Category Archives: WORLD ECONOMY

BoT Governor Dismisses Trump’s Claims of Currency Manipulation

The Bank of Thailand has defended itself from Trump’s accusation of currency manipulation. The central bank’s governor, Veerathai Santiprabhob said in an announcement that there is no evidence implicating any of its officials of currency manipulation to illegally boost exports.

Veerathai released the response after the US decided to carry out an investigation on Southeast Asian nations for potential trade abuse.

According to sources, it’s a common act of central banks to get involved in foreign-exchange matters in times of need such as inflationary environment and geopolitical crises. In an interview with Haslinda Amin of Bloomberg Television, Veerathai dismissed Trump’s allegations.

He said, “I don’t think anyone has evidence that Thailand has manipulated the currency to gain an unfair competitive advantage. Thailand has not adopted any exchange-rate policies to gain an unfair competitive advantage in trade.”

Veerathai defended Thailand saying that the central bank’s foreign-exchange interventions were mostly caused by capital inflows which “have been coming in in a short period of time that could create adverse consequences.” He continued, “At times, we might have to intervene in the foreign-exchange market but that’s largely because of the intense capital inflows that we are on the receiving end of.”

US President Donald Trump has recently released an executive order that will probe 16 countries which have the biggest bilateral trade deficits with the world’s largest economy. Thailand is one of the countries on the receiving end of the order and is expected to be hit greatly because of the country’s dependency on exports. Currently, BoT is buffing up foreign-exchange reserves since the end of 2016 after inflows sharply increased. This move capped the baht’s advances.

Veerathai added that foreign-exchange intervention is normal. He explained, “Foreign-exchange intervention is definitely a measure that all central banks need to have on the menu list but there are also other policy measures that one can look at, from market-based measures to the likes of capital-flow management measures.”

Thailand have one of the largest trading surplus with the US. It is at 11th place.

Bill Gates Still Wealthiest Man Alive, Sirivadhanabhakdi Richest in Thailand

Forbes has officially announced the world’s richest people for the year 2017. And to nobody’s surprise, Bill Gates is still the wealthiest man alive followed by long-time rival on the top spot, Warren Buffett.

The lineup for the world’s wealthiest includes familiar names such as Amazon’s Jeff Bezos and Zara’s Amancio Ortega which bagged the third and fourth spot respectively. Mexico’s Carlos Slim Helu is at number six thanks to his mobile telecom company. Brothers Charles and David Koch shared the eighth and ninth spot. Other tech giants such as Facebook’s Mark Zuckerberg got the number five spot while Oracle’s Larry Ellison was at number seven. The top ten list is completed by Michael Bloomberg and his famous financial firm named after him.

Thailand’s Richest
Thais have secured significant spots in the list of the world’s wealthiest. And while the economy of the Southeast Asian country is at a steady expansion, it looks like only a handful of Thais were able to make the cut. Most of them are known personalities.

Charoen Sirivadhanabhakdi
The Forbes Richest list for Thais is led by Charoen Sirivadhanabhakdi. In the world rankings, he is in 62nd place. His conglomerate, Thai Beverage, has put him in the spot with a value of $15.8 billion. Some of their most famous products are Chang beer and Sang Som Rum. It’s popularity has made the company the largest brewer in Thailand.

Dhanin Chearavanont
The second Thai to make it to the list of richest of the wealthiest of the world comes at 132nd place. Dhanin Chearavanont is currently valued at $9.7 billion and growing. He made his fortune as the chief of the agribusiness industry in Thailand with his conglomerate, Charoen Pokphand Group.

Vichai Srivaddhanaprabha
The king of King Power Duty Free, Vichai Srivaddhanaprabha, enters the list at 414th place with a value of $4.2 billion. As owner and CEO of King Power International Group, he was able to amass great wealth by monopolizing the markets in Thai airports and becoming the leader in travel retail.

