Sunday, December 13, 2009

How Thailand's stock market will be this week

Therdsak Thaveeteeratham Senior vice president, Asia Plus Securities

The Stock Exchange of Thailand (SET) Index has been clouded by a series of negative factors including the Map Ta Phut legal case, continued foreign selling, the Vietnamese dong's devaluation and persistently high levels of public debt in several countries. Yet these factors have been absorbed to some extent, as reflected in falling share prices over the past two months. The market has dropped more than 7 per cent in that period, bringing its price-to-earnings ratio (P/E) down from 14 times to 13 times. Foreign net selling topped Bt26 billion in the period. As such, the downside is limited. The main resistance level will come when P/E drops to 12 times, or the index falls to 650 points. However, those are worst-case scenarios.

During this period, investors are advised to accumulate stock when the index hits 690. Attractive stocks with high potential to outperform the market in December and January include: stocks with high dividend yields, mostly in the property and construction-material sectors, which naturally show low P/Es (outstanding stocks are Thai Metal Trade, Dynasty Ceramic, Supali, SC Asset, Ticon Property Fund and Samui Airport Property Fund); stocks that typically outperform the market in December and January (based on data dating back to 1990, these stocks include PTT, Minor International, Makro and Kasikornbank); and stocks that stand to benefit from the SET50 recalculation next year, in which MBK, Cal-Comp Electronics and Italian-Thai Development might be replaced by True, Bangchak Petroleum and Quality Houses.

History shows there is a 90-per-cent chance of new inclusions yielding 7 per cent in the weeks ahead of their actual inclusion. Of these, Bangchak is the most noteworthy. It is expected to offer a dividend yield of more than 10 per cent, with an expected 2009 dividend of Bt2 per share.

When the SET Index hovers near 690 points, it represents an opportunity for accumulation with a focus on stocks in the three groups listed above.

Kavee Chukitkasem

Kasikorn Securities

Last week's volatility was partly due to the long holidays. But a major contributor was the strengthening of the US dollar, which brought down the prices of risk assets such as oil, gold and stocks. Due to a decline in US unemployment to 10 per cent in November, investors feared the US Federal Reserve could raise interest rates faster than expected. The downgrade of Greece's credit rating contributed to the thin trading volume.

The impacts of these events should be short-lived, however. The Fed is not likely to raise rates any time soon, as reflected in Chairman Ben Bernanke's affirmation that the low-rate environment would continue for a while. Meanwhile, Asian rates could be hiked before the US takes action. The dollar could then weaken against Asian currencies, which would lead to inflows to Asian markets. We're positive on the Asian markets' outlook, and have revised our SET Index target for next year from 765 to 830 points.

Despite the rosy outlook, investors in Thailand must stay alert. The Thai market's attractiveness is diminished in the eyes of foreign investors, and volatility will remain during the Christmas and New Year holidays. While the suspension of the affected Map Ta Phut projects is good for the environment and in terms of compliance with the law, it is doing damage to numerous private companies. Given the lengthy period required to review the projects, these companies are pressing the government to devise a mechanism that will render operation of the projects legal in the meantime.

Meanwhile, political conflicts might intensify after the King's birthday. In January, the Supreme Court will rule on the Bt76-billion asset-foreclosure case against former prime minister Thaksin Shinawatra, and there is a chance the red shirts will beef up protests near the ruling date.

On the bright side, the market should get some support from the "January effect" and stocks' strong fundamentals.

Investors are advised to unload speculative stocks and wait for clearer political conditions. In the short term, Quality Houses, Preuksa Real Estate, Central Plaza Hotel and Thai Stanly Electric are recommended on expectation that their financial results in the fourth quarter of 2009 and first quarter of 2010 will show huge improvements. PTT Exploration and Production is another attractive stock, as oil prices are near the point of rebounding.

Sukit Udomsirikul

Siam City Research Institute

This week the SET should show a clearer direction, as the Federal Open Market Committee is scheduled to hold a meeting tomorrow and Wednesday to discuss the US rate outlook. Last week, there was speculation the US Federal Reserve could raise rates sooner than the third quarter of next year, further strengthening the dollar, which has gained 1.5 per cent against major currencies in the past two weeks. Global stock markets went into a tailspin as a result.

