Dan Harsono, head of retail and consumer banking at Bank of Ayudhya, said that retail customer loans came in higher than expected, increasing 2-3 per cent year-on-year for the first four months of this year. He attributed this to rises in hire purchase loans, Krungsri Auto, credit card loans for Krungsri Consumer, housing loans and personal loans.

The four-month loan-growth figure is on track for its target of 8 per cent for the whole of 2018.

For the latter half of this year, Harsono sees potential for expansion in the bank’s loans resulting from continuing positive factors.

According to the National Economic and Social Development Board (NESDB), Thailand’s gross domestic product (GDP) expanded 4.8 per cent year-on-year in the first quarter of this year, compared to the previous quarter’s growth at 4 per cent.

That economic growth, coupled with higher consumer confidence, has propelled hire purchases, credit card loans, mortgages and personal credit to rise as targeted.

Aside from the local economic supports, Bank of Ayudhya has launched campaigns including a saving deposit campaign encouraging customers to make transactions through mobile banking and ATMs.

“This year, the first-quarter GDP figure has been very good, which has led to bright prospects for the remaining months (of this year) and improvement in the bank’s retail business group,” Harsono said.

In regard to new accounting standard IFRS9, all banks have received impacts and Bank of Ayudhya has prepared its work system to cope with the accounting standard, which is scheduled to come into effect in early 2019.

Oranut Siraprapa, first executive vice president and head of retail strategy product and segmentation Group at Krungthai Bank (KTB), said that the bank’s retail loan has grown satisfactorily for the first four months on expectation to achieve estimated loan growth of 6-7 per cent this year.

She said that the bank would likely continue seeing satisfactory loan expansion for the rest of this year, as it has been continuously seeking new institutional customers. She points to the bank’s strength in connection with the Comptroller General’s Department’s electronic Government Fiscal Management Information System (GFMIS) and the bank’s competitive interest rates.

While its non-performing loans remain below 5 per cent of total outstanding loans, KTB continues controlling the quality of its retail loans at a satisfactory level, she said.

To promote social enterprise is part of the government’s 20-year national strategy, aiming to narrow the income gap between the rich and the poor and protect the environment. The government wants private and social institutions to participate in the development of the country, according to the report released recently by the state’s planning agency.

Majors issues facing social enterprises in Thailand include poor coordination, lack of innovation, difficulty in accessing capital and lack of assessment of progress, according to the report. “Social enterprises in Thailand have room to grow,” said Chutinart Wongsuban, the deputy secretary-general of the NESDB.

Before the advent of social enterprises, there were several forms of organisations pushing social causes. These organisations included cooperatives, non-profit organisations, charity foundations and corporate social responsibility (CSR). However, some of these organisations face problems with financial sustainability as they largely rely on donations. The concept of social enterprise has developed to fill a gap, as it could be used as a tool to both make profit and take care of social issues at the same time. Unlike normal corporates, these are not solely to make profits for shareholders.

The best-known social enterprise in Asia is Grameen Bank, founded by Nobel laureate Muhammad Yunus in Bangladesh. In Thailand, there are ventures such as Cabbages & Condoms Restaurant and Birds and Bees Hotel run by social activist Mechai Viravaidya.

The government issued regulations regarding social enterprises in 2011, setting a broad definition. The criteria to be considered a social enterprise said: its products or services must not be harmful to the health of the people, society and environment; they must adopt a philosophy of economic sufficiency; have financial sustainability; a large proportion of the profits must be allocated for social causes; and they must incorporate good governance.

According to a recent survey, an estimated 2-3 per cent of about 100,000 community-based organisations are counted as social enterprises. And about 1,000 foundations and non-profit organisations have been operating as social enterprises. However, only 101 organisations are currently eligible for tax allowance from the Revenue Department. Thailand is lagging behind other countries in Asia, for example Indonesia has about 2,000 social enterprises, India has over 1 million and Bangladesh has 20,000.

The report suggested that the Thai government should quickly pass new legislation supporting social enterprise. The government is also urged to create an environment conducive to investment in social enterprises, such as supporting social impact bonds. The government may provide some assistance such as funding and technical support in the initial stages. The government could also launch a campaign and certification, Chutinart added.

The IMF welcomed the island nation’s increase in fuel prices last month — a precondition for it to receive $252 million of the three-year loan approved in June 2016.

Sri Lanka’s economy has been on the mend since the IMF bailout, but growth in 2017 was more sluggish than expected and at 3.1 percent was the slowest in 16 years.

