Confidence falls to nine-month low

Thai consumer confidence index fell to a nine-month low last month, Thanavath Phonvichai, vice president for research at the University of the Thai Chamber of Commerce (UTCC), said on Thursday.

  • Published: 5/09/2013 at 05:04 PM
  • Newspaper section: news

Central Bangkok (Photo by Patipat Janthong)

Mr Thanavath said the confidence index slipped for the fifth consecutive month to 79.3 points in August, from 80.3 points in July.

Thailand's economy might face a slow down in the fourth quarter due to the rising cost of living following price increases for cooking gas, electricity and expressway tolls, causing a decline in consumption, he said, adding that the civil unrest in Syria might also affect the world economy.

The UTCC has lowered its economic growth forecast for this year to to 3.5 to 4.0%, from a previous projection of 4.0 to 4.5%, he said.

"The government should speed up spending allocated in its budgets, stimulate trade along border areas and promote tourism," Mr Thanavat, a respected economist, said.

"The protests staged by rubber farmers are hurting the private sector due to road blocks, which cause a loss of 100 million to 200 million baht a day. If the government fails to settle the problem in a month, this year's GDP would be reduced by 0.1%."

The price of Liquefied petroleum gas (LPG) for househoold use has risen by 50 satang per kilogramme to 18.63 baht, the fuel tariff by 7.08 satang per unit to 54 satang, and the Bangkok expressway toll rate by five baht to 50 baht for a four-wheel vehicle. 

Somkiat Tangkitvanich, president of the Thailand Development Research Institute (TDRI), said local investors are moving to Myanmar, Laos, Cambodia and Vietnam where they can enjoy export incentives for goods sold to the United States and Europe.

Somkiat: Minimum wage deters firms

Mr Somkiat said the implementation of the 300-baht daily minimum wage nationwide has also pushed some manufacturers across the border.

The government should establish special economic zones along the border to persuade firms to stay in the country by allowing them to adapt to rising costs. The zones could have special laws concerning minimum wages and foreign workers, he said.

"Special economic zones offering lower labour costs will only be short-lived because labourers always prefer working in higher-wage areas," Mr Somkiat said.

The TDRI chief emphasised the sustainability of local industry lies in the production of Thai brands and value-added goods. The state needs to step up with research and development help, he said.

Meanwhile, business leaders attending a forum on Myanmar said they are optimistic about investing in Myanmar in the long term. The forum, organised by CNBC, was held on Thursday in Bangkok.

Ken Tun, chairman & CEO of the Myanmar-based Parami Energy Group of Companies, said the market has responded very positively to the new government's introduction of an open bidding system for drilling as opposed to direct negotiations used in the past.

Over 30 companies submitted bids for 18 onshore blocks, while 61 companies applied for 30 offshore blocks.

"There's a willingness to become transparent. From a national security point of view, however, not everything has to be transparent. Maybe 80 to 90%," said Ken Tun, who also had a positive view on the 2015 elections in bringing about an improvement in regulations, contracts and frameworks.

"Everybody knows the genie is out of the lamp and doesn't want to go back, so there is no going back at all. A lot of people ask me what are the risks [of investing in Myanmar] and I tell them the biggest risk is not coming here. That is the problem," he said.

Dennis Meseroll, executive director of Tractus Asia, said one of the opportunities the company has right now in Myanmar is to help standardise the process for applying for exploring mining. 

"The mindset held over the [previous] military regime was that you went in and negotiated a deal with one person, either the military or minister. But times have changed," he said.

Sigve Brekke, executive vice president and head of Asia operations at the Norway-based Telenor Group, said the professionalism shown in the tender process for mobile operating licenses in Myanmar came as a positive surprise.

"I think the government really tried to find a company which could provide their people with services," he said.

Mr Brekke said businesses also need to see themselves in a long term perspective of 10-20 years instead of reaping profit from the market in two to three years time.

Matthew Driver, MasterCard's president for Southeast Asia, said the democratization of the country will come with the integration of financial services.

"I believe the genuine sincerity [of the government in putting in place regulations] and that's backed up by actions, but it's going to take a little while," he said.

Michael Rodgers, vice president and head of Asia Pacific at IHS Energy Insight, said the oil and gas bidding process, although not perfect, was "certainly clean enough for them [the government]".

"I would be very surprised if there wasn't some kind of corruption in the background. But I think in a certain way companies are less prone to participate in this sort of activity because ultimately it will come and bite you in the end," he said.

He acknowledged the risks of the sector, which include sectarian violence, separatist groups and landowners who are concerned about environmental impacts and whether they are getting their fair share of revenues. 

"There's a real possibility that something will disrupt the pipelines. The amount of revenue going to the government through this pipeline is going to be substantial, and if people want to disrupt it they can do it," he said.

Mr Rodgers claimed that 31% of Myanmar's export revenues is from gas production of US$3-3.5 billion per year, and will reach 40% in a decade.

According to the CIA Factbook, total exports last year were estimated at $8.53 billion.

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