Business News - February 2013
Thailand’s 2013 Growth Forecast increased to 4.9%
In a recent report, the Bank of Thailand increased Thailand’s growth forecast for 2013 to 4.9% per year, an increase of 0.3% from previous consensus. The move was based on buoyant private consumption, rising exports and increased private investment. In the same monetary policy report, growth is forecast to remain relatively steady at 4.8% during 2014 with revisions likely to be in place prior to the period.
In the export sector business is particularly active with growth expected to be nine percent from last years 3.6 per cent. Mr. Paiboon Kittisrikangwan, Assistant Governor of the Bank of Thailand (BOT), cited lower risk from Europe with the Euro crisis and Greek debt crisis dissipating as well progress on US Fiscal issues as being some of the reasons behind the committee’s upbeat expectations for Thailand’s growth outlook for 2013.
3G licenses auction completed
During January 2013 the National Broadcasting and Telecommunications Commission (NBTC) completed its auction of 3G licenses gaining an average bid of 4.5 billion Thai baht.
This was the same as the minimum bid set by the NBTC for around 70 percent of the total value of the 3G spectrum according to an estimate put forth by a committee from the Faculty of Economics at Chulalongkorn University.
The highest bid put forward was Bt4.95 billion Thai baht. The committee estimated the auction would fetch Bt6.44 billion per five MHz band, meaning the final results came in below expectations.
Amongst the conditions were a requirement to expand 3G coverage by 50 per cent of the country’s total area in two years and 80 per cent in four years. Whilst the capital Bangkok is already well covered, interim areas require additional rollout of the network. Services are required to be launched in major cities no more than three to six months after each license is issued, otherwise measures would be put in place to ensure consumers are protected.
Dawei deep seaport project to be developed
The Japan External Trade Organization (JETRO) will join Thailand and Myanmar in developing the Dawei deep seaport project according to Industry Minister Pongsvas Svasti.
The port is to be 270km west of Bangkok, to the west of Kanchanaburi and Thailand and Myanmar have already signed a memorandum of understanding to jointly develop this important economic project. The two countries agreed to set up a bilateral committee to work on the project.
The Japan External Trade Organization Bangkok president Setsuo Iuchi confirmed Japan’s interest in the Dawei deep seaport during a meeting with the Industry Minister, offering Japanese private sector investment for some parts of the project as well as offering a financial allocation for infrastructure development.
So as to ensure the Thai private sector benefits from the project, the National Economic and Social Development Board and the Finance Ministry are working on a solution to enable related projects to go ahead such as the construction of roads and industrial estates in the vicinity of the port and to construct roads from Dawei to Kanchanburi province to provide good transport links to the new port.
Krungthai Card Public Company Limited announces net profit of 132 Million Baht for the 3rd quarter
The credit card issuer Krungthai Card Public Company Limited managed stellar growth of 233% in the quarter to land a profit of 132 million Baht and offset all previous losses whilst leaving a healthy receivables amount of 41.6 Billion baht in hand.
The company cited more focused receivables portfolio quality control and more efficient debt collection as being responsible in a large part for the excellent results. It takes net profit for the last three quarters to 63 million baht. Another reason for the recent success is the collaboration with partners in the lifestyle sector providing card holders with privileges and other attractions.
Mr. Rathian Srimongkol, President and Chief Executive Officer of Krungthai Card Public Company Limited, said, “We continue to see an overall industry growth of 10 percent for credit card loans over the first eight months of this year, compared to the same period of the previous year. Non-bank institutions are growing at 12 percent over commercial banks at 8 percent. Personal loan business, on the other hand, is growing at 15 percent with commercial banks surpassing non-bank institutions at 31 percent and 9 percent respectively. One of the factors contributing to these is the government policy where domestic spending is encouraged. Consumer loan industry is growing constantly as a result.”
New promotions are expected to increase the card use of existing cardholders whilst at the same time attract new customers to increase market share.
Bank of Japan doubled its inflation target to two percent
In a widely expected move the Bank of Japan (BOJ) doubled its inflation target to two percent and pledged a commitment to buy assets from next year on an open-ended basis. The news caught markets by surprise with many expecting a further increase in the $1.1 trillion asset buying program and a more immediate response to the issue of low inflation. Also, the new target was not based on a unanimous vote with two of the nine board members voting against the new level. In the meantime the committee maintained its overnight call rate target in a range of zero to 0.1 percent by way of a unanimous vote.
Japan has targeted the two percent inflation level in the past but has only hit it once in the last two decades or so. The Yen briefly weakened on the news and then gave back all its gains and some. The BOJ has been under tension from new Prime Minister Shinzo Abe to ensure the Yen weakens and that reflation occurs.
The Bank of Japan issued a joint statement with the government. The statement said, "The BOJ will pursue powerful monetary easing by maintaining virtually zero interest rates and purchases of financial assets as long as it deems appropriate."