Big data has suggested that the property market does not look as good as it seems to be, warns Veerathai Santiprabhob, the Bank of Thailand’s governor.

While property developers could sell out new residential units, the second-home market is a different story, he said.

“When the central bank applies big data analysis by using informaฌtion about electricity consumption, it helps us to understand the realestate market much better,” Veerathai said in an exclusive interview with Nationmultimedia Group.

Consumption of electricity in ageฌing condominium buildings had been in decline for some time, he said – and this suggests many people have moved out of old condominiums to new condominiums.

“It is a warning sign for investors making purchasing real property and hoping to gain by renting it out,” said Veerathai.

The rental rate is currently flat, while nonperforming loans derived from mortgage lending in some subsectors are still rising, he said.

According to the central bank data, non-performing mortgage loans totalled about Bt 24.9 billion at the end of this year’s first quarter. That represented 5.6 per cent of the total non-performing loans in the banking system, or 3.6 per cent of total mortgage loans.

Under pressure from low deposit rates, many investors have searched for yield, with some expected to buy residential units based on a plan to rent them out, according to Veerathai.

Using electricity consumption to shed light on the property market is part of the central bank’s effort to use big data to analyse the market in order to better understand it, he said.

Traditional survey data is not updated, while big data can provide realtime information and so create new indicators, he said.

Big data can be harvested from many sources, including even Google web pages.

The big data analysis serves as an early alert about upcoming serious issues, he said.

Previously, the central used big data to support measures to tackle rising debts among those aged 29-30 years old who were borrowing too many personal loans, he said. The BOT used data from the then National Credit Bureau Co, to back up this action.

“We have shifted from sentiment-based policy to evidence-based polฌicy,” said Veerathai.

The central bank recently signed an agreement with the Labour Ministry to use labour information for economic analysis.

Commenting on the health of the property sector, Samma Kitsin, real estate economist, said that he expected the new-home market to expand five per cent this year.

Apart from ordinary homeowners, there are two groups of investors who make investments in real estate currently, he said. The first group comprises those buying booking tickets for new projects, then quickly selling them to other people. Members of the second group plan to buy residential units and later rent them out to gain financially.

Earnings from a rising stock index usually made speculators active, and vice versa, he said.

Many investors look for residential units in prime areas where large numbers of expats stay, for example along Sukhumvit Road and the inner downtown, he said.

Today the region’s urban areas are home to one-third of its total population but generate more than two-thirds of the region’s GDP, according to a new report from the McKinsey Global Institute (MGI), in collaboration with the Centre for Liveable Cities in Singapore.

Urbanisation is fueling economic growth, but the breakneck pace has left many cities struggling to provide adequate housing, infrastructure, and services to meet the needs of a surging population.

While the urban challenges across Southeast Asia have been growing in scope, new technologies that could tackle some of these issues have reached maturity.

The report, titled Smart cities in Southeast Asia, finds that cities across the region can incorporate data and digital technologies into infrastructure and services—all with an eye to solving specific public problems and making the urban environment more livable, sustainable, and productive. The research, studying dozens of current applications, finds that cities in the region could use digital solutions to improve some qualityof-life indicators by 10-30 per cent. It expands on global research released last month by MGI on how the current generation of smart city technologies can perform in a variety of urban settings worldwide.

Smart cities are poised to have significant and broad-based impact in Southeast Asia cities across Southeast Asia are primed to take advantage on smart solutions. Dozens of smart solutions are available today focusing on every domain of city life: mobility, social infrastructure, the built environment, utilities, security, community, and the economy. As they begin their smart transformation, each city is setting its own priorities regarding which ones to deploy. MGI finds that smart cities could have a substantial impact across Southeast Asia to deliver a better quality-of-life. Among its findings:

-Smart solutions could remove up to some 270,000 kilotons of greenhouse gas emissions annually.

-Some 5,000 lives lost each year to traffic accidents, fires, and homicides could be saved through mobility solutions, crime prevention, and better emergency response.

-Intelligent traffic and transit solutions could save up to 8 million man-years in annual commuting time.

