The Pink Line will run 34.5 kilometres from Khae Rai to Min Buri, and will cost Bt56.69 billion. The Yellow Line stretches 30.4km from Lat Phrao to Samrong, and will have a total project cost of Bt54.64 billion.

Ekniti Nitithanprapas, director-general of the State Enterprise Policy Office, said the government would be responsible for land-procurement costs while the private sector would invest in civil works, trains and rail systems, and consulting fees, as well as maintenance and operations of the elevated-train projects under a 30-year concession.

The private sector will collect the train tickets and take the risks on passenger volumes.

To attract private investors, the PPP Committee, chaired by Deputy Prime Minister Somkid Jatusripitak, agreed for the state to provide financial support to the investors in an amount not exceeding the cost of civil works.

The committee has assigned the MRTA to update the financial assumptions to reduce the state’s burden before submitting the projects’ proposals to the Cabinet for approval this month.

The committee also followed up on the progress of three other fast-track PPP projects, comprising the Blue Line extension project (Hua Lamphong to Bang Khae and Bang Sue to Tha Phra) and the Bangpa-in-Nakhon Ratchasima and Bang Yai-Kanchanaburi motorway projects.

The PPP committee asked relevant agencies to hasten their considerations on these five fast-track projects, which will have a combined investment value of Bt334 billion.

In addition, the committee has resolved problems and obstacles for solar farms and small waste-management projects under the Public-Private Joint Investment Act of 2013.

The three-year break is for big corporations interested in supporting local business, especially agricultural processors, while the five-year waiver is for farmers and local people who join together to build an agricultural processing plant in their district.

Hiranya Sujinai, secretary-general of the BOI said after the agency’s meeting that the projects could get a tax exemption of up to 100 per cent of their investment, but they must apply this year and start operating next year.

This incentive will cover agriculture processing, tourism and One Tambon One Product (Otop) operators.

The board also approved investment incentives for three super-clusters – Food Innopolis, an airline super-cluster and a robot super-cluster.

Food Innopolis and the airline super-cluster will offer a tax exemption for eight years and also extend a discount of half of corporate taxes for the next five years.

The aviation-related projects must be located close to an airport in 14 provinces – Samut Prakan, Bangkok, Nakhon Pathom, Pathum Thani, Chachoengsao, Chon Buri, Rayong, Chiang Rai, Phitsanulok, Nakhon Sawan, Lop Buri, Nakhon Ratchasima, Surat Thani and Songkhla.

Robot super-cluster

The robot super-cluster also gets the same tax-incentive level for super-clusters approved by the Cabinet last year, such as a tax exemption for the first eight years and the extension of the discount of half of corporate taxes for the next five years.

Applications must be filed by December 30.

The board approved 14 projects worth Bt39 billion, including agricultural processing projects worth Bt9.24 billion such as those from Pet Focus Co worth Bt1.3 billion, Green Spot Co worth Bt4.68 billion, Sunshine Biotech International Co worth Bt1.37 billion and Kamphaeng Phet Bio Ethanol Co worth Bt1.5 billion.

The next industries were ceramics, with Kabinburi Glass Industry Co’s Bt7.64-billion project and machinery and logistics worth Bt4.6 billion.

The rest were for super-clusters catering to government policy and the electronics, chemical and plastics, and service industries.

The BOI targets approving projects worth Bt450 billion this year.

In the first month, there were 90 new applications for tax privileges from the BOI worth Bt20.5 billion. This was up 300 per cent from only 33 projects worth Bt7.5 billion in January last year, Hiranya said.

Frankfurt’s DAX 30 index led Europe lower, sliding by 1.6 per cent in midday deals.

In Asia, Chinese shares closed down 2.86 per cent, as traders remained unconvinced that the G20 group of top economic nations had promised enough to revive the world’s sagging economy.

“European equities are trading lower on the back of… the G20 meeting concluding in Shanghai without any major breakthrough where stimulating global growth is concerned,” said Markus Huber, a trader at City of London Markets.

“Souring the mood somewhat not only in Asia but also in Europe is the fact that China has once again fixed its currency lower… This does not only keep the spotlight on a slowing Chinese economy but also creates further uncertainty going forward.”

Adding to the unease was official data Monday showing that eurozone inflation in February fell sharply to negative 0.2 per cent, in the clearest sign yet that several rounds of stimulus measures by the European Central Bank (ECB) are not working.

Pressure has been mounting on central bankers to do more to stimulate growth and reassure investors after financial markets posted one of the worst starts to the year in living memory.

But G20 ministers disagreed over the best way to stem the turmoil, and their final text did not include a call for coordinated action that many had hoped.

The communique said the group “will use all policy tools — monetary, fiscal and structural — individually and collectively” to build confidence and strengthen the recovery.

