Tuesday, February 26, 2008

Thai Economy Expected to Grow 5.5%

Exports grew 18.1% last year

By . Agence France-Presse

Feb. 26, 2008 -- Thailand's leading economic think tank, the National Economic and Social Development Board (NESBD), on Feb. 25 revised sharply upward its growth forecast for 2008, amid expectations for a surge in exports and increased private investment. The economy is now expected to grow between 4.5%-5.5% this year. "I would not have the confidence to make this forecast if I did not have solid data on major new investments and exports, in addition to the positive economic upturn in the final quarter of last year," Ampon Kittiampon, NESDB's secretary general, said.

Thailand posted 5.7% growth in the fourth quarter last year, beating market expectations, the board said. Whole-year growth was 4.8% for 2007.

Last year's growth was powered by exports, which rose 18.1%, despite fears that the strong Thai baht and the weak U.S. dollar would weaken sales to the U.S., the kingdom's biggest trading partner.

The Thai baht is trading at 10-year highs against the dollar, but the think-tank predicted that exports would continue to grow by 12% this year. Inflation is also expected to rise this year, reaching 3.2%-3.7%, against 2.3% last year, the NESDB said.

Ampon said the sunny outlook was helped by a slate of investment plans already approved by the Thai Board of Investment, including new developments in petrochemical, automaking, and electronics.

Despite fears of a slowdown in the U.S. economy, growth in exports to China and new markets in Eastern Europe should help cushion any downturn, he said. "Thailand's economy is likely to show sustained growth, although there are concerns about high oil prices, rising prices for consumer goods and a slowdown in the global economy," he said. "Those factors will affect the economy less if the government carries on its policies with proper financial and monetary measures, while making the private sector feel confident in the economy," Ampon said.

Thaksin To Return To Thailand Thursday

February 26, 2008 8:31 a.m. EST

Vittorio Hernandez - AHN News Writer

Bangkok, Thailand (AHN) - After 17 months of exile, deposed Thai Prime Minister Thaksin Shinawatra is returning home Thursday to face corruption charges leveled against him. Like the return of former Pakistani Prime Minister Benazir Bhutto, Thaksin's homecoming may result to political turmoil for Thailand.

But new Prime Minister Samak Sundaravej allayed fears of political unrest. "I want to urge the Thai people not to be concerned... I do not anticipate any unwanted incidents. There will be no chaos," Samak told media.

Thai Foreign Minister Noppadon Patama, a friend of Thaksin and his former lawyer, broke the news about the former prime minister's return. The two met in China over the weekend.

Army commander Gen. Anupong Paochinda, one of those who led the coup against Thaksin, said the former prime minister will be provided police security.

Thaksin is scheduled to arrive 9 a.m. on Thursday. Upon his arrival, he will surrender to the police and try to post bail for the cases filed against him. Thaksin's wife Pojaman returned home ahead on January and posted bail for a corruption and conflict of interest charge filed against her arising from her purchase of a prime real estate in the country's capital city.

Aside from corruption charges, Thaksin also has a separate case for concealing assets. He is prohibited by law to hold a political office for the next five years.

Monday, February 25, 2008

Coastal Energy announces drilling program in Thailand

Coastal Energy (the "Company" or "Coastal") (TSX VENTURE:CEN)(AIM:CEO) an independent exploration and production company with assets in South-East Asia, announces that drilling of the South Phu Horm-1 ("SPH1") has now commenced. The well is located in Block L15/43 which surrounds the Phu Horm gas field and will be drilled to a total estimated depth of 2462 metres, sub-sea.SPH1 is the second of a two well drilling programme operated by APICO (Korat) Limited who have a 100% interest in the concession. Coastal is APICO's largest shareholder with 36.1 percent interest. The well, which is being drilled by the Ensign No. 16 rig, will test the possible extension of the Phu Horm gas field further south, outside the current production area into Block L15/43 which is 100% owned by APICO.The Phu Horm field came on stream in November, 2006 and is currently producing between 90 - 105 million cubic feet of gas per day. APICO has a 35 percent interest in the Phu Horm field.Coastal's Chairman, Frank Inouye commented, "South Phu Horm-1 is a key well in the APICO onshore drilling portfolio for 2008. The well not only has the potential to confirm the extension of the Phu Horm gas field south, into acreage that is 100% owned by APICO, but more importantly, verify significant additional reserves for the field."Notes to Editors- Coastal Energy is an oil and gas exploration, development and production company, with core assets onshore and offshore Thailand.- The Company specialises in identifying and developing under-exploited or "orphaned" assets. Management has proven experience at identifying and unlocking value from overlooked, abandoned, low risk assets with proven hydrocarbon potential- This strategy has enabled the Company to assemble an asset base in Thailand that includes production of approximately 11.5 mmcf/d of gas under long term contract and offshore oil fields currently under development- Production growth over the next 12 -18 months is expected to grow exponentially and proven, probable and possible reserves are 45.3 million barrels oil equivalents(i)- The Company's current assets include:- Offshore Thailand-- 100% of block G5/43 - two oil fields currently under development with several other appraisal and exploration opportunities. Production is expected to commence Q3 2008- Onshore Thailand-- 12.6% net interest in blocks EU1 and E5N which include the Phu Horm gas field currently producing between 90 and 100 mmcf/d-- 36.1% net interest in block L15/43 surrounding the Phu Horm field-- 36.1% net interest in block L27/43 - containing the undeveloped Dong Mun gas field-- 21.7% net interest in block L13/48 located adjacent to blocks L15/43 and L27/43, contains Si That discovery- For additional information, including the Company's complete competent person's may be found on the Company's website, www.coastalenergy.com or may be found in documents filed on SEDAR, www.sedar.com.(i) BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.Frank Inouye, President, CEO and Director of the Company, and a member of the American Association of Petroleum Geologists, has reviewed the contents of this announcement.These securities have not been registered under United States Securities Act of 1933 (the "US Securities Act") or the securities laws of any state and may not be offered or sold in the United States or to US persons (as defined in Regulation S under the US Securities Act) unless an exemption from registration is available.
"The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release."

