Economic & Commercial Report for the month of December 2015 - Thailand
Internal
Efforts focus on ease of doing business
The government hopes its efforts to raise Thailand's ranking in the World Bank's ease of doing business index will pay off next year.Yesterday's meeting of state agencies to push up Thailand's ranking agreed to set up a committee tasked with cooperating with law firms, the respondents in the World Bank survey, finance permanent secretary Somchai Sujjapongse said.World Bank representatives will visit Thailand to conduct the survey next June.Thailand's global ranking in the ease of doing business index has fallen three places to 49th due mainly to lower scores for starting a business and getting credit, according to the World Bank's latest report. The weakest links are starting a business, getting credit and dealing with construction permits.The Food and Drug Administration also plans to outsource granting permits for low-risk products to private firms.
External
Thailand China Railway cooperative venture officially launched
Source: NNT News
An official commencement ceremony to mark the start of construction of the Thai-Chinese railway, has been held at Chiang Rak Noi Train Station, Ayutthaya province. Deputy Prime Minister ACM Prajin Juntong and Chinese State Councilor Wang Yong, led the ceremony with other important state officials from both countries who gathered to celebrate. Construction is expected to start in May next year, and is expected to take up to three and a half years to complete, stated Thai Transport Minister Arkhom Termpittayapaisith. The Thai-Chinese joint railway development project is worth 530 billion baht, and will be built along four routes: Bangkok-Kaeng Khoi district route (118 km), Kaeng Khoi-Nakhon Ratchasima province route (134 km), Kaeng Khoi-Map Ta Phut port in Rayong province route (238 km), and Nakhon Ratchasima-Nong Khai province route (354 km), giving an estimated total distance of 850 kilometers of new rail. The route will connect with existing lines in Laos heading up to Kunming, China. Once the project is completed, Arkhom added that the train will be able to run at a speed of up to 250 kilometers per hour; each train will be equipped with eight passenger carriages, able to accommodate up to 613 passengers. While trains carrying industrial loads will be able to run at 120 km/h. When the project is completed and operating the two countries expect the trains to effectively enable the rapid transportation of goods and people between the two countries and throughout the region, as well as saving on the fuel consumption of the present road transportation by up to 100 billion baht, along with 200 million baht in terms of likely road accident costs. The fast track rail will greatly reduce transportation time.
Asean countries identifying and filling gaps
Source: Bangkok Post
With the Asean Economic Community (AEC) about to improve skilled labour mobility and open new job opportunities, the demand for medium- and high-skilled workers is expected to surge, along with competition to attract those talents.Despite producing significant numbers of new graduates every year, each of the so-called Asean-5 nations (Singapore, Malaysia, Thailand, the Philippines and Indonesia) still has gaps in its workforce .Singapore has been at the forefront of addressing the skills gap over the years. Based on that information, it provides incentives to government agencies, public and private educational and training institutions, employers and employees to ensure the necessary education and training takes place.. As a result, multinational companies in Singapore have become a significant source of skills training needed for their global operations, while foreign workers help fill skills gaps when local workers are not able to do so. In Thailand, the government is now focusing on expanding vocational and technical training and on combining classroom studies with actual work experience to enhance the relevance of education. Efforts are also being made to unify competence standards and improve national manpower planning. As well, the government is drawing up guidelines on job-relevant skills for more than 100 occupations. Indonesia, meanwhile, stipulates base-level education for the workforce at the high school and vocational school levels, to be followed by specific occupation-based job training to ensure relevance. There are also efforts to strengthen the link between schools and industry in order to broaden the practical training component for students. In Malaysia, public and private universities are among the key skills training providers. But despite the well-structured system for education and training, there are concerns about the outcomes, especially with regard to the capability and employability of graduates in the IT sector. However, there are concerns that it will be difficult to develop strengths in line with the priorities the government has identified unless the country is able to retain a large proportion of skilled workers, as a large number of them travel overseas to work.
Trade officials see 5% export rise in 2016
Source: Bangkok Post
The government has set an export growth target of 5% next year, banking on a global recovery, state stimulus measures and development of special economic zones (SEZs). Other sectors such as spa and healthcare services, entertainment, transport and logistics, education, hospitals, and construction are expected to be instrumental to export growth in the year ahead.The Commerce Ministry is upbeat about shipments to Cambodia, Laos, Myanmar and Vietnam, as well as Australia, India, China, the US and the EU .Lower shipments, however, are expected for Japan, the Middle East and Africa." A further boost will be provided by stimulus measures introduced by the government in 2015, as well as industrial clusters, SEZs and support for investment in 10 targeted industries .The cabinet endorsed a plan last month to attract investment in 10 industries after a Finance Ministry study found that private investment had receded continuously over the past decade. The 10 industries are next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemical ; digital; and medical services. Last month the cabinet also approved in principle a Finance Ministry proposal to set up a 10-billion-baht fund to support investment in the 10 industry clusters. The fund will help investors gain easier access to financial support to accelerate investment in the cluster project. To achieve the target, the Commerce Ministry will stimulate Thai shipments through key strategies such as greater market access and economic cooperation; a demand-driven marketing approach; border trade expansion; outbound investment support and facilitation; small-business and innovation development; and value-added industrial products.Negative factors that may curb exports include low oil prices, China's economic slowdown and EU penalties for illegal, unreported and unregulated fishing practices.
