporter of goods and services but has been closely tailed in recent years by China, which has been gaining ground with the explosive growth of the Chinese economy.
In 2007, Germany exported $1.32 trillion of goods over the full year while China's exports reached $1.22 billion, according to WTO data.
Chinese exports grew by an average of 25 per cent a year between 2000 and 2007 while German exports grew at a slower pace, 13 per cent per annum.
However, Germany's $210.8 billion in services exports in 2007 clearly distanced the $121.6 billion recorded by China.
Chinese goods exports reached US$521.7 billion (Bt17.8 trillion) over the first six months of the year, while Germany's reached $512.6 billion;
"It is an indication that the two countries are very very close," a WTO economist said, confirming a report in Britain's Financial Times newspaper.
But he said that it was too soon to judge if by the end of the year China will have overtaken Germany as the world's largest exporter of goods over the whole of 2009, and declined to make a prediction.
"It will depend on a number of parameters such as the exchange rate as well as a recovery in certain regions," he added.
Exports from both countries faltered for several months due to the global downturn but have shown hints of a recovery recently.
Germany is currently the world's biggest exporter of goods and services but has been closely tailed in recent years by China, which has been gaining ground with the explosive growth of the Chinese economy.
In 2007, Germany exported $1.32 trillion of goods over the full year while China's exports reached $1.22 billion, according to WTO data.
Chinese exports grew by an average of 25 per cent a year between 2000 and 2007 while German exports grew at a slower pace, 13 per cent per annum.
However, Germany's $210.8 billion in services exports in 2007 clearly distanced the $121.6 billion recorded by China.
JAPAN'S TRADE SURPLUS RISES FOR SECOND MONTH IN A ROW
Nascent recovery at risk from weak demand: economists
Japan's trade surplus soared for a second straight month as the world's second-largest economy drags itself out of its worst recession in decades, official data showed yesterday.
Exports exceeded imports for a sixth straight month, aiding a tentative economic recovery from a severe slump trigged by a collapse in overseas demand for Japanese cars, electronics and other goods.
The trade surplus jumped more than four-fold to 380.2 billion yen (Bt138 billion) in July, from 81.9 billion Yen a year earlier, the finance ministry reported.
The figure was slightly smaller than the 390 billion Yen surplus the market had expected.
Hopes are mounting that the global economy is slowly getting back on its feet, helped by massive amounts of government stimulus spending.
Japan's exports fell 36.5 per cent year on year to 4.84 trillion Yen in July while imports sank 40.8 per cent to 4.46 trillion Yen.
Economists have been cautious in their assessments however, warning that the nascent recovery could be undermined by persistently weak domestic demand. Salaries are falling and the unemployment rate has risen to a six-year high of 5.4 per cent.
The fall in exports by value was sharper than the drop of 35.7 per cent in June, but that was because Japanese product prices have fallen as energy costs decline, said Daiwa Institute of Research economist Hiroshi Watanabe.
China's economic stimulus spending and an improvement in the US economy helped to lift demand for Japanese goods, he said.
"Exports will likely improve, at least in terms of volume, until the end of the year. I believe the trade surplus will improve in the coming months."
Export volumes fell 27.6 per cent in July from a year earlier, compared with drops of more than 40 per cent in February and March, the data showed.
"Exports are likely to continue rising, given the favorable outlook for the US and China, Japan's key export destinations," said Barclays Capital economist Kyohei Morita.
One worry, however, is that the end of the US government's popular "Cash-for-Clunkers" programme to boost auto sales this month could weight on exports.
Highlighting the auto industry's ongoing woes, the Nikkei business daily reported that Toyota Motor plans to slash its global production capacity by 10 per cent to cope with weak sales.
Against that backdrop, "exports are unlikely to return to last year's levels even after the global economy and the financial markets stabilise", said RBS Securities economist Junko Nishioka.
Japan entered recession in the second quarter of 2008 as its heavy dependence on overseas demand to drive growth left it highly exposed to the global downturn.
But data released last week showed the economy expanded by 0.9 per cent in the three months to June from the previous quarter, returning to positive growth after the worst recession since World War II.
"We can expect the recovery in production and exports of manufacturing companies will continue in the coming months," said Naoki Murakami, chief economist at Monex Securities.
Japan's trade surplus with the United States shrank by 44.5 per cent in July from a year earlier to 333.0 billion Yen, the finance ministry said.
The trade deficit with China narrowed by 27.2 per cent to 54 billion Yen.
Caption
AUTOS and cranes for export are loaded on board a ship at Yokohama. Japan's trade surplus more than quadrupled in July but still failed to meet expectations.
Japan's trade surplus soared for a second straight month as the world's second-largest economy drags itself out of its worst recession in decades, official data showed yesterday.
Exports exceeded imports for a sixth straight month, aiding a tentative economic recovery from a severe slump trigged by a collapse in overseas demand for Japanese cars, electronics and other goods.
The trade surplus jumped more than four-fold to 380.2 billion yen (Bt138 billion) in July, from 81.9 billion Yen a year earlier, the finance ministry reported.
The figure was slightly smaller than the 390 billion Yen surplus the market had expected.
Hopes are mounting that the global economy is slowly getting back on its feet, helped by massive amounts of government stimulus spending.
Japan's exports fell 36.5 per cent year on year to 4.84 trillion Yen in July while imports sank 40.8 per cent to 4.46 trillion Yen.
Economists have been cautious in their assessments however, warning that the nascent recovery could be undermined by persistently weak domestic demand. Salaries are falling and the unemployment rate has risen to a six-year high of 5.4 per cent.
The fall in exports by value was sharper than the drop of 35.7 per cent in June, but that was because Japanese product prices have fallen as energy costs decline, said Daiwa Institute of Research economist Hiroshi Watanabe.
China's economic stimulus spending and an improvement in the US economy helped to lift demand for Japanese goods, he said.
"Exports will likely improve, at least in terms of volume, until the end of the year. I believe the trade surplus will improve in the coming months."
Export volumes fell 27.6 per cent in July from a year earlier, compared with drops of more than 40 per cent in February and March, the data showed.
"Exports are likely to continue rising, given the favorable outlook for the US and China, Japan's key export destinations," said Barclays Capital economist Kyohei Morita.
One worry, however, is that the end of the US government's popular "Cash-for-Clunkers" programme to boost auto sales this month could weight on exports.
Highlighting the auto industry's ongoing woes, the Nikkei business daily reported that Toyota Motor plans to slash its global production capacity by 10 per cent to cope with weak sales.
Against that backdrop, "exports are unlikely to return to last year's levels even after the global economy and the financial markets stabilise", said RBS Securities economist Junko Nishioka.
Japan entered recession in the second quarter of 2008 as its heavy dependence on overseas demand to drive growth left it highly exposed to the global downturn.
But data released last week showed the economy expanded by 0.9 per cent in the three months to June from the previous quarter, returning to positive growth after the worst recession since World War II.
"We can expect the recovery in production and exports of manufacturing companies will continue in the coming months," said Naoki Murakami, chief economist at Monex Securities.
Japan's trade surplus with the United States shrank by 44.5 per cent in July from a year earlier to 333.0 billion Yen, the finance ministry said.
The trade deficit with China narrowed by 27.2 per cent to 54 billion Yen.
Caption
AUTOS and cranes for export are loaded on board a ship at Yokohama. Japan's trade surplus more than quadrupled in July but still failed to meet expectations.
China top exporter
China's goods exports edged ahead those of the world's largest exporter, Germany, for the first time ever during the first half of 2009, according to World Trade Organisation (WTO) data given on Tuesday.
Chinese goods exports reached $521.7 billion over the first six months of the year, while Germany's reached $521.6 billion.
"It is an indication that the two countries are very very close," a WTO economist told AFP, confirming a report in the Financial Times .But he said it was too soon to judge if by the end of the year China will have overtaken Germany as the world's largest exporter of goods over the whole of 2009,and declined to make a prediction.
"It will depend on a number of parameters such as the exchange rate as well as a recovery in certain regions," he added.
Exports from both countries faltered for several months but have shown hints of a recovery recently.
Germany is the biggest exporter of goods and services but has been closely tailed in recent years by China, which has been gaining ground with the explosive growth of the Chinese economy.
In 2007, Germany exported $1.32 trillion of goods over the full year while China's exports reached $1.22 billion,according to WTO data.
Chinese exports grew by an average of 25% a year between 2000 and 2007 while German exports grew at a slower pace,13% per annum.
However, Germany's $210.8 billion in services exports in 2007 clearly distanced the $121.6 billion recorded by China.
Chinese goods exports reached $521.7 billion over the first six months of the year, while Germany's reached $521.6 billion.
"It is an indication that the two countries are very very close," a WTO economist told AFP, confirming a report in the Financial Times .But he said it was too soon to judge if by the end of the year China will have overtaken Germany as the world's largest exporter of goods over the whole of 2009,and declined to make a prediction.
"It will depend on a number of parameters such as the exchange rate as well as a recovery in certain regions," he added.
Exports from both countries faltered for several months but have shown hints of a recovery recently.
Germany is the biggest exporter of goods and services but has been closely tailed in recent years by China, which has been gaining ground with the explosive growth of the Chinese economy.
In 2007, Germany exported $1.32 trillion of goods over the full year while China's exports reached $1.22 billion,according to WTO data.
Chinese exports grew by an average of 25% a year between 2000 and 2007 while German exports grew at a slower pace,13% per annum.
However, Germany's $210.8 billion in services exports in 2007 clearly distanced the $121.6 billion recorded by China.
Australia looks for new image
Australia launched a multimillion dollar bid yesterday to rebrand itself as more than a nation of bronzed beach-goers, following a failed campaign deemed too offensive to air in some countries.
Trade Minister Simon Crean said the government would spend A$20 million (US$16.4 million) recasting the nation's image to capture the "essence of Australia" as a trade, education and investment destination in Asia.
"We are much more than a nation of great people and great places. We have won 10 Nobel Prizes and we are a nation bursting with creativity and ingenuity,"Crean said.
He vowed to avoid a repeat of the controversial A$180 million "Where the Bloody Hell Are You?"2006 tourism campaign, which was originally deemed too offensive to be screened in some countries, and largely failed in Asia.
Prime Minister Kevin Rudd last year described that campaign as a "rolled gold disaster."
Attempts to lift tourism on the back of the epic 2008 movie Australia also flopped after the film failed to set the box office alight, with official figures this year showing overseas visitor numbers down 2%.
Australia's most successful tourism promotion was a 1980s campaign featuring Crocodile Dundee star Paul Hogan telling tourists he would "put another shrimp on the barbie" for them.
But Crean said Australia needed a brand that went beyond the familiar beach-goer image and which promoted Australia as a "clean-energy" food bowl for Southeast Asia, a market he said presented huge economic opportunities.
"As these economies grow, and they will be the growth economies of the next decade, their living standards will increase," Crean said.
"Their demands for energy and for food will increase.
"But so, too, will their demand for infrastructure and services. This is the creative space in which Australia can play," he added.
Crean denied the country's image had been damaged by the previous campaign or recent diplomatic tensions with China.
Claims of racism and exploitation have also plagued Australia in recent months amid a rash of bad publicity in the region relating to violent attacks and education scams targeting Indian students.
Deputy Prime Minister Julia Gillard will visit the subcontinent next week in a bid to soothe diplomatic tensions over the issue, which has threatened Australia's US$12.7-billion international education industry.
Todd Sampson, head of major advertising firm Leo Burnett Australia, said the country needed to "stand for something" in the eyes of the international public.
"You think of Australia and you sort of draw a blank," Sampson said.
"Beyond koalas, kangaroos and beaches, there's not much there and that's the challenge Australia has."
The government would open applications for the four-year campaign to advertising agencies in the next fortnight,and Crean said he would keep an "open mind" on the shape the brand would take.
It would be locally released in February, with the international launch to take place next May at Shanghai's Expo 2010.
Trade Minister Simon Crean said the government would spend A$20 million (US$16.4 million) recasting the nation's image to capture the "essence of Australia" as a trade, education and investment destination in Asia.