Saturday, February 23, 2008

Asian investors to re-invest in Thailand

23 Feb, 2008, 2123 hrs IST, AGENCIES
BANGKOK: Major Japanese and Indian investors are now prepared to resume their investments in Thailand, Suwit Khunkitti, Thailand's deputy prime minister and industry minister, said. His remarks were made after Hiroshi Shimozuma, chairman of the Kansai Economic Federation (Kankeiren) of Japan, yesterday asked him earlier in the day about the Thai government's investment policy for 2008 and 2009, as Japanese private investors wanted to invest more in Thailand. Cooperation in the fields of trade and investment between the two countries would grow significantly thanks to the implementation of the Japan-Thailand Economic Partnership Agreement (JTEPA). Suwit said his ministry would assign the Board of Investment to cooperate with Japanese Chamber of Commerce and Bangkok-based Japan External Trade Organization (JETRO) to help solve problems for Japanese investors in Thailand. Japanese investors are keen on investing in steel, vehicles and vehicles spareparts industries in Thailand, he said. In another meeting with Subramanium Ramadorai, CEO and managing director of Tata Consultancy Services Ltd , a major manufacturer of auto and steel in India, Suwit said the company was interested in investing in steel, auto and information technology businesses in Thailand. Meanwhile, Prime Minister Samak Sundaravej told a press conference that Japanese ambassador to Thailand Hideaki Kobayashi and Kankeiren chairman Shimozuma had meting with him yesterday. Samak reported that Japan's ambassador had told him that Japanese investors are now prepared to resume investment in Thailand as this country now has an elected government. The Tokyo government is prepared to provide a loan at 1. 4 per cent interest for the elevated train running from Bang Yai in Nonthaburi province, passing through Bang Sue to Ratchaburana in the city's Thonburi side, Samak added.

Thailand reinstates Thaksin's passport

Published: Feb. 23, 2008 at 1:58 PMBANGKOK, Feb. 23 (UPI) -- Thailand has officially reinstated the diplomatic passport of former Prime Minister Thaksin Shinawatra, a source has confirmed.The high-level source said the former prime minister, whose diplomatic passport was revoked following a coup in 2006, was re-issued a diplomatic passport by the Thai Foreign Ministry, The Bangkok Post reported Saturday.The diplomatic move comes nearly two weeks after Thaksin's former aide, Noppadon Pattama, was appointed foreign minister for Thailand.Upon assuming his position at the Foreign Ministry, Noppadon said Thaksin was eligible for the same benefits and rights granted to all past prime ministers who were once issued special passports.While the source said the reinstatement of Thaksin's diplomatic passport was a matter of equal treatment, the Post said it has been suggested it was special treatment meant to facilitate Thaksin's return to Thailand.

Commerce minister sees Thai exports rising to 12.5% in 2008

BANGKOK, Feb 23 (TNA) – Despite a trade deficit in January, the first in 18 months, Commerce Minister Mingkwan Saengsuwan is optimistic that Thailand's exports this year will grow as much as 10.5 to 12.5 per cent over 2007.
Mr. Mingkwan, also deputy prime minister, said Thailand last month exported goods worth about US$13.96 billion, up 33.3 per cent year-on-year, while imports totaled US$14.61 billion, an increase of 49.1 per cent from a year ago.
January's trade deficit was attributed to a payment amounting to US$239 million for Airbus aircraft and on oil drilling platform by energy giant PTT Pcl. amounting US$532 million, he said.
However, Mr. Mingkwan said he was confident that exports this year should grow between 10.5-12.5 per cent, or some US$165-169 billion compared to a trade surplus of about US$12.47 billion in 2007.
The commerce minister said he would meet next week with Thai commercial attaches posted around the world.
Thailand will find ways to further penetrate Chinese, Indian and African markets, and to encourage local exporters to ship more goods to countries which have signed free trade agreements with the Kingdom in order to achieve export goals. (TNA)-E111
Business News : Last Update : 12:23:35 23 February 2008 (GMT+7:00)
Ongoing volatility for Thai stocks; baht stronger against dollarThailand earns surplus on agro exports to Australia7% VAT for 2 more years; farm debts on hold 3 yearsCommerce minister sees Thai exports rising to 12.5% in 2008Japanese, Indian investors ready to re-invest in ThailandGovernment warned not to intervene in pricesPut capital market development on national agenda: SET

