The Cabinet approved the stimulus packages at a meeting on Tuesday, while the National Rice Policy Committee on Wednesday approved a budget of Bt21 billion to guarantee the price of rice harvested in 2019 and 2020.

The deputy prime minister said the movement of interest rates is no more an indicator of the investment trend but it is the people’s confidence that will indicate the level of investment.

Somkid recently held a meeting involving the Bank of Thailand (BoT) and the Finance Ministry to discuss a plan to set up a joint committee to steer the economy.

In a related matter, Standard Chartered Bank has lowered its 2019 GDP growth forecast for Thailand to 3.0 per cent from 3.3 per cent. The bank expects growth in the second half to improve from a weak 2.6 per cent in the first half.

The bank said coordinated policy easing in the form of BoT interest rate cuts and a soon-to-be-implemented fiscal stimulus package should support growth from late in the third quarter and strengthen exports and tourism.

Stimulus measures implemented in the past have proved effective in shoring up the economy.

According to the National Economic and Social Development Council, the country’s GDP expanded 2.3 per cent in the second quarter compared to the previous quarter’s growth of 2.8 per cent.

Fiscal stimuli won’t drive up debt, official insists

Jindarat Viriyataveekul, director of the Public Debt Management Office’s policy and planning bureau, said on Thursday there is no need for concern over the government’s economic stimulus packages boosting public debt.

Jindarat put the debt level as of this month at 41.45 per cent of GDP, much lower than the debt-to-GDP ratio ceiling of 60 per cent set out in the Finance Ministry’s policy framework on fiscal sustainability.

The debt level in the next five years is expected to be 46.73 per cent, while the GDP next year is expected to expand by 3.5 per cent, then 3.6 per cent in 2021, 3.8 per cent in 2022 and 4 per cent in 2023.

The budget deficit is forecast at Bt500 billion per year, peaking at Bt570 billion in 2022.

The country also enjoys low risk in borrowing, she noted. Of total debt, 90 per cent is long-term and 97 per cent is baht-nominated.

Shoke Na Ranong, the bank’s executive vice president and manager of credit card division, said NPLs rose to 2.1 -2.2 per cent in the second quarter this year from 1.9 per cent from the end of last year.

The trend can be attributed to the slowing economy, prompting cardholders to withdraw cash for business and general expense. Cardholders who have defaulted on their monthly payments will be subject to a higher interest rate than other loans.

It is not a major concern but the bank would keep a close watch on the situation, he said , adding that he does not recommend cash withdrawals on credit card as cardholders should instead seek other loans with lower interest rates.

These cardholders are mostly running their own businesses or working as freelancers.

The bank will deal with this customer group by monitoring their behaviour or limiting the amount they could withdraw with the card.

It will also be more prudent in issuing new cards.

Vikrom Kromadit, chairman of Amata Corporation Pcl, said at a signing ceremony on Thursday (August 22) that the firm would bring advanced technology and quality investors to Myanmar while ensuring environment protection for the local communities.

“We will take on a grand project, unforgettable in the history of your country. We will make sure that Yangon  become one of the best future cities in Myanmar,” he said.

“We will bring good investors in line with the All Win philosophy, which means we will not only bring the best customers but also protect the environment. We will ensure the future Yangon city will be better than Amata in Thailand.”

At the event, Vikrom sought support from the regional authorities. He called for one-stop service so that investors do not need to visit various government offices before building their factories in a 2,000-acre [5,059 rai] industrial estate, to be developed by Yangon Amata Smart and Eco City (YASEC), a subsidiary of Amata Corporation, in cooperation with Myanmar’s Department of Urban and Housing Development (DUHD).

“We just need the licence and the land. We would like to start immediately,” he said.

Vikrom expects to start construction work once the rainy season is over.  Amata’s team in Myanmar is now much bigger than that three years ago. He also takes pride in saying that Amata now has more than 1,300 factories with an extensive workforce of over 300,000 employees, contributing US$500 million in  tax to the Royal Thai government every year.

“Today, I come back with a new dream. We are expanding our presence in the whole region, and Myanmar is the most important destination for us because nowadays a lot of Thai companies are coming here,” he said.

With Japanese corporations such as Toyota having established their presence in Myanmar, Vikrom is fully confident that the nation could take advantages of geopolitical issues including international companies moving out of China amid its prolonged trade war with the US.

“It is a good time, even though we are a little bit late,” he said.

“In our planning for  the first phase, we are targeting an inflow of $1 billion in foreign direct investment and job opportunities for nearly 30,000 people. We expect the government  to receive  at least $60 million in taxation.”

Vikrom said PTT Co would establish a 600-megawatt power plant, supplying natural gas to Yangon  to meet the city’s surging demand for electricity once the industrial park becomes operational.

“As the largest company in Thailand, PTT accounts for over 20 per cent of Thailand’s GDP [gross domestic product]. It would like to invest in this power plant in Yangon. They would like to install   their equipment  as soon as possible, and they are willing to provide all the gas Yangon needs in the future,” he said.

Vikrom, together with Yangon Chief Minister Phyo Min Thein, witnessed the signing of a framework agreement to turn Yangon into  a smart and eco city with supporting infrastructure, logistics, services and other related businesses  According to the agreement, DUHD will hold a 20 per cent stake in the mega project.