"We are much more than a nation of great people and great places. We have won 10 Nobel Prizes and we are a nation bursting with creativity and ingenuity,"Crean said.
He vowed to avoid a repeat of the controversial A$180 million "Where the Bloody Hell Are You?"2006 tourism campaign, which was originally deemed too offensive to be screened in some countries, and largely failed in Asia.
Prime Minister Kevin Rudd last year described that campaign as a "rolled gold disaster."
Attempts to lift tourism on the back of the epic 2008 movie Australia also flopped after the film failed to set the box office alight, with official figures this year showing overseas visitor numbers down 2%.
Australia's most successful tourism promotion was a 1980s campaign featuring Crocodile Dundee star Paul Hogan telling tourists he would "put another shrimp on the barbie" for them.
But Crean said Australia needed a brand that went beyond the familiar beach-goer image and which promoted Australia as a "clean-energy" food bowl for Southeast Asia, a market he said presented huge economic opportunities.
"As these economies grow, and they will be the growth economies of the next decade, their living standards will increase," Crean said.
"Their demands for energy and for food will increase.
"But so, too, will their demand for infrastructure and services. This is the creative space in which Australia can play," he added.
Crean denied the country's image had been damaged by the previous campaign or recent diplomatic tensions with China.
Claims of racism and exploitation have also plagued Australia in recent months amid a rash of bad publicity in the region relating to violent attacks and education scams targeting Indian students.
Deputy Prime Minister Julia Gillard will visit the subcontinent next week in a bid to soothe diplomatic tensions over the issue, which has threatened Australia's US$12.7-billion international education industry.
Todd Sampson, head of major advertising firm Leo Burnett Australia, said the country needed to "stand for something" in the eyes of the international public.
"You think of Australia and you sort of draw a blank," Sampson said.
"Beyond koalas, kangaroos and beaches, there's not much there and that's the challenge Australia has."
The government would open applications for the four-year campaign to advertising agencies in the next fortnight,and Crean said he would keep an "open mind" on the shape the brand would take.
It would be locally released in February, with the international launch to take place next May at Shanghai's Expo 2010.
Japan's July trade surplus quadruples
Japan's trade surplus soared for a second straight month as the world's second largest economy limps out of its worst recession in decades, official data showed yesterday.
Exports exceeded imports for a sixth straight month, aiding a tentative economic recovery from a severe slump triggered by a collapse in overseas demand for Japanese cars, electronics and other goods.
The trade surplus jumped more than four-fold to 380.2 billion yen ($4.0 billion)in July, from 81.9 billion yen a year earlier,the finance ministry reported.
The figure was slightly smaller than the 390 billion yen surplus the market had expected.
Hopes are mounting that the global economy is slowly getting back on its feet, helped by massive amounts of government stimulus spending.
Japan's exports fell 36.5% year-onyear to 4.84 trillion yen in July while imports sank 40.8% to 4.46 trillion yen.
The fall in exports by value was sharper than the drop of 35.7% in June, but that was because Japanese product prices have fallen as energy costs decline, said Daiwa Institute of Research economist Hiroshi Watanabe.
China's economic stimulus spending and an improvement in the US economy helped to lift demand for Japanese goods,he said.
"Exports will likely improve, at least in terms of volume, until the end of the year. I believe the trade surplus will improve in the coming months."
Export volumes fell 27.6% in July from a year earlier, compared with drops of more than 40% in February and March,the data showed.
"Exports are likely to continue rising,given the favourable outlook for the US and China - Japan's key export destinations," predicted Barclays Capital economist Kyohei Morita.
One worry, however, is that the end of the US government's popular "Cashfor-Clunkers" programme to boost auto sales this month could weigh on exports.
Highlighting the auto industry's ongoing woes, the Nikkei business daily reported that Toyota Motor Corp plans to slash its global production capacity by 10% to cope with weak sales.
Against that backdrop,"exports are unlikely to return to last year's levels even after the global economy and the financial markets stabilise," said RBS Securities economist Junko Nishioka.
Japan entered recession in the second quarter of 2008 as its heavy dependence on overseas demand to drive growth left it highly exposed to the global downturn.
But data released last week showed the economy expanded by 0.9% in the three months to June from the previous quarter, returning to positive growth after the worst recession since World War II.
Japan's trade surplus with the United States shrank by 44.5% in July from a year earlier to 333.0 billion yen while that with the European Union fell 72.1%to 104.0 billion yen, the finance ministry said. The trade deficit with China narrowed by 27.2% to 54.0 billion yen.
Exports exceeded imports for a sixth straight month, aiding a tentative economic recovery from a severe slump triggered by a collapse in overseas demand for Japanese cars, electronics and other goods.
The trade surplus jumped more than four-fold to 380.2 billion yen ($4.0 billion)in July, from 81.9 billion yen a year earlier,the finance ministry reported.
The figure was slightly smaller than the 390 billion yen surplus the market had expected.
Hopes are mounting that the global economy is slowly getting back on its feet, helped by massive amounts of government stimulus spending.
Japan's exports fell 36.5% year-onyear to 4.84 trillion yen in July while imports sank 40.8% to 4.46 trillion yen.
The fall in exports by value was sharper than the drop of 35.7% in June, but that was because Japanese product prices have fallen as energy costs decline, said Daiwa Institute of Research economist Hiroshi Watanabe.
China's economic stimulus spending and an improvement in the US economy helped to lift demand for Japanese goods,he said.
"Exports will likely improve, at least in terms of volume, until the end of the year. I believe the trade surplus will improve in the coming months."
Export volumes fell 27.6% in July from a year earlier, compared with drops of more than 40% in February and March,the data showed.
"Exports are likely to continue rising,given the favourable outlook for the US and China - Japan's key export destinations," predicted Barclays Capital economist Kyohei Morita.
One worry, however, is that the end of the US government's popular "Cashfor-Clunkers" programme to boost auto sales this month could weigh on exports.
Highlighting the auto industry's ongoing woes, the Nikkei business daily reported that Toyota Motor Corp plans to slash its global production capacity by 10% to cope with weak sales.
Against that backdrop,"exports are unlikely to return to last year's levels even after the global economy and the financial markets stabilise," said RBS Securities economist Junko Nishioka.
Japan entered recession in the second quarter of 2008 as its heavy dependence on overseas demand to drive growth left it highly exposed to the global downturn.
But data released last week showed the economy expanded by 0.9% in the three months to June from the previous quarter, returning to positive growth after the worst recession since World War II.
Japan's trade surplus with the United States shrank by 44.5% in July from a year earlier to 333.0 billion yen while that with the European Union fell 72.1%to 104.0 billion yen, the finance ministry said. The trade deficit with China narrowed by 27.2% to 54.0 billion yen.
Food exporters have doubts
Food exporters remain unsure whether the Thai and world economies have bottomed out, as revived purchase orders for Thai foods are mostly short-term.
"Purchase orders for the food sector until the year-end are still relatively small,with most of them made just for about two months in advance," said Paiboon Ponsuwanna, chairman of the food industry club of the Federation of Thai Industries, at a seminar on Thailand's agro-food economic outlook held yesterday.
"Advance purchase orders should be for a longer term and sustainable if the world's economy has bottomed out."
Short-term purchase orders have tended to prevent food operators and exporters from planning their production in the longer term, he said.
Improved demand from new markets has failed to offset sluggish sales in key markets such as the United States, Europe, Japan and Asean, he added.
In the first six months of this year,Thailand shipped food products worth 354.96 billion baht -6.6% less than in the first half of 2008- and imports fell 13% to 107.40 billion baht.
Food exports this year are now projected to shrink by about 7.2% from 722 billion baht last year, an improvement from earlier forecasts of a 14-15% contraction, he said.
"Thailand's food exports remain in good shape compared with the figures in 2007," said Mr Paiboon.
"The performance would be negative if we compared it with that of last year,when exports saw phenomenal growth as the sector was driven by speculation on fears of food and energy shortage."
Dr Olarn Chaipravat, an honorary adviser to the Fiscal Policy Research Institute Foundation, said Thailand's future policy needs a better understanding of the interconnections between the prices of oil, agricultural commodities and financial assets.
"For Thailand's policy framework over 10 to 15 years, it is essential to study demand for alternative energy, the increase of the world's population, climate change, as well as a new mechanism to raise income of Thai farmers," he said.
"Purchase orders for the food sector until the year-end are still relatively small,with most of them made just for about two months in advance," said Paiboon Ponsuwanna, chairman of the food industry club of the Federation of Thai Industries, at a seminar on Thailand's agro-food economic outlook held yesterday.
"Advance purchase orders should be for a longer term and sustainable if the world's economy has bottomed out."
Short-term purchase orders have tended to prevent food operators and exporters from planning their production in the longer term, he said.
Improved demand from new markets has failed to offset sluggish sales in key markets such as the United States, Europe, Japan and Asean, he added.
In the first six months of this year,Thailand shipped food products worth 354.96 billion baht -6.6% less than in the first half of 2008- and imports fell 13% to 107.40 billion baht.
Food exports this year are now projected to shrink by about 7.2% from 722 billion baht last year, an improvement from earlier forecasts of a 14-15% contraction, he said.
"Thailand's food exports remain in good shape compared with the figures in 2007," said Mr Paiboon.
"The performance would be negative if we compared it with that of last year,when exports saw phenomenal growth as the sector was driven by speculation on fears of food and energy shortage."
Dr Olarn Chaipravat, an honorary adviser to the Fiscal Policy Research Institute Foundation, said Thailand's future policy needs a better understanding of the interconnections between the prices of oil, agricultural commodities and financial assets.
"For Thailand's policy framework over 10 to 15 years, it is essential to study demand for alternative energy, the increase of the world's population, climate change, as well as a new mechanism to raise income of Thai farmers," he said.
Zero duty brightens Rubicon outlook
Rubicon Group, a major Thai shrimp exporter, expects strong sales in the US market after being excluded from the country's anti-dumping penalties.
The group, which represents nine companies in association with the seafood producers and processors Wales &Co Universe, Chanthaburi Frozen Co,and Thai Fishery Coldstorage Co, is expecting its exports to the US to reach $300 million this year, up from the $260 million achieved in 2008.
"The absence of an anti-dumping duty makes our products very competitive in the US market and sales have been up significantly despite the local economic slowdown," said Rubicon Group head Poj Aramwattananont.
The US Department of Commerce excluded the Rubicon Group and Thai I-Mei Frozen Foods from anti-dumping duties for frozen shrimp sold in US markets since Jan 16 this year. The duty rate was reduced to 5.34% from 5.95%for other Thai shrimp exporters following a ruling by the World Trade Organisation.
According to the Thai Frozen Foods Association, the promising US market and a more stable baht helped to increase the volume of Thai shrimp exports in the first half to 152,114 tonnes, from 138,673 tonnes in the same period last year. Export revenue also rose to $1.012 billion from $920 million a year earlier.
Average export prices for shrimp have dropped to $6.40 per kilogramme, down from $6.77 last year.
The US market dominates exports of the crustacean. Its 46% share of the 335,372 tonnes exported last year generated 78.99 billion baht.
Thailand plans to export 362,000 tonnes in 2009 which will generate about 82 billion baht in income. The US should remain the country's largest export destination.
Mr Poj said the US economic recession had affected shrimp sales to the food service sector as consumers have stopped eating out.
"Like many countries, US consumers prefer buying raw materials or semifinished meals to cook at home, creating strong retail sales," he said.
The trend led the company to focus more on the retail market and it has ambitions to increase its retail sales volume to 70% soon from the current 30% to 40%. It plans to offer more readyto-eat and semi-cooked products for the US market.
Mr Poj said that Rubicon, which also operates the tuna exporter Sea Value Co, is expected to earn about 20 billion baht in revenue from tuna exports this year thanks to strong export prices reflecting high raw material prices.
Prices of raw materials have moved from about $900 to $1,200 per tonne late last year to more than $1,500 a tonne in the middle of this year before shooting up to $1,980 last week, he said.
The group, which represents nine companies in association with the seafood producers and processors Wales &Co Universe, Chanthaburi Frozen Co,and Thai Fishery Coldstorage Co, is expecting its exports to the US to reach $300 million this year, up from the $260 million achieved in 2008.