We expect US rates to stay low for now, despite the fact that the November unemployment rate declined to 10 per cent, from 10.2 per cent in October. Fed Chairman Ben Bernanke said recently that the US economic recovery remained fragile; markets assumed the Fed would maintain low rates for some time.

We believe the dollar could weaken this week, and that the SET could rise to 720 points. The dollar could weaken 3.4 per cent based on the Bloomberg Consensus, which estimates that the greenback could weaken to 1.52 per euro in the first quarter of 2010, compared to 1.47 at present.

The expected depreciation of the dollar will likely spur speculation in gold and oil this week. Gold futures for February delivery stood at US$1,120 (Bt37,105) per ounce, while oil futures for March delivery were at $74 per barrel. Large numbers of speculative transactions from hedge funds are expected in the last trading week before Christmas, and US weekly oil reserves will also affect price movements. In Thailand, key figures to be released include November export figures, which could increase as much as 22 per cent year on year, in pace with increasing global demand.

This week, investors looking for short-term gains should enter the market when the SET Index is in the range of 695 to 703 points, and leave when it falls to 688. Recommended stocks: Quality Houses, Minor International, Tipco Asphalt, PTT Exploration and Production and Tata Steel. For medium- and long-term gains, buy high-dividend stocks like Thai Metal Trade, Tirathai, Thai Plaspac, Makro, CP All and Big C Supercentre.

Map Ta Phut fiasco could impact economy "severely"

Map Ta Phut would be the greatest economic risk next year, given the magnitude of the impacts on Thailand's long-term attractiveness.

These were the thoughts last week of some of the top executives at Siam Commercial Bank (SCB).

"The impact of the Map Ta Phut fiasco could be more severe to Thailand than the sub-prime crisis," senior executive vice president Arthid Nanthawithaya said in an interview.

"Despite a limited impact from the loans extended to the companies involved, a huge weight hangs in potential investors' minds. If this fiasco is not ended peacefully, the investment climate will be affected severely."

SCB has extended credit lines of Bt50 billion to the 76 industrial projects in question. The main borrowers are PTT, the Siam Cement Group and their subsidiaries. All Thai banks' combined credit line to the projects is estimated at Bt170 billion.

SCB president Kannikar Chalitaporn agreed the financial impact on the bank was limited, thanks to the liquidity of borrowers. Moreover, most of the projects are just expansions, which would not hurt the liquidity of the companies.

Yet, aside from the impact on the investment climate, as the projects involved are upstream and midstream petrochemical plants, the delay will affect employment and the supply chain. Without raw materials, many plants will have to look to imports at a higher price. And this will lead to higher prices for finished products and consequently the cost of living.

"The problem is not only in Map Ta Phut, but also with the chain reaction, because many projects there supply raw materials for other businesses in the supply chain," said Kannikar.

Given the ongoing discussion, she believes the problem will not be solved within six months. She said she understood the process would take time if all the rules had to be clarified. Then a body in charge would be named to enforce the laws. Evaluation will take place, with a number of committees appointed.

She said the four-party committee chaired by former Prime Minister Anand Panyarachun is only the beginning of the process, as its main task is to finalise recommendations. Then the recommendations will need to be implemented.

Industrialists now fear that gas leaks in Rayong in the past week would intensify pressure on industrial projects.

The Federation of Thai Industries earlier estimated that the delay in 65 industrial projects would affect 37,000 jobs. Labour Minister Paitoon Kaewthong said most of the affected workers are involved with the construction works, and so far about 80 workers have contacted the ministry's hotline centre.

Paitoon said the ministry had contacted the PTT Group suggesting the workers be shifted to places where there is demand. Moreover, he expected construction projects under the Thai Khemkhaeng stimulus package next year to ease the unemployment. The Skill Development Department is also launching training courses for farmers who are seeking industrial jobs in the off-harvest season.

Aside from the Map Ta Phut "fiasco", Kannikar said political turbulence at home would hold back Thailand if the conflict intensified next year. Asked if there was any country Thailand should be afraid of, she simply said: "Thailand itself."

However, Kannikar believes the local economy will fare better next year, thanks mainly to the severe slump this year.

The bank expects the economy to grow more than 3 per cent next year following the sharp contraction this year. SCB's loan growth this year is 1 per cent, against the 3-per-cent contraction in gross domestic product (GDP). The bank's loan growth normally expands 1.5 times GDP.

