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Regional currency could be the new hope of Southeast Asia

Construction industry set to blossom in aftermath of war

CP 7 Eleven stores move away from groceries to high-margin food items

Regional currency could be the new hope of Southeast Asia

Governor of the Bank of Thailand M.R. Pridiyathorn Devakula recently discussed the need for a 9-nation regional currency to reduce dependence on the US dollar and boost regional trade.

Speaking at lecture on “Regional trade: the hope of Southeast Asia”, organized by the Thai International Chamber of Commerce, Pridiyathorn said that nine Asian nations – Thailand, South Korea, Taiwan, the Philippines, Singapore, Hong Kong, China, Malaysia and Indonesia – were increasing their role in global trade, and that inter-regional trade was on the rise.

The BOI governor said this contributed to the growth of countries in the Asian region as he compared Asia to the G-3 grouping comprising the US, EU and Japan, where the value of inter-regional trade was minimal.

“The economic slump in Europe, the US and Japan meant that last year trade among the nine Asian countries grew only 14.2 percent, but exports among these same nine Asian nations expanded by as much as 24.3 percent. This trend was apparent from the fourth quarter of 2001, and growth will proceed in this direction for some time. Investors should attach importance to this and find new investment pathways”, Pridiyathorn said.

He advised the government’s of all nine countries to cooperate in three areas in order to smooth the way for growth in regional trade.

Firstly, governments should promote free trade, such expanding the ASEAN Free Trade Area (AFTA) to include other countries. Secondly, the governments should boost monetary cooperation, with export-import banks of each country establishing a central promissory note market for mutual trade.

“This could be located in Singapore or Hong Kong, which are already financial hubs. If there is already buying and selling in the market, trade financing will emerge by itself. All the countries have signed initial agreements and now have to push further and ensure that markets are receptive. If the will is there, this should be successful,” Pridiyathorn said.

Thirdly, he advocated the establishment of regional controls to ensure that the exchange rates of all nine countries were broadly in line. If some countries used a floating exchange rate while other exchange rates were pegged, this would pose an obstacle to mutual trade.

Regional currencies could be stabilized in several ways; for instance, by giving financial assistance to countries with fiscal reserve problems, or by assisting such countries by importing goods from them. This in the future might lead to a regional currency, which would reduce dependence on the dollar. (TNA)

Construction industry set to blossom in aftermath of war

Thailand’s construction industry is likely to boom in the Middle East once reconstruction of Iraq gets underway, with Thai construction companies roped in to design new buildings and export building materials.

A recent Thai Farmers Research Center report said that Thailand’s construction industry was expanding to foreign markets, both in term of the export of building materials and in term of design and construction. Products which Thailand exported in large quantities included iron and steel, cement, glass and aluminum products.

The Middle East is regarded as a market with particularly high potential for expansion. Last year a group of engineers, architects and contractors who joined in forming the National Federation of Design and Construction Businesses (FEDCON) won a contract to design the athletes’ village for the 15th Asian Games in Doha, Qatar, worth 1.14 billion baht.

This August, FEDCON is due to enter into bidding for the 16 billion baht construction contract for the project, as well as bidding for the construction of roads and an airport worth 20 billion baht.

Each year Thailand exports around 2-3 billion baht worth of construction materials and equipment to the Middle East. Export of iron and steel amount to 800 million baht and plastic flooring and walling are worth 400 million baht.

However, the report cautioned that the Middle Eastern market was different from existing western and Asian markets, and that construction companies have to engage in careful studies before making inroads, as well as understanding trends in demand and market fashions, possibly by creating networks of allied local companies. (TNA)

CP 7 Eleven stores move away from groceries to high-margin food items

CP 7 Eleven, Thailand’s largest chain of convenience stores, said it expects to see its revenues rise by at least 17 percent during the year as the company shifts focus away from groceries and toward high margin food items.

CP 7 Eleven, a unit of the Charoen Pokphand Group, which is Thailand’s largest agricultural conglomerate, is in the process of listing its shares on the Stock Exchange of Thailand (SET) during this year. CP 7 Eleven reported revenue of about 29 billion baht during 2002, a rise of about 15 percent.

With a new focus on food items, the company hopes that its revenue for this year will reach 34 billion baht, a rise of about 17 percent from last year.

Piyawat Titasattavorakul, managing director of CP 7 Eleven said, “The Company is determined to go ahead with listing on SET.” He added however, timing is always crucial and he couldn’t forecast anything at this juncture due to local as well as global concerns.