"The absence of an anti-dumping duty makes our products very competitive in the US market and sales have been up significantly despite the local economic slowdown," said Rubicon Group head Poj Aramwattananont.
The US Department of Commerce excluded the Rubicon Group and Thai I-Mei Frozen Foods from anti-dumping duties for frozen shrimp sold in US markets since Jan 16 this year. The duty rate was reduced to 5.34% from 5.95%for other Thai shrimp exporters following a ruling by the World Trade Organisation.
According to the Thai Frozen Foods Association, the promising US market and a more stable baht helped to increase the volume of Thai shrimp exports in the first half to 152,114 tonnes, from 138,673 tonnes in the same period last year. Export revenue also rose to $1.012 billion from $920 million a year earlier.
Average export prices for shrimp have dropped to $6.40 per kilogramme, down from $6.77 last year.
The US market dominates exports of the crustacean. Its 46% share of the 335,372 tonnes exported last year generated 78.99 billion baht.
Thailand plans to export 362,000 tonnes in 2009 which will generate about 82 billion baht in income. The US should remain the country's largest export destination.
Mr Poj said the US economic recession had affected shrimp sales to the food service sector as consumers have stopped eating out.
"Like many countries, US consumers prefer buying raw materials or semifinished meals to cook at home, creating strong retail sales," he said.
The trend led the company to focus more on the retail market and it has ambitions to increase its retail sales volume to 70% soon from the current 30% to 40%. It plans to offer more readyto-eat and semi-cooked products for the US market.
Mr Poj said that Rubicon, which also operates the tuna exporter Sea Value Co, is expected to earn about 20 billion baht in revenue from tuna exports this year thanks to strong export prices reflecting high raw material prices.
Prices of raw materials have moved from about $900 to $1,200 per tonne late last year to more than $1,500 a tonne in the middle of this year before shooting up to $1,980 last week, he said.
TOG expects lower growth
SET-listed Thai Optical Group, a distributor and exporter of optical lenses,expects its revenue and profit growth to halve to about 7-8% this year due to the global slowdown and political turmoil earlier this year.
The April riots in Bangkok and Pattaya lost the company orders, chairman Sawang Pracharktam told investors at a briefing yesterday.
TOG exports about 95% of its products,mostly to Western Europe, the United States and Asia. The company reported second-quarter sales revenue of 327.23 million baht, down 10.96% from the same period last year. Second-quarter profit also declined 10% year-on-year to 35.09 million baht.
For the first half, the company posted revenue of 687 million baht, up 1.81%year-on-year, with net profit up 14.67%to 74.5 million.
Improved sales of high-value products and cost controls on sales and administration expenses helped increase the company's margins, said Mr Sawang.
"Generally, we look to post revenue and profit growth of 10% to 15% per year. Optical products are generic products that everyone must use," he said.
"With the global economy recovering,we hope that growth will return to normal next year."
The company will increase promotional activities for its Excelite brand in the local market, said Mr Sawang. TOG currently claims a 30% share of the local lens market.
The company expects to step up production from 80% currently to full capacity by the year-end, said managing director Sarote Pracharktam. TOG produces 180-200 million units per year.
The company is investing 70 million baht in a new office building this year and will invest 20 million in plant expansion in 2010. TOG expects to complete a lab in Vietnam this year and to open offices in Malaysia and Singapore in 2010, Russia in 2011 and China in 2012.
Thailand is one of the largest producers of optical lenses, with a 22% share of global production, according to PPG Industries.
TOG shares closed yesterday on the Stock Exchange of Thailand at 3.38 baht,up 10 satang, in trade worth 10.912 million baht.
The April riots in Bangkok and Pattaya lost the company orders, chairman Sawang Pracharktam told investors at a briefing yesterday.
TOG exports about 95% of its products,mostly to Western Europe, the United States and Asia. The company reported second-quarter sales revenue of 327.23 million baht, down 10.96% from the same period last year. Second-quarter profit also declined 10% year-on-year to 35.09 million baht.
For the first half, the company posted revenue of 687 million baht, up 1.81%year-on-year, with net profit up 14.67%to 74.5 million.
Improved sales of high-value products and cost controls on sales and administration expenses helped increase the company's margins, said Mr Sawang.
"Generally, we look to post revenue and profit growth of 10% to 15% per year. Optical products are generic products that everyone must use," he said.
"With the global economy recovering,we hope that growth will return to normal next year."
The company will increase promotional activities for its Excelite brand in the local market, said Mr Sawang. TOG currently claims a 30% share of the local lens market.
The company expects to step up production from 80% currently to full capacity by the year-end, said managing director Sarote Pracharktam. TOG produces 180-200 million units per year.
The company is investing 70 million baht in a new office building this year and will invest 20 million in plant expansion in 2010. TOG expects to complete a lab in Vietnam this year and to open offices in Malaysia and Singapore in 2010, Russia in 2011 and China in 2012.
Thailand is one of the largest producers of optical lenses, with a 22% share of global production, according to PPG Industries.
TOG shares closed yesterday on the Stock Exchange of Thailand at 3.38 baht,up 10 satang, in trade worth 10.912 million baht.
Exports sink 41% this year
The number of Thai-built automobiles exported in the first seven months of this year fell 40.65% year-on-year to 271,339 units, while their value sank 39.5% to 125.68 billion baht, said the Federation of Thai Industries (FTI).
"The global financial crisis still has an effect on the Thai economy and auto exports - despite overseas orders beginning to climb but remaining small,"said Surapong Phaisitpattanapong, a spokesman for FTI's automobile industry club.
Vehicle exports in July plunged 48.7%year-on-year to 36,555 units, while edging up 3.25% from the previous month. The value of last month's vehicle exports dropped 46.7% from July 2008 to 17.36 billion baht.
Local auto production from January to July fell 44.8% year-on-year to 464,068 units:149,416 cars (a 37.6% fall yearon-year) and 307,030 pickup trucks (down 47.96%).
In the same period,263,768 vehicles were produced for export (a 42.65% yearon-year drop) and 200,300 were manufactured for the domestic market (down 47.46%).
Motorcycle production in the first seven months skidded 43.5% year-onyear to 1.09 million units. Motorcycle exports slipped 68.8% to 285,929 units worth 11.3 billion, a decline of 27.37%.
"The global financial crisis still has an effect on the Thai economy and auto exports - despite overseas orders beginning to climb but remaining small,"said Surapong Phaisitpattanapong, a spokesman for FTI's automobile industry club.
Vehicle exports in July plunged 48.7%year-on-year to 36,555 units, while edging up 3.25% from the previous month. The value of last month's vehicle exports dropped 46.7% from July 2008 to 17.36 billion baht.
Local auto production from January to July fell 44.8% year-on-year to 464,068 units:149,416 cars (a 37.6% fall yearon-year) and 307,030 pickup trucks (down 47.96%).
In the same period,263,768 vehicles were produced for export (a 42.65% yearon-year drop) and 200,300 were manufactured for the domestic market (down 47.46%).
Motorcycle production in the first seven months skidded 43.5% year-onyear to 1.09 million units. Motorcycle exports slipped 68.8% to 285,929 units worth 11.3 billion, a decline of 27.37%.
THAI FIRMS URGED TO SEEK JOINT VENTURES IN JAPAN
Manufacturers in supporting industries are being encouraged to form joint ventures with Japanese firms and operate in that country as market conditions open up there.
Chanin Khaochan, director of the BOI Unit for Industrial Linkage Development (Build), believes supporting industries can turn economic crisis into opportunity.
It is difficult to penetrate the Japanese market when the economy is good. Hence, now is a good opportunity, because Japanese firms are looking for partners for foreign investment, in order to reduce business risks," Chanin said.
He said investment in supporting industries had plunged this year, due mainly to a steep decline in the automotive and electronics industries.
Investment applications in such industries in the first seven months were worth Bt20 billion, 40 per cent of them from companies based in Osaka, Japan.
He believes these industries will recover next year in line with the global economy.
Build and the Osaka Chamber of Commerce and Industry co-hosted a business-matching event between 14 Japanese and 50 Thai companies in Bangkok yesterday.
Toru Hashimoto, governor of Osaka prefecture, said manufacturers there were very strong in advanced technology. Small and medium-sized producers were clustered together, which could be beneficial to Thai partners.
Thailand Trade Representative Vachara Phanchet said the Japan External Trade Organisation and the Development Bank of Japan had both agreed to provide loans to Thai companies operating in Japan, in order to promote their investment there, especially in the service sector and especially for spas and restaurants.
"Something else to attract Thai firms is they can mobilise the capital in Japan's Alternative Investment Market, which is open to foreign companies. Listing in this market will foster an international image for Thai companies and allow them to mobilise funds more easily for operating in Japan," he said.
Governor Hashimoto will meet Prime Minister Abhisit Vejjajiva today to tighten trade and investment relations between Thailand and Osaka.
Osaka is Japan's main manufacturing centre, with combined revenue of US$333 billion (Bt11.37 trillion) last year, or 8 per cent of the nation's gross domestic product.
Chanin Khaochan, director of the BOI Unit for Industrial Linkage Development (Build), believes supporting industries can turn economic crisis into opportunity.
It is difficult to penetrate the Japanese market when the economy is good. Hence, now is a good opportunity, because Japanese firms are looking for partners for foreign investment, in order to reduce business risks," Chanin said.
He said investment in supporting industries had plunged this year, due mainly to a steep decline in the automotive and electronics industries.
Investment applications in such industries in the first seven months were worth Bt20 billion, 40 per cent of them from companies based in Osaka, Japan.
He believes these industries will recover next year in line with the global economy.
Build and the Osaka Chamber of Commerce and Industry co-hosted a business-matching event between 14 Japanese and 50 Thai companies in Bangkok yesterday.
Toru Hashimoto, governor of Osaka prefecture, said manufacturers there were very strong in advanced technology. Small and medium-sized producers were clustered together, which could be beneficial to Thai partners.
Thailand Trade Representative Vachara Phanchet said the Japan External Trade Organisation and the Development Bank of Japan had both agreed to provide loans to Thai companies operating in Japan, in order to promote their investment there, especially in the service sector and especially for spas and restaurants.
"Something else to attract Thai firms is they can mobilise the capital in Japan's Alternative Investment Market, which is open to foreign companies. Listing in this market will foster an international image for Thai companies and allow them to mobilise funds more easily for operating in Japan," he said.
Governor Hashimoto will meet Prime Minister Abhisit Vejjajiva today to tighten trade and investment relations between Thailand and Osaka.
Osaka is Japan's main manufacturing centre, with combined revenue of US$333 billion (Bt11.37 trillion) last year, or 8 per cent of the nation's gross domestic product.
AEC WILL COME WITH STIFF COMPETITION, SMES WARNED
Incompetent small and medium-sized enterprises could be wiped out by waves of better-quality goods from the Asean Economic Community (AEC), researchers warned yesterday."Thai SMEs could lose out if they cannot increase their efficiency," said Aat Pisanwanich, director of the
Centre for International Trade Studies at the University of the Thai Chamber of Commerce.
By 2015, they may have to shut down if they lack knowledge and research-and-development capabilities to stand up to other Asean enterprises, a new study conducted by the centre showed.
The AEC, whose measures will start going into effect next year, is expected to create an initial trade deficit of Bt923 million per year in the SME sector, due to the invasion of more competitive goods in the domestic market.
"Although the overall exports of SMEs will increase 10.7 per cent to Bt35.9 billion in 2015, imports will also jump 13.9 per cent to Bt38.03 billion in the same period," Aat said.
The eight SME categories that will be the hardest hit are electronics and electrical appliances, garments and textiles, chemical products, rubber and plastic, wood products, petroleum, mining, and steel.
SMEs need to understand more about how to take advantage of trade liberalisation among Asean countries, he said. But so far, the government has not provided help to develop SMEs' edge amid Asean's economic integration.
The government should draw up a strategy to strengthen SMEs. It must help promote the development of industry clusters from upstream to downstream.
The government should also closely monitor imports.
