Chaiyot said many Thai enteprenuers are now keen to invest in the new growth or S-Curve industries such as food and beverage, electric vehicles, and robotics.

According to Chaiyot, food and beverage (F&B) has a strong potential because it is one of Thailand’s top-five exporters, with a combined employment of more than one million people and a relatively high percentage of local contents.

Overall, there are 8,000-9,000 F&B and related factories with the major players already investing in innovation, automation and new technologies while a growing number of small and medium-sized enterprises (SMEs) are also considering to invest to boost their competitiveness.

“The big players have both vision and financial resources to invest but SMEs are also catching up,” he said, adding that F&B has a bright future due to various factors such as urbanisation of major cities around the world resulting in a higher demand for packaged food and related items.

For Thai F&B players, they have a competitive advantage in terms of abundant domestic raw materials but they need to innovate and automate their operations to stay |competitive in the global market.

In this context, ABB has offered a wide range of products to automate their production, warehouses and logistics while allowing food and other producers to have trace-ability on their products and raw |materials.

This will boost customers’ confidence and other stakeholders in the supply chain especially with regard to public health and other concerns.

In addition, enteprenuers need to be more flexible and responsive as far as their products are concerned due to the products’ shorter life-cycle and the growing popularity of mass-customisation.

To address the new challenges, factories and production lines need to be smarter with more sensors and other equipment installed on motors and machinery to collect data for predictive and other analytic.

Automation of sugar refineries, rice mills and factories in the F&B supply chain is now increasing rapidly as businessmen want to use less workers while boosting their factories’ productivity via automation.

In the long term, production cost is less and businesses can be more flexible and responsive to customers’ needs.

Chaiyot said artificial intelligence (AI), machine learning (ML) and blockchain technologies are coming to the industrial and other sectors with factory asset maintenance among the first area to benefit from predictive analytic so that machinery can be fixed before it is broken.

This will reduce or even remove downtime of production lines, he said, adding that ABB also focuses on the energy sector which is undergoing revolutionary changes due to the advent of renewable energies such as solar and blockchain technology which allows peer-to-peer energy trading.

Electric vehicles are another area which is embracing new technologies so ABB is working on chargers and other equipment to facilitate the advent of EVs

Overall, ABB is adding more software and services to its wide portfolio of hardware and related products to capitalise on data-driven and real-time management of industrial and other assets using cloud-based computing facilities in partnership with Microsoft and IBM Watson.

They encourage consumer spending as well as business expansion. They also drive up asset prices and, in turn, create newfound wealth for many investors around the world. Ultra-low interest rates and relentless liquidity injection from major central banks have kept global stock markets on the steady course upward for the past several years. Volatility has been kept unusually low, on a premise that central banks stood ready to stimulate economy if anything bad were to happen.

But as strong economic momentum lessens the need for stimulus, central banks will gradually raise interest rates and wind down their bond buying (QE) programmes .

The European Central Bank (ECB) has already announced the plan to reduce the monthly bond purchases to 15 billion euro from 30 billion euro after September 2018 and completely terminate QE by the end of this year.

The US Federal Reserves (Fed) is also buying fewer bonds to allow its balance sheet to shrink.

Just as central banks are buying less, the US government is planning to sell more. The US Treasury department is boosting sales of government bonds to help finance a widening budget gap due tax cuts and spending increase. The Treasury Department predicted the US government’s borrowing needs in the second half of this year will jump to the most since the financial crisis a decade ago. The Congressional Budget Office forecasts the US budget deficit will jump from around $500 billion in 2016 to $900 billion this year and will continue climbing to exceed a trillion mark in 2019.

The falling demands from central banks coupled with record bond sales by US government could create tremendous stress in financial markets. Interest rates could rise steeply as market struggles to absorb additional bond supplies. Liquidity conditions could also deteriorate as massive bond sales competes for market funding. We recommend investors to keep an eye on US Treasury bond yields as a sign of stress in financial markets. Our earning yield gap model suggests that stock market could come under pressure if US 10-year Treasury bond yield overshoots 3.3 per cent.

KOMSORN PRAKOBPHOL is Head of Strategy at TISCO Economic Strategy Unit. He can be reached via http://www.tiscowealth.com or komsorn@tisco.co.th.

In a speech in Bangkok on the launch of the mobile app, which comes under the broader Pracha Rat project for grassroots economic development, Prime Minister Prayut Chan-o-cha said the service would help people to increase their purchasing power.

It serves the needs of those who earn less than Bt100,000 a year, with around 11.4 million of them now registered for the welfare cards.

For the first stage, efforts had been focused on encouraging a sufficient number of shop owners to get on board and enable the project to get under way.

The premier rejected suggestions that the initiative is aimed at benefiting the major retailers.