Rather than focusing on loan growth, Kannikar is more concerned with the bank's sources of income and cost controls as "operating a bank is different than it was 10 years ago, when business depended entirely on lending".

"Operating a bank is different than it was 10 years ago, when business depended entirely on lending. Now we must control costs and look for opportunities to increase revenue," she said.

While non-interest income was nil over a decade ago, it now accounts for 35 per cent of the total. And Kannikar is looking to increase the ratio further, through better services, which must be supported by efficient information technology. Each year, the bank spends more Bt1 billion on its information-technology (IT) system.

"It's difficult to increase the non-interest income, as that comes on an annual basis. Each year, we must renew the services to reap the income, unlike when we extend a loan, which generates interest income throughout the loan period. Without efficient IT, non-interest income cannot not be increased. I never feel sorry about investing in the system," she said.

Wednesday, December 2, 2009

Thai Court Upholds Suspension of Industrial Projects (Update1)

By Daniel Ten Kate and Suttinee Yuvejwattana

Dec. 2 (Bloomberg) -- Thailand’s Supreme Administrative Court upheld the suspension of 65 industrial projects halted in September because of pollution concerns, a ruling that may sour investor sentiment and hurt the economy.

Construction on 11 projects may go forward as planned during the trial because they don’t have an environmental impact, Judge Kasem Comsatyatham said today. A lower court on Sept. 29 issued an injunction to stop work on 76 projects with a combined value of 400 billion baht ($12 billion). The court didn’t state the value of the 11 projects approved.

The ruling further delays investments by Siam Cement Pcl and PTT Pcl, which together account for 17 percent of the SET index’s market capitalization. The central bank previously said a one-year delay of the investments may shave next year’s gross domestic product growth by as much as 0.5 percentage point.

“It is a compromise result that is presumably intended to give something to both sides, but it’s not a result that helps the economy,” said Andrew Matthews, Bangkok-based partner of U.K. law firm Clifford Chance LLP. “The immediate task for the government is damage limitation and to broadcast this in the most positive way they can to investors who are holding back.”

Projects that will remain suspended include PTT’s $780 million gas separation plant, PTT Chemical Pcl’s polyethylene expansion project and the expansion of an olefins plant by a unit of Siam Cement, according to a list provided by the court. PTT Aromatics & Refining Pcl’s aromatics expansion project also remains suspended, the court said.

PTT Shares Slump

PTT fell 5.1 percent to 225 baht after the ruling, PTT Chemical dropped 5.3 percent to 71.5 baht, PTT Aromatics lost 3.8 percent to 23 baht and Siam Cement dropped 5.1 percent to 223 baht, the most in more than a month. The SET index fell 2.3 percent to 693.51, the biggest drop since Nov. 12.

Officials from PTT and Siam Cement declined to immediately comment on the ruling.

Prime Minister Abhisit Vejjajiva said yesterday his government, which was surprised by the decision in September and immediately appealed, would keep “fighting” if the decision went against him. The petrochemical, refinery and electricity projects in Map Ta Phut, Thailand’s largest industrial port, buoy the country’s manufacturing and exports, which amount to about 60 percent of Southeast Asia’s second-biggest economy.

“We are a one-strategy economy, and that is industrialization using Map Ta Phut,” Supavud Saicheua, managing director of Phatra Securities Pcl, Thailand’s third- biggest brokerage, said before the ruling. “Growth could drop quite precipitously” without the investments, he said.

Constitutional Test

The case brought by environmental groups is the first to test Article 67 of the 2007 constitution drafted by a military- appointed committee a year after it ousted Prime Minister Thaksin Shinawatra in a coup. The clause bans all projects that don’t have environment and health studies, public consultations and opinions from independent experts.

“We hope to reach a conclusion on the new criteria soon, to prevent any impact on other new projects,” Abhisit said today. “The joint committee is working on it now. The legal process will continue as the case is still at the court. When all the projects follow the constitution, the case shouldn’t be a problem.”

Environmental groups claim the investments would generate pollution that would hurt the public. Last month, the Cabinet approved changes to environmental legislation that would create an organization to oversee such projects and require assessments on the environmental and health impact to be concluded before construction can begin.