Local companies should further develop their product quality and create added value, while lowering production and logistic costs to ensure better competitiveness with other Asean countries.
The centre's study also found that incomes for farmers would not improve as a result of the regional economic integration.
On average, farm income will rise only Bt23 a month towards 2015, while income for industrial workers will rise Bt118 a month during the period.
Chainant Ukosakul, vice chairman of the university's committee on trade rules and international trade, questioned whether Thailand was ready for free trade in Asean, because SMEs were still in the dark about the AEC.
He urged the government to provide more information on the opening of trade in both goods and services, which could create new challenges for smaller businesses.
Centre for International Trade Studies at the University of the Thai Chamber of Commerce.
By 2015, they may have to shut down if they lack knowledge and research-and-development capabilities to stand up to other Asean enterprises, a new study conducted by the centre showed.
The AEC, whose measures will start going into effect next year, is expected to create an initial trade deficit of Bt923 million per year in the SME sector, due to the invasion of more competitive goods in the domestic market.
"Although the overall exports of SMEs will increase 10.7 per cent to Bt35.9 billion in 2015, imports will also jump 13.9 per cent to Bt38.03 billion in the same period," Aat said.
The eight SME categories that will be the hardest hit are electronics and electrical appliances, garments and textiles, chemical products, rubber and plastic, wood products, petroleum, mining, and steel.
SMEs need to understand more about how to take advantage of trade liberalisation among Asean countries, he said. But so far, the government has not provided help to develop SMEs' edge amid Asean's economic integration.
The government should draw up a strategy to strengthen SMEs. It must help promote the development of industry clusters from upstream to downstream.
The government should also closely monitor imports.
Local companies should further develop their product quality and create added value, while lowering production and logistic costs to ensure better competitiveness with other Asean countries.
The centre's study also found that incomes for farmers would not improve as a result of the regional economic integration.
On average, farm income will rise only Bt23 a month towards 2015, while income for industrial workers will rise Bt118 a month during the period.
Chainant Ukosakul, vice chairman of the university's committee on trade rules and international trade, questioned whether Thailand was ready for free trade in Asean, because SMEs were still in the dark about the AEC.
He urged the government to provide more information on the opening of trade in both goods and services, which could create new challenges for smaller businesses.
SMEs on alert as AEC nears
Local small and medium-sized enterprises are expected to be hardest hit once the Asean Economic Community (AEC) starts to take effect next year, a university study warns.
"Certain Thai businesses such as electrical appliances and electronics, textiles and garments, chemicals, rubber, plastic,wooden products, petrochemicals, steel and mining would face adverse conditions once import tariffs are brought down to zero next year under the AEC agreement," said Aat Pisanwanich, director of the Center for International Trade Studies of the University of the Thai Chamber of Commerce.
"Without proper preparations, those industries would definitely face intensifying competition and be subject to operating losses."
Eleven priority goods and services sectors are part of a pilot programme to be completed by 2010 under the AEC regional integration goals. Full integration is supposed to take place by 2015.
The priority sectors are agro-based products, fisheries, wood-based products, rubber-based products, textiles and apparel, automotive, electronics,information and communication technology, health care, tourism, and air travel. Recently, logistics were added as the 12th priority sector.
The study estimates that integration would raise export revenue from small and medium-sized enterprises by 35.9 billion baht and imports worth 38 billion baht in 2015.
Currently, exports from SMEs are estimated at 5.2 trillion baht, with the 12 priority sectors under the AEC pilot programme making up 80%. Imports were estimated at 5.2 trillion baht.
The study also projected that eco-nomic integration would benefit Thailand's non-farm sector more than the farm sector. Income of the farm sector was expected to increase by 1,428 baht per household per year, with the nonfarm sector rising 3,380 baht per household per year in 2015.
Currently,farm sector household income is estimated at 12,300 baht per month, while the non-farm sector earns 28,000 baht per month.
"We're now gravely concerned, particularly over five sectors - tourism,aviation, health care, and information technology - in which foreign ownership of up to 70% would be allowed next year," said Mr Aat.
"From this study, questions arise whether those businesses are well prepared for higher competition under the AEC over the next six years, as this should affect the way of life of all Thais going forward."
"Certain Thai businesses such as electrical appliances and electronics, textiles and garments, chemicals, rubber, plastic,wooden products, petrochemicals, steel and mining would face adverse conditions once import tariffs are brought down to zero next year under the AEC agreement," said Aat Pisanwanich, director of the Center for International Trade Studies of the University of the Thai Chamber of Commerce.
"Without proper preparations, those industries would definitely face intensifying competition and be subject to operating losses."
Eleven priority goods and services sectors are part of a pilot programme to be completed by 2010 under the AEC regional integration goals. Full integration is supposed to take place by 2015.
The priority sectors are agro-based products, fisheries, wood-based products, rubber-based products, textiles and apparel, automotive, electronics,information and communication technology, health care, tourism, and air travel. Recently, logistics were added as the 12th priority sector.
The study estimates that integration would raise export revenue from small and medium-sized enterprises by 35.9 billion baht and imports worth 38 billion baht in 2015.
Currently, exports from SMEs are estimated at 5.2 trillion baht, with the 12 priority sectors under the AEC pilot programme making up 80%. Imports were estimated at 5.2 trillion baht.
The study also projected that eco-nomic integration would benefit Thailand's non-farm sector more than the farm sector. Income of the farm sector was expected to increase by 1,428 baht per household per year, with the nonfarm sector rising 3,380 baht per household per year in 2015.
Currently,farm sector household income is estimated at 12,300 baht per month, while the non-farm sector earns 28,000 baht per month.
"We're now gravely concerned, particularly over five sectors - tourism,aviation, health care, and information technology - in which foreign ownership of up to 70% would be allowed next year," said Mr Aat.
"From this study, questions arise whether those businesses are well prepared for higher competition under the AEC over the next six years, as this should affect the way of life of all Thais going forward."
Monday, August 24, 2009
Colombo expects foreign money to pour in
Sri Lanka is banking on foreign cash to rebuild shattered infrastructure as the island emerges from decades of ethnic civil war, officials say.
Analysts are expecting a large investment peace dividend in the country,where bomb attacks and fighting dented investor confidence and kept highspending tourists away from the tropical South Asian island.
There will be plenty of opportunities for investment once the former war zone is open for business, said Chinthaka Ranasinghe, head of research at John Keells Stock Brokers in Colombo.
"These areas have been virtually bombed out. This throws up enormous potential" for investment, Mr Ranasinghe said."A large number of houses need to be built" along with "new roads, schools,telephone and electricity lines ... the investment rebound will be spectacular".
Three months after the end of the war against the Tamil Tiger rebels, the government has yet to announce a timetable for when the devastated region will be fully open for business.
But the government has said it hopes to resettle at least 80% of the nearly 300,000 people in the north who were displaced during the last stages of the conflict by the end of 2009, as mine clearing work progresses.
The Treasury estimates nearly $3 billion will be spent by international donors and the government over the next three years to rebuild roads, bridges, electricity,water and sewer lines.
More than $2 billion of that money will be spent in the north where the final battles of the war were fought in May, the Treasury said. The rest of the money will be spent in the east which was taken back from the rebels in 2007.
Dialog Telekom, the Sri Lankan unit of Malaysia's Axiata Group Berhad, was the first international company to set foot into the former war zone, by launching a mobile phone network initially intended for use by government troops.
Dialog will spend up to $10 million this year to install 60 base stations in the former war-torn areas, said chief executive Hans Wijayasuriya, who anticipates "pent-up demand".
Home to about 14% of Sri Lanka's 20 million people, the island's north also has fertile farmland, fishing and mineral deposits, Mr Ranasinghe said.
With a $2.6 billion bailout package from the International Monetary Fund to shore up the economy following the war that left tens of thousands dead, the central bank plans to tap overseas markets in September to raise $500 million through a sovereign bond.
Analysts are expecting a large investment peace dividend in the country,where bomb attacks and fighting dented investor confidence and kept highspending tourists away from the tropical South Asian island.
There will be plenty of opportunities for investment once the former war zone is open for business, said Chinthaka Ranasinghe, head of research at John Keells Stock Brokers in Colombo.
"These areas have been virtually bombed out. This throws up enormous potential" for investment, Mr Ranasinghe said."A large number of houses need to be built" along with "new roads, schools,telephone and electricity lines ... the investment rebound will be spectacular".
Three months after the end of the war against the Tamil Tiger rebels, the government has yet to announce a timetable for when the devastated region will be fully open for business.
But the government has said it hopes to resettle at least 80% of the nearly 300,000 people in the north who were displaced during the last stages of the conflict by the end of 2009, as mine clearing work progresses.
The Treasury estimates nearly $3 billion will be spent by international donors and the government over the next three years to rebuild roads, bridges, electricity,water and sewer lines.
More than $2 billion of that money will be spent in the north where the final battles of the war were fought in May, the Treasury said. The rest of the money will be spent in the east which was taken back from the rebels in 2007.
Dialog Telekom, the Sri Lankan unit of Malaysia's Axiata Group Berhad, was the first international company to set foot into the former war zone, by launching a mobile phone network initially intended for use by government troops.
Dialog will spend up to $10 million this year to install 60 base stations in the former war-torn areas, said chief executive Hans Wijayasuriya, who anticipates "pent-up demand".
Home to about 14% of Sri Lanka's 20 million people, the island's north also has fertile farmland, fishing and mineral deposits, Mr Ranasinghe said.
With a $2.6 billion bailout package from the International Monetary Fund to shore up the economy following the war that left tens of thousands dead, the central bank plans to tap overseas markets in September to raise $500 million through a sovereign bond.
The 6th CAEXPO helps Thai enterprises further explore Chinese market
A Press conference on the 6th CAEXPO will be jointly held by the CAEXPO Secretariat and the Department of Export Promotion (DEP), Ministry of Commerce of Thailand, for releasing more updated information about the upcoming event to the Thai enterprises and facilitating their participation in it.
The press conference is arranged at 10:00-12:00 a.m on Augutst 27 in room 30410, 4F, Ministry of Commerce (MOC) 44/100 Nonthaburi 1 Rd., Amphur Muang, Nonthaburi.
As it is open to major Thai chambers of commerce/professional associations, leading enterprises and others parties concerned, this press conference will brief Thai businesses on the progress of the 6th CAEXPO general preparations, especially those made in Thailand, and also give them a good opportunity to raise questions directly to the officials fromt he CAEXPO Secretariat and thhe DEP.
The press conference has gained great support from the Chinese Embassy in Thailand, Chinese commercial & Economic counselor's Office in Thailand and 4 CAEXPO Supporting Chambers of Commerce, namely, Thai-Chinese Chamber of Commerce, All-Thai Traders Association, Thailand-China Business Council and the Federation of Thai Industries. Officials and representatives from Thai commerce administrations and the above chambers of commerce as well as leading entrepreneurs will be invited.
Governments of both Thailand and china highly value the 6th CAEXPO. The Ministry of Commerce of China (MOFCOM) has listed the event among the 4 major state-level expositions/trade fairs it sponsors, annd requested the departments of commerce in all Chinese domestic provinces/municipalities to encourage more quality enterprises and products to the event for exhibition and procurement, while the DEP adopts a series of policies and measures this year to mobilize more Thai businesses to join in the event. Besides, the 4 CAEXPO Supporting Chambers of Commerce in Thailand have karranged more incentives to their member enterprises for particpating in the event. by now, the exhibitor organizing task in Thailand has been fulfilled with all booths arrangedfor Thai exhibitors being fully booked and confirmed.
Since the launching of the CAEXPO in 2004, Thailand has joined in this event for 5 straight years, and achieved sound economic and trade outcomes with a total concluded trade volume of USD276.109 million. At the previous 5 CAEXPOs, Thailand has showcased its cutting-edged exhibits including agro-based products, processed foodstuff, light industrial products, medical and health care products annd services, and also done a good purchase of quality Chinese products like machinery & equipment, electronics & electrical appliances and building materials.
