The new generation is spending too much.

That’s the point Bank of Thailand Governor Veerathai Santiprabhob tried to get across at the seminar “The Royal Initiative: Immunity for Thai Economic Structure” in Bangkok on Monday.

Veerathai said that the household debt was increasing dramatically, partly from the first car policy and the zero per cent retail loan competition.

A look into the behaviour of Thais found that they are spending more money and are incurring higher debts. This was especially so for the new generation, who have just graduated and started to work but are overspending and likely to shop online, he said.

The low interest rates for quite some time now have discouraged the incentive to save, Veerathai said. The central bank is therefore trying to encourage more savings by issuing personal credit card regulations, loan-to-value measures, and opening debt-settlement clinics.

More than 40 per cent of farmers are still poor, with an average monthly income of Bt4,750, and they are moving to cities to work, so it’s time to believe in the sufficiency economy approach, which must be followed immediately, Veerathai said.

The household debt is currently high at Bt12.9 trillion – 78.7 per cent of the gross domestic product, according to the central bank.

Energy Minister Sontirat Sontijirawong said his ministry has already set up a war room to monitor possible impacts from the attacks. He said Thailand imports 170,000 barrels of oil daily from Saudi Arabia, or just 16 per cent of the total import of 1 million barrels of petrol per day. He added that if Thailand is unable to import petrol from Saudi Arabia, it can turn to other countries.

Thailand’s crude oil reserve as of September 16 was 3.366 billion litres and reserves of finished oil was 1.848 billion litres, while that of liquified petroleum gas for household use was 131 million kilograms.

He estimated that if price of crude oi, fluctuates by US$1 (Bt30.5), the local retail price will change either way by 20 satang per litre. If price of crude oil rises by $5 per barrel, then the local retail price will be jacked up by Bt1 per litre.

He said initially he will use the Oil Fund to stabilise the retail price, but the final decision will depend on whether Saudi Arabia can resume normal oil production in the next 48 hours.

Thailand’s Oil Fund had Bt39.402 billion as of September 15.

Chaiwat Kovavisarach, president of petroleum company Bangchak, said the attack does not affect it because it imports petrol from Malaysia. He added that though the attacks may affect the global price of crude oil, it is unlikely to surge too much because there is still a high supply of oil in the market.

According to Kasikorn Research Centre (KResearch), if Saudi Arabia does not launch a serious counterattack, the global crude oil price will only rise for two weeks, which will boost inflation in Thailand during the last four months of the year by 0.05 per cent. Thailand’s average inflation rate will then rise to 0.84 per cent this year.

However, if Saudi Arabia does launch a fierce counterattack, then it may jack up the Brent crude oil price to between $70 and $80 per barrel for the rest of the year, which will raise Thailand’s average inflation rate this year to 1.08 per cent.

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The research house believes the US economy is still showing slight growth, though the global market’s unpredictability may affect the country’s economy for the rest of the year, which is why the Federal Reserve may consider cutting the interest rate.

The US Fed will also bring down the economic growth target for the rest of this year and next year, Kasikorn said.

If the US Fed decides to cut the interest rate, it will boost the flow of capital into emerging markets like Thailand, though Kasikorn does not believe Thailand’s Monetary Policy Committee (MPC) will reduce interest rates in response to the Fed.

“We believe the MPC will monitor the economy before deciding on cutting the interest rate,” the centre said.

The world oil prices jumped 15-19 per cent on Monday following Saturday’s attack..

“It could translate into retail oil prices going up Bt1-2Bt per litre tomorrow, warned “Manoon Siriwan, an expert on energy issues, on Monday.

The government should dip into the Oil Fund with a Bt0.50 per litre subsidy for diesel, which is largely consumed by industry, transport , business and farmers at up to 65 million litres daily, he said.

The Energy Ministry has the authority to make the decision.

Manoon said the Oil Fund should not be used to subsidize motorists who use petrol.

The Energy Minister has called a meeting for Monday to assess the impact of higher oil prices.

Manoon said the high prices could be ongoing if it takes the Saudi government many weeks or months to restore their oil production. About 5 per cent of world supplies have been cut due to the attack, with market speculation contributing to the resultant spikes, he added.

This is helping to build an even better performance before the 2019 fiscal year comes to a close at the end of this month and the momentum is expected to continue through to next year.

Nichapa Yoswee, TCEB’s Senior Vice President – Business, said: “TCEB’s achievement thus far and plans for the coming years strengthen Thailand’s popularity as a preferred destination for incentive groups from China. TCEB’s ‘Thailand Redefine Your Business Events’ brand is helping to drive this outstanding performance. More campaigns will be considered for the incentives market during the 2020 fiscal year.”

Thailand was selected as the host country for more than 70 incentive groups from China between October 2018 and  July, representing a total of 169,215 delegates with average expenditure of Bt72,297 per trip and generating Bt12.23 billion Baht in revenue for the Thai economy.

For the highly coveted ‘Mega’-styled incentive segment of 1,000 delegates or more, Thailand welcomed 37 groups from the total 70. This represented 99,967 delegates who generated revenue of 7.2 billion Baht. This achievement, in part, can be attributed to TCEB’s “Meet Mega” campaign that offers financial rewards for mega-size groups.

The Chinese groups come from all over the country, with the majority from Beijing, Shanghai, Guangzhou, and Shenzhen respectively, as well as from other major urban centres where large Chinese companies have offices. Top destinations for Chinese incentive groups in Thailand include Bangkok and Pattaya.

“Thailand’s strength in attracting Chinese incentives includes visa-on-arrival fee waiver scheme, modern MICE infrastructure, convenience of access, famous Thai hospitality and culture, renowned Thai cuisine and the incredible value for money,” Nichapa said.

