Burning of dry leaves of sugar cane before they are cut and harvested manually has led to environmental issues and complaints from people living near the plantations.

Sarayut Yimyuan, deputy BAAC manager, said the bank recently signed a memorandum of understanding with the Office of Cane and Sugar Board (OCSB) and 57 sugar milling factories across the country for the implementation of the three-year soft loan project approved by the Cabinet.

He said the Cabinet has given the green light to the BAAC to provide Bt2 billion worth of soft loans a year to sugar cane farmers for tractors or other machinery that would assist in the harvesting and do away with the need to resort to the environment-unfriendly practice of pre-harvest fire clearing.

Sarayut said the loans would be granted at the interest rate of 5 per cent per annum but farmers would have to shoulder the interest at a two-per cent rate while the rest would come from the government’s subsidy. He added that the sugar factories would act as loan guarantors for the farmers who sell their sugar cane to the guaranteeing plants.

Worawan Chid-aroon, secretary general of the OCSB, said the soft loan project is part of the government’s measures to have all sugar cane planters stop burning their crops by 2022 to lessen air pollution.

She said the loans were aimed mainly at allowing farmers to buy small harvesting tractors that can be made in the country at a cost of Bt300,000 per vehicle. The loans can also be used to buy imported harvesting tractors but these tractors must be imported within two years.

Worawan added that farmers can also seek loans to buy non-harvesting tractors and trucks or to develop their plantations or dig reservoirs but they will be charged annual interest of four per cent.

The ceiling of loans for each farmer will be limited at Bt29 million, she added.

The private sector meanwhile indicated it would also support SMEs by helping them earn more than Bt500 million from the show while arranging business matching between local and international businesses. Banks taking part in the expo are offering special loan campaigns at low interest rates.

Utama stressed the importance of SMEs transforming their business to support the new digital era and to shore up their strength and ensure sustainability.

Smart SMEs Expo 2019, which has as its concept “One stop to find the way to be rich”, also brings together businesses and organizations with the ability to drive and support SMEs on the road to competing on the global market.

Utama noted that the former government and private sector had always supported SMS through the creation of infrastructure and new opportunities including the digital marketplace and a cashless society.

“I think that in this digital economy era, SMEs who do not adapt will find it difficult to survive. The former government partnered with the private sector to drive and support micro SMEs, start-ups and entrepreneurs so that they would be able to adapt and be more competitive. They must be open to new opportunities and join with partners to strengthen their businesses and create future development,” said Utama.

“The country will soon have a new government that will drive the economy forwards and create stability. I believe this new government will play as important a role in promoting and developing SMEs as its predecessor. However, we must wait for the official announcement of the government direction.”

Pisit Prakitworapong, managing director at PMG Corporation, noted that the expo will also allow SMEs to meet new customers and discover new ideas and new innovations to support their future business. It is expected that the expo will generate at least Bt1.2 billion in trade and that visitors will spend more on Bt500 million on products.

Also taking part in the expo are 10 banks and financial institutions such as Government Savings Bank, Kasikorn Bank (KBank) and Bank for Agriculture and Agricultural Cooperative, all of which are offering special loan campaigns with low interest rates for SMEs. Demand for such loans is expected to exceed Bt2 billion.

The expo features five special highlights: business franchise, health and beauty, food and beverage and service innovations such as cosmetic manufacturing, CP Retailink as well as Natural Products and Spa.

Moreover, the Department of Business Development is also cooperating with business partners in offering 40 franchise brands and special loans and conduct business matching activities.

The expo continues through Sunday (July 7) at Halls 7-8, Impact Muang Thong Thani.

The average daily trading value of SET and Market for Alternative Investment (mai) in June was Bt60.53 billion (approximately US$1.95 billion), up 3.1 per cent from the preceding month. Foreign investors were the net buyers of Thai shares for the third straight month in June, gaining the highest monthly net inflows in the region.

Forward and historical P/E ratios of SET were 16.4 times and 18.6 times respectively at end-June, compared with the average of the Asian peers of 14.5 and 16 times respectively.

Dividend yield ratio of SET was 2.98 per cent at the mid-year point, above Asian stock markets’ average ratio of 2.79 per cent.

A combined market capitalisation of SET and mai at end-June jumped by 10.9 per cent from end-2018 to Bt18 trillion, moving in tandem with the SET Index.

Funds mobilized through IPOs during the first half of 2019 stood at Bt8.53 billion.

In June, the average derivatives trading volume rocketed by 65 per cent from the previous month to 590,647 contracts per day.

