Business_Snapshot

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Byline Roengboon Klongkumnuankarn and Kaewwalee Kaewnil

Ma r c h 2 0 0 6

Thailand Investor Service Center

Preeda Laocharoenwong preeda@thailandoutlook.com Pisit Tuchinda pisit@thailandoutlook.com Vipada Mavichak vipada@thailandoutlook.com Sittikorn Direksoonthorn Sittikorn@thailandoutlook.com Roengboon Klongkumnuankarn roengboon@thailandoutlook.com Sirichai Kijpaituraya sirichai@thailandoutlook.com Pattara Sriyaporn pattara@thailandoutlook.com Tel: +66 (0) 2357 3490 Fax: + 66 (0) 2357 3533 E-mail: tisc@thailandoutlook.com

This document is issued by Thailand Investor Service Center (TISC). While all reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. Opinions, projections and estimates are subject to change without notice. This document is for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration.

ECONOMIC EXECUTIVE SUMMARY In March 2006, the National Economic and Social Development Board (NESDB) trimmed its forecast for economic growth of Thailand this year to between 4.5 and 5.5 percent, declined from its previous projection of 4.7-5.7 percent. This was in line with a forecast form Asia economist at Morgan Stanley in Hong Kong that has reduced 2006 growth forecast for Thailand to 4.9 percent from 5.4 percent. The economist warned that stagflation was also a risk in this year and in 2007. Meanwhile, the executive of Deutsche Bank Asia Pacific believed differently by remaining positive about the future prospects of Thailand which were forecasting that economic growth would reach 5.2 percent in 2006, upped from around 4.5 percent seen in 2005, and was also interested in actively facilitating the government's planned mega-projects. Other Thailand’s economic think-tanks foreseen that Thailand would experience the growth with acceptable rate owing to the strong economic foundation, for instance, the University of Thai Chamber and Commerce pointed out that Thai economy was expected to grow at a range of 4-4.5 percent if the current political situation returned to normal and a snap election was held within 60 days. According to the recent political crisis, Fiscal Policy Office pointed out that although the extent of any impact was unpredictable, it would affect four economic factors sensitive to politics including consumer and investor confidence, the public sector, international trade, and financial markets. Consumers might reduce their spending, whilst investors might delay investment plans. Consequently, the consumer confidence index announced by the University of the Thai Chamber of Commerce represented a slight drop when the political waters started roiling. The index dropped to 82 in January and 79.6 in February from 82.5 in December. In particular, the index in February dropped in all categories to the lowest level in five months due to surging oil prices and political uncertainties. The investor confidence index also fell to 45.2 in January from 45.9 in December last year. Investment producing goods for domestic consumption, and investment related to government projects might be postponed until political tension settles. Investment related to exports; on the other hand, would proceed without delay if demand in overseas markets kept on expanding. If political uncertainty continued, it might also affect public spending in the fiscal year 2007, the budget for which has yet to be approved by the government. Investment in mega-projects would also be delayed, specifically projects related to masstransit and logistics improvements under a scheme to modernize the country. Nevertheless, political instability was unlikely to have a negative impact on the export sector unless it turned violent. The exports of goods and services so far had not been affected. But it would slow demand for imports due to a drop in domestic consumption and delayed private and public investment, which would improve the current-account balance. The data indicated that exports grew 14.5 percent, upped from 11.7 percent in December

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last year while imports expanded only 0.4 percent, downed from 26 percent. A trade balance in January was in deficit of US$388 million. Finally, regarding to financial markets, if the situation does not turn violence, the central bank would likely further increase the policy rate in order to curb with inflationary pressure. In the case of violence, the Bank of Thailand might hold back on raising rates. Now that the situation did not become violence, we could observe that several banks, e.g. Krung Thai Bank (KTB), Siam Commercial Bank (SCB), Bank of Ayudhya (BAY) and Thai Military Bank (TMB) raised their interest rate in both deposit and lending, followed in the footsteps of Bangkok Bank (BBL) after it sparked the latest moves by jacking up its interest rates twice in one week. This, in turn, might slowdown in the loan and economic growth as well as the reentry of non-performing loans in the banking system. In terms of oil price and the world economy, global oil price remained its upward trend which contributed to the greater inflation. However, the Thai Ministry of Commerce ensured its ability to curb inflation within the band of 3.5 to 4.5 percent for this year. In addition, NESDB further revealed its forecast in world oil price in line with above statement that it was expected to increase to $55-58 per barrel from an earlier forecast of $50-55, while the world economy was projected to grow by only 3 percent, diminished from a previous projection of 4 percent. One factor behind the cut in the forecast was the expected delay in major infrastructure projects.