Irish uncertainty

Back in Europe, Irish Prime Minister Enda Kenny faced a struggle to form a new government after apparently failing to win a majority, as counting continued after a weekend vote marked by anger against austerity.

Market reaction was muted, with 10-year Irish government bonds almost unchanged and the main Dublin stock index down only slightly.

“The Irish bond market reaction has been remarkably muted,” said Brenda Kelly, head analyst at traders London Capital Group, noting however that this could be more down to expected stimulus by the ECB “than any real confidence” in Irish politics.

Global stock markets had been buoyed Friday by firmer oil prices and after brighter-than-expected US growth data.

“It could be argued some of these (pre-weekend) gains were as a result of some optimism about this weekend’s events in Shanghai as G20 finance ministers met to discuss the global economy,” said Michael Hewson, chief market analyst at CMC Markets UK.

– AFP

Solutions to Nok Air’s critical shortage of pilots remain unclear as the airline has been forced to reduce its domestic services by more than 20 per cent since February 14 when flights were abruptly cancelled, stranding more than 1,400 passengers at Don Mueang airport.

The February 14 pilots’ strike and the resignation of 17 pilots – with effect from tomorrow – from Nok Air’s total of 192 will lead to the cancellation of nearly 500 flights by March 10.

Nok Air, founded in 2004, posted a net loss of Bt726 million for 2015, the second consecutive year of losses, largely due to fierce competition in the low-cost airline sector. In 2014, Nok Air’s losses amounted to Bt472 million.

Analyst sources said Nok Air appeared to have held significant contracts hedging oil prices, which prevented it from benefiting when fuel prices dropped sharply as other carriers such as Bangkok Airways and Thai Air Asia reported better results and profits.

So far, THAI, which holds 39.2 per cent of Nok Air, has not publicly responded to the crisis except by providing substitution flights following cancellations. Today’s board meeting should address the issue, said one source, adding that Nok Air needs better solutions for its internal management problems to repair the business and financial damage.

‘Serious problems’

While CEO Patee Sarasin, who has a 4-per-cent stake in Nok Air, has insisted the airline will return to full operations after March 10, analysts are not sure because the problems appear serious and recruiting 20 to 30 new pilots while restructuring flight operations will probably not be completed in just a few days.

Besides THAI, other top shareholders of Nok Air include Aviation Investment International (10 per cent), CPB Equity Co Ltd (4.8 per cent), Siam Commercial Bank (4 per cent), King Power International (4 per cent), Supapong Asvinvichit (4 per cent), Citigroup Global Markets (1.3 per cent), the Social Security Office (0.5 per cent) and the Provident Fund of the Electricity Generating Authority of Thailand (0.5 per cent).

Several financial analysts have questioned why major stakeholders remained quiet when they should have pushed for more action to prevent the crisis from worsening.

A source at the Thai Pilots Association said it was uncommon for major shareholders to leave airline management alone in such a critical situation because a single entity might not be able to tackle the problem.

Meanwhile, the Civil Aviation Authority of Thailand (CAAT) suggested that Nok Air may resort to a temporary halt of its services while resolving its pilot shortage problem and restructuring its flight operations to avoid further negative effects for passengers and the airline industry.

The CAAT’s acting director, Chula Sukmanop, said Nok Air is bleeding financially due to daily revenue losses so it would not be able to sustain itself for an extended period.

So far, Nok Air has turned to six other airlines including THAI, Thai Smile and Thai Lion to provide substitute domestic flights on a charter basis.

The draft of the five-year plan will be proposed to the government as part of 12th National Economic and Social Development Plan 2017-2021, TCT president Ittirit Kinglake said.

The TCT organised a workshop in Bangkok and Kanchanaburi last week to promote the plan, and plans to hold seven more workshops before the end of next month.

Ittirit said the plan should be finalised by April.

He said the council would collect tourism data from the public and private sector including small operators.

The country should have |more products to lure repeat |visitors to the country and attract first-time travellers here.

He said the council would focus on promoting attractions in the eight clusters under a Mekongregion theme. The clusters are the Lanna culture, south Isan, the Thai culture, the Chao Phraya River, the east of the Gulf, the west of the Gulf and the Andaman coast.

“We aim to promote eight clusters as new preferred destinations for the international market and also to attract local travellers,” Ittirit added.

The TCT has also outlined other development plans for next five years such as improving infrastructure and transportation to lure more tourists, revise regulations to attract more visitors, and promote intra and cross-border tourism.

The TCT urged the government to improve the country’s aviation safety to meet international standards in order to improve Thailand’s image.

He is also concerned about the impact the country’s severe drought is having on the industry.

But after years of increasingly desperate attempts to kick-start growth there is fear among bankers and top finance officials that monetary policy is running out of effective ammunition and future stimulus efforts could even be harmful.