The welfare card project has entered its second phase with a focus on providing skills training to the low-income earners.

It will increase the money made available in the cards from between Bt200 and Bt300 per person a month to Bt300-Bt500.

Prayut said at the event – in the Impact Muang Thong Thani complex – that the government wanted to boost the incomes of everyone, adding that when welfare recipients manage to move up the income ladder they would also become liable to pay tax.

Regarding the government’s plan for big investments in mega-projects, he said the state revenue could not stretch to cover all such projects, given the country’s low tax base.

Commerce Minister Sontirat Sontijirawong, at the same event, said the ministry had joined with the Ministry of Finance and Krungthai Bank to develop the Thung Ngern Pracha Rat mobile app as a payment solution for the participating shops and the card holders.

The app comes as an alternative to the installation in the shops of an electronic data capture (EDC) device for payments under this Pracha Rat initiative, Sontirat said.

Some 20,000 shops have registered for use of the mobile app.

The ministry expects that at least 100,000 shops will be participating in the project within next two months, reaching 200,000 within four months.

Sontirat said that for the shops that have already installed EDC devices, they would receive support to engage in e-commerce operations.

For the half of the year, it received Bt21.92 billion in royalty fees.

Veerasak Pungrassamee, director-general of the department, said that of the first-half collection in fees, Bt20.84 billion has been given to the Ministry of Finance as national revenue and the remaining Bt1.08 billion was allocated to local organisations.

Since the royalty fees were imposed in 1981 until June 2018, total operating income from petroleum operations in Thailand amounted to Bt2.14 trillion. The revenue streams came from the petroleum royalty fees, extraordinary gains, income from a Thailand-Malaysia joint organisation, and petroleum income tax, another other sources.

In regard to the royalty fees for onshore fields, the department has proposed cutting the contributions to the Provincial Administrative Organisations from 20 per cent to 10 per cent. It wants more to be given to Subdistrict Administrative Organisations (SAOs) in areas where the systems of energy infrastructure are located for greater community acceptance.

Currently, of the total collection of petroleum royalty fees, 20 per cent is given to local organisations including SAOs and municipalities in the petroleum concession areas, 10 per cent to SAOs and municipalities in provinces where petroleum production exists, 10 per cent to SAOs and municipalities in other provinces, and 20 per cent to Provincial Administrative Organisations. The remaining 40 per cent is handed over to the Finance Ministry as national revenue.

Veerasak said that Thailand’s demand for liquefied natural gas (LNG) is forecast to rise in replacement of natural gas in the Gulf of Thailand. After 2022-2023, the amount of natural gas is estimated to drop to about 1.5 billion cubic feet per day from the current figure of 3.8 billion cubic feet.

The National Energy Policy Council (NEPC) has mandated that the Electricity Generating Authority of Thailand (Egat) start importing a maximum of 1.5 million tonnes of LNG a year to the Terminal 1 extension – which has been constructed by PTT – in the Map Ta Phut area in 2019. Meanwhile, the gas price and the amount of imports have been under consideration.

“Imports of LNG by Egat should be done by separating the gas procurement system from the power procurement to determine criteria for cost calculation and type of gas procurement contract on whether it will be spot or long term for 10-20 years,” Veerasak said. The result will be finalised by the NEPC.

To handle arrangements with the gas contract in Myanmar, due to expire in 2027, the Ministry of Energy plans to upgrade the 3,600-megawatt Ratchaburi power plant – whose contract will expire in the same year – to be able to receive gas from the east instead.

In the first half of this year, petroleum production in Thailand edged up 0.5 per cent year on year to 830,161 barrels of oil equivalent. Of this increase, the natural gas output rose 3.1 per cent year on year to 3,470 million cubic feet per day and the LNG produced increased 3 per cent to 105,576 barrels. However, the production of crude oil fell 8.7 per cent year on year to 132,567 barrels per day.

The Ministry of Energy reportedly will propose that the NEPC review Egat’s plan this year for imports of 1.5 million tonnes of LNG per year on concern over the possible impacts on Thailand’s electricity costs from the to-be-imported gas price. It will consider the issue at a meeting on August 3.

The ministry will also seek approval of PTT’s long-term plan to procure 2.6 million tonnes of gas a year from the Mozambique Rovuma Offshore Area 1 Project. Meanwhile, the amount of gas will not be calculated in the Pool Gas system.

The progress on the electricity load forecast will also be reported in the NEPC meeting to enable the drafting of the Power Development Plan 2018. The initial details for the plan will be completed in September.

Meeting yesterday, the Cabinet also approved a budget of Bt85.34 billion to construct a double-track railway connecting Denchai, Chiang Rai and Chang Kong in a showpiece project to boost the economy in the North.