Friday, February 22, 2008

Star Petroleum To Delay IPO; Esso Thailand IPO On Track

February 19, 2008: 01:13 AM EST

BANGKOK -(Dow Jones)- The initial public offering of Star Petroleum Refining Co., a Thai unit of U.S.-based Chevron Corp. (CVX), is likely to be postponed until the fourth quarter, while the IPO of Esso Thailand remains on track for April, a senior government official said Tuesday.

"The executives of SPRC have informed that it will put off the share offering to the fourth quarter since the process takes time," said Energy Ministry Permanent Secretary Pornchai Rujiprapa.

"However, the ministry has asked the company to rework the IPO plan to speed up the process to have its shares floated around late third quarter or early fourth quarter."

SPRC, 60%-owned by Chevron and 40%-owned by PTT PCL (PTT.TH), had been expected to float its shares around mid-2008. It operates a 150,000 barrel-a-day refinery in the country's eastern seaboard area.

Pornchai said the IPO of oil refiner Esso Thailand, a unit of ExxonMobil Corp. (XOM), will take place in April as planned.

Esso plans to sell at least 25% of its shares in April, and list on the Stock Exchange of Thailand in early May.

After the share sale, ExxonMobil will own 67.5% of the Thai unit from 87.5% currently, the company has said in a filing to the Securities & Exchange Commission.

The Finance Ministry's 12.5% stake in Esso is likely to fall to 7.5%.

Esso has a refining capacity of 177,000 barrels a day and a 13% share of Thailand's refined oil market. It also operates an aromatics plant which annually produces 500,000 tons of paraxylene.

-By Supunnabul Suwannakij, Dow Jones Newswires; 66 2266 0744; tu.suwannakij@ dowjones.com

Thailand expects natural gas fields to provide big boost this year

Tuesday, February 19, 2008

BANGKOK: Three natural gas fields in the Gulf of Thailand will start producing about one billion cubic feet of natural gas per day in 2008 to feed power-hungry Thailand, the country's top energy firm, PTT, said on Tuesday.

All of the new supplies of natural gas from the Arthit, Arthit North and Block A18 fields in Malaysia and Thailand's joint development area, totaling 28 million cubic meters a day, will be used to produce electricity to catch up with rising demand in recent years, said Chitrapongse Kwangsukstith, a PTT official.

"After years of developing, we'll get a lot of new gas this year," said Chitrapongse, the chief operating officer for PTT's upstream and natural gas operations.

"We'll have gas from Arthit field, which should start producing gas late this month, followed by Block A18 in April and the Arthit North in August," Chitrapongse said.

Domestic demand for natural gas rose by about 10 percent in 2007, with demand projected to grow at the same pace to 2012 as power plants and chemical firms switch from expensive imported oil to natural gas-driven plants and more natural gas is used in automobiles.

Natural gas accounts for two-thirds of the fuel used to generate electricity in Thailand.

Initial output from the Arthit field, operated by PTT Exploration and Production, would total about 330 million cubic feet per day, while the Arthit North would produce just under half of that and Block A18 would deliver 400 million cubic feet per day.

"Natural gas volumes will rise to 4,300 to 4,400 million cubic feet a day by the end of this year," Chitrapongse said, up from 3,400 to 3,500 now.

PTT, which has signed a 10-year contract to import 1 million tons a year of liquefied natural gas from Qatargas starting in 2011, also aims to sign deals soon with two more LNG suppliers, but he did not identify them.

"Altogether, there should be about two million tons of new gas coming before end of the first half of this year," he said.

In 2006, PTT signed a preliminary agreement with Pars LNG of Iran to buy three million tons of LNG a year for 20 years, but the deal has been delayed. PTT was also negotiating with other LNG suppliers from South Africa, the Middle East, Indonesia and Australia, Chitrapongse said. PTT expected to see strong growth in sales of natural gas this year, supported by increased flow, he said.

The company has yet to report 2007 results but sales in 2006 totaled 1.2 trillion baht, or $38 billion, of which $7.5 billion came from its natural gas business.

Thaksinomics, Redux

February 22, 2008

Thailand's new Prime Minister this week gave some indication of his government's planned economic policies and it's back to the future. By promising to revive Keynesian economics, Samak Sundaravej is hearkening back to "Thaksinomics," the populist agenda that endeared former Prime Minister Thaksin Shinawatra to rural voters. While politically that might seem a savvy move, economically speaking it's a big mistake.

Mr. Samak has yet to lay out all the details of his plan, but here's what we know so far: On Monday, he delivered a policy statement to Parliament outlining his government's priorities. Citing the subprime crisis and rising inflationary pressures, Mr. Samak wants to lay the "groundwork for stable and sustainable growth," shift Thailand's manufacturing sector to higher-end products and attract foreign investment.