-Deploying smart healthcare solutions for the urban population could reduce the region’s disease burden by 12 million disability-adjusted life years—in other words, not only extending overall life expectancy but adding years of good health. -By creating more efficient and productive environments for business and hiring, Southeast Asia could add almost 1.5 million jobs.

-Residents could also save as much as $16 billion annually as smart solutions contribute to better housing options and lowering energy bills.

-The current generation of smart applications can help cities make significant or moderate progress toward meeting 70 percent of the Sustainable Development Goals.

“Urbanization can propel Southeast Asia to the level of economic and human development, but only if growth is managed well,” said Jonathan Woetzel, Senior Partner and Leader of McKinsey’s Special Cities Initiative. “Cities need to act now to address growing environmental stresses and particularly to combat climate change and improve their resilience.”

There is already a wave of innovation across the region. It includes digital citizen apps, homegrown ride-hailing apps, data-driven transit planning, intelligent traffic systems, data-driven disaster risk assessment, advanced construction techniques, smart energy meters, and much more. Low-income cities may be able to jumpstart progress by creating open data portals, which make raw information available for private-sector innovation that does not require any public investment.

The report notes that private-sector companies that find ways to contribute to the public good and expand choices for urban residents can find substantial market opportunities across Southeast Asia.

MGI estimates that smart mobility applications could create up to $70 billion in value, while opportunities to make the built environment smarter could be worth more than $25 billion. But the report cautions that companies with aspirations to become urban solution providers need to navigate a dynamic and complex ecosystem. Companies need an intimate understanding of a city’s context so they can anchor their offerings and value proposition to the real needs of residents, and they may need to add new government relations capabilities.

Contributed MCKINSEY GLOBAL Institute (MGI), in collaboration with the Centre for Liveable Cities in Singapore.

 This is following his views on “AOT opens way for duty-free concession at Suvarnabhumi to use international standard formats in Europe-Asia” and “Feasibility of structures for duty-free concession space” which included content to the effect that giving multiple concessions is complex to manage and may cause some operators to be at a disadvantage.

TheAssociation also emphasised the issue of public pick-up counters at airports must be constituted according to Customs law and not open to concession; but operators leasing space should be ready for AOT’s direct system and should collect a service fee not exceeding 1 per cent of sales.

For a transparent and efficient procedure to select concessionaires, the Associations have proposed AOT to disclose the names of advisers in the case of giving duty-free and commercial space concessions in Suvarnabhumi International Airport, and also announce an official and clear schedule for selecting concessionaires, to prevent distortions of gaining information from interviews of AOT executives.

There should also be invitations for all stakeholders to give their opinions on the announcements of the State Enterprise Policy Committee, so that AOT can consider the complete information covering all areas, which is the greatest benefit for AOT, international airport users and the country.

In keeping with this balanced view, the business figures say they are bullish on the Thai economy despite the unfolding moves in the trade conflict. They believe that trade tensions between the US, China, Europe, Canada, Mexico and India will have a only a limited impact on Thai exports.

Preedee Daochai, chairman of the Joint Standing Committee on Commerce, Industry and Banking, said yesterday the committee had revised up its projection for export growth this year to 7-10 per cent, from a previous estimate of 5-8 per cent. The threat of a trade war involving some of the world’s major economies is expected to have only a small impact on Thai exports while the global economy continues to expand, he said.

The panel also revised up its forecast for the Kingdom’s economic growth for this year to a range of 4.3-4.8 per cent, from 4-4.5 per cent previously.

Ghayapad Tantipipatpong, chairman of the Thai National Shippers’ Council, said exports of washing machines to the United States have declined, falling to U$83 million in the first five months of this year, from $136 million in the same period last year. Exports of solar cell plunged to $65 million, down from $151 million.

“A more obvious impact of the trade tension is expected to be evident in the fourth quarter of this year,” Ghayapad said. Still, the council is maintaining its forecast for 8 per cent growth this year in exports, she said.

The products that are seen as most vulnerable to the impact of a trade war are in the production chains of machinery, vehicles and parts, and electrical products, she said. There are alternative markets for electrical products, such as Spain, Ukraine and Brazil. For vehicles and parts, substitute markets are Hong Kong, Russia and Middle East, Ghayapad said.

