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Textile purchase orders from US and EU remain intact

Petrol traders accuse oil giants of price fixing

Finance Ministry say’s VAT to stay at 7% for at least two years

Moody’s gives thumbs up to Thai economy

Textile purchase orders from US and EU remain intact

Textile exports to the United States and the European Union have not yet been affected by the US-Iraq war as total purchase orders remain intact. Suchart Chantranakaraj, president of the Thai Clothing Industry’s Association, said the purchasing orders from the US and EU had not yet dropped and he believes the war will not adversely affect the export of Thai textiles.

Suchart said he was confident the US would be able to control the situation and keep its economy growing, which would benefit the Thai export and economy. But he conceded shipping operators had already increased freight service fees and war-risk insurance premiums. Still, this did not affect local exporters because prices of exported products are based on freight on board (FOB).

“We believe we can maintain our textile export base in the US and EU this year. We think textile export could grow 4-5% this year and that is a satisfactory figure,” Suchart said. (TNA)


Petrol traders accuse oil giants of price fixing

Large-scale oil companies are taking advantage of rising global oil prices by setting exorbitant rates for refinery prices, according to small-scale petrol traders.

Accusing large-scale oil companies of price fixing, Somphob Thanatheeraphong, president of the Oil Traders Council, said that oil companies had set marketing prices as high as 1.66 baht per liter, despite the fact that they were receiving compensation from the government for its intervention in the price of oil. As a result, oil companies were reaping huge profits at the expense of small-scale traders.

Somphob also accused the oil companies of refusing to sell oil to wholesale oil traders, which he said was crippling the production, agriculture and transportation sectors, which in the past had purchased oil from wholesalers at low rates.

“Large-scale oil companies are giving small-scale traders only 35 satang per liter in market share fees. This means that small-scale traders are forced to run at a loss when they sell this oil. Such practices also deal a blow to competition in the retail oil sector”, Somphob said. He is calling on the government to solve the problem before small-scale oil traders were forced to close up shop.

But his allegations were hotly refuted by Abhisit Rujikiartkamjorn, deputy manager of PTT Plc’s oil group, who denied that large-scale oil companies were engaged in any form of price fixing.

Abhisit said that both the refinery price and the retail price were currently set by the state, and that the market share fee given to small-scale traders depended on the traders’ own investment. (TNA)


Finance Ministry say’s VAT to stay at 7% for at least two years

Thailand’s Finance Minister Suchart Jaovisidha recently announced that the nation’s value added tax (VAT) will stay at 7 percent for the next two or three years.

“As an economist I believe 7 percent may not be high enough and we will eventually have to increase it, but at the present, the ministry feels an increase would have a negative impact on consumer confidence,” Suchart said.

Suchart said ordinarily he would be in favor of raising indirect taxes such as VAT and slashing direct income taxes. But the government’s current economic policy is to pursue the consumer-led growth model. To increase the VAT now could put pressure on the buying public.

Instead Suchart said he hopes to continue to increase revenue collection, which improved substantially last year. “This would allow for a lower-than-expected budget deficit and curb on expenditure,” he explained.

The government has stressed its commitment to fiscal discipline and has vowed to balance the budget by 2007 in hopes of obtaining a sovereign credit rating upgrade. Suchart said he was confident Thailand’s credit rating would be upgraded by the end of this year after all three major credit ratings agencies had given the country a positive outlook in recent months. (TNA)


Moody’s gives thumbs up to Thai economy

The US-based credit rating agency Moody’s Investor Services has praised the Thai economy and the government’s ability to control economic risk, and forecast that its revenues this year would exceed spending by 79 billion baht.

A finance ministry spokesman said on March 22 that Moody’s Investor Services, in its official report on the Thai economy, described the Thai economy as having improved, saying that the government was successfully controlling economic risk. This in turn assisted the government in drawing up budgetary and fiscal measures, and boosted domestic consumer confidence.

The Thai government has predicted economic growth this year of at least five percent, and has stressed that the outbreak of war between the US and Iraq should not make any significant dents in key economic indicators.

The Moody’s report also praised Thailand for reducing foreign debts and boosting foreign reserves to US$36 billion, despite debt repayments to the International Monetary Fund (IMF) of US$4.7 billion.

The report said the revival of the fiscal sector pointed to sustainability in that sector in the future, with the government reaping large amount of revenues as the economy grew in line with new government policies.

However, the report also said that it would be some time before Thailand’s financial system had fully recuperated, despite the fact that debt restructuring carried out by several companies had now hit 50 percent of the total target figure.

The report blamed the judicial system for hindering debt restructuring among small-scale debtors, while praising the Thai Asset Management Corporation (TAMC) for improving Thailand’s non-performing loan situation, particularly among banks in which the government had intervened.

The report concluded that the revival of the Thai economy in 2002 augured well for the present and future, with the strengthening of the regional economy going hand in hand with the strengthening of Thailand’s fiscal base. (TNA)