[Samak Sundaravej]

By using words such as "growth" and "foreign investment," Mr. Samak is distinguishing himself from the former military junta, which had a distinct disdain for both. But Mr. Samak's first order of business isn't serious structural economic reform. Like Mr. Thaksin's administration, the Samak government would prime the fiscal pump by expanding state health-care coverage, giving money to "village funds," building public housing, backing megainfrastructure projects, providing soft loans to small and medium-sized businesses, and imposing a debt moratorium for farmers. And that's just a partial list of his spending plans.

It's hard to estimate how much Mr. Thaksin spent on his Keynesian adventure, given that some of those projects weren't included on the federal government's balance sheet but, rather, funded through state banks. Rough estimates put Thaksinomics outlays around 100 billion baht ($3 billion) a year. Mr. Samak has mentioned "mega-projects" of 500 billion baht. That's big money for a central government whose total projected revenue for 2007 was 1.5 trillion baht.

[Thaksin Shinawatra]

The irony here is that Thaksinomics was never a great success. Mr. Thaksin's hodge-podge spending projects didn't do much to upgrade the country's export sector, attract foreign investment or boost overall economic growth. Rather, Thailand under Thaksin -- like much of the rest of Asia -- enjoyed the flood of investment dollars created by the U.S. Federal Reserve under Alan Greenspan and the upswing in export demand from the U.S., Europe and the rest of the region. As Thai exports soared, so did tax revenue.

That's not the external environment that Thailand faces today. The Fed may again be flooding the world with dollars, but as the Prime Minister notes, inflationary pressures are mounting. Thailand's consumer confidence is recovering after the military junta's economic mismanagement but it is still fragile. Foreign investment in Thailand lags that of its Asian peers. Couple that with shaky financial markets, and there's no guarantee Thailand will enjoy robust investment or buoyant export demand this year.

Mr. Samak's newly elected government would serve its constituents better if it kept its spending promises constrained and focused on making Thailand an easier place to do business. It could start by cutting corporate and personal income taxes, getting rid of all capital controls and reinvigorating free trade talks. Rather than borrowing money to increase the government deficit, Mr. Samak could aim for a balanced budget.

It's possible that the Prime Minister wants to cement his government's popularity with its rural voter base before turning to reform. But as any Japanese politician could tell you, once a government starts down a road of handouts and infrastructure spending promises, it's hard to turn back.

Thursday, February 21, 2008

Oxiana touts Thai iron ore discovery

GOLD and copper producer Oxiana has flagged an "outstanding" iron ore discovery in Thailand after the company delivered a drop in full year earnings.

Oxiana (oxr.ASX:Quote,News) managing director Owen Hegarty said it was still "early days'' for the discovery, in the south east of Thailand, but was upbeat about its potential.

"The workers uncovered what we believe is some outstanding iron ore potential there, and we'll be following that up as you would expect with great gusto,'' Mr Hegarty told analysts in a conference call.

Oxiana has lodged applications over the prospective area and is permitted to do basic work, but not yet allowed to conduct drilling.

Mr Hegarty said the iron ore was "mostly'' high grade hematite and located in "good proximity to infrastructure''.

"It is good geographics, but the problem with Thailand at the moment is the political situation,'' Ord Minnett analyst Peter Arden told AAP.

"Kingsgate (Consolidated) is still trying to get its gold mining leases granted.''

Gold miner Kingsgate has been waiting for a number of years for the Thai government to grant mining leases on northern edge of its Chatree mine to allow the operation to expand.

Mr Arden said, however, that there was enormous interest in iron ore at the moment and Oxiana would likely find "some pretty willing partners'' to fund some of the development.

Oxiana today reported net profit of $305.8 million for the 12 months to December 31, a 45 per cent drop on the previous corresponding period's result of $553.17 million.

The result was short of the average analyst consensus of $320 million.

Oxiana said strong production was offset by a "stronger Australian dollar, a weaker zinc price, and a higher effective tax rate''.

The company has started paying tax at the full corporate rate in Laos where its flagship Sepon copper and gold operation is located.

Mr Hegarty was bullish on the outlook for global economic growth, despite a slowing in the United States, and the strength of prices and demand for commodities this year.

He said China was showing "powerful'' growth and said "the demand for all of the material and commodities that we are interested in continues to grow''.

The company reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $595.1 million, down from $827.18 million.

Oxiana declared a dividend of 4 cents per share, taking total dividend repayments for the year to 8 cents. Shares in the company were 13 cents higher at $3.50 by 12.47pm (AEDT).