The release of the latest tranche of the loan had been held up pending the government agreeing to raise fuel prices to recover production costs and do away with subsidies.

The IMF said the price hike by state-run Ceylon Petroleum Corporation, in some cases by as much as 130 percent, was a “major achievement” that would reduce fiscal risk.

The price of kerosene oil, widely used in rural Sri Lanka for cooking and in lamps, was also more than doubled last month, while gasoline prices increased by just under 15 percent.

The IMF said Sri Lanka should also implement a pricing policy for electricity, which is currently subsidised for households and small businesses.

“It is essential for the authorities to implement an automatic pricing formula for electricity and a restructuring plan for Sri Lankan Airlines,” IMF’s Deputy Managing Director Mitsuhiro Furusawa said in a statement.

One of the biggest drags on the country’s balance sheet is national carrier Sri Lankan, which has accumulated losses and debts of over $2 billion and is a huge burden on taxpayers.

The government has failed to privatise the airline due to a lukewarm response from investors while an attempt to find an international partner to revive it has also failed.

Meanwhile, Sri Lanka’s real estate sector has been expanding rapidly — raising concerns of a bubble — and the Central Bank of Sri Lanka has said the sector is under close watch to prevent fallout for banks.

“While financial soundness indicators remain stable, continued credit growth in the real estate sector warrants close monitoring,” said Furusawa.

Employment in the non-farm sector dropped 2.8 per cent in the first quarter of 2018 despite economic growth reaching 4.8 per cent, according to the Social Situation and Outlook report released yesterday by the NESDB.

Total employment stood at 38.1 million, a 0.2-per-cent decrease year on year. The country’s unemployment rate remained low at 1.2 per cent, the state think-tank reported.

The number of people employed in the non-farm sector totalled 25.7 million, a drop of 2.8 per cent.

“The decline of employment in the retail and wholesale and construction sectors was due to businesses introducing new technologies and automation in their production and services,” Chutinart Wongsuban, the deputy secretary-general of the NESDB, said. It may take time before labour adjusts itself, she said. Moreover, the labour market has fully benefited from the economic recovery, she added.

According to the report, the largest drop – 11.8 per cent year on year – was in the construction industry, followed by a 5.1-per-cent drop in education and 3.2 per cent drop in logistics. The wholesale and retail sales sectors also faced a 2.8-per-cent drop, hotels and restaurant services experienced a drop of 1.3 per cent while other sectors had a combined drop of 2.3 per cent.

The farm sector employed 11.7 million, a rise of 6 per cent, due to an expansion of farm output driven by favourable weather. However, the prices of many farm products such as rubber sheet and palm oil remained low and contributed to the declining income of farmers.

The average price of farm products decreased by 12.3 per cent year on year in the first quarter, following the declining trend of 2.2 per cent, 12.9 per cent and 6 per cent in the second, third and fourth quarters last year respectively. This led to 4.8-per-cent drop in the incomes of farmers.

The average income of labourers, however, increased by 2.3 per cent year on year and labour productivity rose 5.1 per cent.

An increase in daily minimum wage of between Bt308-Bt330 became effective on April 1. Authorities have been monitoring whether employers have raised the wages of labourers, said Chutinart.

From the survey of the labour market between April and May, authorities found that 188 manufacturers – estimated to be 4.4 per cent of factories surveyed – did not raise wages. And 1,327 workers or 1 per cent of total workers surveyed had not received the minimum wage.

The NESDB also worried about the rising household debt as indicated by the rising consumer loans. Personal loans increased 7.1 per cent year on year in the first quarter of this year. Car loans, in particular, were up 10.6 per cent year on year.

This is in line with household debt in the fourth quarter of last year as 10.8 million out of 21 million families had debt. For those families owing debts, each had an average debt of Bt178,994 up from Bt156,770 in 2015.

The total household debt in the fourth quarter amounted to Bt11.98 trillion, up 4.3 per cent, or equivalent to 77.54 per cent of GDP. “Household debt as key indicators have to be monitored closely,” added Chutinart.

Honeywell yesterday said that IRPC Plc will use a range of advanced process technologies from Honeywell UOP for a new aromatics complex in Rayong province.

As part of the project, Honeywell UOP will provide licensing, design, key equipment and catalysts and adsorbents. When completed in 2022, the complex will produce 1.2 million tonnes per year of paraxylene used to make plastic resins, films and fibres.

