Vol. II No. 35 Saturday August 30 - September 5, 2003
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HEADLINES [click on headline to view story]:

Economist expresses concern over rising household debt

ASEAN’s largest solar powered electricity plant to open in Mae Hong Son

Thailand and Laos agree to expand trade and investment

Local industries urged to improve production efficiency

Economist expresses concern over rising household debt

While speaking at a recent seminar, Chirathep Senivongs Na Ayudhya, an economist at the Bank of Thailand (BOT) said latest figures show a sharp increase in personal loans which is resulting in higher household debt.

“We are back to the 20 to 30 percent growth in personal loans, similar to that seen during the pre-crisis level and this is something that the country needs to keep a close eye on,” Chirathep told the seminar.

Chirathep’s study was backed by central bank governor, Pridiyathorn Devakula, who agreed rising household debt was something that would be monitored. “We are closely watching the situation, but presently we view these debts are still at a manageable level,” Pridiyathorn said. “Thailand’s consumer confidence index recently hit a 58 month high, led by purchases of durable goods which boosted demand for consumer loans,” he added.

Chirathep said that his study shows that household debt rose around 20 percent to 82,485 last year from 68,279 baht in 2001 and about 69,674 baht in 1998, a year into the economic crisis. (TNA)

ASEAN’s largest solar powered electricity plant to open in Mae Hong Son

Thailand is set to harness its year-round sunshine to provide electricity for the northern province of Mae Hong Son, with the Electricity Generating Authority of Thailand (EGAT) now pushing forward with a 200 million baht project to establish a solar powered generating plant there.

Speaking after the ceremony to lay the foundation stone at the solar powered station in Tambon Pha Bong, Energy Minister Prommin Lertsuridej said, “The opening of the generating plant underlines the government’s policy to provide electricity to people living in remote locations and ensure the use of clean energy. The Mae Hong Son plant will be the largest solar powered station in the Association of Southeast Asian Nations (ASEAN).

While conceding that the production costs for solar powered electricity were five times higher than those for ordinary electricity, the energy minister stressed that the construction costs for the station were considerably lower than the billions of baht which would otherwise have to be spent on bringing in electricity from nearby provinces.

EGAT governor Sithiporn Rattanaphas added, “The Pha Bong plant will help preserve the environment and meet the growing demands of tourists in the province. In the first phase, the plant will generate 500 kilowatts, but in the future the plant will generate 1,750 kilowatts.” (TNA)

Thailand and Laos agree to expand trade and investment

Senior Commerce Ministry officials have hailed a recent trip to Laos as a resounding success, after the two countries agreed to boost bilateral trade and investment, with Laos acting as a gateway for Thai goods to the region.

Wichak Wisetnoi, Deputy Director-General of the Department of International Trade led a delegation of businesspeople from the timber industry, furniture industry, agricultural sector, vegetable oil sector, paper pulp industry, construction sector, eucalyptus cultivation sector, and transport sector to business and investment talks in the Lao provinces of Savannakhet and Champasak. The Thai delegation was able to meet deputy governors of both provinces, as well as policy-making officials.

Laos asked for assistance in investment and development in marketing, and had requested that Thailand purchase more Lao products. Wichak noted that the completion of the second Friendship Bridge, scheduled for 2006, would give a boost to the regional economy by forging more communication links between Thailand, Myanmar, Laos and Vietnam.

The Thai delegation also proposed investment in an integrated eucalyptus cultivation program. In addition, Thailand expressed an interest in collaborative development to add value to wood waste and small wood products, as well as assist in marketing.

The two sides also want to boost the soy bean cultivation sector, noting that Thailand currently imported 1.5 million tons of soy beans each year from the United States, Brazil and Argentina. (TNA)

Local industries urged to improve production efficiency

Leading economists say many local industries need to improve production efficiency unless they want to lose competitiveness. Speaking at a seminar on “Strategy to Enhance Competitiveness of Thai Industries, Theera Atchakul, economic advisor of Industrial Finance Corporation of Thailand (IFCT), said some foreign economists warned the Thai economic growth of 5-6% might not be sustainable because the expansion stemmed from economic stimulation through state spending, and not actual production efficiency.

Theera said, “The IFCT and the Industrial Economics Office jointly estimated industrial competitiveness by using the Total Factor Productivity (TFP) approach to gauge production efficiency of each industry in many countries including Japan, Hong Kong, France, Germany, China, the United States and Thailand. They found the production efficiency of Thailand lowest since the country’s economic growth stemmed from an increase in labor and capacity, not production efficiency.”

Theera said many industries ran the risk of losing competitiveness with foreign rivals as their TFP is lower than 100 points. The industries at risk include auto parts, concrete products, processed fruits and vegetables, ceramics, electrical appliances, sugar, steel products, footwear, furniture, and textiles. (TNA)

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