Government green light for power purchase from Laos
Source: Bangkok Post
The government approved a draft memorandum of understanding (MoU) yesterday to purchase electricity from the Nam Thuen 1 hydropower project in Laos. Energy Minister Gen Anantaporn Kanjanarat said Thailand was looking for additional power supply from Laos, but insisted the electricity deals from neighboring countries will be based largely on the principle that it is only for energy that Thailand cannot produce. Six hydropower plants now feed Thailand's power grid. Four other power plants are under construction that are expected to sell another 2,334 MW to Thailand. They are due to start operating between this year and 2019.Hongsa's 626-MW third and last power generator will come online next March after an investment cost of US$3.71 billion. Its first unit started operation in June and the second this month . Hongsa is a joint venture between RH International (Singapore) Corporation (40%), a wholly owned subsidiary of Ratchaburi Electricity Generating Holding, Banpu Power (40%) and Electricite du Laos (20%).Gen Prayut also ordered related agencies to closely monitor the oil price and prepare preventative plans for oil price fluctuation. Gen Anantaporn said the ministry reported the oil price was predicted to remain unchanged next year thanks to soft demand in light of the world's economic slowdown and growing alternative energies.
Fears remain despite WTO subsidy ban
Source: Bangkok Post
The private sector remains concerned about the emergence of new domestic subsidies in developed nations after countries in the World Trade Organization (WTO) agreed on Saturday to abolish subsidies on farming exports. Pornsil Patcharintanakul, adviser to the Thai Chamber of Commerce, said the historic farming subsidy deal will greatly benefit Thailand, which has never had export subsidies. Most major economies heavily subsidize their agricultural products. The EU, for instance, allocates US$70 billion a year for agricultural export subsidies, while the US earmarks $40 billion a year. Subsidies mainly come in the form of direct payments, export credits, guarantees and insurance, food aid, state trading enterprises, and export restrictions and taxes. Thailand is among the G20 bloc of developing countries that have called for an end to agricultural export subsidies in order to strengthen their bargaining power in relation to developed countries such as Japan and the US as well as EU members, which continue to protect their agricultural sectors. The proposal revived a previous plan that was rejected at the end of 2008 while aiming to overcome US objections that were the main stumbling block at the time. WTO member countries agreed on Sunday to abolish agricultural export subsidies after five days of talks in Nairobi, Kenya. Developed countries agreed to stop the subsidies immediately and developing nations must follow by the end of 2018.The WTO, which represents 162 countries, called it the most significant outcome on agriculture since the body's foundation in 1995.But long-standing talks on other trade barriers were left unresolved at the end of the summit. Removing agriculture export subsidies is intended to help farmers in poorer countries to compete more fairly. .On the other hand, without export subsidies, Thailand may see higher costs for importing, particularly raw materials used for animal feeds such as maize, soy bean meal and wheat, making their production costs higher," scrapping farm export subsidies will be good for Thai agricultural shipments and help raise farm prices after the US, EU, Australia and Japan had subsidized their farm exports for 20-30 years.
BoT expects a cautious economic recover in 2016
Source: NNT News
The Bank of Thailand (BoT) has concluded that the domestic economy as well as world markets will see an upturn in 2016. BoT Governor Veerathai Santiprabhob indicated the central bank expects next year’s global economy to gradually recover, due to the positive performance anticipated in major economies such as the United States. However, the global economy will be depressed by slow growth in China, while conflicting monetary policies in the United States, Europe, China, Japan and emerging markets will continue to cause volatility in the foreign exchange market. Meanwhile, the Thai economy is expected to gradually recover in certain sectors but will still remain fragile. Thailand’s economy will face challenges from under-performing Chinese and Asian economies, despite the government’s infrastructure investment projects, short-term stimulus measures, and growth in the consumer and tourist sectors. Although low commodity prices will help the cost of oil imports, the country’s agricultural products such as rubber and palm oil will suffer as a result. The BoT is scheduled to unveil an updated economic forecast on December 25.
All Asian currencies seen down for third year
Source: Bangkok Post
All 10 major Asian currencies are likely to end 2015 down against the US dollar for the third year, strategists say. They blame China. Indonesia’s rupiah, South Korea’s won and the Singapore dollar are projected to decline the most in 2016, with India’s rupee seen depreciating the least. While the US Federal Reserve on Wednesday indicated four interest-rate increases next year, Taiwan cut on Thursday and economists are forecasting reductions in China, South Korea, Thailand, India and Indonesia to spur growth. China’s slowdown is hurting Asian nations with strong trade linkages to the world’s second-biggest economy, and the Aug 11 devaluation of the yuan clouded the outlook for a currency that had been source of stability in Asia during past crises. Goldman Sachs Group Inc and JPMorgan Chase & Co say Chinese renminbi weakness will infect exchange rates in the region and across emerging markets. The Chinese yuan trumps the US dollar so far in terms of its impact on Asian currencies," said Claudio Piron, co-head of Asian currency and rates strategy at Bank of America Merrill Lynch in Singapore. “Asia has a heightened sensitivity to the yuan, which represents the hub of the region’s supply chain to the rest of the world." The yuan weakened 2% this month in Hong Kong’s offshore market, the most in Asia after the won, and 1.3% in Shanghai after the People’s Bank of China allowed its decline versus the dollar to accelerate. Restrictions on trading are being lifted as the International Monetary Fund adds the currency to its reserve basket.