Apart from the pavilion of commodity Trade, the CAEXPO also set up the Pavilion of Investment Cooperation and thhe Pavilion of Cities of Charm. The briefing conferences on the investment environment of China and the 10 ASEAN countries and other theme conferences/forums will also be held during its fair period, for promoting China-ASEAN cooperation in various fields such as investment and tourism. Via the CAEXPO, Thai businesses has further explored the Chinese market, attracted international capital and found their partners.
The 6th CAEXPO will be held on October 20-24, 2009 in Nanning, Guangxi, China. To facilitate the participation of Thai businessmen, temporary direct chartered flights between Bangkok and Nanningg will again be open during the fair period, as did in the previous years. And more transit flights between Hong Kong and Nanning, Guangzhou and Nanning will also be available. with only one hour flight, Canton fair participants may easily extend their trip to the CAEXPO.
The press conference is arranged at 10:00-12:00 a.m on Augutst 27 in room 30410, 4F, Ministry of Commerce (MOC) 44/100 Nonthaburi 1 Rd., Amphur Muang, Nonthaburi.
As it is open to major Thai chambers of commerce/professional associations, leading enterprises and others parties concerned, this press conference will brief Thai businesses on the progress of the 6th CAEXPO general preparations, especially those made in Thailand, and also give them a good opportunity to raise questions directly to the officials fromt he CAEXPO Secretariat and thhe DEP.
The press conference has gained great support from the Chinese Embassy in Thailand, Chinese commercial & Economic counselor's Office in Thailand and 4 CAEXPO Supporting Chambers of Commerce, namely, Thai-Chinese Chamber of Commerce, All-Thai Traders Association, Thailand-China Business Council and the Federation of Thai Industries. Officials and representatives from Thai commerce administrations and the above chambers of commerce as well as leading entrepreneurs will be invited.
Governments of both Thailand and china highly value the 6th CAEXPO. The Ministry of Commerce of China (MOFCOM) has listed the event among the 4 major state-level expositions/trade fairs it sponsors, annd requested the departments of commerce in all Chinese domestic provinces/municipalities to encourage more quality enterprises and products to the event for exhibition and procurement, while the DEP adopts a series of policies and measures this year to mobilize more Thai businesses to join in the event. Besides, the 4 CAEXPO Supporting Chambers of Commerce in Thailand have karranged more incentives to their member enterprises for particpating in the event. by now, the exhibitor organizing task in Thailand has been fulfilled with all booths arrangedfor Thai exhibitors being fully booked and confirmed.
Since the launching of the CAEXPO in 2004, Thailand has joined in this event for 5 straight years, and achieved sound economic and trade outcomes with a total concluded trade volume of USD276.109 million. At the previous 5 CAEXPOs, Thailand has showcased its cutting-edged exhibits including agro-based products, processed foodstuff, light industrial products, medical and health care products annd services, and also done a good purchase of quality Chinese products like machinery & equipment, electronics & electrical appliances and building materials.
Apart from the pavilion of commodity Trade, the CAEXPO also set up the Pavilion of Investment Cooperation and thhe Pavilion of Cities of Charm. The briefing conferences on the investment environment of China and the 10 ASEAN countries and other theme conferences/forums will also be held during its fair period, for promoting China-ASEAN cooperation in various fields such as investment and tourism. Via the CAEXPO, Thai businesses has further explored the Chinese market, attracted international capital and found their partners.
The 6th CAEXPO will be held on October 20-24, 2009 in Nanning, Guangxi, China. To facilitate the participation of Thai businessmen, temporary direct chartered flights between Bangkok and Nanningg will again be open during the fair period, as did in the previous years. And more transit flights between Hong Kong and Nanning, Guangzhou and Nanning will also be available. with only one hour flight, Canton fair participants may easily extend their trip to the CAEXPO.
CENTRAL PATTANA GEARS FOR FIRST OVERSEAS JV
Leading mall developer Central Pattana (CPN) will conclude a joint-venture deal with a potential Chinese partner within six to eight months, president and CEO Kobchai Chirathivat said yesterday.
A shopping mall to be located in China will be CPN's first foreign project, costing Bt4 billion to Bt5 billion and take up to three years to build.
"We see China as a huge market with tremendous business potential. There are 20 major cities there, each with more than 10 million population on average," said Kobchai.
But he declined to name which city might host the project until after a partnership deal was signed.
Kobchai said CPN had negotiated with many landlords in major Chinese cities in China for joint-venture possibilities.
"However, we want to be the major shareholder in the joint venture, because we want to manage the mall. We require a local partner with good connections to state officials and local businesses," he said.
Kobchai said CPN would develop the mall's concept to match that of the community around it.
"We want to be part of their community," said Kobchai.
Kobchai said like Thailand, China had formulated a policy of attracting foreign investors, particularly in the trading and retail sectors. However, the Chinese government allows foreign investors to own more than half of a joint venture.
"We'll select a location with less competition and in which we can lead the market," said Kobchai, adding that the move was in line with CPN's strategy of dominating the shopping-centre market in each location it entered.
"We've been conducting a market-feasibility in China for five years now. Before that, we delayed our plans in the wake of the 1997 financial crisis.
Kobchai said CPN would also spend Bt8 billion to Bt9 billion to develop new shopping centres domestically next year, including on Rama IX Road.
A shopping mall to be located in China will be CPN's first foreign project, costing Bt4 billion to Bt5 billion and take up to three years to build.
"We see China as a huge market with tremendous business potential. There are 20 major cities there, each with more than 10 million population on average," said Kobchai.
But he declined to name which city might host the project until after a partnership deal was signed.
Kobchai said CPN had negotiated with many landlords in major Chinese cities in China for joint-venture possibilities.
"However, we want to be the major shareholder in the joint venture, because we want to manage the mall. We require a local partner with good connections to state officials and local businesses," he said.
Kobchai said CPN would develop the mall's concept to match that of the community around it.
"We want to be part of their community," said Kobchai.
Kobchai said like Thailand, China had formulated a policy of attracting foreign investors, particularly in the trading and retail sectors. However, the Chinese government allows foreign investors to own more than half of a joint venture.
"We'll select a location with less competition and in which we can lead the market," said Kobchai, adding that the move was in line with CPN's strategy of dominating the shopping-centre market in each location it entered.
"We've been conducting a market-feasibility in China for five years now. Before that, we delayed our plans in the wake of the 1997 financial crisis.
Kobchai said CPN would also spend Bt8 billion to Bt9 billion to develop new shopping centres domestically next year, including on Rama IX Road.
PM'S AWARDS GO TO 34 OUTSTANDING EXPORT FIRMS
Thai exporters who won this year's Prime Minister's Awards say creativity, packaging development and social responsibility have been vital for their business success amid the global economic downturn.
Prime Minister Abhisit Vejjajiva yesterday rewarded 34 outstanding exporters with 40 of the prestigious awards in a ceremony at Government House.
Abhisit said he strongly believed Thai exports would soon return to positive growth, because there were good signs of economic recovery in many countries.
"Exports in the fourth quarter should increase, and that will result in a lower fall in export growth, averaging a 10-per-cent contraction for the full year," he said.
The prime minister said economic growth dropped 4.5 per cent year on year in the second quarter. However, he is confident the economy will recover in the second half and that Thailand's economic growth will contract only 3-4 per cent for the full year.
To ensure smooth export growth, Abhisit said the government would tighten collaboration between government agencies and support creative economic policies as keys to promoting a higher value for exports.
This year's PM Awards were made in five categories. Five companies were named Best Exporterl; five firms were recognised for Thai-Owned Brands; two awards were made to Best Service Providers; five awards were made for Otop Export Recognition; and 23 awards went to 19 firms for Design Excellence.
Thammasak Jittimaporn, managing director of Green Spot, which won a Best Exporter award, said despite some negative factors, including the strengthening of the baht and slowing economic growth, the company's exports still increased 20 per cent in the first half.
Moreover, the firm has contracted soybean farmers in the North as a strategy to lower fluctuations in world soybean prices, as well as support Thai farmers.
Pakinee Jiwattanapaiboon, marketing and research and development manager of Xongdur Thai Organic Food, which won a PM's Award for Otop Export Recognition, said his firm created and launched new products, with good packaging design, every six months.
Healthy food products are on high demand, and the company has set up many training programmes for its contract farmers, so they can better understand organic farming systems, she said. "The company's turnover has increased 30 per cent year on year despite the global economic downturn," Pakinee said.
Dhanabadee Art Ceramic won a PM's Award for Design Excellence. Managing director Panasin Dhanabadesakul said his firm had spent 5 per cent of its revenue of Bt65 million on innovations.
The company also adds valued to its products by adapting local wisdom and raw materials for its design creativity.
Bangkok International Preparatory and Secondary School was named one of the country's Best Service Providers. Headmaster Keith Wecker said the school concentrated on increasing opportunities for Thai students to study international progrkammes by setting medium fees.
Normally, international schools charge Bt600,000 to Bt700,000 per year, but Bangkok Prep's fees are Bt250,000 to Bt400,000 for three semesters.
Napatr Morin, director of Tia Ngee Hiang, a producer of processed food, meat and rice crackers under the Chaosua brand, said his firm won a Thai-Owned Bran Award by focusing on creating brand recognition and quality development.
Prime Minister Abhisit Vejjajiva yesterday rewarded 34 outstanding exporters with 40 of the prestigious awards in a ceremony at Government House.
Abhisit said he strongly believed Thai exports would soon return to positive growth, because there were good signs of economic recovery in many countries.
"Exports in the fourth quarter should increase, and that will result in a lower fall in export growth, averaging a 10-per-cent contraction for the full year," he said.
The prime minister said economic growth dropped 4.5 per cent year on year in the second quarter. However, he is confident the economy will recover in the second half and that Thailand's economic growth will contract only 3-4 per cent for the full year.
To ensure smooth export growth, Abhisit said the government would tighten collaboration between government agencies and support creative economic policies as keys to promoting a higher value for exports.
This year's PM Awards were made in five categories. Five companies were named Best Exporterl; five firms were recognised for Thai-Owned Brands; two awards were made to Best Service Providers; five awards were made for Otop Export Recognition; and 23 awards went to 19 firms for Design Excellence.
Thammasak Jittimaporn, managing director of Green Spot, which won a Best Exporter award, said despite some negative factors, including the strengthening of the baht and slowing economic growth, the company's exports still increased 20 per cent in the first half.
Moreover, the firm has contracted soybean farmers in the North as a strategy to lower fluctuations in world soybean prices, as well as support Thai farmers.
Pakinee Jiwattanapaiboon, marketing and research and development manager of Xongdur Thai Organic Food, which won a PM's Award for Otop Export Recognition, said his firm created and launched new products, with good packaging design, every six months.
Healthy food products are on high demand, and the company has set up many training programmes for its contract farmers, so they can better understand organic farming systems, she said. "The company's turnover has increased 30 per cent year on year despite the global economic downturn," Pakinee said.
Dhanabadee Art Ceramic won a PM's Award for Design Excellence. Managing director Panasin Dhanabadesakul said his firm had spent 5 per cent of its revenue of Bt65 million on innovations.
The company also adds valued to its products by adapting local wisdom and raw materials for its design creativity.
Bangkok International Preparatory and Secondary School was named one of the country's Best Service Providers. Headmaster Keith Wecker said the school concentrated on increasing opportunities for Thai students to study international progrkammes by setting medium fees.
Normally, international schools charge Bt600,000 to Bt700,000 per year, but Bangkok Prep's fees are Bt250,000 to Bt400,000 for three semesters.
Napatr Morin, director of Tia Ngee Hiang, a producer of processed food, meat and rice crackers under the Chaosua brand, said his firm won a Thai-Owned Bran Award by focusing on creating brand recognition and quality development.
EXPORTERS SEEK TAX CUTS FOR REST OF YEAR
The government has been urged to cut withholding and income taxes applying to exporters as an urgent measure to boost export growth in the remaining months of 2009.
The call was made yesterday by exporters themselves, saying that proposed cuts to import duties may be ineffective in bolstering export growth in all sectors.
Next week the Commerce Ministry is to propose a cut in import duties to the Cabinet, as a measure to promote export growth in the second half of the year. The measure was suggested earlier by 23 trade associations.