It also will increase its benzene production capacity from 114,000 to 495,000 tonnes a year. Benzene is a fuel additive and ingredient in plastics, lubricants, rubber, dyes and detergents.

“This complex will enable IRPC to significantly convert its available intermediate feedstocks to higher value aromatics products such as paraxylene and benzene,” said John Gugel, vice president and general manager, process technology and equipment, at Honeywell UOP.

“This is the latest in a series of aromatics projects using advanced UOP technologies that have low capital and operating expense.”

LAOS SEEKS TO RIDE ON THAI TOURISM BOOM

Lao policymakers should find ways to benefit from the growing Thai tourism industry, a research group said.

The Lao National Economic Research Institute, under the supervision of former prime minister Bouasone Bouphavanh, made this policy recommendation to the Lao government – especially tourism policymakers – in its annual report.

The increasing number of tourists visiting Thailand will create opportunities for Laos to attract them while they are in the region, the institute said. – Vientiane Times

The forecast from the telecoms and broadcasting regulator comes as Ericsson, a maker of telecommunications equipment and provider of services, says the manufacturing and energy and utilities sectors will be among the biggest users of the 5G services, along with organisations that deal with public safety.

NBTC secretary general Takorn Tantasith said the adoption of the 5G framework fits with the country’s shift into the digital era.

“The 5G network will drive economy forwards and spur the adoption of innovative technologies,” Takorn said. “High-speed Internet will be provided to people in rural area nationwide by the end of this year, so that all Thais will able to access information via a high-speed network.”

He said that the commission will invite bids for 1800 MHz spectrum on June 15, with the bidding for spectrum on the 5G network to be opened in 2020.

Nadine Allen, country manager of Ericsson (Thailand), said that the firm expects that the 5G network will be rolled out in Thailand from 2020 to 2022. Telecoms operators will be first movers for this technology in the country, Allen said

“Thailand is among the top three countries in the Asia-Pacific region in terms of growth potential arising from the adoption of the 5G network,” she said.

“5G will help companies to manage mobile data traffic growth while boosting capacity and efficiency. The 5G network will cover 20 per cent of global traffic on 2023.”

Allen said the 5G network would boost the update of the Internet of things (IoT) and enhance the use of mobile broadband, among other benefits.

“Around 70 per cent of IoT leaders are focusing on cellular IoT and around 80 per cent of operators around the world want to move up the value chain of the 5G network,” she said.

She said that aside from the manufacturing, energy and utilities, and public safety sectors, 5G would also be a draw for providers of healthcare, public transport and companies in the media and entertainment industries.

“I think that 5G can add 22 per cent on top of traditional service revenues for operations in Thailand. 5G will deliver enhanced mobile broadband and enable the exploration of new-use cases and business models,” Allen said.

The Thai Regional Economic Sentiment Index (RSI) in May pointed to rising confidence in economy on a six-month outlook nationwide.

The rise in sentiment was most marked in the Central, Eastern and Northern parts of the country, said Soraphol Tulayasathien, deputy spokesman for the Finance Ministry, yesterday.

For the Central region, the RSI index was 91.4, reflecting businesses’ strong optimism on the outlook for the economy, driven by rising exports and an expansion in the manufacturing sector, Soraphol said.

Auto and part manufacturers based in Ayutthaya province had increased their production to meet rising global demand, he said. The province also benefited from an increase in the number of tourists drawn by the smash-hit soap opera “Love Destiny”.

For the Eastern region, the RSI index was at 89.2, with respondents citing expanding investment, including in industrial production. The region has been blessed as the beneficiary of legislation for the Eastern Economic Corridor, which took effect recently.

Investment also rose in the provinces neighbouring the EEC provinces of Rayong, Chon Buri and Chachoengsao. Soraphol cited the increased investment in hotels in Nakhon Nayok and in factories in Sa Kaew.

For the Northern provinces, the staging of national sporting events in Chiang Rai had contributed to the rising of confidence in that region. The RSI index was at 86.7, Soraphol said. Demand for industrial products in the domestic and export markets had also expanded production activities, he said. Another positive was the government’s implementation of a special economic zone in Tak province that boosted the regional economy, he added.

An index above 50 suggests more confidence in the future than at present, while a reading below that mark indicates a lack of confidence in the future.

Sustained increases in exports also benefitted the Northeast, with a reading of 83.2 in the confidence index. Rising prices for maize, sugarcane and cassava root contributed to the expansion of the region’s economy.