Chinese tourists die in Pattaya Thailand boat-clash

BANGKOK, Dec. 2 (Xinhua) -- Two Chinese tourists died in a speed-boat-clash on Wednesday off Thailand's Pattaya coast, while at least another 14 people on board got injured.

The Chinese travel agency that organized the tour group identified the two victims, who got drowned, as Zheng Honglu, male,57, and Chen Dingshan, male, 61.

According to an official from the Chinese embassy in Thailand, another nine tourists from the Chinese mainland and one from China's Hong Kong, were injured when two speed boats clashed at about 12:30 p.m. local time in Pattaya offshore.

The accident happened about 100 meters offshore, said Liu Xiaojian, an injured Chinese tourist, when an one-engine speed boat named Ta-wat-chai-nam-chok collided with the other one-engine speed boat named New Friend.

"The boat was carrying us, 29 tourists from China, three tour guides and a boat driver to go back to Pattaya shore from Lan Island, when I felt the strong shock suddenly and the boat begin to sink right away into the sea," Liu said in the hospital. He said his nose was broken in the accident and probably need to accept surgery.

The other boat, with 13 tourists from the Middle East, Britain and Russia along with two boat drivers, stuck onto the shallow water, according to The Nation online.

All the injured had been sent to Pattaya Memorial Hospital immediately, said the hospital's coordinator Somkiat Potrerayut, adding that eight of them had been discharged as their injuries are minor.

Besides the 9 mainlanders and a Hong Kong tourist, there were also two British, one Pakistani and one Thai injured in the accident, he said.

Somkiat said so far there are six Chinese, including the one from Hong Kong, remaining in hospital, with two of them in ICU. "But the two guys are fully conscious and are able to talk, " he said, adding they will stay in the ICU for one or two more days after suffering the condition of "near drowning".

The two victims, who were identified to be dead on the way to the Memorial Hospital, had been sent to the nearest public hospital for the possible autopsy, Somkiat told Xinhua.

According to The Nation online, Muang Pattaya's deputy superintendent Pol Lt Col Chanapat Nawalak said the initial police investigation found that the two boats drove in the opposite direction to one another, arriving at and departing from the pier, when a side of New Friend boat hit the other boat's rear, causing both boats to break and sink. Police was aiming to press the charge of reckless driving, causing other people's deaths and injuries, against both boats' drivers.

The officials from the Chinese embassy arrived in Pattaya this afternoon to help investigate the accident and to show their condolence to the dead and the injured.

The Chinese victims were under a tour group organized by Wuhan Spring International Travel Service of China's Hubei Province. Ms.Liu Huiping, an staff from the travel agency, told Xinhua that they will send staff to Thailand Thursday to take care of their tourists and other issues.

Beach resort town Pattaya is located in Thailand's eastern province of Chon-bu-ri.

Monday, November 30, 2009

SET targets Bt100 bn market cap

The Stock Exchange of Thailand is concentrating on boosting its market capitalisation by Bt100 billion next year, mainly through more initial public offerings. With the listing of state enterprise subsidiaries, the Thai market's weighting in the Morgan Stanley Capital Index would increase.

SET president Patareeya Benjapolchai said yesterday that the bourse's strategy to boost the market's competitiveness and the entire economy would focus on market quality, integrity, liquidity and IT systems to accommodate future expansion and demutualisation.

Daily turnover is expected to reach Bt17.5 billion to Bt22 billion.

For market quality and integrity, the exchange will focus on IPOs. As of October 7, only 31 companies had market caps over US$1 billion, which is fewer than in Hong Kong, Taiwan, Singapore, Malaysia and Indonesia.

As the 31 companies' combined market cap was $128 billion, the market's weighting in the MSCI Index was only 1.9 per cent, down from 3-4 per cent in the past.

In Hong Kong, 250 companies with market caps over $1 billion each have a combined market cap of $3.3 trillion.

Taiwan's 29 companies' market cap was $457 billion, Singapore's 63 companies' market cap was $409 billion, Malaysia's 49 companies' market cap was $208 billion and Indonesia's 41 companies' market cap was $176 billion.

Vichate Tantiwanich, chief marketing officer for issuer and listing, said so far this year the exchange's market cap has risen Bt30 billion to Bt40 billion. Next year, the value would be Bt100 billion, excluding companies seeking a dual listing.

