Source: Bangkok Post

Thailand could face increasing pressure in 2010 to shift exchange-rate policies in order to maintain competitiveness in the global market, says Kirida Bhaopichitr, senior economist for the World Bank in Bangkok.

Capital flows have been returning to emerging markets such as Thailand since the middle of the year, she said at a seminar held by the Iron and Steel Institute yesterday.

Fund flows have come into not only government bond markets to help finance public stimulus spending, but have also come in the form of foreign direct investments and equity flows.

The result of added capital flows into the Asian economies is added pressure for currencies in the region to appreciate.

At the same time, the US dollar is facing pressure owing to structural weaknesses in the US economy, and has fallen sharply against both the euro and the Japanese yen.

Asian economies have been intervening steadily in their currency markets to slow the pace of currency appreciation and prop up their export sectors.

“With large capital inflows and a weakening US dollar, emerging market currencies are on an appreciating trend,” Dr Kirida said.

The baht has gained 4.8% against the US dollar this year, compared with 3.65% for the Singapore dollar, 8.3% for the Korean won and 16.3% for the Indonesian rupiah. The Bank of Thailand has maintained that it will intervene in the markets only to smooth out volatility rather than seek to shift fundamental market trends.

Most analysts expect the baht to continue to appreciate over the next several months, considering the trend for a weaker dollar and Thailand’s own current account surplus, which hit an eight-month high at $2.17 billion in October. Foreign reserves have risen to $136.9 billion as of late November, compared with $111 billion at the end of 2008.

In any case, Dr Kirida said that pushing a strategy for currency depreciation would involve its own costs. While potentially helping the export sector, a weaker baht would also mean higher costs for imports, including oil, capital equipment and raw materials.

The World Bank currently projects Thai economic growth for 2010 of 3.5%, although this depends in large part on the outlook for the global economy.

Dr Kirida said even as the global recovery is tenuous, oil prices are projected to rise to average $75 per barrel next year, compared with $65 this year.

While oil prices remain far from the $130 level seen in 2008, the increase in energy costs will have a knock-on effect on other commodities, including food.

Pongnakorn Pochakorn, an economist with the Fiscal Policy Office, said the Finance Ministry maintained a base projection of 3.3% growth next year, with estimates from 2.5% to 4.1%.

The effectiveness of the Thai Khem Kaeng infrastructure investment programme will have a significant impact on growth trends in 2010, he said, with the base growth estimate based on a disbursal rate of 70% of the budget set under the spending programme.

“This is a relatively conservative target. If spending under the Thai Khem Kaeng programme increases beyond 70%, there is a chance that economic growth could rise over 3.3% next year,” Mr Pongnakorn said.

In any case, he said that 3.3% growth in 2010, while a considerable turnaround from the contraction of 3% projected this year, remains well under potential GDP growth for Thailand of 5.5% per year.

Source: Bangkok Post

The Tourism and Sports Ministry is helping Thai tourism operators and professionals prepare for increased job mobility throughout Asean from 2015.

The ministry is preparing training courses to upgrade the skills of Thai professionals to ensure they can go to work in other Asean member countries without problems.

If the curricula prove successful, Thailand may propose them as a common standard for the bloc, said permanent secretary Sasithara Pichaichannarong .

Thailand is committed to labour mobility under the Asean Framework Agreement on Services (AFAS) in 2015, when professionals from member countries will be able to work throughout the association’s grouping.

“We want to make sure that Thailand is ready to join AFAS. We aim to push our curricula to become a model for Asean community and hope they will accept it,” she said.

The ministry is now awaiting the 200-million-baht budget from the government to push forward the Asean Mutual Recognition Arrangement on Tourism Professionals (MRA) next year.

The tourism skill-enhancement curricula, to be completed by 2013, will consist of 240 courses. At present, the first four courses for bellboys, waiters, travel consultants and ticketing managers have been completed and registration will begin next year.

The ministry will work with Dusit Thani College, Eastern Asia University, and Suan Sunnandha Rajabhat University in designing the four courses.

Ms Sasithara said the ministry will also set up a MRA committee to supervise the project and certify trainees who finish the courses in the future. It will also publicise the project among tourism professionals in Chon Buri, Khon Kaen, Phuket and Chiang Mai soon.

Asean members previously signed the Asean Comprehensive Investment Agreement which came into effect early this year.

The agreement allows members to invest and open restaurants and four- and five-star hotels in member countries. They can hold up to a 51% stake in such ventures in 2010, rising to 70% in 2015.

Source: Bangkok Post

The company responsible for the beleaguered Thailand Elite Card, a scheme offering privileges to foreign visitors, confirmed that its current cardholders could continue to enjoy their privileges despite the planned shift of the company’s ownership.

Methavee Tunwattanapong, acting managing director of Thailand Privilege Card Co (TPC), said it had circulated a notification to its 2,569 members to clarify that their privileges were not suspended because the cabinet had only approved a change in the company’s management while maintaining privileges.

Thailand Elite, touted as the world’s first country privilege membership card, was launched by the Thaksin Shinawatra government in 2003.

The cards, priced at 1-2 million baht in the past and at 1.5 million baht each today, offer fast-track immigration, discounts at luxury resorts, spas and and golf courses, and many other perks aimed at increasing tourism revenue.

But after six years, the members total 2,570, and TPC, set up by the Tourism Authority of Thailand to run the scheme, has accumulated losses of 1.4 billion baht due to high payroll and management costs and also alleged abuse of privileges by executives.

The company is waiting for facts from the Interior Ministry and the Immigration Bureau to examine whether 795 of its cardholders are residing in Thailand, as the membership terms allow only visiting foreigners to enjoy the benefits.

A source said 63 cardholders were violating the membership terms because they resided in Thailand and held Thai passports, or both Thai and foreign passports.

Disqualified members would be contacted individually because the company is concerned about the impact on the country’s image and is trying to avoid legal disputes.

Ms Methavee said interest from private firms in acquiring the company would depend on the auction’s terms of reference, which are to be drafted by the National Economic and Social Development Board and the Finance Ministry.

However, the cabinet needs to consider how to handle the immigration privileges of visa issuing and fast-track immigration when ownership shifts to the private sector.

As of Nov 12, TPC had 304 million baht in cash in hand. It has monthly costs of about 5 million baht to pay for the use of limousines, golf courses and spas by its members.

Since July of this year, its sales and administration expenses have been about 10-12 million baht a month, a drop of 50% from last year.

The Elite Card recorded 1,800 members entering and departing Thailand during 2007-08 and 1,600 members during the first 10 months of this year.