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New government told to push ahead with fiscal legislation

Local contractors should be given priority

Consumer confidence index rises in January

Government urged to hold a referendum on privatization

New government told to push ahead with fiscal legislation

The new government should rush to get fiscal legislation on the statute book in order to boost confidence in Thai financial institutions, according to a leading research center.

In a recent report, the Kasikorn Research Center (KRC) spoke of the need to ensure that fiscal legislation which was undergoing review during the last term of Parliament is brought into force as soon as possible. Such legislation includes amendments to the 1997 Asset Management Corporation Act, amendments to the 2002 Credit Fonciers Business Act and draft laws on deposit insurance institutes, financial institutions and the Bank of Thailand.

The research center noted that while this legislation may not in itself be urgent, bringing it to the statute book quickly will have a beneficial effect on overhauling national financial structures and will help boost confidence in the nation’s financial institutions. Describing the success of the legislation as a key indicator of the performance of the new government, the report said that the passage of the laws will be watched with interest by Thai and foreign investors alike.

The research center expects amendments to the Credit Fonciers Act and the Asset Management Corporation Act to be relatively speedy and uncomplicated, but admits that other legislation, particularly the draft law on deposit insurance institutes, could be more detailed and sensitive. Nonetheless, the center views this legislation as an important step in the development of innovations in financial deposits, which will see changes to the way in which business is conducted in the future.

The report also noted that the proposed establishment of a super regulatory agency to oversee financial institutions will play an important part in determining the success of draft legislation on financial institutions and the Bank of Thailand. (TNA)


Local contractors should be given priority

The government should review a method of engaging contractors to implement state-owned investment projects to give many local contractors opportunities to win bidding of each project, according to the Thai Construction Industry Association.

Phumsan Rojanalertchanya, president of the association, said local contracts are in the position to implement state-owned large infrastructure projects. So, he did not want the government to engage contractors based only on the economic perspective.

Instead, the government should give a priority to how to create the value-added and opportunities for local contractors so they could gain experience and win project contracts overseas. To this end, he said, the government should review the method of engaging contractors to carry out state-owned projects to ensure more local contractors get the jobs.

Phumsan said the association did not want the government to pool the state-owned projects because only a few major contractors would be entitled to implementing the projects. What the government should do is to distribute each project so local contractors would have an opportunity to carry out the project. He believed although the projects were distributed to many contractors, the construction standard and accountability of each contractor would not be different from the set criteria.

“I have met and discussed with Prime Minister Thaksin Shinawatra three times and found the premier shared a common view with the association. But in practice, the bidding for state-owned projects at present has criteria that do not benefit local contractors,” he said. (TNA)


Consumer confidence index rises in January

Spending in the New Year Festival and the just-finished general election helped push up the confidence index in all categories in January although there was a sign of slowdown in consumption, according to the University of Chamber of Commerce’s Economic and Business Forecasting Center.

Saovanee Thairungroj, Dean of the Economics Faculty, disclosed a survey conducted by the center showed the confidence index in all categories edged up. For instance, the confidence index on overall economy rose to 90.9 from 89.3 points in December, on job opportunities rose to 87.8 from 86, and on future incomes to 105.1 from 103.1 It resulted in an increase in the consumer confidence index to 105.1 from 103.1.

She attributed the increase in the confidence index to the easing of consumer worry about effects from last month’s tsunamis in six southern Andaman provinces, persistent southern violence, and bird flu outbreak.

Spending on the New Year Festival and the general election also helped boosted the confidence index. Higher fuel prices are only a negative factor that undermines the confidence. However, she said, the confidence index in many categories stayed below the 100-point level for the 13th consecutive month.

For instance, the confidence index on future situation edged down for the 6th consecutive month. Beside effects from the tsunami, the government’s decision to float diesel oil prices in April could make people slow consumption by 3-6 months.

Thanawat Palavichai, director of the center, said the landslide victory of the Thai-Rak-Thai Party in the general election, which could lead to the establishment of the single party government, would contribute to the increase in the confidence index. He projected the confidence index in February would stay close to that in January.

Since the confidence index is likely to stay unchanged or drop slightly, private companies must accelerate adjusting their marketing strategies to maintain the total sales and keep selling prices unchanged. (TNA)


Government urged to hold a referendum on privatization

A member of the panel that drafted Thailand’s Constitution has urged the prime minister to hold a referendum on the government’s planned privatization of state-owned enterprises. A well known lawyer and a member in the panel that drafted the 1997 Constitution, Kanin Boonsuwan said a referendum should be held to approve the premier’s right to push on with listing more state enterprises on the stock market.

Thaksin has vowed to press on with the government’s plans to privatize state-owned enterprises by listing them on the stock market, citing the success of the partial privatization of the oil firm PTT.

“Thaksin seems to have the monopoly of making public statement on this issue. If this is really good, then why not hold a referendum in line with Article 214 of the Constitution?” Kanin said. The process would allow 90 days for all stakeholders to present their points of view to the voters.

Thaksin’s plans for these enterprises amounts to carving up the national assets and selling them in installments, through a vehicle called the State Enterprises Act, Kanin alleged. This Act enables the government to virtually “dissolve” these enterprises over a fixed period of time, he said. Kanin urged the PM to fulfill his promise to listen to the views of all sides on the issue of privatization. (TNA)