The SET will target large companies holding contracts with the public sector.

The State Enterprise Policy Committee has also shortlisted 10 subsidiaries of state enterprises with listing potential. Their values range from Bt3 billion to Bt10 billion. They include Post Office, a unit of Thailand Post, and Star Petroleum Refining, which is owned by PTT.

"We estimated the Bt100 billion mark through discussions with companies and their financial advisers. The goal would be achieved if state enterprise subsidiaries are listed, and the government is encouraging concession holders to list. We want to raise the weight in the MSCI Index," he said.

Transaction value from institutional investors would be increased from 10 per cent of market cap to 12 per cent. More transactions are expected in derivatives, following amendments in rules to facilitate institutional investors.

The Bank of Thailand recently allowed investors to use foreign-currency collateral, while the Government Pension Fund and Social Security Fund are allowed to increase equity investment, said Sopawadee Lertmanaschai, chief marketing officer for markets and post-trade services.

Sunday, November 29, 2009

Expats fall in love with Thailand but not the language

If you are an expatriate, Thailand is the best country to find love - however, it's also one of the hardest places for learning the local language.

Canada, Australia and Thailand are regarded by expatriates as the premier places in the world to live and love, according to the second annual expatriate experience survey by HSBC Bank International.

Canada has the best quality of life and is among the easiest places in the world to integrate with the local population, according to the survey of 3,146 people working in 30 different industries and 50 countries. Australia and Thailand come next on the list.

One in five expats has found love, with Thailand being the most likely place to fall in love followed by Germany and Brazil. Almost half of Thailand's expats say that they have found love.

Asia emerged as the place to go for making friends, with Thailand ranked first, followed by Vietnam, Hong Kong and Malaysia. More than half of the expats questioned in the survey - 58 per cent - have lived abroad for more than five years.

The top three countries for settling down are South Africa, Thailand and Canada, where expats have lived for more than five years.

The survey found that for expats, a higher income does not necessarily mean a better quality of life, said Alan Smith, head of international wealth management for HSBC.

Those earning less are also more likely to find love, with expats earning under US$60,000 (1.9 million baht) more likely to find love abroad than any other group. Similarly, expats over the age of 55 will have a greater chance of finding their life partner - one in four expats around the world aged 55 and over have found love or a life partner while living abroad.

Expats living in English-speaking countries have less trouble with language barriers, regardless of their origins. Learning the local language remains the biggest expat challenge of all.

While Thailand is seen as the easiest place to make friends, it is ranked 26th for ease of learning the local language.

For ease in finding a school, Thailand comes fourth; organising finances, 11th. For arranging healthcare, it is ranked second; finding somewhere to live, first. For setting up utilities, 9th; making local friends, 16th; and arranging accommodation, second.

Last year Germany, Canada and Spain were the top three countries deemed to have the best lifestyle for expats.

In another online survey, the British rated Thailand their No.1 holiday destination of 10 countries.

A total of 1,241 Britons responded to the survey, which polled 24,000 people around the world.

Thailand scooped 25% of British votes and the United States 11% but France came last, scoring a miserable 2%.

Delights of the Singapore to Bangkok 'jungle railway'

The two-day train journey from Singapore to Bangkok offers many delights including a variety of local - sometimes rather pungent - delicacies, as Christine Finn discovered.

Paddy fields seen from the train
The train travels through the countryside of Malaysia and Thailand

One of the biggest questions before a long train ride is about eating. By that I mean not only what food there will be, but whether there will be any at all.

On long-distance trains in America, Japan, China and Siberia, I feasted on delicious finds en route, but journeys like these always start with a stock-up of unfamiliar snacks at the station kiosks.

In Singapore's art deco terminal, bound for Bangkok, I spied something unusual: durian flavoured popcorn.

Now, the durian is a fruit which provokes abject delight or utter disgust. Its pungency is legendary: a mixture of cheese, onions, sherry, rotting meat and drains.

Author Anthony Burgess wrote that it was "like eating sweet raspberry blancmange in a lavatory". The celebrity chef Anthony Bourdain described it far worse: "Like French-kissing your dead grandmother". Oddly, he is still a huge fan.

So potent is the aroma from its large, fleshy lobes that the green, spiny fruit is banned from hotels, hospitals, planes and most other public transport, trains included.