He added that he had learnt from Aramco and related parties that the situation there was under control and the damage was being assessed. The incident would not affect the oil depots, which supply crude oil to Thailand’s oil and gas conglomerate PTT, the minister added.

The ministry is keeping itself abreast of the situation and has already devised a back-up plan. He assured that the country had sufficient supply for the short-term if the attack led to severe impact on Saudi Arabia’s oil exports.

Last week the ministry asked six refineries nationwide to start reporting their reserves, production, and oil purchases on a daily basis, from the previous practice of monthly reports, in a move to prevent oil supply shortage.

It added that the country’s oil reserves were enough for 30 to 45 days if there was a supply shortage.

The drone attack reportedly cut Saudi Arabia’s output by around 5.7 million barrels per day or 5 per cent of the total global oil production.

Anusorn Thammajai, director of Rangsit University’s Institute of Economics, warned that if Saudi Arabia counterattacked, the situation could worsen and that would put pressure on global and Thailand’s oil price, Anusorn said.

The global oil price could jump by between US$5 and $10 per barrel next week. If the baht remains strong, this could assuage the impact from the pressure on local retail oil price to a certain degree.

If the drone attack led to a prolonged military action, this might affect global oil supply and result in protracted high oil price. If so this would exacerbate the ailing global economy, he warned.

These will include measures such as skills training for low earners, and plans to raise revenues for poorer states like Perlis, Kedah and Kelantan, and in rural areas.

“We need to raise earnings but not just by raising salaries alone,” said Tun Dr Mahathir at a press conference after the meeting. “We need to uplift the abilities of our workers so they’re more productive”.

The “Shared Prosperity” economic plan was unveiled in May this yearas a needs-based approach to achieving sustainable and equitable economic growth by 2030. It aims to provide a “decent standard of living for all Malaysians” across race, geography and class.

This plan marked a shift to a more inclusive development strategy that cuts across all ethnic groups, a departure from the country’s decades-old National Economic Policy that favours the majority Malay community.

Dr Mahathir’s announcement came as main opposition parties Umno and Parti Islam SeMalaysia (PAS) signed a political cooperation pact to unite against government policies that they say sideline the Malay Muslim community.

While the Prime Minister did not mention the Malays specifically, they stand to benefit the most from these measures as they make up the majority of low-income groups and those who live in rural areas.

Two of the poorer states singled out for assistance, Perlis and Kelantan, are currently administered by Umno and PAS respectively.

Kedah is governed by Dr Mahathir’s Pakatan Harapan coalition, with his son Mukhriz Mahathir the Menteri Besar.

Dr Mahathir also said the government will end the practice of indiscriminately handing out licences, contracts and approved permits. The so-called AP system was originally intended to assist Malay entrepreneurs gain a foothold and advance in business, but has been open to abuse.

“We will prioritise results more than (giving out) opportunities,” he told reporters, explaining that some of these opportunities have been wasted in the past.

Dr Mahathir said that instead of using these contracts to further their skills in a certain industry or sector, some companies sold off the contracts to others for a quick buck instead.

The Prime Minister said this year’s Budget, set to be announced on Oct 11, will emphasise providing vocational and skills training to keep up with higher-end jobs.

The Stock Exchange of Thailand Index could move up to nearly 1,700 points next week, the Kasikorn Research Centre has forecast

The research house predicted that on the downside, it could fall further from Friday’s level, with defending lines of 1,650 and 1,640. On the upside swing, it could test barriers at 1,675 or as high as 1,690.

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The SET Index on Friday fell to 1,661.96, down 0.49 per cent from the previous week, as investors sold shares to take profits. The daily average volume was Bt59.85 billion, up 4.68 per cent.

Next week, investors will await the latest developments in the US-China trade war, any movements in Brexit, the meeting of the US Federal Reserve on September 17-18, the meeting of the Bank of Japan, China economic data, fixed capital investment, industrial output and retail sales in August.

Investors are also eagerly awaiting key economic indicators in the US, including the survey of industrial activities by Fed’s New York branch; business trends of the Fed’s Philadelphia branch; the housing index in September; industrial production, second-home sales, housing starts in August and net capital flows in July, the research house added

The baht continued its upward trend, appreciating to Bt30.42 to the US dollar on Friday, up from Bt30.67 the previous Friday, after having risen to a six-year high of Bt30.36 at some time during the day.

Regional currencies also moved up against the US dollar as markets expressed relief about the trade war and the European Central Bank (ECB)’s latest monetary easing.

The ECB cut its deposit facility rate, paid by banks on reserves parked with the ECB, to deeper negative territory from minus 0.4 per cent to minus 0.5 per cent and resumed bond purchases to encourage banks to lend more.

The measures came as Germany, Europe’s largest economy, showed signs of a looming recession. US President Donald Trump delayed tariff hikes on Chinese goods and China also postponed increasing tariffs on US goods.

The Kasikorn Research Centre forecast that the baht may move in a range of Bt30.20 and Bt30.60 a dollar next week.

Investors are awaiting latest developments in the trade war, the developments in Brexit, the meeting of the US Federal Reserve on September 17-18, the meeting of the Bank of Japan and Chinese economic indicators. Investors are also eagerly awaiting key economic indicators in the US, including a survey of industrial activities by the Fed’s New York branch; business trends by the Fed’s Philadelphia branch; the housing index in September; industrial production, second-home sales, housing starts in August and net capital flows in July, the research house added.

Exporters, economists and overseas Thai workers have long complained about the appreciating baht damaging exports, farm products and causing exchange losses for overseas Thai workers, adversely impacting the overall economy. Thai investors who invested in foreign equities were also facing exchange rate losses when repatriating money due to the rising baht.