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shrimpcertification
ASEAN certification for
the shrimp industry
Proactively
avoiding trade sanctions
By Jon Fernquest
 The
US is Thailand's biggest market for shrimp, representing about 50% of
Thai shrimp exports.
For several years Thailand's shrimp industry endured a grueling
fight against US anti-dumping
sanctions
(Read case
study also paper on anti-dumping
as veiled protectionist
measure).
Six years ago in 2003
a trade
association
of Shrimp farmers in the
US filed an
anti-dumping petition
against six countries — Brazil,
China, Ecuador, India, Thailand and Vietnam.
Thailand eventually
won the fight and the punitive
anti-dumping duties
were finally reduced (Read article).
As the Bangkok Post
observed a few months ago, "From 2004, US Customs had required exporters subject to
anti-dumping duties to post a bond covering the full amount as security
against the risk of default."
This burdensome requirement was also finally lifted recently.
Today's
article features a lot vocabulary in the area of international
trade law
(See below).
certificate
(noun) - an official document that shows that certain facts are true
(for example, a school certificate proves you graduated from school, a
cleanliness certficate proves that your workplace is clean, a
certificate of origin proves that your product comes from a certain
place)
certification (noun)
- an official process that provides proof that certain standards have
been met after tests and inspection, an official document (certificate)
to prove that these standards have been met การรับรองคุณภาพ
certify (verb)
- provide official proof that something is true (that certain goals
have been achieved)
certify shrimp -
provide official proof that shrimp meet standards
proactively (adverb)
, proactive (adjective)
- acting early to solve problems before they occur, anticipate and
solve problems before they actually happen
sanctions -
punishment for countries that have broken international law
(restricting trade and official contact)
a grueling fight
- an extremely difficult
and tiring fight
dumping -
when a manufacturer exports a product to another country at a
price which is below its costs of production
or below the price it charges in its home market or
(See Wikipedia)
anti-dumping sanctions
- when one
country punishes another country for dumping
veiled - disguised,
doesn't look like what it really is
protectionist - policies,
ideas, or laws that reduce imports into a country from other countries
(See glossary)
veiled protectionist
measure - some action that is protectionist but doesn't
look like it
a trade association
- an
organisation joining together all the companies in an industry in a
country to represent them and defend their rights
a petition - a
formal request made to people with authority (in goverment such as a
court)
filed an anti-dumping
petition -
made a formal request that the government punish another country for
dumping
punitive -
punishing
duties - taxes
paid on imported goods
punitive anti-dumping
duties -
customs - the
government agency that controls goods entering and leaving a country,
checking to make sure they are not illegal and collecting taxes or
duties on goods
subject to
anti-dumping duties -
a bond - (See Wikipedia)
post a bond covering the full amount as security
against the risk of default -
burdensome -
lift a requirement
- end the requirement
Asean plans to set up
body to certify shrimp
Increasing
barriers add costs for farmers
By WALAILAK
KEERATIPIPATPONG
1/07/2009
The
Asean Shrimp Alliance (ASA) is working to establish a regional
certification body
to verify the
production standards of shrimp raised
in member countries for exports.
The move, discussed at
a
meeting in Bangkok yesterday, aims at lessening
pressure
from buying
countries, which have set different restrictive
standards
against
imported shrimp and other types of aquacultural produce.
While
the standards, considered by some as safeguard
measures,
share some
similarities, they eventually add to shrimp farmers' costs, according
to Somying Piumsombun, the director-general of the Fisheries Department.
"They
have to change
their production practices to comply with
those
standards,
a move that erodes
their export competitiveness," she said.
According
to Dr Somying, many Asean countries have played an important role in
the world shrimp industry and their production standards are in line
with international
benchmarks
recognised in the global market.
Thailand's
shrimp farming, for example, complies with the Thai government's good
agricultural practice, which is by no means
inferior to the
standard
set by ACC
(Aquaculture Certification Council) of the US, she said.
"The
Thai shrimp industry had in the past suffered from nitrofuran
residues
but we later solved the problem with a lot of improvements and
efforts," she said.
Dr Somying said she
believes that some
countries have imposed restrictive import standards
not only to protect
local consumers but also for commercial purpose. Tighter
rules
could
end up pushing the prices of imported products.
She admitted
that the establishment of the Asean certification body might not be
completed in the near future. In any case, the two-day discussion at
the ASA's forum ending today would show promising results with clearer
guidelines
for further works.
ASA was formed in 2007
by Asean
members, especially major shrimp producing and exporting countries such
as Thailand, Vietnam and Indonesia.