However, Thai Garment Manufacturers Association secretary-general Wallop Vitanakorn said that import tariffs for his industry were already very low. Only 1-per-cent import duty is payable on yarn and 5 per cent on fabric. Import tariffs on machinery for the indystry are also only 1 per cent, he said.
The Asean-China Free Trade Agreement will also abolish import taxes on textile and fabric imports next year.
To ensure that the government's support measures will help all industrial sectors, the government should cut withholding taxes for all exporters from 3 per cent to 1 per cent instead of cutting import duties, he said.
Although the Finance Ministry may lose some income, it should not face any legal difficulties in cutting withholding taxes to give the export sector temporary help for the remaining month of the year, Wallop said.
He also called for the government to reduce company income taxes from 30 per cent to 25 or 28 per cent for exporters, because high tax collections were part of the burden being carried by exporters.
Wallop said the government had already reduced income taxes for stocl-marketing investors. It should also consider cutting taxes for the export sector, which was a major engine driving Thailand's economic growth.
In addition, to increase liquidity for small- and medium-sizes enterprises (SMEs), Wallop called for government-owned banks to relax the qualifications required for loan finance.
For example, government banks should lower their collateral or mortgage security requirements from 80 to 100 per cent of total loan value to less than 50 per cent for SMEs.
Thai Frozen Foods Association president Panisual Jamnanwej said that in this industry, import tariffs were major burden only for shrimp exporters.
He suggested that the government should consider cutting import tariffs on shrimp feed because this was a major cost of production for shrimp exporters.
To ensure smooth export growth, the government should stabilise the exhcange rate, as the baht's apprecition had caused difficulties for exporters' competitiveness, he said.
A Commerce Ministry source said the Commerce and Finance Ministries had agreed that, instead of cutting taxes related to imports, they should seek new measures that could be implemented more rapidly.
"The ministry has asked exporters from each tradle association to send their opinions, and on which products they want the government to cut import duties. Responses will be returned to the ministry this week for passing on for the Cabinet's approval, as an urgent measure to lower the burden on exporters," the source said.
Previously, a proposal to cut related import tariffs to help exporters was rejected by the Finance Ministry as it involved legal changes.
Nevertheless, the source said cuts to import tariffs should be implemented within a month of receiving Cabinet's approval. This would ensure that exports could return to positive growth next month or in October.
This would help to avoid a drop in exports earlier projected at a contraction of 18 to 20 per cent, and would mean a drop of only 10 to 13 per cent for the entire year, the source said.
The call was made yesterday by exporters themselves, saying that proposed cuts to import duties may be ineffective in bolstering export growth in all sectors.
Next week the Commerce Ministry is to propose a cut in import duties to the Cabinet, as a measure to promote export growth in the second half of the year. The measure was suggested earlier by 23 trade associations.
However, Thai Garment Manufacturers Association secretary-general Wallop Vitanakorn said that import tariffs for his industry were already very low. Only 1-per-cent import duty is payable on yarn and 5 per cent on fabric. Import tariffs on machinery for the indystry are also only 1 per cent, he said.
The Asean-China Free Trade Agreement will also abolish import taxes on textile and fabric imports next year.
To ensure that the government's support measures will help all industrial sectors, the government should cut withholding taxes for all exporters from 3 per cent to 1 per cent instead of cutting import duties, he said.
Although the Finance Ministry may lose some income, it should not face any legal difficulties in cutting withholding taxes to give the export sector temporary help for the remaining month of the year, Wallop said.
He also called for the government to reduce company income taxes from 30 per cent to 25 or 28 per cent for exporters, because high tax collections were part of the burden being carried by exporters.
Wallop said the government had already reduced income taxes for stocl-marketing investors. It should also consider cutting taxes for the export sector, which was a major engine driving Thailand's economic growth.
In addition, to increase liquidity for small- and medium-sizes enterprises (SMEs), Wallop called for government-owned banks to relax the qualifications required for loan finance.
For example, government banks should lower their collateral or mortgage security requirements from 80 to 100 per cent of total loan value to less than 50 per cent for SMEs.
Thai Frozen Foods Association president Panisual Jamnanwej said that in this industry, import tariffs were major burden only for shrimp exporters.
He suggested that the government should consider cutting import tariffs on shrimp feed because this was a major cost of production for shrimp exporters.
To ensure smooth export growth, the government should stabilise the exhcange rate, as the baht's apprecition had caused difficulties for exporters' competitiveness, he said.
A Commerce Ministry source said the Commerce and Finance Ministries had agreed that, instead of cutting taxes related to imports, they should seek new measures that could be implemented more rapidly.
"The ministry has asked exporters from each tradle association to send their opinions, and on which products they want the government to cut import duties. Responses will be returned to the ministry this week for passing on for the Cabinet's approval, as an urgent measure to lower the burden on exporters," the source said.
Previously, a proposal to cut related import tariffs to help exporters was rejected by the Finance Ministry as it involved legal changes.
Nevertheless, the source said cuts to import tariffs should be implemented within a month of receiving Cabinet's approval. This would ensure that exports could return to positive growth next month or in October.
This would help to avoid a drop in exports earlier projected at a contraction of 18 to 20 per cent, and would mean a drop of only 10 to 13 per cent for the entire year, the source said.
Phuket land holdings all legal, office insists
The Phuket Land Office says it is unable to determine if any land on the resort island is registered on behalf of foreigners in the name of proxies.
However, an executive at the office,who asked not to be named, yesterday said the office could confirm that all land on the island was legally owned by Thais.
He said all land title deeds had been issued legally.
The Thailand Research Fund released a research paper on Sunday in which it claimed about 90% of beach property in Phuket was controlled by foreigners through their Thai proxies.
It said foreigners' land holdings in Phuket were the most concentrated on Patong and Rawai beaches.
Foreigners were also said to control most of the land in prime tourism areas in Chiang Mai and Rayong provinces.
Local officials and legal experts have helped clear the way for foreign investors to take control of the country's rice farms and property in resort provinces,the research found.
The official at the Phuket Land Office said about 140,000 land title deeds had been issued for land in Phuket. About 90,000 of these were for land in Muang district, up to 40,000 in Thalang district and about 12,000 deeds in Kathu district,which covers Patong.
Patong deputy mayor Chairat Sukkhabal said all land ownership in his municipality was legal.
"I insist that in Patong, Thai nationals own 98% of beach land, while the other 2% is co-owned by Thais and foreigners," he said.
Mr Chairat said most hotels in Patong were owned by local well-to-do families,such as the Ekwanichs, Yitengs, Pachanthabuts, Keesins, Somnams, Jirayus and Tantiwits.
All land on Patong beach belongs to Thais, he said, but some foreigners had married Thais and started up tourism businesses on the land together.
"They [foreigners who have married Thais] have the right to do this. They can develop the land into business premises, but they cannot take the land away.
"Thai shareholders are required to take part in the management of the businesses they co-own."
Prices of land in Patong municipality,a popular tourist attraction in Phuket,are just as high as they are in the Silom and Sukhumvit areas in Bangkok, Mr Chairat said.
Investors in Patong tended to put their money into hospitality businesses,ranging from restaurants and beer bars to hotels.
The officer at the land office said land in the Patong area was priced at more than 80,000 baht a square wah,or over 30 million baht a rai. All the land in prime areas such as Thaweewong Road and on Patong beach had been scooped up.
However, an executive at the office,who asked not to be named, yesterday said the office could confirm that all land on the island was legally owned by Thais.
He said all land title deeds had been issued legally.
The Thailand Research Fund released a research paper on Sunday in which it claimed about 90% of beach property in Phuket was controlled by foreigners through their Thai proxies.
It said foreigners' land holdings in Phuket were the most concentrated on Patong and Rawai beaches.
Foreigners were also said to control most of the land in prime tourism areas in Chiang Mai and Rayong provinces.
Local officials and legal experts have helped clear the way for foreign investors to take control of the country's rice farms and property in resort provinces,the research found.
The official at the Phuket Land Office said about 140,000 land title deeds had been issued for land in Phuket. About 90,000 of these were for land in Muang district, up to 40,000 in Thalang district and about 12,000 deeds in Kathu district,which covers Patong.
Patong deputy mayor Chairat Sukkhabal said all land ownership in his municipality was legal.
"I insist that in Patong, Thai nationals own 98% of beach land, while the other 2% is co-owned by Thais and foreigners," he said.
Mr Chairat said most hotels in Patong were owned by local well-to-do families,such as the Ekwanichs, Yitengs, Pachanthabuts, Keesins, Somnams, Jirayus and Tantiwits.
All land on Patong beach belongs to Thais, he said, but some foreigners had married Thais and started up tourism businesses on the land together.
"They [foreigners who have married Thais] have the right to do this. They can develop the land into business premises, but they cannot take the land away.
"Thai shareholders are required to take part in the management of the businesses they co-own."
Prices of land in Patong municipality,a popular tourist attraction in Phuket,are just as high as they are in the Silom and Sukhumvit areas in Bangkok, Mr Chairat said.
Investors in Patong tended to put their money into hospitality businesses,ranging from restaurants and beer bars to hotels.
The officer at the land office said land in the Patong area was priced at more than 80,000 baht a square wah,or over 30 million baht a rai. All the land in prime areas such as Thaweewong Road and on Patong beach had been scooped up.
THAI UNION URGES GOVT TO PURSUE FTA WITH EU
Thailand's leading canned and seafood exporter, Thai Union Frozen Products, has urged the government to strengthen exporters' competitiveness by going ahead with bilateral free-trade negotiations with the European Union.
Company president Thiraphong Chansiri said Thailand should move ahead on trade liberalisation with the EU to facilitate market access for Thai foods. So far, Thai foods are subjected to high import tariffs compared with other export rivals in the EU.
"Thai food enterprises have reaped the highest benefit from the FTA's low tariff. The government should consider continuing bilateral trade talks with the EU under the Asean-EU FTA," he said.
Exports of Thai canned tuna to the EU is subject to 24-per-cent export tariff, while other export rivals such as the African, Caribbean and the Pacific Group of States (ACP) and Andean countries have enjoyed a zero per cent tariff rate.
Thiraphong said that if the government can negotiate for lower rates to halve the current import tariff, Thai exporters should be able to boost export share in the market.
He also called for the government to talk to EU countries about increasing market access for sardine and mackerel exports due to their high export potential overseas.
In addition, the company is expecting other bilateral trade pacts, including with Japan, to rapidly pave the way for higher export growth of agricultural and fishery products.
However, he called on the government to issue early warning about rising non-tariff barriers as it could hamper export growth of the Kingdom, despite having FTAs.
Nuntawan Sakuntanaga, director-general of the Trade Negotiations Department, said that talks with the EU under the Asean framework had been suspended due to varying levels of interest among Asean member states.
However, due to the lack of a clear policy to pursue bilateral talks, the department is waiting for the government's mandate on further negotiations.
The EU strongly wants to press ahead with a bilateral free-trade pact with Thailand and some countries in Asean as it foresees high potential for market access.
Company president Thiraphong Chansiri said Thailand should move ahead on trade liberalisation with the EU to facilitate market access for Thai foods. So far, Thai foods are subjected to high import tariffs compared with other export rivals in the EU.
"Thai food enterprises have reaped the highest benefit from the FTA's low tariff. The government should consider continuing bilateral trade talks with the EU under the Asean-EU FTA," he said.
Exports of Thai canned tuna to the EU is subject to 24-per-cent export tariff, while other export rivals such as the African, Caribbean and the Pacific Group of States (ACP) and Andean countries have enjoyed a zero per cent tariff rate.
Thiraphong said that if the government can negotiate for lower rates to halve the current import tariff, Thai exporters should be able to boost export share in the market.
He also called for the government to talk to EU countries about increasing market access for sardine and mackerel exports due to their high export potential overseas.
In addition, the company is expecting other bilateral trade pacts, including with Japan, to rapidly pave the way for higher export growth of agricultural and fishery products.
However, he called on the government to issue early warning about rising non-tariff barriers as it could hamper export growth of the Kingdom, despite having FTAs.
Nuntawan Sakuntanaga, director-general of the Trade Negotiations Department, said that talks with the EU under the Asean framework had been suspended due to varying levels of interest among Asean member states.