Vanich Chaiyawan
The owner of Thailand’s second largest insurance company, Thai Life Insurance Co. Ltd is Vanich Chaiyawan who landed the 460th place at a value of $3.9 billion. The company is currently in it’s expanding stages with branches opening in Myanmar and other Asean countries. His assets include a 1% stake in Thai Beverage, the company that is owned by Thailand’s richest man, Charoen Sirivadhanabhakdi.

Sumet Jiaravanon
Completing Thailand’s top five richest is Sumet Jiaravanon who is at 564th among the world’s wealthiest. Coincidentally, Sumet Jiaravanon is the older brother of the second richest man in Thailand, Dhanin Chearavanont. Sumet Jiaravanon’s wealth comes from the family business, Charoen Pokphand Group.

Thailand and Burma Ink 16 Business MOUs

Thai and Burmese officials signed together a total of 16 bilateral business memoranda of understanding (MoUs) last February 2 in Burma. The event was attended by the Deputy Prime Minister of Thailand, Somkid Jatusripitak.

The MoUs covered six business sectors including the finance sector, the agricultural sector, and the infrastructure development sector. According to the vice president of the Union of Myanmar Federation of chambers of Commerce and Industry (UMFCCI), U Ye Min Aung, the collaboration between the two countries is expected to foster better relations between their respective local businesses namely Burma government ministries, Thai companies, and the UMFCCI itself.

U Ye Min Aung commented about the event saying, “These are big agreements that the NLD government is signing with Thailand. Thailand is among the top foreign investors here, and these agreements will foster more economic cooperation.

“These agreements are made from government to government, and from government to business too. Every industry has signed an MOU here today.”

Investment in Burma is an act shared by many other countries, only three of which, surpasses the amount that Thailand has allocated to Burma. These countries are Singapore who has a $2.6 billion investment, China who put in $447 million, and Hong Kong who allotted $187 million in the country. Thailand had $106 million invested during the 2016-17 fiscal year according to the Directorate of Investment and Company Administration.

One of the businesses has signed an agreement with Thailand is the Kanbawza (KBZ) Bank, one of the five major banks in Burma. The deal between the two entities involve the use of the Thai government’s remittance services.

Meanwhile, the Burmese bank has already branched out to Thailand, opening an office and introducing a remittance service that can be utilized by workers from Thailand and Burma.

U Nyo Mint, a senior official in the KBZ Group expressed their intentions on the agreement with Thailand saying, “Many Burmese workers are working in Thailand. So that’s why remittance services should be more active. We have been working with Thai banks already, and today we signed an agreement in front of the Thai government that will strengthen that level of cooperation.

“Thai investors are near the top among foreign direct investment in Burma. And our economic cooperation will grow bigger in the future.”

Thailand Set to Adopt Blockchain Within Two Years

Blockchain or distributed ledger technology (DLT) is enjoying worldwide attention. Just last year, more countries and their respective central banks have gotten involved with DLT. Private firms were also in on the trend with many of them showing enthusiasm by building consortiums.

The rise of blockchain technology was very successful this year. Government, finance, and health sectors benefitted greatly with DLT. This year, it’s Thailand’s turn to enter the blockchain industry.

The Southeast Asian country is currently undergoing Thailand 4.0, an economic model that aims to use technology as a platform to become a high-income economy. As Thailand focuses on becoming a “Smart Thailand”, DLT will, prove to be a big help in achieving their goals.

Blockchain specialists see the nationwide adoption of DLT within two years provided that the government gives its support in the form of legal approval. Financial institutions and banking firms will have competition from DLT as it will allow the people to transact locally and internationally without having to go through them.

According to an expert on the field of blockchain, Bhume Bhumiratana, “The adoption of blockchain technology is expected to be widely seen here by 2018, thanks to its capability of transferring valued assets with trustworthiness, transparency and security.”