Novices, like me, start the relationship cautiously.

I first sampled it as an ice-cream flavouring. So how could I resist durian popcorn? I bought one of the luridly coloured packets, tucked it into my bag and started my two-day journey.

Spicy rice

Inside train carriage

Sitting in the dining car with mugs of teak-coloured tea and fresh papaya, time flew by in a jungle tunnel.

The first part of my trip to Bangkok began on the jungle train, which burrows through the heart of Malaysia to the east coast.

Rail aficionados love the west-coast route from Singapore via Butterworth and Kuala Lumpur, a journey through British colonial history.

But I fancied fewer rubber plantations and more mystery.

I clambered into my second-class sleeper.

It was comfortable but the upper berth was a little cramped for a picnic of snacks, so I went in search of spicy rice in the dining-car.

Back in my bunk, night fell quickly and the train powered into the dark, as Rudyard Kipling's jungle tales worked on my imagination.

The dawn barely broke through the dense vegetation.

Sitting in the dining car with mugs of teak-coloured tea and fresh papaya, time flew by in a jungle tunnel.

We reached the end of my first line at Wakaf Bharu, and the durian popcorn was still intact in my rucksack.

Off the train and to the border by taxi.

Thai green curry

I crossed into Thailand on foot.

At Sunghai Kolok station, I bought a ticket for the afternoon train to Bangkok. It was a long wait, I was hungry and the durian popcorn was burning a hole in my bag.

Map showing Singapore, Malaysia, Thailand and Indonesia

But the prospect of something freshly cooked was suddenly more compelling. I walked into town and feasted on Thai green curry, watching the world go by.

Back on board, I had joyfully snagged a lower bunk in second class.

"Dinner?" A young Thai man with a long pony-tail and eyes made up like a peacock's tail came to my seat with a menu.

It was one of my most enjoyable train meals ever, memorable also because this time armed guards were patrolling past my plate.

The previous month a train had been targeted by terrorists. But my tensest moment was a light one: a soldier got his rifle trapped in my compartment door and we shared a nervous smile.

Later an attendant - with a magician's flourish - conjured my seat into a single bed, with fine white cotton sheets and a thick white throw as seen at boutique hotels.

I smiled "goodnight" to the woman across the compartment, drew the curtain and slept better than I have in many a stationary bed.

Dawn broke on villages, paddy fields and limestone crags. Children were walking to school, motorbikes coursing across the landscape. Soon we were cruising up the east coast of Thailand, in sight of the sea.

Fishy porridge

We were running two, maybe three, hours late.

Packet of durian-flavoured popcorn

Three weeks later, back in England, the durian popcorn is still unopened

My fellow-travellers were getting tetchy and I was getting hungry. I searched for the durian popcorn.

But I wondered whether I should risk unleashing this incendiary flavour.

As I deliberated, the train stopped at a station full of hawkers bringing food onboard.

"Try!" said a fellow passenger pushing a bowl of fishy porridge into my hands.

Glutinous rice, shrimps and spicy green vegetables. Delicious.

I arrived at Bangkok station still reclining on my white-draped sofa-bed. I had promised myself a Thai beer and the noodle classic, pad Thai, before heading for my plane.

Three weeks later, back in England, the durian popcorn is still unopened.

I gave it to a friend and it has pride of place on his mantelpiece. He loves the lurid illustration on the packet and is waiting for an occasion to open it.

But he has never heard of durian. So, how much should I tell him?

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Tuesday, November 17, 2009

Thailand's Elite Card on the auction block

The cabinet on Tuesday assigned the Finance Ministry and National Economic and Social Development Board to draft conditions for the auction of Thailand Privilege Cards Co (TPC), operator of the Thailand Elite Card scheme, deputy government spokesman Vachara Kannikar said.

Mr Vachara said the intention is for a private firm to take over the scheme, which was launched by the Thaksin Shinawatra administration. The drafting of the auction conditions would be done within a month and the auction completed in two months.

He said Prime Minister Abhisit Vejjajiva told the cabinet that some private firms had shown an interest in buying TPC and taking over its debt, on the condition that the government waive visa regulations for card members.

If there was no sale of TPC to the private sector in three months, the government would dissolve the company and transfer its membership to the care of the Tourism Authority of Thailand. No new members would be accepted, the spokesman said.