However, due to the lack of a clear policy to pursue bilateral talks, the department is waiting for the government's mandate on further negotiations.
The EU strongly wants to press ahead with a bilateral free-trade pact with Thailand and some countries in Asean as it foresees high potential for market access.
PTTEP MAY NEED 50 DAYS TO PLUG TIMOR SEA RIG
PTT Exploration and Production said it might take 50 days to stop an oil and gas leak off northwest Australia as marine authorities fight to prevent the slick harming migratory whales and breeding turtles.
PTT may move a rig from Singapore to plug a well leaking 3,500 metres beneath the seabed, said Jose Martins, a director of the Thai company's Australian unit.
Oil, gas and condensate started seeping into the Timor Sea last Friday from the West Atlas drilling rig.
Australia's decision this week on whether to approve Chevron Corp's A$50 billion (Bt1.4 trillion) Gorgon liquefied natural gas project to the south won't be influenced by the spill, environment minister Peter Garrett said yesterday.
The leak has caused a 30-kilometre light-oil slick off the Kimberley, a region Tourism Australia describes as "one of the world's last true wilderness areas."
The incident is "potentially going to bring a bit of attention on itself and on the industry," said Peter Arden, a Melbourne-based mining analyst at Ord Minnett, an affiliate of JPMorgan Chase. "Most of the big guys do their work very carefully because they just can't afford a headline like this."
PTT, Thailand's only publicly traded exploration company, rose Bt7.00 to close at Bt244.00 and its subsidiary PTT Exploration and Production edged up Bt1.00 to Bt142.00 as crude oil traded near a 10-month high.
The company will pay for the cost of dispersing the slick, PTTEP Australasia's Martins said in Perth on Sunday.
He declined to comment on the risk of the West Atlas rig catching fire, what caused the leak, how much oil or gas may be flowing out, or the related costs. All 69 crew were evacuated on Friday.
"MARINE SUPERHIGHWAY"
The area has been dubbed a "marine superhighway", Australian Greens marine spokeswoman Senator Rachel Siewert said on Sunday. "There are populations of baby turtles this time of year, and the area also serves as a migrator route for whales and other marine life."
The slick is drifting away from the mainland in a northwesterly direction and unlikely to reach the coastline, Western Australia Premier Colin Barnett said yesterday.
It may still affect the Ashmore Reef, about 840 kilometres west of Darwin and 610 kilometres north of Broome, he said.
The reef is regarded by the government as a "biodiversity hotspot" because it intersects the bio-geogrphical regions of Australia and Southeast Asia.
PTT may move a rig from Singapore to plug a well leaking 3,500 metres beneath the seabed, said Jose Martins, a director of the Thai company's Australian unit.
Oil, gas and condensate started seeping into the Timor Sea last Friday from the West Atlas drilling rig.
Australia's decision this week on whether to approve Chevron Corp's A$50 billion (Bt1.4 trillion) Gorgon liquefied natural gas project to the south won't be influenced by the spill, environment minister Peter Garrett said yesterday.
The leak has caused a 30-kilometre light-oil slick off the Kimberley, a region Tourism Australia describes as "one of the world's last true wilderness areas."
The incident is "potentially going to bring a bit of attention on itself and on the industry," said Peter Arden, a Melbourne-based mining analyst at Ord Minnett, an affiliate of JPMorgan Chase. "Most of the big guys do their work very carefully because they just can't afford a headline like this."
PTT, Thailand's only publicly traded exploration company, rose Bt7.00 to close at Bt244.00 and its subsidiary PTT Exploration and Production edged up Bt1.00 to Bt142.00 as crude oil traded near a 10-month high.
The company will pay for the cost of dispersing the slick, PTTEP Australasia's Martins said in Perth on Sunday.
He declined to comment on the risk of the West Atlas rig catching fire, what caused the leak, how much oil or gas may be flowing out, or the related costs. All 69 crew were evacuated on Friday.
"MARINE SUPERHIGHWAY"
The area has been dubbed a "marine superhighway", Australian Greens marine spokeswoman Senator Rachel Siewert said on Sunday. "There are populations of baby turtles this time of year, and the area also serves as a migrator route for whales and other marine life."
The slick is drifting away from the mainland in a northwesterly direction and unlikely to reach the coastline, Western Australia Premier Colin Barnett said yesterday.
It may still affect the Ashmore Reef, about 840 kilometres west of Darwin and 610 kilometres north of Broome, he said.
The reef is regarded by the government as a "biodiversity hotspot" because it intersects the bio-geogrphical regions of Australia and Southeast Asia.
Tilapia exports to be promoted
The Fishery Department plans to launch a three-year strategic plan to promote the tilapia - known in Thailand as pla nil - as a new export item.The plan, to be implemented from 2010 to 2012, aims at upgrading tilapia farms to international standards and increasing production to about 300,000 tonnes a year, of which 50,000 tonnes would be exported to Japan, Europe,the United States and the Middle East.
Tilapia has become a popular aquaculture product as health concerns have increased demand for white rather than red fish meat.
Improving tilapia farming is part of the government's Strong Thailand strategy of investing in various industries to enhance production facilities, said Jirawan Yamprayoon, a deputy directorgeneral of the department.
The department is expected to receive a budget of about 380 million baht from the Strong Thailand scheme to run the tilapia project.
The department will meet with farmers, exporters and related parties on Thursday before drafting strategic plans for the tilapia industry, said Dr Jirawan.
Co-operation contracts, including contract farming for the Thai Frozen Food Association to supply quality tilapia for export, are being opened to interested parties. The first agreement covers farmers in Chon Buri and members of the association.
The export market for tilapia has been very competitive in recent years due largely to lower-priced products from China and Vietnam, said Poj Aramwattananont, honorary adviser to the Thai Frozen Food Association.
To avoid a price war with these two countries, Thai processors should focus on the premium market, where Indonesia is a key player, shipping processed fish,fillets or tailored meat rather than raw frozen fish. To compete in export markets,farmers should increase yields and ensure the flesh of their tilapia has no muddy smell, he said.
Tilapia have been raised in many provinces. The average yield per rai is 490 kilogrammes.
Tilapia has become a popular aquaculture product as health concerns have increased demand for white rather than red fish meat.
Improving tilapia farming is part of the government's Strong Thailand strategy of investing in various industries to enhance production facilities, said Jirawan Yamprayoon, a deputy directorgeneral of the department.
The department is expected to receive a budget of about 380 million baht from the Strong Thailand scheme to run the tilapia project.
The department will meet with farmers, exporters and related parties on Thursday before drafting strategic plans for the tilapia industry, said Dr Jirawan.
Co-operation contracts, including contract farming for the Thai Frozen Food Association to supply quality tilapia for export, are being opened to interested parties. The first agreement covers farmers in Chon Buri and members of the association.
The export market for tilapia has been very competitive in recent years due largely to lower-priced products from China and Vietnam, said Poj Aramwattananont, honorary adviser to the Thai Frozen Food Association.
To avoid a price war with these two countries, Thai processors should focus on the premium market, where Indonesia is a key player, shipping processed fish,fillets or tailored meat rather than raw frozen fish. To compete in export markets,farmers should increase yields and ensure the flesh of their tilapia has no muddy smell, he said.
Tilapia have been raised in many provinces. The average yield per rai is 490 kilogrammes.
Nominee ownership under watch
The Lands Department has joined the Business Development Department in checking the shareholding structures of companies suspected of holding land plots and having exceeded the foreign shareholding limit, according to Anuwat Maytheewibulwut, the Lands Department's director-general.
By law, a company that owns land must not have foreign nationals holding more than 49% of its shares.
"We (the two departments) check them annually in June," he said."If we find anything unusual, we will ask the department to check the changes in its shareholding structure."
If the investigation reveals that the firm holding the land have an illegal shareholding structure, the Lands Department will ask it to transfer the plots within 180 to 365 days.
Recently, the Lands Department found a company in Phuket whose foreign ownership exceeded the legal limit.
The firm had formerly registered with a legal ownership - with foreigners holding a 49% stake and Thais the balance.However, it later increased its capital,with foreign nationals taking up all new shares, making it ineligible to own land.After the department learned about this case, it took action to have the firm transfer the land it owned.
Over the past five years, the department forced companies whose foreign ownerships exceed the legal limit to transfer 28 plots, said Mr Anuwat.
To prevent further incidents, all lands offices nationwide are told to check every new transaction or registration, a tall order given the more than 31 million plots in the country, he said.
"Whenever we learn about it or get information from other agencies or court orders, we will check it out. The government already notified us on the issue of illegal shareholding by foreigners. We're ready to handle this issue," the directorgeneral added.
Patima Jeerapaet, chairman of the property committee of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), suggested the government establish a new agency or upgrade the current ones to promote agricultural investment legally, the same way the Board of Investment was set up to promote industrial investment.
"Let's attract them [foreign investors]to do it within the proper legal framework," he said."It's not disastrous that they enter to invest but they should do it right and legally. The thing is, do they know our laws?"
Mr Patima said trying to block overseas investment in Thai agricultural land, especially from the Middle East where food supplies were scarce, was next to impossible."I was approached by Thai landlords asking me to seek foreign investors to buy their farm land," said Mr Patima, who is also the managing director of Colliers International Thailand.
"They said they had 5,000 rai of farm land to sell. They hope to get good prices from foreign buyers. How can we or the government prevent this?"
In his view, Thais will stand to gain from more jobs and higher incomes if overseas investors are allowed to invest in farm land. They can also learn new technology from foreigners.
By law, a company that owns land must not have foreign nationals holding more than 49% of its shares.
"We (the two departments) check them annually in June," he said."If we find anything unusual, we will ask the department to check the changes in its shareholding structure."
If the investigation reveals that the firm holding the land have an illegal shareholding structure, the Lands Department will ask it to transfer the plots within 180 to 365 days.
Recently, the Lands Department found a company in Phuket whose foreign ownership exceeded the legal limit.
The firm had formerly registered with a legal ownership - with foreigners holding a 49% stake and Thais the balance.However, it later increased its capital,with foreign nationals taking up all new shares, making it ineligible to own land.After the department learned about this case, it took action to have the firm transfer the land it owned.
Over the past five years, the department forced companies whose foreign ownerships exceed the legal limit to transfer 28 plots, said Mr Anuwat.
To prevent further incidents, all lands offices nationwide are told to check every new transaction or registration, a tall order given the more than 31 million plots in the country, he said.
"Whenever we learn about it or get information from other agencies or court orders, we will check it out. The government already notified us on the issue of illegal shareholding by foreigners. We're ready to handle this issue," the directorgeneral added.
Patima Jeerapaet, chairman of the property committee of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), suggested the government establish a new agency or upgrade the current ones to promote agricultural investment legally, the same way the Board of Investment was set up to promote industrial investment.
"Let's attract them [foreign investors]to do it within the proper legal framework," he said."It's not disastrous that they enter to invest but they should do it right and legally. The thing is, do they know our laws?"
Mr Patima said trying to block overseas investment in Thai agricultural land, especially from the Middle East where food supplies were scarce, was next to impossible."I was approached by Thai landlords asking me to seek foreign investors to buy their farm land," said Mr Patima, who is also the managing director of Colliers International Thailand.
"They said they had 5,000 rai of farm land to sell. They hope to get good prices from foreign buyers. How can we or the government prevent this?"
In his view, Thais will stand to gain from more jobs and higher incomes if overseas investors are allowed to invest in farm land. They can also learn new technology from foreigners.
TIME HAS COME FOR ASIA TO FORGET THE US MARKET, LOOK TO ITS HOME POTENTIAL
Believe all the optimistic economic recovery forecasts if you will, but, according to Nobel laureate Joseph Stiglitz, the thrill ride has just begun. Excerpts from his interview with The Nation editor-in-chief Suthichai Yoon, the first in a two-part series:
Professor, you always sound quite pessimistic about recovery of the American economy. Why so?