SET Senior Executive Vice President Soraphol Tulayasathien said that the SET Index rose to the highest among Asian bourses with the most value of foreign net inflows in June, boosted by the prospect of continuity in Thailand’s economic policies following a clearer picture of local politics, coupled with a string of positive external factors including US-China’s easing of trade tensions and the US Federal Reserve’s gradual move in monetary policy.

“The most effective measure to stimulate the economy in the second half is to promote policies that directly target consumer spending,” Mana Nimitvanich, first vice president of the group, said on Thursday.

He expects the next government to inject Bt50 billion to Bt100 billion into the economy by the year-end through policies to promote consumption such as offering welfare cards to low-income earners in the country.

Boosting consumer spending is necessary to cushion the negative impact from the slowdown of exports since the beginning of this year, he said.

“We have cut our GDP growth forecast for 2019 from 3.6 per cent to 3.3 per cent, due mainly to the ongoing US-China trade tensions, which have continued to damage Thai exports,” said Phacharaphot Nuntramas, senior vice president of the bank’s macro research unit.

The group expects Thai exports to grow by a mere 0.8 per cent in 2019, down sharply from 7.7 per cent last year, largely due to the trade conflicts.

The slashing of the export growth forecast is also due to the signing of the EU-Vietnam free trade agreement (EVFTA), which will make exports from Vietnam to the EU more competitive than Thai products.

“Thai shipments to the EU account for up to 10 per cent of the country’s total exports,” Mana stated.

However, he said, Thailand’s exports to the region have already been overtaken by Vietnam in recent years. With the EVFTA becoming active later this year, Vietnamese goods will be even more competitive than Thai products. Mana predicted that the EVFTA will cut into more than 1 per cent of total Thai exports in 2019.

Both Thailand and Vietnam primarily export machinery and parts, electrical appliances and garments to the EU. With lower tariffs and cheaper prices under the free trade pact, Vietnamese exports may cut into Thailand’s existing market in the region, he explained.

To cope with this issue, exporters should consider relocating their manufacturing base to Vietnam to capitalise on that country’s advantages in exports and leverage their lower cost of labour, Mana suggested.

Meanwhile, public spending, which was touted as Thailand’s new engine for growth in 2019, has not been as high as expected.

The Transport Ministry plans to invest Bt200 billion in infrastructure projects this year, Mana said. However, the bank’s assessment of various public infrastructure projects throughout the country estimates only Bt77 billion will actually be invested this year.

“Of the Bt77 billion to be invested in transportation infrastructure this year, Bt50 billion will be spent on projects around the central region,” he stated. This means the impact of public investment in these projects will not be felt equally throughout the country.

Furthermore, Bt77 billion would amount to only 0.1 of the country’s GDP, while exports, which have been in decline since the beginning of the year, account for 75 per cent.

“Therefore, our assessment suggests that public investment will not be sufficient to offset Thailand’s slow economic growth in the second half,” Mana concluded.

On the other hand, Thailand’s financial markets have been reacting well to the global financial trends, the group stated.

Central banks around the world have signalled cuts in interest rates. The group said the Bank of Thailand is expected to maintain the policy rate at 1.75 per cent throughout 2019 and 2020, as inflation stays low. It does not anticipate the policy rate to be raised, as that may lead to a further strengthening of the baht, making Thai exports even less competitive.

The central bank’s current stance, compared to last year’s trend of rate increases, has improved investor confidence and prospects are positive for the rest of 2019, given that Thailand’s political situation remains stable, said Jittipol Puksamatanan, chief market strategist of Krungthai Bank.

Jittipol added that the baht will remain strong throughout the year, thanks to the Kingdom’s high current account surplus. Jittipol predicted that the currency would rise to Bt30.25/dollar by the year-end.

However, foreign investors has continued to record net bought Bt1.59 billion.

Most investors were concerned about the latest report from Thailand’s State Audit Office suggesting that electrical power plants must be held at least 51 per cent by the government within 10 years from now. The department has forwarded the proposal to the Energy Ministry to consider.

This report impacts directly on the confidence of investor in the energy and electricity power plant firms. The share price of this sector has dropped and there is also an impact on the stock market, a broker said.

The top five listed firms showing high trade value are Gulf Energy Development Plc or GULF with Thursday’s closing price at Bt125.5 per share, a Bt3 drop from Wednesday with a trade value of Bt4.82 billion; followed by Global Power Synergy Plc or GPSC with a close at Bt69.25 per share on Thursday, a drop of Bt2.5 per share with trade valued at Bt4.19 billion; CP All Plc or CPALL with a close at Bt85.5 per share on Thursday, a Bt1 drop Bt1 from Wednesday with trade valued at Bt3.21 billion; BCPG Plc or BCPG closing at Bt19.2 per share on Thursday, a drop of Bt1.8 from Wednesday with trade valued at Bt3.06 billion; and PTT Plc or PTT which closed at Bt48.25 per share on Thursday with its price unchanged from Wednesday and a trade value of Bt2.39 billion.