While Thailand tries to keep up with the global pressures of utilizing DLT, it’s efforts to adopt it now has put it on top of the Asean community who is generally lagging when it comes to implementation of blockchain technology. The reasoning for this delay, according to Mr Bhume, is the fact that DLT tends to be complicated. However, it being rather cheap and fairly easy to maintain, Mr Bhume believes that its widespread adoption in businesses and government institutions will be easier now that they are ready to tackle it.

A partner at Baker McKenzie Thailand, a law firm, Dhiraphol Suwanprateep, said that the current laws and regulations are not suitable yet for blockchain. He said, “Policymakers need to understand this technology and consider relevant regulations before adopting it.”

As an answer to this, the Electronic Transactions Development Agency is rectifying the Electronic Transaction Act 2001. The amendments made will be able to support the use of DLT in smart contracts, e-automated systems, and other financial uses. Furthermore, private data on distributed ledgers will be tackled in the data privacy law where sharing and security will be taken into account. Mr Dhiraphol commented more on the matter saying, “There are also data residency/sovereignty laws to consider, where certain countries do not allow the transfer of sensitive data outside the country of origin.”

Kasikornbank Predicts Only One Fed Rate Hike This Year

Kasikornbank (KBank), a leading banking group of Thailand, is forecasting a one-time only US Federal Reserve (Fed) rate hike for 2017. KBank, represented by their head of capital markets research, Kobsidthi Silpachai, is confident in their prediction as they said that inflationary pressure could go lower than anticipated. What’s more, KBank also sees that the market will be cautious especially because it is expected that the dollar will be strong enough to dampen competition between US companies.

In a statement Mr Kobsidthi Silpachai confirmed the Thai banks forecast saying, “We expect only one rate hike from the Fed this year, lower than the three increases signalled by the Fed, since we believe that inflation may not be as high as earlier expected and the Fed will also have to consider the competitiveness of US companies. As the market has priced in this news, the US dollar increased even before the Fed jacked up its rate in December .”

Furthermore, Mr Kobsidthi Silpachai emphasized the move that most investors have resulted in doing: turning to safe havens. 2016 geopolitical events including the US Presidential elections and the Brexit have pushed investors to seek asylum. Trump’s fiscal expansionary policy also adds to the reason for this as it caused the strengthening of the dollar.

Another factor that would refrain the Fed from further hiking their interest rates is the relationship with China. Currently, the Chinese yuan is being pressure by the US dollar. This is seen as a reason for some of Chinese exports to cheapen. The yuan has already lost over 7% versus the dollar.

Mr Kopsidthi Silpachai continues, “As a result, inflation in the US might not be as high as the Fed had earlier expected, lowering the need hike the target rate several times this year.”

This downward path that the Chinese yuan is tracking will give the Fed the chance to raise rates at a relaxed pace so they can maintain the competition among US companies.

Thailand Passes Stricter Cybercrime Law

The Thai junta has recently passed a cybercrime law that will give the government stricter access to the internet.

The Computer Crimes Act was passed with an overwhelming 167 yes votes, five abstentions and no contentions. The act was approved last December 16, 2016. It is now only awaiting the signature of the new king Maha Vajiralongkorn before it officially becomes law.

The cybercrime law is highly contested by critics. Despite this, the results were unanimous.

The controversial move are commented by critics as invasive because it will supposedly give the junta the capacity to probe all citizens with the goal of finding dissenters of the current administration. This increasing focus on cyber control stems from the junta’s general mandate of regulating the freedom to express their opinions. Ever since they came to power in 2014, the Thai junta subdued criticism of them by prohibiting rallies, shutting down websites that advocated negative things about the government, restricting the media, and approving prosecution of critics online.

Ex-policeman and supporter of the cybercrime law, lawmaker Chatchawan Suksomjit commented on the matter saying, “I can reassure that this law is important and necessary but will absolutely not violate personal rights.”