The cabinet also assigned the Finance Ministry and TAT to check the status of the existing 2,570 Thailand Elite Card members, since 795 of them were believed to reside in Thailand in contravention of the membership rules.

The Thailand Elite Card scheme was launched by the Thaksin government in 2003. The cards promised fast-track immigration, discounts at luxury resorts and golf courses, and many other perks. The scheme was intended to attract the world's weathy and generate high revenue.

But after six years, there are only 2,570 members, and the TPC, set up by TAT to run the scheme, had a crippling net loss of 1.4 billion baht.

Bangkok Faces Grim Future as Waters Rise

17 November 2009

Monsoonal floods in Bangkok, Thailand
Monsoonal floods in Bangkok, Thailand
Built along the banks of the Chao Praya river as it nears the ocean, Bangkok has long been vulnerable to flooding. Poor urban planning and careless expansion have made the problem worse. And now, climate change eventually could help swamp the city.

The late rainy season storm sweeps across Bangkok, sending sheets of rain down, forcing traffic to a crawl, and quickly flooding low-lying areas.

Warning: water rising

Flooding is a regular feature of this city of 10 million. Usually the water drains away within a few hours. But some climate experts and city planners say future floods may cause lasting damage because of rising sea waters.

Batteries of reports warn of the threat of rising waters to this city and other low-lying communities. The conservation group WWF lists Bangkok alongside Dhaka, Manila, Jakarta, Calcutta, Phnom Penh, Ho Chi Minh City and Shanghai as some of the most vulnerable to massive flooding.

And the United Nation's Intergovernmental Panel on climate change lists Bangkok among the 20 major cities at risk of being swamped by rising sea levels.

Samith Dharmasaroja is the former head of Thailand's metrological department. He gained fame by warning that Thailand's coasts were vulnerable to tsunamis.

The warnings were ignored until the deadly December 2004 Indian Ocean tsunami. Now Samith warns that rising sea levels could swamp Bangkok within two decades.

He says the issue has received little public attention, and unless something is done, Bangkok could be flooded permanently.

"Yes lost forever. Some try to say well forget it because we will move our capital to somewhere else. But it's not that easy," Samith noted. "Moving a capital with 10 million people somewhere; not only the people [have to be moved] you have many constructions - many universities, many government offices, office building, hospitals, and so on. The old historical building - how can you move everything - it would be underwater?"

Preparative measures

Samith says the government should consider building an 80-kilometer long system of dikes at the mouth of the Chao Phraya River basin to hold back rising tides. He estimates it would cost more than $3 billion.

Global warming is contributing to rising sea levels, because of melting ice at the poles and the thermal expansion of the water. The issue will be on the agenda at the global climate talks in Copenhagen next month.

Negotiators at the talks, however, are not expected to reach a binding agreement to limit emissions of greenhouse gases, such as carbon dioxide, which are produced by activities such as burning oil. Nor are they expected to agree on aid to developing countries to protect them from rising sea levels and other effects of warmer temperatures.

Bangkok was once known as the Venice of the East because of its system of canals. To contain floods, the city has a system of flood walls, pumping stations, retention ponds and temporary overflows to the north.

But Samith and other experts say that might not be enough. The city has grown dramatically over the past 30 years, spreading into lower lying areas.

Poor urban planning

Danai Rattakul, from Chulalongkorn University, blames poor urban planning for floods
Danai Rattakul, from Chulalongkorn University, blames poor urban planning for floods
Danai Thaitakoo is a lecturer in the Faculty of Architecture at Bangkok's Chulalongkorn University. He says poor planning and urban development have allowed many canals to be filled to make way for roads and other development.

"The canal structure - they don't see the canals as a critical structure for this kind of drainage," Danai said. "When they talk about water - and refilling the canals - most of the canals disappear. We don't have that structure that used to be able to drain the water out of the area or even to contain the water for a certain period."

Danai says planners need to consider restoring the canal system. He says Bangkok also faces the threat of coastal erosion from the rising seas and storm surges.

Other researchers warn that naturally occurring subsidence of the land under the city will add to flooding problems.