Friday, February 8, 2008

Thaksin to return to Thailand before May: foreign minister

BANGKOK (AFP) — Deposed prime minister Thaksin Shinawatra will return to Thailand from a self-imposed exile before May, the kingdom's new foreign minister said Friday.
"Definitely he will return before May and his legal team will work out an exact date," Foreign Minister Noppadon Pattama told reporters.
Until he was sworn in as a cabinet member on Wednesday, Noppadon had been a personal lawyer for Thaksin, ousted by the army in a coup in September 2006.
Since then, the former prime minister has been living in exile, mainly in Hong Kong and London. His wife Pojaman last month told a court that Thaksin would return to Thailand in May.
The former first couple face corruption charges filed by the previous military government. Pojaman, who returned from Hong Kong in early January, appeared at the Supreme Court and pleaded not guilty in a statement.
The new foreign minister said Thaksin had called to congratulate him on his new job.
Noppadon was one of several close aides to Thaksin who joined the government of Prime Minister Samak Sundaravej, taking key posts including the finance minister and deputy prime minister.
Thaksin's allies were voted back into power in December in the first elections since the bloodless coup.
Samak told reporters that his government had no involvement in planning Thaksin's return, but said the former premier should receive a fair trial when he goes to court.
"He wants to defend himself, but some have their own prejudices against him. There are people who think they are above the judges, and I don't think that's right or appropriate," he said.
Thailand's army chief, General Anupong Paojinda, said he did not believe that Thaksin's return would spark new protests like the street demonstrations that precipitated the coup.
"I don't think his return will cause any conflicts among Thais. Our country had suffered huge losses, so people should put their personal issues behind them," he told reporters.
Popular protests, led mainly by Bangkok's middle class, had rattled Bangkok for months in early 2006 with demands for Thaksin to resign over allegations of corruption.
The leaders of the protests have already threatened to return to the streets if the new government interferes in the court cases against Thaksin.

Thursday, February 7, 2008

Thailand to reconsider currency controls: finance minister

BANGKOK (AFP) — Thailand's new finance minister, Surapong Suebwonglee, said Thursday he would meet with the central bank next week to consider lifting currency controls, as he prepares a plan to boost the economy.

The review of the controls, imposed by the previous military regime in a bid to halt the baht's rapid rise against the dollar, would be included in an overall review of the nation's exchange rate policies, he said.

"However, if any measures are not working, they must be cancelled," he told reporters on his first day in the job.

The military junta that ousted prime minister Thaksin Shinawatra imposed tough currency controls in December 2006 in a bid to a rein in the strengthening baht.

The controls spooked foreign investors and caused the biggest one-day drop in the Thai stock market in late 2006, with losses worth 23 billion dollars.

Many exemptions have since been made to the currency rules, including some just this week, but the general policy remains in place.

Along with the capital controls, the junta's proposed changes to a controversial law aimed at tightening foreign investment also left foreign investors jittery over making new business plans in Thailand.

But Foreign Minister Noppadon Pattama said his first priorities in office would be to rebuild investor confidence and reassure business leaders at home and abroad that Thailand's politics and economy would remain stable.

"My first job is to restore the country's image and to make investors confident, particularly about the stability of Thailand's politics and economy," Noppadon, a former lawyer for Thaksin, told a news conference.

Surapong said the finance ministry would unveil its plan to revive the economy before February 20, the deadline for the government to present its policies to parliament.

The plan would include tax measures as well as schemes to stimulate the economy at the grassroots level, including an expansion of popular rural development programmes, he said.

"I want everyone to feel confident in the economy," he said, predicting that growth would pick up within six months.

The new finance minister predicted that the economy would grow by up to 5.5 percent this year, as previously forecast by the ministry.

In a January meeting with reporters, Surapong said he would revive Thaksin's populist economic policy if he became the finance minister.

Thaksin injected money into the rural economy through measures including debt relief, investment funds and cheap medical care and boosted incomes of farmers, who make up the majority of Thailand's population of 64 million.

The kingdom's top business leaders also urged Surapong to introduce an economic stimulus package to shore up the economy, which grew just 4.8 percent in 2007, ranking among the lowest in Southeast Asia.

Adisak Rohitasune, vice chairman of the Federation of Thai Industries, the kingdom's largest business group, said Surapong should keep the capital controls to rein in the baht, which stood at 10-year-highs against the dollar.

The strong baht makes Thai exports less competitive abroad and cuts the value of repatriated profits.

Thailand is the world's biggest exporter of rice and also a major producer of cars, textiles, electrical appliances, fruit and shrimp. Exports alone account for more than 60 percent of the economy.

Wednesday, February 6, 2008

Thailand's new minister asked to scrap reserve rule

Finance Ministry officials will propose that new minister Surapong Suebwonglee review the Bank of Thailand's 30% reserve requirement on capital inflows, according to Pannee Stavarodom, the director of the ministry's Fiscal Policy Office (FPO).

The governing People Power Party (PPP) promised in its campaign last year that it would scrap the capital controls that took effect in December 2006. Their main aim at the time was to slow the appreciation of the baht.

Mrs Pannee said the controls should be lifted if they are no longer deemed necessary because compliance had increased operating costs for businesses.

''[The government] should review whether the measure remains necessary. If not, it should lift it,'' she said.

''The option to fully hedge is an additional cost to businesses. And the central bank regards the capital controls as virtually non-existent.''