AGRICULTURAL SECTOR Agricultural Price Index of Thailand and World Market 205

100 95

190 Domestic Farm Prices

World Market 90

175

85 160 80 145 75 130

70

115

65

100 Jan-03

60 Jul-03

Jan-04

Jul-04

Jan-05

Source: Bank of Thailand

Jul-05

Jan-06

In February 2006, farm income from major crops increased by 35.9 percent compared to the same period of 2005, also sharply rose from that of in the previous month, which mainly drived by both price and supply of crop. Domestic agricultural price surged by 20.8 percent from the same period of 2005, but decelerated from the pervious month in every product group except fishery product which experienced a steep increase compared to January 2006. Livestock price declined slightly by 0.8 percent due to the excess supply of chicken and egg, Fishery price, on the other hand, rose significantly by 19.1 percent resulting from the higher export demand of shrimp.

However, the expected domestic agricultural price will be slow down in the near future as the weather will be more likely to accommodate a domestic cultivation. World agricultural price (includes 12 major agricultural products influencing on Thai economy) increased by 23.5 percent from the same period of 2005, accelerated from the previous month as well. This was mainly due to the increase in price of rice, sugar and rubber, particularly a rise in world sugar price as a result of sustained demand, yet a lower supply.

INDUSTRIAL SECTOR Private Investment Index (preliminary figure) in February expanded by 5.4 percent year-on-year, mostly following a significant rise in equipment, in that both import volume of capital goods at constant price and the number of car sold rose from that of February last year. Nevertheless, the construction investment continued to drop in line with the slowing real estate sector. Generally, it was implied by the diminishing in Construction Areas Permitted in Municipal Zone as well as domestic cement sales.

Private investment Index 93

90

87

84

81

78

75 ม.ค.-04

เม.ย.-04

ก.ค.-04

ต.ค.-04

ม.ค.-05

เม.ย.-05

ก.ค.-05

ต.ค.-05

ม.ค.-06

Source: Bank of Thailand

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Business Sentiment Index (BSI)

60

Business Sentiment Index (BSI) marked slightly lower to 45.0, recorded as the index which was less than 50 point for 22 consecutive months. The Expected BSI (3-month ahead) downed from the previous month to 52.7, the index; nonetheless, has remained above 50 point for 7 consecutive months which implied that business people still foreseen a better business sentiment in the near future.

58 56 54 52 50 48 46 44 BSI

3-month forward looking BSI

42 40 Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Source: Bank of Thailand

With regard to the private investment, during the second month of 2006, the Board of Investment (BOI) approved 209 applications submitted, with the total investment equaled to THB 28.8 billion. These figures mutually indicated a dramatic rise compared to that of the previous month. Moreover, it was expected that 25,132 people were likely to be employed. In lights of total registered capital of THB 4.2 billion, Thai and foreign proportions were at THB 2.2 and THB 2.0 billion, respectively. Of all sectors that projects had been applied for and have been approved by BOI, Service and Infrastructure accounted for the highest investment value, with the figure of THB 7.4 billion, and then followed closely by the investment in Metal Processing and Agricultural Products, with the numbers of THB 6.5 billion and THB 5.7 billion, respectively. BOI set a target to increase the value of investment projects seeking promotional privileges to 700 billion baht in 2005 and 800 billion baht in 2006, and it was confident that it would meet the target of 800 billion baht in promoted business ventures this year despite political turmoil. Besides, a current political disturbance has not affected total applications for investment promotions granted, particularly for an export-oriented production industry. A number of applications for BOI’s promotional privileges continued to increase, as Thai economy has prior experienced to many problems including bird flu outbreak, surging fuel prices, and higher product costs happening through last year. The investment project value would reach one trillion baht in 2008. BOI would focus on enhancing a value-added for Thai products and granting promotional privileges to certain groups of operators, particularly SMEs or research and development. Among other industries, automobiles and parts, electronics and parts, chemicals, agro-industrial processing, infrastructure and fashion would be the favored industries, with investment values this year remaining unchanged.