Despite the public hesitation, the government says that this law is essential to modernize the system. Critics and rights advocates noted that the cybercrime law was too vague, effectively enlarging the power of the government to scrutinize and censor the online community.

Versions of the law has already been released. One version was given by The Thai Netizen Network. In this article, it is indicated that violators of the law can face up to five years of incarceration. Violations include the provision of “false information into a computer system that jeopardises national security, public safety, national economic stability or public infrastructure, or causes panic.”

An opposing group has already launched a petition signed by over 300,000 people. Thai Netizen Network representative, Arthit Suriyawongkul emphasized the dangers of the proposed measure saying, “The definition (of this term) is not written in any law, it is just up to the committee. It’s going to be very difficult for people to know what they can and cannot say. It could also be very inconsistent from one government to another.”

There are more regulations under the law including the authorization for officials to request for website activity and traffic data directly from service providers.

Thai Banks Prepare for New Year Rush

Thai banks are getting ready for the coming holidays with financial firms already funding cash reserves.

Bangkok Bank is readying 60 billion baht in cash while Kasikornbank (KBank) and Siam Commercial Bank (SCB) are preparing 32 billion baht and 56 billion baht in cash respectively. This nationwide preparation is expected to withstand the anticipated massive numbers of withdrawals that usually happens during holidays.

Bangkok Bank has already waived its inter-regional ATM withdrawal fees. 10,000 ATMs will be available to the public for the holiday season while 300 micro-branches in shopping malls will be open to serve people during mall hours. Bangkok Bank has already said that its focus will be the tracking and refilling ATM cash reserves that are located in major tourist and popular areas.

Meanwhile, KBank will implement holiday measure from December 31 to January 3. The 32 million baht cash that has been allocated by the bank will be divided to the following: 4.4 billion baht cash for banks in the capital of Bangkok while 6.6 billion baht will be for the provincial banks all over the nation. The remaining 21 billion baht will be available on more than 8,900 KBank ATMs in the whole country.

SCBs 56 billion baht cash reserves will be divided into two: 43 billion baht for ATMs and 13 billion baht for bank branches and other clients.

All Thai banks will resume normal operations on January 4, 2017.

Bank of Thailand Expected to Keep Rates Steady Until 2018

K-Research doubts that the Bank of Thailand will keep its rates as it is for at least two more years.

According to Charl Kengchon, manager director of K-Research, was quoted saying that holding interest rates is the most likely move for the Bank of Thailand because the country is currently experiencing subdued inflation. This allows the benchmark rates to stay still in spite of the global economic changes, particularly the impending interest rate hike of the Federal Reserve this December.

The steady interest rate will not hold back growth in Thailand though according to K-Research. Domestic consumption is set to expand by 2.2% while GDP growth is anticipated to be at 3.3% with the good flow of domestic investment. In fact, domestic investment is seen to get better at 4.4% by next year. Meanwhile, exports is predicted to also be a factor in bolstering the Thai economy with an anticipated growth of 0.8%.

The election of incoming President Trump also has effects on Thailand. While the market volatility has been a short-term affair, the long-term effects could come in the form of trade changes. It is a well-known fact that Trump is against TPP or the Trans-Pacific Partnership and foreign direct investment or FDI. This could mean that the ASEAN countries including Thailand, will seek out new opportunities that is looking to be offered by China. This poses as a bit of a conflict as Trump is known to be averse with the Chinese.

Charl Kengchon commented on the matter saying, “Thailand’s FDI, especially from China and Japan, would decelerate in the mid-term, around the next two years, as foreign investors would prefer to wait and get a clearer picture of Mr Trump’s policies. This would have an impact on domestic investment and local business operators and they should prepare for adjustments in line with changes in the global situation.”

Kasikorn Research Center or K-Research is the academic arm of one of Thailand’s leading bank group, Kasikornbank.