“Monetary policy is extremely accommodative to the point that it may even be counterproductive in terms of negative side effects on banks, policies and growth,” German Finance Minister Wolfgang Schaeuble said at the G20 meeting.

“Fiscal as well as monetary policies have reached their limits,” he said. “If you want the real economy to grow, there are no shortcuts which avoid reforms.”

The G20 acknowledged that monetary policy alone is not enough to combat rising global risks but leaders failed to outline concrete steps, making only vague and general pledges.

Facing a new paradigm of slow growth and the legacy of crises, top central banks have kept rates near or below zero for years, waiting in vain for governments to embrace reforms instead of pointing the finger at monetary policy.

Testing uncharted waters, smaller central banks in Switzerland, Sweden and Denmark even cut rates deep into negative territory, raising the prospect that monetary policy still had some room left.

The BOJ and the ECB both followed suit but the results have been mixed, with side effects.

POSSIBLE BUT COSTLY

“Some things may be technically possible, but it’s a different question when it comes to whether they are feasible,” BOJ board members Takahide Kiuchi.

“The reality in Japan is that it’s gradually becoming difficult to come up with policy steps for which the merits sufficiently outweigh the costs,” Kiuchi said, suggesting that the BOJ may have exhausted its options when it cut its key rate to below zero last month.

Although the rate cut pushed bond yields into negative territory, it failed to lift stock prices or stop an unwelcome rise in the yen, meaning that policy is not achieving its goals.

In the world of such unconventional monetary policies, the law of diminishing returns apply, so each new measure yields less but carries a greater risk.

“The options are not unlimited,” Swiss National Bank chief Thomas Jordan said. “The effects of monetary policy measures can wane with duration and dosage.”

“Interest rates … cannot continue to be lowered into negative territory without at some point precipitating a flight to cash,” he added.

BUBBLES, ZOMBIES

Low rates and big central bank asset buys, a key part of unconventional policy, fuel asset price bubbles, particularly for housing, and keep poorly functioning “zombie” firms alive through access to cheap credit, slowly eroding competitiveness.

Low rates also depress bank profits, eventually reducing banks’ ability to lend, while quantitative easing disrupts markets, reducing liquidity and limiting market access.

With China, Japan, the ECB and Switzerland all seeking a weaker exchange rate, banks are facing the risk of an open currency war, losing their ability to boost prices and competitiveness through devaluation.

“Central banks should rethink their strategy,” said Michael Heise, chief economist of Allianz, an insurer and one of the world’s biggest investors. “The power of the central banks is limited. We have been over reliant on central banks to fix the problem but it is not under their control.”

Indeed, this time many of the shocks are external, such as slowing emerging market growth and deflationary pressures from low oil prices.

These shocks are difficult to counter and weak PMI and confidence indicators in Europe suggest that growth is already taking a hit, despite a 1.5 trillion euro stimulus programme from the ECB.

Help could come from fiscal spending but the G20 meeting highlighted that few governments have room to manoeuvre and those which could spend more, such as Germany, made it clear they are not going to.

That leaves central banks stuck with a need to act and the ECB is almost certain to ease policy on March 10, delivering as mall rate cut and a few changes to its assets buys, moves well short of a quantum leap.

Still, if a global crisis flared up again, central banks still have a few powerful, though controversial and potentially illegal tools left.

Economists say that central banks could force commercial lenders to offer loans at a negative interest rate in return for guaranteed earnings, stimulating both growth and investment. That would force central banks to take big losses.

They say a last resort would be to offer “helicopter money”, free cash provided to all euro zone citizens with the aim of stimulating spending and inflation.

This was suggested by former Fed chairman Ben Bernanke in 2002 as an effective way to fight deflation but European policymakers have not seriously discussed the idea.

It would face fierce resistance from conservative countries like Germany, where even asset purchases have been challenged in court, likely leading to years of legal and political challenges.

It would also be questionable as domestic demand in the euro area is holding up well and cheap central bank money is already providing liquidity.

– REUTERS

THE head of the Thailand Development Research Institute (TDRI) spoke out yesterday against the idea to use Article 44 of the interim constitution to help troubled digital-TV operators, saying such a move could create new difficulties in law enforcement by the broadcasting regulator in the future.

TDRI president Somkiat Tangkitvanich said he disagreed with the idea, which was floated by a group of digital terrestrial-TV operators and commented on by Takorn Tantasith, secretary-general of the National Broadcasting and Telecommunications Commission (NBTC) recently.

Takorn’s steering committee tasked with solving problems in the digital-TV sector expects to submit the operators’ package of proposals soon for the ruling junta to consider.

They include postponing the third instalment of the upfront licensing fee, totalling more than Bt8 billion; extending the term of digital-TV licences; and permission to exit licence-based digital-TV business without having to pay remaining instalments of the upfront licence fee.