The Manufacturing Production Index (MPI with 76 products categories) in February 2006 moved up 78.00 160 by 12.8 percent year-on-year, also speeded up from 76.00 140 the previous month. Products contributing 74.00 significantly to the expansion involved electronics and 120 72.00 vehicles and equipments thanks to strong export 100 70.00 growth and the introduction of new car models. 80 68.00 Besides, beverage persisted to expand well while 60 66.00 textiles still expanded in line with clothing export Capacity Utilization (exclude liquor) 40 growth. Petroleum products also enjoyed a growth 64.00 because of the low base last year. The Capacity 20 62.00 MPI (exclude liquor) Utilization Rate (with 69 products categories) of the 60.00 0 manufacturing sector marked lower at 72.3 percent ม.ค.-04 เม.ย.-04 ก.ค.-04 ต.ค.-04 ม.ค.-05 เม.ย.-05 ก.ค.-05 ต.ค.-05 ม.ค.-06 Source: Bank of Thailand compared to 73.4 percent in the pervious month. This was due to the seasonally low number of work days in February but when controlling this seasonal factor, the rate was found to up from the month earlier. 80.00

MPI

CapU

180

SERVICE SECTOR According to the University of the Thai Chamber of Commerce, the appropriated index for tourism expenditure diminished from 75.8 point in February 2006 to 73.2 point in March 2006. This was in line with the dwindling to lower than 100 point of this month Consumer Confidence Index. BOT also published the number of foreign visitors in February which was 1,060,000 persons, an increase by 18.7 percent compared to the same period of last year; still, the figure of foreign visitors dropped slightly from the first month of this year. The year-on-year increase in the number of

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alien visitors was partly due to a lower base representing during this period of last year. The occupancy rate recorded at 75.2 percent compared to 64.2 percent in the same period of last year. This recovery was believed to occur throughout nationwide regions.

OTHER UPDATED MOVEMENTS IN MARCH Regarding to the interesting government policies, Caretaker Deputy Prime Minister and Commerce Minister Somkid Jatusripitak has urged Thai state enterprises and private firms to invest more and explore for market opportunities overseas despite the current political uncertainty. The Finance Ministry's Fiscal Policy Office (FPO) said political tensions have delayed both government and private investment and it hoped demand for exports will be sufficient to help Thailand's economy grow. The officer said exports were likely to be the sole engine for economic growth because domestic investment and consumption would be affected by the current political turmoil. This, in turn, might be obstructed by the recently remained stable or appreciated of Thai baht compared with USD, boosted by the strengthening of the Japanese yen. Thailand plans to set up eight distribution centers in China this year to boost exports there by 40 percent. The centers will be established in Zhangshan, Shanghai, Kunming, Chingdao, Xiang Yan, Chengdu, Wu Han and Dalian. This was the plan to reduce middlemen and consignment problems of Thai exporters. Last year, Thai exports to China grew 28.8 percent to US$9.2 billion (Bt368 billion). In January this year, the number jumped 51 percent to $881 million year-onyear. Three more distribution centers would go up in Shandong, Shanxi and Chongching next year. In building the centers, the Thai government weighed the benefits that come from serving the strong demand coming from China and its growing consumer market. Moreover, Thailand and China have agreed to expand bilateral trade to reach US$50 billion annually by 2010.