Cheap steel imports to face probes
Source: Bangkok Post
The government will soon consider anti-dumping duties on high-carbon steel wire imported from China. It will also soon launch an anti-dumping probe into imports of hot-rolled steel sheet and steel tubes and pipe from China and South Korea. Commerce Minister Apiradi Tantraporn said the investigations were prompted by complaints from local steel makers that the surge in imports had harmed domestic production. In a meeting yesterday, the anti-dumping and countervailing committee found the complaints to be valid and considered it imperative to proceed with the probes. The committee also approved an anti-dumping investigation into imports of coiled and uncoiled hot-rolled steel from Brazil, Iran and Turkey.Mrs Apiradi said the Foreign Trade Department would soon declare the probes and later their outcomes.An anti-dumping measure is a trade regulation used by many countries to prevent local industries from being hurt by cheap imports that are "dumped" on the market. Dumping is when the export price of a good is lower than the domestic price and could signal export subsidies or other trade procedures enabling the export price to be lower. Under Thailand's legal procedures, local producers must file dumping complaints with the Commerce Ministry against foreign companies whose export price is below the domestic price in their homeland. If the investigation determines dumping did occur, the Commerce Ministry will impose an anti-dumping tariff on the imports, normally equal to the price gap. Many Thai steel companies are complaining of plunging sales on the back of weak purchasing power from a tepid global economy. They say their situation has been worsened by cheap Chinese steel being dumped in Thailand. Thailand imported 12 million tonnes of steel from China last year, up from 7 million in each of the previous two years.
Thailand touted tourism driver
Source: Bangkok Post
Locally, stakeholders are beating the drums for the establishment of an AEC Tourism Centre to capitalize on the integration of the regional market and to strengthen and diversify strategies to maintain the country's spot on the global tourism radar. Southeast Asia will become an emerging destination for the global market and the Thai tourism industry will continue to grow over the next three to four years, according to the Pacific Asia Travel Association (Pata). Arrivals in Thailand are expected to pass the 30-million mark for the first time next year, with 31 million visitors forecast, up from 28 million this year. Thailand is expected to be fifth-largest market in the Asia-Pacific region in terms of visitor numbers and the fourth-biggest in Asia this year and the next four years.The international tourism association also predicts arrivals to Thailand to climb to 35 million in 2017, 40 million in 2018 and 47 million in 2019, ahead of some other popular destinations in Southeast Asia such as Malaysia, Singapore and Indonesia. "Thailand's tourism has surged over the past 10 years despite facing crises many times. Some other countries like China, India, Indonesia and Vietnam are following the same path," Mario Hardy, chief executive officer of Pata, said yesterday. The Thai government and tourism authorities should improve infrastructure to deal with the need for connectivity and the growth of transport, he said. The country has to enhance water and waste management, as some destinations suffer from water shortages during the high season. New attractions in second-tier provinces are needed to help spread tourists to new places. The formation of the AEC's single market will push all countries to work together and cooperate more, especially to attract tourists from third countries. In the region, Thailand is one of four mature markets along with Malaysia, Singapore and Indonesia. These countries are set to adopt new roles to help drive tourism in the region. The opening of the AEC in 2016 may not bring immediate change to the region, but all the countries should consider some common agreements such as a single visa, open-sky implementation and cross-border investment.
ASEAN countries to strengthen regional economy
Source: NNT News
The Ministry of Commerce's Inspector General Arunee Poolkaew said the global economic situation has fluctuated due to several factors, prompting the ASEAN countries to establish regional economic strength. The ASEAN bloc should focus on building potentials for the stimulating of an economic growth, especially in logistics, finance, telecommunications and service sectors which could help strengthen those for trade and investment sectors. Although the global economic growth has slowed down, the ASEAN economy remains strong, he commented, adding that he expected the bloc's GDP to grow by five percent as a whole this year.
The 4th meeting of the India-Thailand High Level Defence Dialogue was held today at the Ministry of Defence of Thailand today. Mr. Ravi Kant, Additional Secretary, Ministry of Defence, India and General Chaichan Changmongkol, Deputy Permanent Secretary, Ministry of Defence, Thailand co-chaired the meeting. The Indian delegation called on Permanent Secretary, Ministry of Defence, Thailand and, General Preecha Chan-Ocha.
Source: Commercial Section, Embassy of India, Bangkok