Well, I'm optimistic that the worst is over. We had this complete credit contraction but that part is over. Question is whether we will be quickly on a robust road. I'm pessimistic about that. Even if banks keep recapitalised, they will have learned their lessons, so they won't be lending so recklessly. And so the debt-based US growth model is over, at least for a while. And that means that we will have a shortfall.
More savings are only good for the long run. But then we have to ask what's going to make up for the reduction in consumption. And investment won't do it because investment won't come in if consumption is weak. Export can't do it if the global economy if weak. Government is filling the gap for a while but we had too big a deficit, and many people say we can't continue on the basis of deficit spending like that.
So, when you look at all categories, there's no basis for a robust recovery until the rest of the world gets going and until we can do some restructuring at home.
Do you think the Asian and American economies can be decoupled?
Growth in the past in Asia was heavily dependent on exports to the US. But it's more decoupled now. Asia can rely on itself for increase in demand. You can't rely on the American market. You have no choice. You have huge domestic potential, large population base, people saving very heavily, and large demand for investment. You have all the ingredients for a strong aggregate demand. You have a reservoir of savings that can help finance that demand. So, yes, it's very clear that you now have a diversified production base, not just producing textiles. So why not? Every reason for Asian growth to feed on itself.
Do we need to do anything more to be really independent?
All the economies in East Asia were export-oriented, even China's, or especially China's. You are export-oriented to America. If you become more oriented to regional growth, that will take some changes of structure.
The goods you produce may not be the same goods as the ones for the American market. With necessary changes, it can happen relatively quickly.
China and India - are they competitors, rivals, or are they friends?
I think that right now they have a high degree of complementarity. China has been into more manufacturing, while India outsourcing and hi-tech. So, right now they are going on two different bases. But in the future there will be more overlaps. India does want to begin doing more manufacturing and China wants to do more of the outsourcing. But I think it is quite similar (between Europe and America). They have developed in the same areas with different competencies. Take automobiles. Europe has developed hi-tech automobiles - Mercedes or BMW- while America's gone for more big cars.
That's an example of what we call product differentiation and the large market in Asia can provide that kind of differentiation. So in my mind I see that as an increasing richness of the economies.
Asean, China, India - can they form a triangle that could really make Asia less dependent on America and Europe?
Yes. Very much so. Now they have been developing the knowledge-base that will be able to provide some innovations and dynamic properties that will enable them to close the gap.
How about Thailand and its chances of recovery?
Well, I have been coming to Thailand now for 40-42 years and I've seen marvellous changes. The bouncing back from the previous crisis was very impressive. I think that it will probably recover robustly. Obviously, part of this will depend on (what happens globally).
Is it still a V-shaped situation?
Nobody is talking about V. Most people think it will be some version of a W, which means whenever we recover, it will get worse again. That's most likely and the debate right now is whether the next down-leg occurs in 2010 or 2011. Very few people are seeing a robust recovery by America.
The news is overall not good but it isn't a surprise. You see, they say the stock market does well. Well, yes, but that's used for gambling. You've got a real indicator and that is consumers' spending, which is just as previously predicted- weak. And even the positive news is negative. For instance, profits are up, but why are profits up? Because companies are doing a better job at cost-cutting. What does that mean? They're firing workers. So, profits are up because they fire workers.
And the enthusiasm that the increase in the number of unemployed is only a quarter million ... in normal time that would have been a disaster. Things are so bad that when people are losing a quarter million jobs, we think things are good.
So when we look at it things are better than they were, the worst, but unless growth is 3 per cent, unemployment will jump. All the standard forecasts are seeing unemployment increasing to well-over 10 per cent.
Now it's 9.3 per cent. But those numbers may not be good measures. Sometimes unemployment rates go down because people get so discouraged they don't even look for jobs. We have good measures that include those who get discouraged from working or working part-time because they can't find a job. That brings it to over 15 per cent. So one in six people can't get a job, or full-time work.
So, how can we see a recovery when employment goes up?
Exactly, the administration is saying recession is over and what they mean is the growth has become positive. For most citizens, they don't feel it, because what they mean is: can I get a job and am I getting paid well?
And if the employment is going up, wages are going to be stagnant and insecurity is going to be high. Here in America if you lose your jobs you lose your health insurance. So, if you lose your job, you lose your home and you lose your health insurance, that's a disaster.
Most Americans live in this state of precariousness of not knowing whether tomorrow they will get a pink slip meaning they are fired. And with that everything's over.
How much confidence do you have in President Obama?
Stiglitz: Well, I have confidence in his heart. He's been subjected to enormous political forces. Unfortunately, the financial market, which brought on this crisis, has played a disproportionate role in designing the strategy for dealing with this crisis. The special interests are dominating financial policy and are now dominating the healthcare insurance.
Are his advisers to blame?
Decision was made early on that we needed to get somebody with the confidence of the financial market. But the problem was the financial market had done so badly it didn't [have] the confidence of the rest of America. So [when] you've got somebody who's got the confidence of the financial market, you almost by nature [have] lost public confidence.
What did they do with the bail-out money? They used it to pay bonuses. They used it to pay out dividends. They didn't use it to lend.
So why didn't Obama take the appropriate action when he knew in his heart that he was spending his taxpayers' money to bail out the rich, the Wall Street people?
Just speculating here. I think that at the time, he thought if he could get the financial market fixed, the economy will be fixed and if the economy is fixed, all will be forgiven even if it was unfair. If you fix the financial market, you will fix the economy and you will get away with murder.
To me it is very clear that the financial market is only part of the problem. So even fixing it still leaves underlying problems. Illness in the financial market runs deeper than much of the financial market cares to admit. To me, throwing money at the financial market will lead not to lending but to the exact kind of behaviour that we had seen.
What would you have advised the president if you could?
I would have said simply "Play by the rules of capitalism". The rules say if a bank owes more money than it can pay, go to bankruptcy. The more you have the shareholders pay, the less you have to make the taxpayers pay. If you let the shareholders off the hook then you have more problems than you can answer.
Ten years ago you [Thai people] know best about this. This is what the IMF and US treasury told you to do. And Thailand and Indonesia did that.
So this is double standard?
Very clearly double standard.
Professor, you always sound quite pessimistic about recovery of the American economy. Why so?
Well, I'm optimistic that the worst is over. We had this complete credit contraction but that part is over. Question is whether we will be quickly on a robust road. I'm pessimistic about that. Even if banks keep recapitalised, they will have learned their lessons, so they won't be lending so recklessly. And so the debt-based US growth model is over, at least for a while. And that means that we will have a shortfall.
More savings are only good for the long run. But then we have to ask what's going to make up for the reduction in consumption. And investment won't do it because investment won't come in if consumption is weak. Export can't do it if the global economy if weak. Government is filling the gap for a while but we had too big a deficit, and many people say we can't continue on the basis of deficit spending like that.
So, when you look at all categories, there's no basis for a robust recovery until the rest of the world gets going and until we can do some restructuring at home.
Do you think the Asian and American economies can be decoupled?
Growth in the past in Asia was heavily dependent on exports to the US. But it's more decoupled now. Asia can rely on itself for increase in demand. You can't rely on the American market. You have no choice. You have huge domestic potential, large population base, people saving very heavily, and large demand for investment. You have all the ingredients for a strong aggregate demand. You have a reservoir of savings that can help finance that demand. So, yes, it's very clear that you now have a diversified production base, not just producing textiles. So why not? Every reason for Asian growth to feed on itself.
Do we need to do anything more to be really independent?
All the economies in East Asia were export-oriented, even China's, or especially China's. You are export-oriented to America. If you become more oriented to regional growth, that will take some changes of structure.
The goods you produce may not be the same goods as the ones for the American market. With necessary changes, it can happen relatively quickly.
China and India - are they competitors, rivals, or are they friends?
I think that right now they have a high degree of complementarity. China has been into more manufacturing, while India outsourcing and hi-tech. So, right now they are going on two different bases. But in the future there will be more overlaps. India does want to begin doing more manufacturing and China wants to do more of the outsourcing. But I think it is quite similar (between Europe and America). They have developed in the same areas with different competencies. Take automobiles. Europe has developed hi-tech automobiles - Mercedes or BMW- while America's gone for more big cars.
That's an example of what we call product differentiation and the large market in Asia can provide that kind of differentiation. So in my mind I see that as an increasing richness of the economies.
Asean, China, India - can they form a triangle that could really make Asia less dependent on America and Europe?
Yes. Very much so. Now they have been developing the knowledge-base that will be able to provide some innovations and dynamic properties that will enable them to close the gap.
How about Thailand and its chances of recovery?
Well, I have been coming to Thailand now for 40-42 years and I've seen marvellous changes. The bouncing back from the previous crisis was very impressive. I think that it will probably recover robustly. Obviously, part of this will depend on (what happens globally).
Is it still a V-shaped situation?
Nobody is talking about V. Most people think it will be some version of a W, which means whenever we recover, it will get worse again. That's most likely and the debate right now is whether the next down-leg occurs in 2010 or 2011. Very few people are seeing a robust recovery by America.
The news is overall not good but it isn't a surprise. You see, they say the stock market does well. Well, yes, but that's used for gambling. You've got a real indicator and that is consumers' spending, which is just as previously predicted- weak. And even the positive news is negative. For instance, profits are up, but why are profits up? Because companies are doing a better job at cost-cutting. What does that mean? They're firing workers. So, profits are up because they fire workers.
And the enthusiasm that the increase in the number of unemployed is only a quarter million ... in normal time that would have been a disaster. Things are so bad that when people are losing a quarter million jobs, we think things are good.
So when we look at it things are better than they were, the worst, but unless growth is 3 per cent, unemployment will jump. All the standard forecasts are seeing unemployment increasing to well-over 10 per cent.
Now it's 9.3 per cent. But those numbers may not be good measures. Sometimes unemployment rates go down because people get so discouraged they don't even look for jobs. We have good measures that include those who get discouraged from working or working part-time because they can't find a job. That brings it to over 15 per cent. So one in six people can't get a job, or full-time work.
So, how can we see a recovery when employment goes up?
Exactly, the administration is saying recession is over and what they mean is the growth has become positive. For most citizens, they don't feel it, because what they mean is: can I get a job and am I getting paid well?
And if the employment is going up, wages are going to be stagnant and insecurity is going to be high. Here in America if you lose your jobs you lose your health insurance. So, if you lose your job, you lose your home and you lose your health insurance, that's a disaster.
Most Americans live in this state of precariousness of not knowing whether tomorrow they will get a pink slip meaning they are fired. And with that everything's over.
How much confidence do you have in President Obama?
Stiglitz: Well, I have confidence in his heart. He's been subjected to enormous political forces. Unfortunately, the financial market, which brought on this crisis, has played a disproportionate role in designing the strategy for dealing with this crisis. The special interests are dominating financial policy and are now dominating the healthcare insurance.
Are his advisers to blame?
Decision was made early on that we needed to get somebody with the confidence of the financial market. But the problem was the financial market had done so badly it didn't [have] the confidence of the rest of America. So [when] you've got somebody who's got the confidence of the financial market, you almost by nature [have] lost public confidence.
What did they do with the bail-out money? They used it to pay bonuses. They used it to pay out dividends. They didn't use it to lend.
So why didn't Obama take the appropriate action when he knew in his heart that he was spending his taxpayers' money to bail out the rich, the Wall Street people?
Just speculating here. I think that at the time, he thought if he could get the financial market fixed, the economy will be fixed and if the economy is fixed, all will be forgiven even if it was unfair. If you fix the financial market, you will fix the economy and you will get away with murder.
To me it is very clear that the financial market is only part of the problem. So even fixing it still leaves underlying problems. Illness in the financial market runs deeper than much of the financial market cares to admit. To me, throwing money at the financial market will lead not to lending but to the exact kind of behaviour that we had seen.
What would you have advised the president if you could?
I would have said simply "Play by the rules of capitalism". The rules say if a bank owes more money than it can pay, go to bankruptcy. The more you have the shareholders pay, the less you have to make the taxpayers pay. If you let the shareholders off the hook then you have more problems than you can answer.
Ten years ago you [Thai people] know best about this. This is what the IMF and US treasury told you to do. And Thailand and Indonesia did that.
So this is double standard?
Very clearly double standard.
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