HIGHLIGHTED NEWS1 BY SECTOR AGRICULTURE Rice exports expected to sag as rivals grab share (03 Mar 06): The Thai Rice Exporters Association predicts that the export volume of rice will be less than 7 million tones this year, due mainly to major importing countries placing more orders with the Kingdom's export rivals. (The Nation) Thailand bids to promote exports of safe chickens and shrimps (04 Mar 06): The Ministry of Commerce will invite trading partners from Europe and the Middle East to inspect chicken and shrimp production in Thailand in May with an objective to boost exports of the two products, said the Director General of the ministry's Department of Export Promotion. (MCOT) Farmers slam 'double taxation' (09 Mar 06): More than 100 shrimp farmers and hatchery operators submitted an open letter to President George W Bush via the US Embassy in Bangkok yesterday. They are seeking fair trade and protesting anti-dumping measures in which the US Customs Border Protection Agency implements a Continuous Bond seen as a form of double taxation. (The Nation) Commerce Minister announces new retail prices for sugar (09 Mar 06): The Ministry of Commerce's Department of Internal Trade has set new retail prices of sugar following a cabinet decision earlier this week to allow a Bt3 per kilogram wholesale price rise of the commodity product to address the problem of sugar shortage and smuggling of the product to neighboring countries. (MCOT) Thai Shrimp exports to EU expected to increase in 2006 due to GSP (14 Mar 06): The impact of the resumption of the GSP (General System of Preferences) is favourable to Thai shrimp exports, especially to Europe, President of the Thai Shrimp Association said on Monday. In 2005 shrimp exports to the EU reached 11,686 tonnes compared to 8,001 tonnes in 2004, or a 46 per cent increase. In 2006 it is expected that the export volume could increase from 11,686 tonnes in 2005 to reach 30,000 tonnes, or about a 150 per cent increase. (MCOT)

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For more details, visit www.thailandoutlook.com in the section of ‘investor news’, which sorted by date.

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Rubber farmers eye market for new yield (21 Mar 06): The National Innovation Agency (NIA) is helping pararubber farmers in Satun to use technology to add value to their products and develop non-contaminated rubber sheets that will fetch higher prices in the market. (Bangkok Post) Fruit importers set up stalls in Thailand (22 Mar 06): Fruit importers from around the world have gathered in Thailand for a government-sponsored export promotion meeting with local producers. The Department of Export Promotion (DEP) said the meeting was part of the plan to expand the global distribution of Thai fruit over the next few months as producers begin to harvest their crops. (MCOT) Thai shrimpers blast lack of progress on US duty charges (23 Mar 06): Shrimp farmers have criticised Karun Kittisataporn, the permanent-secretary for the Commerce Ministry, for failing to file a formal complaint to the World Trade Organisation over a continuous bond requirement set by the United States. (Bangkok Post) Rice bidding cancelled (23 Mar 06): The Commerce Ministry yesterday cancelled the first round of bidding by exporters for the government's stocks of Khao Hom Mali, or jasmine rice, after failing to persuade bidders to increase their offers. The ministry has not yet decided how it will manage its stockpile of 400,826 tonnes of jasmine rice, which is ready for sale. In total, it holds about 900,000 tonnes of jasmine rice, but 500,000 tonnes of it is being held in warehouses awaiting surveys to determine its quality. (The Nation) Thai chicken's German goal (27 Mar 06): The Commerce Ministry is launching a campaign to encourage the consumption of Thai processed chicken during World Cup 2006 in Germany. The campaign also aims to solve a supply shortage in Europe. The strategy focuses on encouraging food chains and restaurants to use chicken in a variety of German dishes. It will also promote the safety of Thai processed chicken in the wake of avian influenza. (The Nation) Betagro expands despite bird flu (29 Mar 06): The Betagro Group, a leading agricultural company, plans to pursue a 2.7-billion-baht investment in the chicken industry this year to tap into growth in heat-treated meat exports. The investment will go ahead despite the bird flu outbreak that hit poultry farms in Europe and Asia late last year. (Bangkok Post) Sugar exports expected to rise following WTO ruling (29 Mar 06): Thailand, Brazil and Australia could enjoy increased exports of sugar after the World Trade Organisation's appellate body ruled that the European Union must stop its subsidy programme. Apiradi Tantraporn, director-general of Trade Negotiations Department, said yesterday that the ruling would force the EU to stop subsidies of sugar exports in both volume and value beyond limits set by the WTO. (The Nation) New supply to end sugar shortage in one month (29 Mar 06): The Commerce Ministry yesterday said that the sugar shortage should be eliminated within a month after three million sacks of sugar are released into the markaet soon. As a result the amount of sugar for sale in the market would climb to 55,000 sacks a week compared to the previous amount of 38,000 sacks. (The Nation) Sugar price float recommended (29 Mar 06): Top state officials and the private sector are urging the government to consider a "floating price" policy for the sugar industry to stop the problems of a prolonged shortage and illegal exports. Chakramon Phasukvanich, permanent secretary of the Industry Ministry, said the government should float sugar prices by letting the domestic price move in line with the world market. (The Nation) Shrimpers demand Thai lawsuit against US at WTO over double taxation (30 Mar 06): BANGKOK, March 29 (TNA) - Shrimp farmers are threatening to rally in Bangkok to protest the Commerce Ministry's inaction to their plight. Surat Thani Shrimp Breeders Association chairman Ekapoj Yodpinij said on Wednesday that industry representatives nationwide earlier petitioned Deputy Prime Minister and Commerce Minister Somkid Jatusripitak and gave him 30 days to act. (MCOT) Sugar supplies doubled to ease shortage problem (31 Mar 06): The Commerce Ministry yesterday expressed confidence that its short-term doubling of sugar supplies to the domestic market would solve the prolonged shortage and the problem of illegal exports. The ministry has opted for quota management for a short-term solution rather than considering a proposal on a floating price policy to solve problems in the long run. (The Nation)