These countries have played
a significant role in
Asia and helped transformed the region into the
world's major shrimp production base, accounting for nearly 85% of
world production. The major markets of shrimp products are the United
States, European Union, and Japan.
Thailand alone
produced about
500,000 tonnes of shrimp last year. Of the total output, 90% was
exported, generating income of about 80 billion baht. Half of the
exports were destined for the US market.
Dr Somying said that
the organisation aims to help improve shrimp farming among member
countries and overcome export obstacles.
Despite
low rejection rates, importers keep setting more purchasing conditions
in terms of standards
certification
such as diseases and some
non-tariff
barriers
over the past five years.
(Source: Bangkok Post, business, Asean
plans to set up body to certify shrimp,
Increasing barriers add costs for farmers, WALAILAK KEERATIPIPATPONG,
1/07/2009, link)
proof (noun) -
fact, evidence and arguments that shows that something is true
prove (verb) - to use fact, evidence and arguments to show
that something is true
a body - an
organisation
set up a body - create an organisation
barriers, barriers to
trade - laws that make it more difficult for exports from
other countries to enter a country as imports
regional
certification body - an organisation in a region like
ASEAN that officially certifies that standards have been met
standards - acceptable
levels of quality มาตราฐาน
production standards - levels
of quality that the goods produced in a factory must meet
restrictive standards
- standards
that restrict what can be produced and how it can be produced (for
example, with workers that are paid a reasonable amount and treated
fairly)
verify - check
and prove that something is true or that standards have been met
verify the production
standards - check and prove that production standards
have been met
comply with standards
- follow the standards, meet the standards
standards certification -
issueing an offiicial document that standards have been
met
pressure - when
people are being pushed or forced to so something
lessening pressure -
be less forceful about people doing something
safeguard - protect
safeguard measures
- actions
taken to protect something
fisheries -
fish farms, places to raise fishes
production practices -
the standard ways that a task are done or performed
competitiveness - how
well a company is able to maintain or gain customers in a market
export competitiveness
- how
well a company is able to maintain or gain customers in export
markets
erodes their export
competitiveness -
in line
with - following, agreeing with
benchmarks - standards
used to judge how good or bad other things are
international benchmarks
recognised in the global market.
complies with the Thai
government's good
agricultural practice,
by no means inferior to
- has equal quality or higher than
aquaculture -
the farming of shell fish and plants underwater includes:
fish
farming, shrimp farming, oyster farming, raising cultured pearls, kelp,
seaweed, and algae (See Wikipedia)
ACF (Aquaculture
Certification Council)
- an NGO for standards certification at aquaculture facilities around
the world, includes food safety, environmental, and social
standards (See website)
nitrofuran - a
kind of drugs used as antibiotics or antimicrobials (See Wikipedia)
antibiotics - a drug that kills or inhibits the
growth of bacteria (See Wikipedia)
antimicrobials
- a drug that kills or inhibits the growth of microorganisms such as
bacteria, fungi, or protozoans, as well as destroying viruses (See Wikipedia)
residues -
the part that remains after the rest has gone away
nitrofan residues -
some of the drug that remains (not good)
imposed - force someone to do something or follow some
rule
tighter rules - stricter rules,
rules that strongly
control an activity
guidelines - instructions
or advice about how to do some task
clearer
guidelines - instructions that are easy to understand and
follow
played
a significant
role in - was an important part of
transformed -
changed
overcome -
solve a problem
obstacles -
things that make it difficult to so something
tariff - a
tax on imports or exports
non-tariff barriers - non-tax-related laws in a country
to prevent imports from other countries
usedcarfinancing
Used car market in
Thailand contracts
due to a lack of financing
By Jon Fernquest
 The
used car sector is the subject of this week's Business Focus in the
Bangkok Post.
Several interesting
articles investigated different aspects of this important sector in
Thailand:
1.
Thailand's thriving trade
in aftermarket parts ( link).
2. Cheaper automobile insurance policies ( link).
3. Branding and public perception
of used-car dealers ( link).
4. The used car loan market in Thailand ( link).
5. Lack of finance leads to used car market contraction (See following
article).
Here is the lead article from Business Focus:
Economics
BUSINESS FOCUS
STUCK IN LOW GEAR
Used-car
sales are off as much as those of new cars, not for lack of buyers but
lack of finance.
By Nareerat Wiriyapong
and Yuthana Praiwan
29/06/2009
It's no surprise that
many consumers are hesitant
to buy new cars these days, given uncertainty about jobs and future
incomes. One would expect that the used-car market should be doing
better as people seek cheaper wheels.
