What's new in business news: October 21, 2013

Notebook sales continue to fall, B500 foreigner fee for entry into Thailand & govt bank to borrow B140bn more for rice program.


Notebook sales continue to fall 

This year is poised to become the worst in history for Thailand's notebook market, with a 20% contraction with sales of 1.6 million units, down from the 2 million targeted

High household debt and a sluggish economy have been blamed for the sharp drop in sales. Tablets and smartphones have thrived at the expense of notebooks. At least 300 IT retail outlets have closed down this year and others are relocating their stores to cheaper locations.

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B500 foreigner fee for entry into Thailand   

The government is considering a plan to charge foreigners a 500-baht entry fee from January next year. Government officials expect the extra charge would lead to an increase in the quality of tourists entering Thailand. When reporters asked the Public Health Minister Mr Pradit if the plan could backfire and result in fewer tourist arrivals, he said the tourism ministry did not oppose the plan. The feedback from the tourism sector, however, has all been negative

Sitdiwat Cheevarattanaporn, chairman of the Association of Thai Travel Agents (Atta) said it is not a good move and not in line with the government's plan to promote tourism.  "The plan will affect the tourism industry, both in the short run and the long run, because tourists will feel bad about Thailand and they may feel they are being cheated," Mr Sitdiwat said.

Porntip Hirunket, vice chair of the Tourism Council of Thailand, said collecting entry fees from foreigners would dampen the tourism atmosphere. Authorities should do a better job of screening tourists, enforcing the existing laws and preventing tourists from being conned, she said.

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Govt bank to borrow another B140bn for rice program 

The Bank for Agriculture and Agricultural Cooperatives (BAAC) will borrow 140 billion baht with the Finance Ministry's loan guarantee to fund the 270-billion-baht budget set for the government's rice-pledging scheme for the current harvest year. The remaining 130 billion baht will come from rice sales from the state stockpile. The borrowing is possible because the Finance Ministry still has some room to guarantee the loans. By law, the ministry can guarantee loans for the state-owned bank up to six times its capital fund, or around 600 billion baht.

The government has also capped the debt incurred from running the scheme at 500 billion baht by the end of 2014. This means the Commerce Ministry needs to sell at least 270 billion baht worth of rice from the stockpile to achieve the target. Over the past two harvest years, the BAAC spent 179 billion baht on top of the 500-billion-baht budget to fund the scheme and all 679 billion baht was transferred to 4.2 million farmers through the BAAC's accounts. The BAAC has to date been repaid 130 billion baht by the Commerce Ministry, which is in charge of rice sales. The remaining 49 billion baht has yet to be repaid. The cabinet has approved to repay the bank another 25 billion baht from the budget and the remaining 24 billion baht is expected to come from rice sales. The Commerce Ministry is confident of selling 10 billion baht worth of rice each month between October and December this year to repay the BAAC.

[As for the state bank's financial health, it extended 149 billion baht in new loans during the six months to Sept 30 this year, excluding those to the rice-pledging scheme, raising outstanding credit to 1.21 trillion baht. Its deposits increased by 19.4 billion baht during the period to 1.02 trillion baht. The BAAC's accounting year starts from April 1. Its revenue and net profit during the March-to-September period amounted to 34.49 billion baht and 5.1 billion baht, respectively. Its non-performing loans were 5.63% of outstanding loans at the end of September, while its capital adequacy ratio was 11.13% of risk-weighted assets - well above the 8.5% minimum requirement of the Bank of Thailand.]

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Writer: Jon Fernquest
Position: Online Writer