Finance Minister Apisak Tantivorawong yesterday said that, regarding the debt assistance, the Cabinet had given the green light to a three-year debt moratorium for small farmers, among other measures aimed at easing their burden.

The project starts today and will end on July 31,2021, he said after the Cabinet meeting.

The government will provide financial support for 3.81 million farmers who are clients of the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC). The government will offer an interest rate subsidy via the BAAC, which will manage the project.

All farmers covered by the programme will gain a 3-per cent reduction in interest rates on loans worth Bt300,000 for one year.

The farmers can apply for the debt moratorium on the principal of the loans for the three years, but they still need to make interest payments during that period.

The total cost of the debt-assistance package is estimated at Bt16 billion and the government will allocate the first batch of funding worth Bt2.7 billion for the current fiscal year, with a further Bt13 billion to be allocated in fiscal 2019.

Agriculture and Cooperatives Minister Krisda Boonrat said that rice farmers who participate in a project to encourage the growing of alternative crops supported by the government would be eligible for the debt suspension.

The government believes a switch into the new crops would raise the incomes of farmers.

Separately, Transport Minister Arkhom Termpittayapaisith said after the Cabinet meeting that the Bt85.34 billion approved for the Denchai-Chiang Rai-Chiang Kong link would enable work to proceed on the 323.1 kilometre double-track rail line. It is expected to take four years to build, with companies invited to bid this year for a share of the works.

The minister said the government would compensate those property owners whose land will be expropriated for the project, with Bt10.7 billion set aside for this and a further Bt1.8 billion for hiring consultants

Regarding the bidding for contracts under the project, Arkhom said the works would be divided into three parts: a 104-kilometre section from Denchai district in Phrae to Ngao district in Lumpang at Bt26.7 billion; a 135-kilometre section from Ngao to Chiang Rai at Bt28.73 billion; and the 84-kilometre section from Chiang Rai to Chiang Kong at Bt17.48 billion. “This route will boost border trade growth by up to 40 per cent,” Arkhom said.

In another development, the Cabinet approved a strategy for the management of the country’s ore resources over the next 20 years.

Government spokesman Maj-Genl Sansern Kaewkamnerd said that the Cabinet agreed with 20-year strategy covering 2018 to 2036 and the master plan for the management of these resources from 2018 to 2022, as proposed by the Ministry of Natural Resources and Environment.

The strategy plan covers four areas. First, the government aims to increase the country’s stability and competitiveness in relation its ore resources. Second, the strategy will ensure a balance between economic interest, people’s health and preserving the environment in how the nation’s mineral wealth is exploited.

The third area concerns transparency in ore management and license procedures. To achieve this, adequate information about ores and related activities must be available for the public to scrutinise. Lastly, the strategy aims to promote participation among interest groups about the management of the ores and their development.

For the five-year master plan, the government aims to group ore sites, with some coming under economic usage and others for limited use or conservation purposes.

The development policy for ores must address the sustainability of natural resources and people’s health. The master plan also aims to develop a new mechanism for ore exaction concessions, taxes, regulations and supervision and performance review of the involved agencies. The plans will also promote participation among key stakeholders, the government, the private sectors and people at all levels in order to manage the resources sustainably.

Sansern said the 20-year ore strategy is in line with the 20-year national strategy initiated by the junta-backed government.

They also expect the baht to remain steady amid the uncertainties.

Nuttachart Mekmasin, assistant managing director for research at Trinity Securities, said that the Stock Exchange of Thailand (SET) Index could slow down in its rising trend when it encounters the first resistance level of 1,720 points and the key resistance level of 1,750s. The key support level is 1,650 points.

When the SET Index stays around 1,700 points or higher, equivalent to a forward market price to earnings (P/E) ratio of 14.1 times, it could become fragile in term of valuations, Nuttachart said.

The SET Index yesterday inched down 0.08 point to 1,701.79, with daily trading turnover of Bt57.01 billion.

This month short-term positive sentiment could come from better-than-expected earnings results from the banks and other groups that are due to be announced later, Nuttachart said.

Jitipol Puksamatanan, a strategist of Krungthai Bank, said the baht this week would likely move in a range of 33.25-33.35 to the US dollar on a daily basis and 33.10-33.60 for the week.

This week, movements in the monetary policy committees in several countries – including the United States, Britain and Japan – as well as US workforce figures should be kept on watch. These moves could prompt the US dollar to rise, while markets could continue to adopt a risk-off attitude, Jitipol said.

Monetary tightening have heightened market volatility but “we believe that risk to more monetary tightening is not much” and finally, markets will return to focus mainly on economic expansion and inflation, he said.

It is possible for markets to make corrections to wait for economic certainty in the future, he said.

On the equity side, markets have been concerned over trade sanctions between the US and other countries which could affect main markets of US companies, erode their profitability and raise borrowing costs across the world, he said.