Govt steps in to spur economy

Govt steps in to spur economy

Takes 'drastic' moves to curb slowdown

Two key economy-related state agencies have taken drastic measures to curb the impacts from the US-China trade war as the Thai economy slows.

The Finance Ministry is pressing state enterprises to inject 130 billion baht into their investment projects by the end of this year, while the central bank has surprised observers by shaving the policy interest rate by 25 basis points, the first cut in almost four years.

Finance Minister Uttama Savanaya said on Wednesday the ministry has told the State Enterprise Policy Office (Sepo) to speed up disbursement of an additional 130 billion baht of state enterprise investments to meet targets by the end of this year.

Sepo has also been instructed to work with other agencies to remove any hurdles to investment, Mr Uttama said.

Also, the Bank of Thailand stunned the market yesterday by following the lead of other major central banks with its rate cut effort to boost the economy.

The Monetary Policy Committee voted 5-2 to cut the benchmark rate from 1.75% to 1.5%, matching the previous level before the hike in December last year.

The committee judged the Thai economy would grow more slowly than previously projected because a contraction in exports has been hurting domestic demand.

The cabinet on Tuesday met to discuss the volatility of the global economy. Deputy Prime Minister Somkid Jatusripitak briefed the meeting on three major global issues that could adversely affect Thailand's economy -- the China-US trade war, the protests in Hong Kong which are affecting stock markets, and the depreciation of the yuan.

Mr Somkid said Thailand's economy is feeling the heat of the intensifying Chinese-US trade war, which is hitting the country's exports. However, during the past three to four years, investment in state enterprise projects has helped buoy the economy, he said.

Among the state enterprises involved in the investment push are CAT Telecom and Thailand Post. Thailand Post plans to become the logistics hub for the government's flagship Eastern Economic Corridor scheme by 2019 and also aims to become a fully automated operation by 2022.

Transport Minister Saksayam Chidchob said that Mr Somkid has issued an ultimatum to state enterprises: those that fail to invest will have their unused budget confiscated by the Finance Ministry and returned to state coffers.

Charnwit Nakburi, deputy director-general at Sepo, said this year's investment budgets of the 45 state enterprises come to 329 billion baht. Of that, some 129 billion baht or 87% was spent between October last year and June this year.

Meanwhile, Deputy Prime Minister and Commerce Minister Jurin Laksanavisit said a meeting of the state, the private sector and palm growers had agreed to a proposed price guarantee of 4 baht per kilogramme of palm nuts under a maximum quota of 25 rai per household.

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