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Units

Million Baht

Automotive Industry

AUTOMOBILE

350,000

1,200,000 Car Production

300,000

1,000,000 Domectic Consumption

250,000

Automobile and Parts Exports (million baht)

800,000

200,000

Gains from free trade helping KPN prosper (07 Mar 06): The SET-listed auto-parts producer KPN Automotive has projected revenue growth of 30% this year, thanks to industry growth driven by trade liberalisation and bilateral free-trade agreements. (Bangkok Post)

600,000 150,000 400,000 100,000 200,000

50,000

0

Nissan revs up in Thailand (13 Mar 06): Nissan Motor Co Ltd will soon start exporting Thai-made cars and trucks to Australia under new free-trade privileges. The move is part of its strategy to promote investment in Thailand and catch up with rival Toyota. (The Nation)

0

Motor show expects to drive sales (23 Mar 06): Experts have mixed views over the possible impact of political tension on car sales. Surapong Paisitpatnapong, a spokesman for the Federation of Note: as of February 2006 Thai Industries' Automotive Industry Club, said members believed vehicle production in Thailand this year would reach a target of 1.24 million units, despite political uncertainty. Of the total production this year, 723,000 units would be sold locally and the remaining 522,000 units would be exported. (Bangkok Post) 2000

2001

2002

2003

2004

2005

2006

Source: Thailand Automotive Institute

Jetro report on auto parts out today (24 Mar 06): The Japan External Trade Organisation (Jetro) will today present the results of its survey on the competitiveness of the ASEAN auto parts industry, at the 5th Auto Supporting Industry Conference. (The Nation) Import tariffs on automobiles among ASEAN members to be reduced to 0% (30 Mar 06): Tariffs on automobile imports among member countries of the Association of Southeast Asian Nations (ASEAN) are likely to be reduced to zero per cent over the next five years. Director-General of the Customs Department Sathit Limpongpan on Tuesday said in a seminar here on Thailand's Detroit of Asia Policy that the automobile import tariffs among the 10 ASEAN member countries could be reduced to zero per cent by 2010-2011. (MCOT) February auto exports up 88.7% (31 Mar 06): Thailand exported 52,282 cars and trucks in February, up 88.7 percent from the same month of 2005, Toyota Motor Corp's Thai unit said on Monday.(Business Day)

ENERGY Power consumption rises at slower pace in Q1 of fiscal 2006 (03 Mar 06): The overall electricity consumption nationwide increased at a slower pace in the first quarter of the fiscal 2006 due to public cooperation in the power-saving campaign, according to the Energy Ministry. (MCOT) Thailand likely to end premium gasoline consumption by 2006 (04 Mar 06): Thailand is likely to cease its premium gasoline consumption by the end of this year, thanks to its successful campaigns in encouraging motorists to turn to use gasohol, instead. (MCOT) Diesel price reaches historic highest level in new fuel price hike (04 Mar 06): Local oil traders have announced a new price hike by Bt0.30 per litre for gasoline and by Bt0.40 per litre for diesel, which makes the domestic diesel price reach its historic highest level so far. (MCOT) Engine-friendly fuel launched (08 Mar 06): The US oil giant Chevron Corporation yesterday began selling Techron petrol products, including gasohol, at all Caltex stations in Thailand. Caltex Oil (Thailand) Ltd, a subsidiary of Chevron, will spend about 100 million baht to promote the new products, with the aim of raising its market share this year from 8% currently. (Bangkok Post) Gasohol price gap unrealistic – Shell (09 Mar 06): Shell Co Thailand has called on the government to lower the gap between Octane-95 petrol and gasohol prices to Bt1 a litre, in a bid to tackle ethanol shortages in the next one to two months. (Bangkok Post)