Trump Victory Upset Thai Markets But No Long-Term Impact Is Seen

Thailand’s economy is still on track for its projected economic outlook despite being surprised by the election of new US President Donald Trump. Markets across the globe were shaken by one of the most watched election in history. When Trump won over Clinton, the market was sent in a frenzy of volatility that left traders cautious and investors afraid.

Over in Thailand, the market experienced the same. Trump’s win has caused fund to go out of the country. Despite extreme movements, a senior Finance Ministry official says that Thailand is only affected in the short-term. Furthermore, it won’t affect the economy’s long-term plans and positive economic outlook.

It has been a difficult month for Thailand with the recent death of their revered king whom they used to look up to in times of national turmoil and uncertainty such as this.

Warotai Kosolpisitkul, a Fiscal Policy Office director-general in the Finance Ministry, said that they had anticipated the outflow of foreign funds. They saw that traders and investors would be fleeing towards safe assets after the Republican nominee Donald Trump triumphed over Democrat representative Hillary Clinton. Right from the onset of the election last Wednesday, as the world watched Trump take the lead, safe havens such as gold and the Swiss franc have surged to record highs. The baht understandably weakened versus the dollar because of this.

Gold prices were changed 19 times until 3:36 pm during election day according to the Gold Traders Association. Buying prices were at 21,011.76 baht per baht-weight for gold ornaments and 21,400 baht per baht-weight for gold bar while selling prices were at 22,000 baht per baht-weight for gold ornaments and 21,500 baht per baht-weight for gold bar.

The Stock Exchange of Thailand declined as much as 1.6% in intraday trading when Trump was just ahead of Clinton. It closed down 0.03%.

With all the volatility, Warotai said he remained confident that the Thai markets will be able to handle such rapid chages. He attributes his assurance to the country’s high foreign reserves and stable economic fundamentals. He said that the long-term economic prospect will be unchanged for Thailand.

ETX Capital analyst Neil Wilson had something to say about the volatility, “We have seen the market reaction be nowhere near as bad as it might have been — we could yet see a big pullback. Just like Brexit the longer term implications of this vote are much harder to discern and forcing investors to take stock. “For now markets look like they are in limbo, maybe waiting for the US open for direction.”

King’s Death Will Not Delay Thai Elections

In Thailand where economic and political problems are abound, the death of their revered leader, King Bhumibol Adulyadej, is another hit to their struggling country. However, this unfortunate incident will not delay an anticipated elections for the Thai.

According to media, the general election in 2017 will not be postponed despite entering a year of mourning. Thailand has been under the rule of military junta since 2014 that displaced then leader Yingluck Shinawatra. He was replaced by then head of military and now prime minister Prayuth Chan-ocha. Since then, Thailand has been under strict jurisdiction.

Now as the country looks forward to a welcome change in the form of the 2017 election, the death of their king planted speculations that the military junta may extend the poll date to make room for the year of mourning for the longest reigning monarch of the world.

King Bhumibol Adulyadej’s death has put the country under a somber mood with joyous events being banned for 30 days. Meanwhile, public servants are to wear black for one year to honor the leader. Most public places such as cinemas, parks, and restaurants closed on the day of his death with several expected to be out of business until further notice. Market participants are already expecting a decline in the Thai markets with the significant decrease in trading activity. With most of the locals flying to the palace to pay respects to the late king, several industries are expected to be affected such as tourism, labor, and retail.

The king is a beloved icon of Thailand looked upon by locals as a father figure that guides them in times of turmoil. His son, Crown Prince Maha Vajiralongkorn’s ascension to throne is an anticipated event. Moreover, the elections will go ahead as planned and that the military government will pave way for civilian rule according to media .

While some personalities are concerned about the future of Thailand now that their king is gone, some people are choosing to focus on the now. A spokesperson for the military, Weerachon Sukondhapatipak did not comment on the matter but instead said, “This is not the time to discuss politics.”

Despite the concerns, the media said, “The government has reaffirmed its commitment to following the roadmap for general elections scheduled for late next year.”