Combination of factors could be lethal

Bhijit Rattakul, Executive Director of the Asia Preparedness Center
Bhijit Rattakul, Executive Director of the Asia Preparedness Center
Bhijit Rattakul is a former Bangkok city governor who had to deal with the flooding problem while he was in office in the 1990s. Bhijit says rising sea waters and runoff from the northern regions will combine to overwhelm the city.

"There is the overflow of the waters, because of sea level rise and because we cannot discharge the water from the north out to the sea. So that kind of thing will eventually create a scenario … there will be a flood and it's not a normal flood it will be a long flood … not five hours, not six hours may be days before we can pump it out," Bhijit said.

However, engineers with the Bangkok Metropolitan Authority remain confident that existing flood control methods will protect the city for some years to come.

Bangkok faced severe flooding in 1983 and again in 1995. Since then, the government has built 77 kilometers of flood walls along the river banks. The engineers, who are barred by city policy from giving their names, told VOA the walls are a meter high, and that various studies indicate the water level over the next few decades will rise only about 33 centimeters.

The engineers say they will continue to study the issue, but they will need clear evidence that additional work is justified now before asking the city government for more flood control funds.

Thailand's new gold rush

While no investment can truly provide an iron-clad guarantee, one of the safer bets going into 2010 seems to be commodities and precious metals.

Gold, a traditional safe haven for investors, has rocketed to more than $1,100 per ounce in recent weeks, driven by investors seeking an inflation hedge and expecting further US dollar weakness in the years ahead.

At the SET in the City investment exhibition, signs of gold fever could be seen aplenty, with brokers and fund managers pitching the latest services in the form of gold futures contracts or dedicated gold funds.

For a gold investor, it’s never been easier to invest in the metal. Forget about queuing up at your local gold shop or worrying about the security of your home strongbox for holding coins, necklaces or bars. Investment can now be made through a simple call to a broker, or online anywhere at anytime, thanks to the proliferation of foreign investment funds, gold funds and the growth of the derivatives market.

One 58-year-old woman listened with interest to a pitch from a marketing official at Globlex Securities.

“I have been investing in gold bars for 20 years, and can remember when prices were just 800 baht per ounce. These gold futures sound quite interesting,” she said, as she peered at a educational banner through her white-framed glasses.

The investor admitted that the ins and outs of derivatives contracts could be daunting for a novice.

“I have been investing in stocks for a long time. But derivatives is something different. Money isn’t paper – you need time to climb the learning curve,” she said as she filled out an application to open a futures account.

For Globlex, investors already familiar with stocks and the securities market represent a natural target for expansion to futures and options trading.

Parkpoom Pakvisal, the managing director of Globlex Holding Management, said the company signed up 120 new customers in the first day of SET in the City.

“We’re delighted with the response. We had been expecting to get around 200 accounts for all four days,” he said.

Around half of the new accounts opened at the Globlex booth are for gold trading, with the rest a mix of securities and derivatives brokerage accounts.

“There are many investment tools available besides stocks. For now, though, gold is what’s hot, as we are likely to see prices continue to rise through Chinese New Year,” said Mr Parkpoom.

Gold prices, which closed at about 17,500 baht per baht-weight locally and at US$1,106 per ounce in Hong Kong, could reach $1,130 to $1,150 by the end of the month and $1,200 by year-end, he said.

Mr Parkpoom said gold is definitely an asset class that should be in any investors’ portfolio, given the short-term trends.

But new investors just entering the gold market should consider investing in physical gold before they venture into the futures market.

“If you compare gold bars with gold futures, bars are probably best for those looking for a savings vehicle, with a priority on wealth accumulation and limited risk,” Mr Parkpoom said.

“Gold futures, however, offer the chance to profit on either the buy or sell side. The potential is there for higher returns, but with higher risk. You need to know your investment objective first.”

Gold futures are traded on the Thailand Futures Exchange, with each contract based on 50 baht-weight of 96.5% gold, the standard purity used in the Thai market. Prices are quoted based on one baht-weight of gold, with settlement made in cash and contracts offered for each even-numbered month. Trading limits are set at 20% from the previous day’s settlement price.

Kesara Manchusree, the SET’s group head for product development, said that from Feb 8, the TFEX would introduce a new gold futures contract with a size of 10 baht-weight of gold.

Published: 16/11/2009 at 12:00 AM
Newspaper section: Business