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Wind turbines planned as alternative energy source for Thailand (12 Mar 06): The Energy Conservation Promotion Fund (ECPF) is supporting a project to produce electricity by wind turbines in two southern provinces, Director-General of the Energy Policy and Planning Office (EPPO), Metta Banturngsuk said Sunday. (MCOT) PTT Utility signs power contract (15 Mar 06): PTT Utility Ltd, a subsidiary of oil and gas conglomerate PTT Plc, has signed an agreement to supply steam power and electricity to MIG Production Ltd, or MIGP, for 15 years. (MCOT) PTT Plc planning to go multinational (17 Mar 06): Revenues paid to the state from PTT Plc through taxes and dividends will total around 300 billion baht over the next five years, or an average of 60 billion a year compared with 50 billion baht currently, due to investment expansion throughout PTT and its subsidiaries, according to PTT president Prasert Bunsumpun. He said PTT had earmarked 600 billion baht of investment capital over the next five years, as part of its strategy to become a multinational firm. (Bangkok Post) Energy Minister confident ethanol supply won't be in dire shortage (17 Mar 06): Energy Minister Viset Choopiban on Wednesday expressed confidence that local ethanol supply would not be in so dire shortage that imports are needed. (MCOT) Banks to make energy loans (21 Mar 06): Bangkok Bank has announced new low-interest loans available to companies and individuals wishing to invest in energy-saving technology. They include loans for companies wanting to buy equipment under the government's energy-saving scheme, loans for converting vehicles to run on natural gas and loans for efficiency projects by small- and medium-sized enterprises. Bangkok Bank is cooperating with the Energy Ministry and PTT Plc on the loans. (The Nation) Be frugal, urges Egat (23 Mar 06): Egat Plc has stepped up a campaign to reduce energy consumption and save 1.1 billion baht during the current hot season. The state-run power utility has also put extra electricity generation capacity on standby to cope with an anticipated peak demand of 21,650 megawatts over the next several months. (Bangkok Post) Egat ruling a blow to government Process, not policy, found illegitimate (24 Mar 06): The Thaksin Shinawatra government suffered a fresh setback yesterday after the Supreme Administrative Court struck down decrees for the privatisation of Egat Plc. The court, in a closely watched decision, ruled that the privatisation process had been marred by political conflicts of interest and that the public hearing process was flawed. (Bangkok Post) Court's ruling on EGAT won't adversely affect SET, says analyst (24 Mar 06): BANGKOK, March 24 (TNA) – The Supreme Administrative Court’s ruling against a planned listing of EGAT Public Company Limited (EGAT) on the Stock Exchange of Thailand (SET) will not considerably affect investment sentiment because most investors have earlier expected such a decision, according to a leading stock analyst. (MCOT) EGAT IPO RULING: Egcomp, Ratch likely to benefit (28 Mar 06): Regulators tipped to lift restriction on bidding for IPPs, analysts forecast. By revoking Egat's initial public offering plan, the Supreme Administrative Court may have instead rewarded its affiliates Electricity Generating Plc (Egcomp) and Ratchaburi Electricity Generating Holding Plc (Ratch). (The Nation) EGAT plans for future unprivatised (28 Mar 06): The country’s biggest state power utility EGAT held a topmanagement meeting Monday to discuss its future following the Supreme Administrative Court’s verdict last week (MCOT) Egat defeat could increase public debt (29 Mar 06): The failure of Egat Plc to list on the stock market will have impacts on fiscal policy targets and the money market, according to the Fiscal Policy Office. Naris Chaiyasoot, the director-general of the office, said Egat would be forced to borrow from the money market to mobilise funds for its future investments after the Supreme Administrative Court scrapped the state power utility's privatisation plan last week. (Bangkok Post) Units

Million baht 160,000

8,000 Land Transactions Nationwide (million baht)

140,000

7,000 New Housing in BKK Metropolis and Vicinity (units)

120,000

6,000 100,000

PROPERTY Asian Property confident in overall economy (02 Mar 06): Asian Property Development Plc (AP) forecasts that political unrest will have an impact on purchasing power in the housing market.