Farm products such as cassava root, fruit, coconuts, beans, vegetables and meat are expected to see gains, as Thailand may be able to export more of them, she said.

She urged the government to accelerate free- trade negotiations with trading partners such as Pakistan, Bangladesh, the EU and Turkey and for the country to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), said that sales of a few export items would be hurt by the trade tensions. Electronics products, washing machines, and steel products are in this list, he said. Producers of these products may consider delaying investments, he said in response to a question how the trade tensions could affect business investment plan.

Another fear is that Chinese manufacturers may use Thailand for the import and re-export of products hit by high US tariff rates, he said. Such actions would lead to the US tariffs on Thai products.

Kalin Sarasin, chairman of the Thai Chamber of Commerce, is among the optimists and says there may be positive impacts on investment in Thailand.

Mukhisa Kituyi, secretary-general of the United Nations Conference on Trade and Development (UNCTAD), made the comment yesterday as he expressed concerns over protectionist forces that have weakened global multilateral trade system under the World Trade Organisation (WTO).

Alongside his call for a more active stance from East Asia, a conference in Bangkok also heard a call from a World Bank economist for more investment in human capital.

Kituyi, in making his call for a stand against protectionism, he referred to the United States’ actions in unilaterally imposing tariffs on imported goods and the retaliatory measures that followed from the affected trade partners. Unilateral actions will not benefit anyone, he said.

“The US consumers and the US economy are not going to win,” he warned at the Trade and Development Regional Forum 2018, an event in Bangkok co-hosted by the International Institute for Trade and Development (ITD) and UNCTAD.

He was optimistic that East Asia and Southeast Asia could play leading roles in driving the global economy and championing the rules for free trade.

Kituyi cited the significantly increased foreign direct investment (FDI) that came into China and the Asean economies, despite declining flows in other parts of the world.

The region gained FDI from outside and within the bloc. Thailand has also become a source of FDI, he said, as more Thai investors spent up overseas.

Kituyi said East Asia and Asean could play a diplomatic role in promoting South-South cooperation, in reference to trade and investment between developing countries.

Such trade flows account for more than 50 per cent of global trade and most are concentrated in the Asia-Pacific region.

The region makes up 60 per cent of the world’s gross domestic product (GDP), according to ITD.

Supachai Panitchpakdi, a former secretary-general of UNCTAD, said that he did not think a trade war would be fully played out.

The US is unlikely to be successful in disrupting production chains in Asia, which accounts for 60-70 per cent of global production chains, said Supachai, who was also a former director of the WTO.

Benefits of liberalisation

“The production chains have been driven by trade and investment liberalisation as many countries lower tariffs and other trade and investment barriers, so that we have a computer now that can be produced in 10 countries,” he said.

He predicted that steel production in the US would not be revitalised by President Donald Trump’s imposition of tariffs on steel imports due to the higher production costs in the US.

Trump’s tariffs on steel and aluminium imports had already hurt the car market in the US. Retaliation from China in the form of a 25 per cent tariff on US soybeans, from July 6, has depressed prices of the beans in the US, said Supachai.

World Bank economist Quentin Wodon, one of the authors of The Changing Wealth of Nations 2018: Building a Sustainable Future report, called for leaders of middle- and lower-income countries to invest more in human capital development.

He said that, as indicated in a World Bank study conducted between 1995 and 2014 in 141 countries, human capital has contributed significantly to global wealth.

Global wealth rose by 66 per cent over the 20 years, while wealth per capita increased 30 per cent.

Middle-income countries’ share of global wealth has risen from 19 per cent to 28 per cent over the period, in large part because of gains in East Asia and the Pacific, Wodon said.

Human capital is the largest component of total wealth, except|in low-income countries where|natural capital remains the largest part.

In the high-income countries of the OECD, human capital accounts for 70 per cent of the total.

The share of human capital in wealth is also high among upper-middle-countries, with an estimated 58 per cent, compared with the shares from produced capital and natural capital at 25 per cent and 17 per cent, respectively. Thailand is in the upper middle income group.

To develop human capital, countries in the region could start with children at a very young age by avoiding malnutrition and ensuring they are sent to school, Wodon said.