However, the NBTC itself has no authority to decide on these |matters.

Somkiat’s comment was made at a public forum, “Alternatives for Media Reform under the Draft of New Constitution”, co-organised by TDRI and the NBTC at a Bangkok venue.

He suggested that the broadcasting regulator should amend some details in the existing law to pave the way for ailing TV broadcasters to have more flexibility in running their business, such as a via a merger-and-acquisition approach to welcome new players to enter the market under existing licences.

“In regard to using Article 44 to unlock this problem, I do believe there would [as a result] be uncertainty as well as unpredictable factors surfacing in the TV broadcasting industry. These could possibly become new problems that the NBTC would have to be responsible for in the future,” he said.

The TDRI president added that the NBTC should help reduce risk in business operations by speeding up the transition from analogue to digital broadcasting, rolling out a public-relations campaign to raise awareness of digital-TV broadcasting service and regulating digital network providers to ensure fair charges.

In response to his comments, NBTC commissioner Supinya Klangnarong told the forum she agreed with amending the law to pave the way for new players to enter TV broadcasting business in light of some licence-holders struggling in the face of fierce competition in the sector.

She noted, however, that mergers and acquisitions were already allowed under the existing regulations.

The serious situation in Samut Sakhon province and other ports around Thailand was caused by a European Union ultimatum against illegal fishing. The EU imposed a “yellow card” on the Thai fishing industry last April giving the country time to fix its illegal, unreported and unregulated (IUU) fishing or face a costly ban on seafood exports into Europe.

Porn Chansri, a merchant selling groceries at Tar Ming (Niwet) Market, a fresh market in front of Mahachai Niwet Housing, said daily sales at her shop had declined significantly from between Bt7,000 and Bt8,000 three or four months ago to between Bt3,000 and Bt4,000 today.

Porn, who has been at the market for two years, said many Myanmar clients had reduced their purchases each time. She said around three-fourths of the clients at her shop were Myanmar nationals living in Mahachai Niwet and nearby areas, while another one-third were Thais.

International media reports about the use of forced labour have put pressure on Thailand’s seafood industry since late last year, forcing the Thai Frozen Foods Association to ban members from employing outsource pre-processing sheds. This caused many workers to lose jobs as small companies had to close down. More than 5,000 jobs were lost as a result of the outsourcing ban, according to the reports.

The closure of many seafood-processing plants in Mahachai has had a significant impact on Myanmar workers. Some have lost their jobs, while many of the plants still operating have cut migrant workers’ overtime in half.

Nat Mahachai, owner of a small barbershop at Mahachai Niwet, said Myanmar people in the community usually preferred to have their hair cut at his store on Wednesdays. However, the number of customers has dropped significantly, from 20-30 each Wednesday to only five or six.

“Many fishing boats and small outsourced processed-seafood plants in Mahachai have closed and laid off employees,” Nat said.

He said many workers who had lost their jobs had decided to go back to their own country. Meanwhile, some of them decided to switch to working as car-care staff, fuel-station attendants, or merchants at train stations and fresh markets in the area.

“Many Myanmar migrant workers have left Mahachai for other cities, such as Pak Nam and Phra Pradaeng in Samut Prakan, and to find jobs in other kinds of factories, such as for auto parts and packaging,” Nat said.

Cuts in overtime

Tan Tan Tei, a Myanmar woman who works as an officer at the Siriburana private medical clinic in Mahachai Niwet, said about 90 per cent of Myanmar people in the community had worked at the seafood-processing plants in Mahachai and nearby areas in Samut Sakhon.

She said many plant workers had suffered from the cuts in overtime from five to six hours a day previously to only two hours. Many small seafood plants have shut down, causing many Myanmar workers to lose their jobs.

“I myself have seen Myanmar people returning to Myanmar every day because of the closure of seafood-processing plants in the province,” Tan Tan Tei said.

She said many Thai investors had opened factories in Myanmar after the opening of the country to attract foreign investors.

“Even at my home town Moh Lamyai, there are cement and canned-fish plants being opened and owned by Thais. Myanmar has opened the country for foreign investors, including from Thailand, to set up business, and that created great potential for Myanmar workers to back home and enjoy higher opportunities to get job.”

Meanwhile, a Myanmar worker who declined to disclose his name said he came with his friends from Yangon to work and live in Mahachai in 2004. Even thought many plants in Mahachai now are being closed, he has no plan to return to Myanmar in the near future.

“Myanmar needs several more years to be settled in terms of basic infrastructure, such as in the financial sector, to promote a good business environment and encourage foreign investment,” he said.

“Compared with Thailand, it is still quite difficult to find jobs in Myanmar today,” he added.