5,000 80,000 4,000

''Housing demand depends on the economy. If this political situation is extended until it affects the economy, it will

60,000 3,000

40,000

20,000

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Jan-04

Apr-04

Source: Bank of Thailand

Jul-04

Oct-04

Jan-05

Apr-05

Jul-05

Oct-05

7


affect home purchasing power as well; however, the company is confident in the overall climate. (Bangkok Post) Pre-Built constructs 30% growth target (06 Mar 06): Home-builder Pre-Built Plc expects its revenues to total Bt2.7 billion, up 30 per cent from last year's Bt2.1 billion, according to chief executive officer Chaiyarat Thampeera. (The Nation) Single-house buyers waiting for political dust to clear, says Supalai (06 Mar 06): Sales of housing priced around five million baht a unit have slowed by 20% due to the current political climate, according to Supalai Plc. Atip Bijanonda, deputy managing director of the listed developer, said single houses priced above five million baht were often purchased as second homes and therefore potential buyers would be more cautious as they waited to see the economic impact of the political situation. (Bangkok Post) Office building sales jump 50 per cent (14 Mar 06): Bangkok's real-estate investment market was exceptionally active last year with sales and acquisitions worth Bt7.5 billion taking place, according to Jones Lang LaSalle. (The Nation) 41% fewer homes get under way (15 Mar 06): There were 27 new property projects launched in February, 41 per cent fewer than last year's monthly average for new project launches, according to the Agency for Real Estate Affairs, an independent property consulting firm. The combined value of February's new projects was Bt9.9 billion. The number of units in February's new projects also fell by 20 per cent from last year's average, to 4,017 units, the agency said. Of the 27 new projects, 26 were residential and one was geared toward the home office market. (The Nation) Property developers to delay investment if political woes drag on (16 Mar 06): Property developers are likely to postpone their investment in new projects if the current political turbulence still persists, according to an industry executive. (MCOT) Condo market heats up in CBD (23 Mar 06): Huge investments to launch new condominium projects in Bangkok's central business district (CBD), near the Skytrain and subway, between now and 2009 will result in some stiff competition, says Jones Lang LaSalle Research. Most developers will avoid direct price discounts for their clients. The research group also predicted that price levels of condominiums inside the competitive zone would change dramatically, despite the possibility of the resale market attracting some of the demand and diverting it from the first-hand market. (The Nation) Property loans continue to grow despite upward interest trend (28 Mar 06): BANGKOK, March 28 (TNA) – Property loans have still grown satisfactorily for now despite an upward trend of interest rates, according to the Bank of Thailand. (MCOT)

TOURISM Thousand 1,550

Percent 80 75 70

1,250

65 60 950

55 50

650 Number of Foreign Tourists

The Occupency Ratio

45 40

350 35 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06

Political turmoil not affect Thai tourism (04 Mar 06): Thailand's tourist arrivals have so far unaffected by the kingdom's ongoing political turmoil, as air ticket bookings still look positive with no cancellations made, according to senior airline executives of the Bangkok Airlines group. (MCOT) Growing exports as Japanese opt for Thaistyle pampering (06 Mar 06): Thailand's spatreatment export industry, particularly to Japan, has great potential given the growing taste worldwide for Asian products, says a Japanese expert. (Bangkok Post)

Source: Bank of Thailand

THAI load factor high despite uncertainties (07 Mar 06): Regional travel agents say the political climate has not triggered any unusual cancellations for air travel to Thailand. International passengers, travel agents and tour operators have reacted calmly to current trouble surrounding caretaker Prime Minister Thaksin Shinawatra, according to airline executives. (Bangkok Post) Travel trade ignores politics for questions about airport (13 Mar 06): International participants at the world's largest travel show, ITB Berlin, appear more interested in when Suvarnabhumi airport will open than in the political turmoil currently affecting Thailand, according to Thai exhibitors. The reaction came as a surprise for Thailand's travel and tourism representatives, who had spent considerable time preparing assurances that the kingdom was still a good destination despite political wrangling. (Bangkok Post)