Yasuo Tsutsui, managing director of YASEC, said the project would come with  huge employment opportunities, reduce regional poverty and promote capacity building for peopole in Myanmar. He said the green and smart technology concept would be adopted in project management.

“It will be the first sustainable eco city in the country,” he said.

“We believe it will meet all the conditions of a sustainable city with the focus  on providing an eco-friendly environment, quality employment opportunities, education, healthcare and commercial facilities in a single venue.”

Ye Sit Min, deputy director at DUHD, told The Nation that the framework agreement is the very first step in the implementation of the large-scale industrial estate which will ultimately become much larger than the Thilawa Special Economic Zone upon completion.

According to the official, the first phase would be developed on  200 acres [506 rai] in the East Dagon township of Yangon. Light and medium scale industries will be prioritised in the initial phase which is scheduled for completion in two years.

“Today, we signed the framework agreement and hope to enter into a joint venture agreement soon. We we will immediately implement the project once we have received the permit from the Myanmar Investment Commission,” he said.

A fund worth Bt55 billion has been set aside to grant soft loans to farmers affected by this year’s severe drought, a senior official from the Bank for Agriculture and Agricultural Cooperatives (BAAC) said on August 22.

Speaking at an event in Surin province, assistant BAAC manager Somkiat Kimaoha said the 1 million loans of Bt50,000 each will be interest free in first-year repayment, while those repaying the loan in two to five years will have to pay a low unspecified interest rate.

He said Bt50 billion will be used to provide loans worth Bt50,000 each until December 31, adding that the remaining Bt5 billion will cover loans for farmers who want to restore their farm’s fertility or want to switch to crops that do not require too much water.

The Bt5 billion will cover 10,000 loans of Bt500,000 each, which can be repaid over 15 years at an interest rate of 5 per cent.

Somkiat said farmers registered with the Department of Agriculture Extension are entitled to receive compensation for drought at the rate of Bt500 per rai for no more than 20 rai.

Speaking at a realty seminar hosted by the newspaper Krungthep Turakit on Thursday, he said the sector could readily adjust to the Bank of Thailand’s loan-to-value (LTV) policy on mortgage loans that took effect on April 1.

He also pointed out that the Thai economy continues to expand.

The government’s latest economic stimulus packages are aimed at helping revive the grassroots economy, and that should in turn benefit to the property sector, Uttama said.

The Bt316-billion stimulus package approved by the Cabinet on August 20 focuses on cash handouts for low-income earners and domestic travellers and extends soft loans to drought-afflicted farmers.

Uttama said that, once the US-China trade war ends, the Thai economy will expand at a faster rate.

He predicted that, regardless, GDP growth will reach 3 per cent, as forecast by the National Economic and Social Development Council.

He asked everyone involved to help build public confidence in the economy despite any challenges that might arise.

Wittayakorn Maneenetr, deputy director-general of the Department of International Trade Promotion (DITP), said this week the agency would create a “TopThai Flagship Store” page on the business-to-consumer website Tmall Global to meet Chinese demand.

It’s targeting 250 million female online shoppers who have a combined purchasing power of Bt20 trillion.

Wittayakorn said the DITP expected to attract more than 50 top companies and SME businesses and offer more than 1,000 items. Major marketing campaigns will coincide with annual Chinese festivals.

The department will also seek e-commerce partnerships with entities such as Amazon and Kha-leang.com, which has expertise extending across Cambodia, Laos, Myanmar and Vietnam, to support its marketing of Thai food and other products globally in a “roving commercial” promotion taking place from August 28-31 in Songkhla and Nakhon Ratchasima.

The DITP is also approaching potential partners in the United States (Amazon and eBay), South America (B2Brazil), Africa (Gosoko), Myanmar (Bagantrade), South Korea (TradeKorea and Coupang) and Hong Kong (HKTDC).

It also expects the Bank of Thailand (BoT) to introduce macro-prudential measures to curb household leverage, likely further denting car sales.

Implementation of the budget for the 2020 fiscal year (FY20), which starts on October 1) may be delayed to January 2020. The US-China trade war, meanwhile, continues to hamper exports and investment.

The bank has also lowered its 2020 and 2021 growth forecasts of Thailand to 3.5 per cent (from 4.0 percent) and to 4.0 per cent (from 4.5 per cent), respectively, to reflect these headwinds.

Despite the downward revision of its 2019 forecast, the bank expects the second half 2019 growth to improve from a weak 2.6 per cent in the first half.

Coordinated policy easing in the form of BoT rate cuts and a soon-to-be-implemented fiscal stimulus package should support growth from late in the third quarter, along with a low base for exports and tourism. Stimulus measures implemented in past years have proved effective in shoring up the economy.

The cabinet approved an economic stimulus package worth Bt316 billion (2 per cent of GDP) on August 20, with a focus on cash handouts for low-income earners and domestic travellers and soft loans for drought-afflicted farmers.

It will be implemented immediately and financed by loans from state run-banks, the government’s ‘Pracharath’ welfare scheme and the FY19 unallocated budget.

The bank now expect a 25-basis-point rate cut by the BoT in September, versus the bank’s previous view of no change for the rest of the year. This brings its end-2019 policy rate forecast to 1.25 per cent from 1.50 percent; it continues to expect no change in 2020 or 2021.