The 30% rule initially required foreign investors to set aside 30% of their inflows with the central bank for one year as an unremunerated reserve, meaning they would receive no interest. Transactions of less than one year in duration would be subject to a 10% penalty.

The central bank has since eased the rule to exempt inflows into the Stock Exchange of Thailand, but maintains the reserve requirement for investments in the debt market and property funds. Investors can also choose to fully hedge their transactions against the duration of their transactions to bypass the rule.

Mrs Pannee said the FPO would propose options to Dr Surapong to help ensure that the baht moved in line with regional currencies even if the capital controls were scrapped.
PPP officials, meanwhile, said that the government could pressure the central bank to reduce its interest rate to narrow the gap with US rates. The local one-day repurchase rate is now 3.25%, against the Fed Funds rate of 3%.

Mrs Pannee declined to comment on central bank monetary policies, but agreed that the baht could appreciate if domestic rates were higher than offshore rates. ''Capital flows move in line with returns. Inflows will prove beneficial when the economy is in need of liquidity. Otherwise, it will be an additional cost.''

She said the government should ensure that the baht moved in line with regional currencies.
''The FPO will propose various options to the government. It depends on the ministry's decision, whether the measure will be adopted or not,'' she said.
Suparut Kawatkul, the ministry's permanent secretary, agreed that existing capital controls cannot completely block volatile capital inflows.

''We can't halt capital inflows, but we can slow them,'' Mr Suparut said recently. ''The question is whether we can really control these flows, and what the side effects might be.''

He said the waiver for equities even as the 30% rule continues to apply for the bond market created disparities. Foreign participation in the bond market has fallen sharply, hindering the development of the country's debt market.

Another cost of the controls has been added administrative expenses for financial institutions as well as companies with offshore subsidiaries or borrowings.

''The fact is, it's still an open debate on whether the 30% rule has helped or hurt. Without the rule, the baht could be stronger. But I don't think that this measure alone will help address the issue of currency appreciation,'' he said.

Tuesday, February 5, 2008

Thailand's Travel Tidbits

Travel industry to maintain growth


In 2008 the global tourism industry is expected to maintain the five percent growth it posted last year while service quality, environmental concern and social responsibility will become key factors for travellers in choosing their destinations, says a study by the international tourism consulting group IPK.

Asia will lead in terms of both inbound and outbound travel, and according to the study, travel patterns may change. For example, the US market will favour Asia at the expense of Europe, while the increase in oil prices that led to rise in fuel surcharges have had "almost no impact" on travel demand because travel has become an integral part of people's lives and it is not likely to be sacrificed for whatever reason, the study noted.

The other reason is that the cost of travel continues to decline in real terms. Asia will become the new leader of travel and tourism, outperforming all other regions of the world. This is clearly seen by the massive number of aircraft on order by airlines in the region, and by non-Asian airlines planning to expand capacity into Asia. The growth in Asia this year will also be stimulated by the Olympic Games in Beijing, China.

All age groups are increasingly looking to travel to provide an enriching experience, whether this involves activities, adventure or more community based educational experiences. Stronger focus on hospitality, authenticity and tradition are all considered important, as well as there is an increasing demand for uniqueness, individuality and sustainability.

"Quality is now the buzzword," said Rolf Freitag, president and founder of IPK International. "It is rapidly replacing the 'cheap is chic' slogan," he said.

Internet is another important factor that can give travellers greater control of their travel decisions because they increasingly turn to individual web sites to research their travel options, monitoring consumer views rather than having to rely on suppliers and the travel traders. This has increased individual travel, both among young people and the growing numbers of seniors who have more time on their hands.

In addition to the issue of climate change and other related issues such as social responsibility are starting to influence travellers' choice of holidays and destinations.

Some aspects of maintaining the local environment and being "socially conscious" are increasingly attractive to travellers - particularly those associated with local culture and communities.


Mekong tourism

Tourism ministers from countries that make up the Greater Mekong Sub-region (GMS) agreed at a meeting held recently in Bangkok to launch the so-called "Visit Mekong Year 2010" campaign to promote tourism.

According to Mekong Tourism Office (MTO), the idea was presented by Peter Semone, its senior advisor. The year-long campaign aims to increase awareness about tourism products available to international travellers in the sub-region that includes Cambodia, Laos, Burma, Thailand, Vietnam, and Yunnan and Guangxi provinces of China.

"There will be activities in each country and their private sectors will be fully involved. Our aim is to establish the Mekong sub-region as a recognised destination brand," Semone noted.


Maps that matter

ESRI (Thailand), a one-stop GIS service provider, has published a map detailing travel routes and destinations in Thailand accompanied by short descriptions and related views.

Called Highway Map, it is an updated version of the previous issue and has new maps of places such as Pai, Mae Sot and Pak Chong. It has information on an additional 1,000 new locations complete with GPS coordinates and phone index that make it easy to read. The book costs 345 baht.

Meanwhile, Sarakadi Press has published Map of 76 Provinces: Travel Throughout Thailand. The map expands on the previous issue, but what is more interesting is that both the versions complement each other. On the facing page of each map is information about places of interest, where to eat or buy souvenirs. It's priced 350 baht. Both maps come only in Thai language.