Terdsak Taweethiratham, the vice president of Asia Plus Securities, said the down market is considered a normal correction, because the driving factor is depleted after the market had previously risen when investors accepted the good news, such as the new Thai government’s final Cabinet list, the G20 meeting, the accompanying US delay in increased import taxes for products from China, and the re-opening of trade negotiations between the two countries.

Exports were singled out as the key negative factor driving down growth in gross domestic product (GDP). The research group on Thursday predicted that the value of shipments will by grow by only 0.8 per cent, largely due to the effects of the trade war between the US and China and the appreciation of the baht since the beginning of the year.
The baht is predicted to reach 30.25 to the US dollar by the end of 2019. Krungthai Macro Research expects the Bank of Thailand to maintain its policy rate at 1.75 per cent into 2020.

The CCI for June came in at 63.4 points, extending a decline from the 64.8 posted in May. The result is the most downbeat recorded by the Centre for Economic and Business Forecasting of the Chamber of Commerce University since October 2017.

The centre’s director, Thanawat Phonwichai, also said that people’s confidence in finding a new job dropped from 73.3 points in May to 72.2 this month. Confidence about consumers’ future income prospects fell from 95 points in May to 93.5 in June.

The declines in the key components of the index are seen as a response to consumers’ worries over the country’s economy, with the likelihood of fallout from the trade war between China and the US, alongside concerns over the new government’s stability, Thanawat said.

He estimates that if the baht remains strong until the end of the year, the losses will rise to Bt500 billion. This will directly impact local incomes and purchasing power, with most export businesses likely to reduce staff bonuses.

“In 2018, the exchange rate averaged Bt32.48 to the US$ but now, the Thai Baht is buying between Bt30.5 and Bt30.6, meaning that exporters are losing an average of Bt2 per US$ or about 6 per cent. Exports that were worth Bt8.15 trillion in 2018 are worth only Bt7.65 trillion at an exchange rate of Bt30.5/US$, so if this continues, they could thus lose up to Bt500 billion on the exchange rate alone,” he said.

Moreover, the strong Baht is not only affecting the export market but is also having an impact on the purchase of properties in the country, with foreign investors having to pay more to buy a residence.

For example, foreigners buying condominium units priced at Bt10 million last year would have paid about US$307,881. This year, the same priced residence would cost them US$327,439.

“We have seen the number of foreign buyers drop since early this year both as a result of the stronger baht and the global economy,” property experts told The Nation

LPN Development’s chief executive and managing director Opas Sripayak said that last year, investors from both China and Europe were buying residential properties in Bangkok, especially condominium units, but that most of them have put decisions to buy on hold because of the increased costs caused by the exchange rate.

According to the Bank of Thailand reports, in 2018 foreign investors bought condominiums in Thailand worth Bt92 billion, up 29.57 per cent over 2017, which recorded foreign investment in condominiums at Bt71 billion. The top countries who bought condominiums in Thailand are Hong Kong, China, Singapore, Taiwan, Japan, and USA.

However, the Commerce Ministry is maintaining export target growth at three per cent in this year compared with last year, Chutima Bunyapraphasara, the acting commerce minister, said on Wednesday.

She said that trade promotion agencies should focus more on each region of the world, each country and each city, including secondary cities.

For the US market, she suggested the promotions focus on individual industries, especially those that benefit from the trade dispute.

With China, the market focus should be on items with high consumer demand, such as halal products, pet-related goods, health and beauty, and services.

The ministry also focuses on the Asean market and proposes networking with Chinese businesses relocating their production bases to the region in order to support Thai products.

Meanwhile, the Bank of Thailand suggests companies with US$ loans pay them back soon. Manufacturers planning to import raw materials and machinery to restructure their manufacturing plants should note that this is the best time to buy, as the exchange rate works in their favour and they will pay less.

Don, the senior director of the central bank’s economic and policy department, made the remark at a seminar on the economic outlook for the second half of this year. The event was hosted by KBank Private Banking.

Don said that earlier the committee had viewed that the economy would expand 3.3 per cent this year on the assumption that export growth would be flat.

However, the committee later was of the view that exports could experience a contraction this year, which would affect the economy. If the economic outlook becomes worse than expected, the committee might consider adjusting monetary policy as it deems fit.

On Tuesday some economists said they believed that the central bank would keep the policy rate unchanged for the rest of this year.