Another boost comes from newly built factories in Ubon Ratchathani, Kalasin and Surin.

An increase in the number of foreign tourists contributed to rising confidence in the Western parts of the country. The RSI index for that region was 83.1. More tourists visited Ratchaburi, Suphanburi and Phetchaburi. Retail sales in the region also shows signs of rising.

The South also shared in the benefits of the increase in tourism. More visitors went to new tourist attractions in Pattalung and many of them continued to visit the tourism mainstays of Phuket and Krabi provinces. The index was 69.1.

Soraphol said that other economic indicators pointed to continued growth in April, after gross domestic product expanded 4.8 per cent between January and March.

On the consumption side, car sales rose 17.2 per cent year on year, extending gains to 15 consecutive months. The collection of value-added tax increased 7 per cent. And collection of VAT from imported consumer goods saw a rise an impressive rise of 12 per cent from negative growth over a number of months previously. Imports of consumer goods rose 17.6 per cent.

On the investment side, sales of commercial cars rose 30.6 per cent and imports of capital goods, 3.4 per cent. Exports in US dollar terms rose 12.3 per cent, extending a winning streak to 14 straight months. Tourist arrivals came in at 3.09 million, up 9.4 per cent year on year in April.

Meanwhile, Supant Mongkolsuthree, chairman of the Federation of Thai Industries, said that the political crisis in Italy – with the fears for an impact on Europe – was not likely to affect Thailand’s exports. He believed that the European Union would rescue Italy if its economy suffered badly as a result of the political gridlock.

Supant said the baht’s weakening to around Bt32 to the US dollar is good for the export sector. If it strengthens, back to Bt31, this would hurt exports, he said.

Sakda Pongcharoenyong, president of Tris Rating, said that Thai-listed companies possess the financial strength to deal with possible risks, as seen in their earnings results following the Thai economic expansion.

Most of the companies are free of liquidity crunch and cash-flow problems, given their ability to obtain bank borrowings and raise capital through the bond market.

However, the business sector should be well-prepared for higher borrowing costs in light of the uptrend in interest rates amid consistent signs of a global economic recovery, he said.

The United States has gradually raised the Fed funds rate since late 2015 and this year Federal Reserve is expected to hike the rate twice or three times. The Fed has already increased the policy rate once to 1.50-1.75 per cent this year.

After the US rate hike, other countries, particularly emerging economies with rapid expansion, followed suit in an effort to keep foreign capital in their countries instead of moving back to the US.

The policy rates are the benchmark for money-market rates which are regarded as the borrowing costs for the business sector.

As the rise in interest rates continued, bond yields increased in the past two months. The Thai government bond yield has risen 30 basis points on average, prompting investors to slow down their investments and adopt a wait-and-see attitude for the rate to stabilise.

Basically, markets have been making corrections and investors should be on the sideline for one to two months as a number of bond issues will be launched. If demand drops, yields are expected to accelerate to attract investors.

“Increased yields have prompted less demand which have waited to see interest rates to be steady but this could be short term. It does not mean all-time slowdown. Next month, a lot of bond issues will be launched and we have to wait to see how much demand is,” he said.

Although the private sector’s costs will increase in line with trends for interest rates and crude prices, he said, but believing that business operations will not be highly affected as most companies are well-prepared for higher costs.

In the past two to three years, large-sized companies have launched a number of debentures, given their expectations for interest rate upward trend. Increased crude prices have been seen to affect some businesses.

Thai business sector are stronger in terms of capital, resources and human resources to be able to cope with possible business risks and open for business opportunities in light of growing Thai economy, Sakda said.

He expected the Thai economy to expand in the rest of this year, driven by internal and external factors.

“Increased cost may affect businesses by sector. There has not been any concerns for the overall businesses. Only the agriculture have been affected by low prices,” he said.

On another front, Thai bourse have been confronting block trade.

Sutthisit Jamdee, assistant managing director of Kasikorn Securities, block trade volume in Thailand Futures Exchange has increased to Bt50 billion this year from Bt20-Bt30 billion, given entries of foreign securities from Singapore and the US into Thailand.

Now, there are 10 players for block trade services from the previous’s five local players.

More challenges will exist for block trade with TFEX’s new regulations which will allow more stocks for the transactions. According to the previous regulations, block trade could be made in stocks in SET100 only.

Sutthisit said that Kasikorn Securities has focused on risk management and faster transactions for customers. Customers will easily move in and out with brokerage-house safety.