If you have comments or news to share, email to karnjanak@bangkokpost.co.th.

Thailand's RFID Truck and Logistics Tracking


Active RFID technology helps keep SCG Logistics' lignite shipments on schedule


Radio Frequency Identification (RFID) technology has proved itself in the logistics sector with a large Thai shipping company, SCG Logistics Management, effectively using active RFID technology to manage a fleet of delivery trucks.

With a total of some 3,000 trucks, the SCG Group transports more than 200 different products and has a total of over 7,000 transactions a day and RFID has improved the efficiency of its logistics and inventory management in the transportation of lignite.

SCG Logistics Management system management department manager Vinit Vichittanaporn said the company provided distribution services to all regions of Thailand, including making international deliveries to Laos, Vietnam and Cambodia.

Vinit said that various products required different management approaches but stressed that the technology deployed had to depend on business needs.

RFID was suitable for a job that had a lot of transactions involving a large amount of automatic, real-time data, he said, adding that the company had begun by implementing a transportation management system (TMS) in 2001 to optimise the logistics system.

In the original transportation model, SCG Logistics had faced many problems. Vinit cited the company's distribution of lignite which had to be taken from the mine at Mae Moh in Lampang to three cement factories in Saraburi at Taluang, Kangkoi and Tawong.

Some 800 trucks made 150 trips a day transporting lignite for 15 carrier companies. "The trucks had to wait for one another and they often had to switch to other plants if the storage space at the plant they had gone to was full, and this had caused extra fuel costs," Vinit explained.

He added that before there had been no visibility to monitor fleet capacities, with long waiting times for trucks and a lot of documents such as shipping documents, courier invoices, weight reports that had to be filled out. Moreover, there was the problem of data delays and inaccurate invoices, he said.

Thus, SCG Logistics had looked for a solution and had made a comparison between an RFID- and a GPS-based (geographic positioning service) approach. The company had decided on RFID and started implementing it at the end of 2005 and today the technology has been applied to lignite shipments and would be further expanded to manage the logistics of another two raw materials: gypsum and coal, he said.

During the pilot testing system, the company exploited active RFID technology at a 2.4GHz (microwave) frequency.

The active RFID tags were attached to 30 trucks while the readers were placed at the destinations, such as at the entrances to the mine to read data from a distance while the trucks were moving and at weighing machines in order to compare the weights of products at the origin and the destination.

"We also integrated the RFID system with our ERP and the real-time enterprise application integration (EAI) systems," Vinit explained.

SCG's RFID web tracking was also connected to its customers' ERP system and thus customers did not need to key in the fleet data because this information would show on their monitors in real-time. It also could track the status of each truck during the transportation.

Initially, said Vinit, the company had faced network failures, a lack of integration of the systems, disconnections between weighing stations at the mine and at the plants, power failures, human errors, non-processed procedures and issues with new trucks and carriers.

However, the company was eventually able to get accurate information since RFID chips have a unique identifying number and the system was free from human intervention that would ensure that they would get reliable truck identification and arrival times, he said.

With accurate, real time information on individual vehicles, an operation plan that would maximise the usage of each vehicle could be worked out. All the information was in electronic format and this could easily support paperless operations, such as the calculation of fleet charges.

"Contractors are also happy because the information is in real time. The drivers can get their wages as soon as their job is done and need not wait a long time, as had been the case before," Vinit said, adding that the company could reduce the number of workers involved.

The company is now implementing RFID to track imported coal from Ayutthaya to its customers and will implement an RFID reader at the stockpile. SCG Logistics Management now plans to expand RFID to other fleets in the near future, such as to those shipping gypsum and rolls of paper.

Thailand's PTT to form $900m LNG joint venture

In talks with Egat, Egco on terminal


PTT Plc is in talks with the Egco Group and the Electricity Generating Authority of Thailand (Egat) to form a new business venture to run a $900-million liquefied natural gas (LNG) project.

Chitrapongse Kwangsukstith, PTT's chief operating officer for upstream and gas operations, said the discussions followed a 2006 agreement among the three partners to explore possible investments in LNG.

LNG operations have been delayed for more than a year, after PTT failed to close a supply deal with Iran for LNG from the Pars field in that country due to disagreements on price.

PTT had signed a deal in 2006 with the operators of the Pars field to purchase three million tonnes of LNG per year for 20 years.

PTT president Prasert Bunsumpun said the company needed to move forward with a venture to meet rising gas demand over the next five years.

''We are discussing what share each party should hold. We are not yet at the final stage, but it must be completed soon,'' he said.

PTT would retain a majority share in the proposed LNG import terminal, he added.

PTT, the country's largest energy conglomerate, typically maintained 35% to 45% stakes in joint ventures and generally expresses a preference to hold management authority.

Under the 2006 memorandum of understanding with Egat and Egco, the LNG business would be initiated by PTT, with other partners brought in at different phases to help finance the massive capital investment required by the project.