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60,000 Chinese and Singaporean tourists cancel Thailand visits due to political crisis (20 Mar 06): Thailand's tourism has begun to feel the pinch of ongoing political crisis as more than 60,000 Chinese and Singaporean tourists have cancelled trips to the kingdom during the past three weeks, Thailand's tourism agency said Monday. (MCOT) THAI teams up with TAT and Star Alliance to stimulate local tourism (20 Mar 06): Thai Airways International Public Company Limited (THAI) has teamed up with the Tourism Authority of Thailand (TAT) and the Star Alliance to organize additional programs to stimulate local tourism under the Star Alliance Visit Thailand Campaign, which will last until September this year. (MCOT)

OTHERS SMEs' economic role shrinks (03 Mar 06): The government's budget for SMEs increased over the first four fiscal years of this decade, but gross domestic product of SMEs declined during that time, Aat Pisanwanich, director of the SME Study Centre of the University of the Thai Chamber of Commerce, said yesterday while presenting a new study the centre completed last month. (The Nation) FTI and EXIM Bank to encourage entrepreneurs to invest overseas (03 Mar 06): The Federation of Thai Industries (FTI) has teamed up with the Export and Import Bank of Thailand to encourage local entrepreneurs to invest overseas, particularly the countries where labor costs are low especially in Vietnam, Laos, and Cambodia. (MCOT) Future of factoring services lies in SMEs (08 Mar 06): Venture capital firms predict a positive future for factoring services, with small-and medium-sized enterprises representing a huge potential market as banks tighten small business lending criteria. Factoring services allow companies to sell off accounts receivable in exchange for ready cash. (Bangkok Post) Experts see more mergers this year (08 Mar 06): Merger and acquisition activities in Thailand are expected to rise this year, particularly in the energy, telecom, finance and auto sectors, according to local experts. Nattawat Chunhawuttiyanon, director for advisory services at PricewaterhouseCoopers, said Thai firms had begun seeking funds through mergers and acquisitions (M&A) to expand their markets and enhance their competitiveness. (Bangkok Post) Applied science, technology research pact for practical benefit to society, economy (14 Mar 06): Seeking to translate Thailand's theoretical science and technological research into applied benefits with tangible results for the wider society and economy, two leading institutions which are The Federation of Thai Industries (FTI) and the Thailand Institute of Scientific and Technological Research (TISTR) announced a creation cooperation partnership to promote the shared commercial use of scientific and technological research. (MCOT)

Exporters likely to see less impact than makers of goods sold locally (17 Mar 06): The current political turmoil is likely hurt many businesses whose products are sold locally while exporters may be affected less because their major demand comes from offshore. However, big exporters remain optimistic that the political deadlock will be solved soon and investment in Thailand will continue to thrive in the longer term, says Satit Sirirangkamanont, the secretary-general of the Board of Investment. (Bangkok Post) FTI, military school to train more workers (21 Mar 06): The Federation of Thai Industries (FTI) is joining with the Military Technical Training School (MTTS) to produce more skilled labour to support the expansion of the industrial sector. (Bangkok Post) Investors go ahead with three mega projects in Thailand (23 Mar 06): The Board of Investment of Thailand (BOI) has granted investment promotional privileges to three major investment projects in the country worth 52 billion baht totally, saying the current political turmoil has not affected the investment. (MCOT) Export Promotion Dept to expand Thai franchises into US and Japan (23 Mar 06): The Export Promotion Department is set to expand the Thai franchise business into the United States and Japanese markets following a successful positioning of many franchises in neighboring countries and Asian markets. (MCOT) Govt plans to promote Thai foreign franchising (28 Mar 06): The Commerce Ministry is planning to push large-sized Thai enterprises into creating franchise operations overseas in order to compete with international brands. Commerce vice minister Suvit Maesincee said yesterday the ministry would attempt to persuade big Thai companies to develop franchise businesses to strengthen their competitiveness alongside other global franchises. (The Nation)

www.ThailandOutlook.com

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