Mr Chitrapongse said project investment would begin by the end of the year, with the calling of a bid for contractors for the LNG tank terminal and a five-million-tonne storage facility. The terminal is scheduled to start operating in 2011.

The terminal, to be located in the Map Ta Phut industrial area, will be capable of handling the largest LNG supertankers.

On Sunday, PTT executives signed an agreement with Qatargas Operating Co in Doha to purchase one million tonnes of LNG per year with delivery to start in early 2011.

The contract has a 10-year term, and also offers a clause giving PTT priority for another one million tonnes per year of gas if needed.

PTT is also negotiating with other LNG suppliers in Indonesia, with the aim of locking in supplies up to the project's full capacity of five million tonnes per year.

Executives said talks were under way with Australian firms and gas suppliers in the Middle East.

The proposed LNG import terminal could also be expanded to handle double capacity under a second phase if demand growth remains steady.

Piyasvasti Amranand, the energy minister under the Surayud Chulanont government, said the delays in closing the LNG purchase agreement were primarily due to uncertainties about the readiness of Thailand to receive the supplies, and he warned that LNG would cost significantly more than other energy sources used for electricity generation.

Electricity generated from LNG costs around 2.5 baht per unit, compared with two baht per unit for gas sourced from the Gulf of Thailand and Burma or for imported coal.

Hydropower, meanwhile, carries the lowest cost, at 1.8 to 1.9 baht per unit for power transmitted from Laos.

Natural gas already accounts for two-thirds of the fuel used to generate the country's electricity, and authorities say that development of other sources is critical for long-term energy security.

Demand for gas has risen sharply as high oil prices have led firms to switch to gas-driven plants rather than plants using bunker oil and diesel. Consumer use of natural gas for vehicles has also increased thanks to lower prices when compared with diesel or petrol.

PTT shares closed yesterday on the Stock Exchange of Thailand at 326 baht, down two baht, in trade worth 2.56 billion baht.

Thailand's PTT in Talks to Sell Thai LNG Stake to Investors

by Dinakar Sethuraman

Feb. 5 (Bloomberg) -- PTT Pcl, Thailand's biggest energy company, is in talks with local investors to sell a stake in a $900 million liquefied natural gas project, a company official said.

PTT will retain a majority share in the proposed LNG import terminal, a PTT official said, without giving details and asking not to be identified because of company rules. The terminal, in Rayong province in eastern Thailand, will start in 2011, increasing imports to a maximum 5 million metric tons a year.

Southeast Asia's second-biggest economy has increased the use of natural gas in automobiles, power generation and manufacturing amid rising oil prices. PTT signed a deal this month with Qatar to import 1 million tons of LNG a year starting in 2011 and is in talks with other suppliers for additional fuel. Asia's benchmark LNG prices have tripled in the last five years.

``The main concern about Thailand was their ability to pay international prices for LNG supplies,'' Cecile Jovene, head of the gas team at U.S. consultant FACTS Inc., said by telephone from Singapore. ``The preliminary agreement with Qatar indicates that they are willing to go ahead.''

Thailand consumed about 3 billion cubic feet a day of gas in 2006, according to BP's Statistical Review of World Energy 2007. Demand will increase to 7 billion cubic feet a day within 15 years, Prasert Bunsumpun, president of PTT, said in June, of which LNG would account for about 10 percent. More than two- thirds of power plants in the country use natural gas as their main fuel to generate electricity.

Pricey Imports

Thailand may pool expensive LNG with cheaper domestic gas to lower the price of clean fuel for consumers, Jovene said. Consumers paid about $4.6 a million British thermal units for natural gas last year, according to the Web site of Thailand's ministry of energy. By contrast Japan, the world's biggest LNG buyer, paid about $10.2 a million British thermal units during the same period, according to the country's Ministry of Finance.

PTT signed an agreement on Feb. 3 with Qatargas Operating Co. in Doha to purchase 1 million tons of LNG a year starting early 2011, Qatargas said in a statement. The terminal will be designed to receive the world's biggest LNG tankers, on order for Qatar. The company may conclude pricing talks and sign a final contract by the end of this year, the PTT official said.

PTT is negotiating with other suppliers in Australia and the Middle East for additional LNG, the official said. The proposed LNG import terminal, in the Mattaput industrial area in eastern Thailand, may double its capacity in the second phase.

Switch to Gas

Demand for natural gas has risen faster than projected as high oil prices prompt manufacturers to shift to natural gas from bunker oil and diesel, Thailand's Energy Minister Piyasvasti Amranand said on Jan. 28. Thailand imports 25 percent of its natural gas supplies via pipeline from neighboring Myanmar, according to PTT's Web site.

The contract to buy natural gas from suppliers in Qatar will last about 10 years, Chitrapongse Kwangsukstith, PTT's executive vice president, told reporters on Jan. 28.

PTT in July 2006 signed a contract with the operator of the Pars LNG project in Iran to buy 3 million tons of LNG a year for 20 years. The talks with Iran have stalled because the Pars project has not been approved, the official said.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net