But sales of
used cars in Thailand have declined by 30% this year - the same rate of contraction as the new-car market - as
the economic slump curbs
purchasing power
while fluctuating oil prices affect customers' decision-making.
But dealers say the
biggest brake on sales has been the inability of buyers to get
financing.
"Economic factors have
strongly dampened
used-car sales volume,
the same as the new-car market has experienced," said Sitachai
Jeeratunyasakul, vice-president of Toyota Motor Thailand (TMT).
TMT, Thailand's
largest automaker, has marketed used cars for the past five years under
the "Toyota Sure" brand.
"We
estimate the overall used-car market has dropped by 30%. Toyota Sure,
however, expects sales to drop less than those of our new cars," he
said.
When the economy
slows, Mr Sitachai says more
consumers are likely to seek used cars because they cost 20-50% less
than new ones depending on models
and age.
But leasing
conditions
have become very tough, while lenders have also raised
down-payment requirements and interest rates on
used-car loans, he said.
"Financial firms
minimise risks from leasing services during the economic slowdown by
strictly checking
each customer's background and track
record of debt payment," said Mr Sitachai.
Chaiyapol
Cholprasertsuk, the owner of a used-car centre on Ratchadapisek Road,
said his monthly sales had dropped 30% from 2008 to 20 units.
"Consumers'
purchasing power
have been lower while leasing firms have become so strict about
approving auto loans," he said.
The
22-year-old business sells vehicles from Toyota, Isuzu, Nissan,
Mitsubishi, Chevrolet and Ford, mainly pickup trucks. It works with
more than 10 leasing firms such as Thanachart, GE, Tisco, SCB Leasing,
and Siam City Leasing.
Since the beginning of
this year, leasing
companies have demanded a down payment of 25% of a used car's price, up
from 10-15% last year, to cope with rising risks of non-performing
loans.
The NPL ratio has reached an unprecedented 30% of total car sales at his
centre, Mr Chaiyapol said.
"Interest
rates for used-car purchases, varying from 3.5% to 10%, have not fallen
even though banks have cut rates many times," he said.
"Even
though down payments and interest rates for new-car purchases have been
reduced, I think the price gap between new and used cars remains
substantial and is a major deciding factor for car buyers."
Toyota
Buzz, which sells used Toyotas on Ratchadaphisek Road, also expects its
sales could fall 20-30% unless new marketing campaigns and increased after-sales
services
can lure
customers.
With quality
certification by TMT,
Buzz used cars cost more than those sold by independent
dealers.
"As consumers'
purchasing power has decreased, used vehicles might be the option if they want to buy a car,"
said a Toyota Buzz executive.
He agreed that tough
lending terms
had deterred many customers. "However, we
have seen customers buying cars with cash rising substantially."
Also
hurting the used-car market is the heavy competition in the new-car
market. Common promotions include price discounts, zero down payment,
low interest, free first-class insurance, as well as extended
payment periods.
Chawalit
Wanittananun, the operator of Rodbaan Khun Chawalit, says used-car
dealers need to put more effort into speeding up customer decisions.
"Their
behaviour has changed a lot since the economy slowed down. They spend
much longer time making decisions, they have a lot more conditions.
They compare dealers' offers as they expect to see better offers," he
said.
In a tough market, high
inventories
are a major burden for used-car dealers. Mr Chawalit has cut his
inventory to no more than two months at his Rattanathibet showroom,
focusing on Japanese cars for which there is steady demand.
Among the cars keeping
their value are the popular Toyota Yaris and Vios. A 2006 Yaris can fetch between 400,000 and 580,000
baht depending on options, and a Vios for the same year will cost
350,000 to 450,000 baht, he said.
contracts - grows
smaller, shrinks
thrive - do
well and be successful
thriving trade
- doing lots of business, making lots of money
an aftermarket,
a secondary market - a market for already used
things
automotive aftermarket
parts - the
market for automotive parts and servicing after the initial sale of a
new car, "the part of the automotive industry concerned with the
manufacturing, remanufacturing, distribution, retailing, and
installation of all vehicle parts, chemicals, tools, equipment and
accessories for light and heavy vehicles after the sale of the
automobile" (See Wikipedia
and explanation)
perception - the
way people think about something, the impression that people have of
something
STUCK IN LOW GEAR
- cannot change from low gear in your car, in low gear a car goes
slowly
sales are off -
sales have fallen recently
hesitant - waiting
to act, not acting quickly
contraction -
get smaller, shrink
curbs purchasing power
- reduces how much you can buy
dampened used -
car sales volume
models
- different designs or types of a product
lease - a legal
agreement allowing the use of a building, equipment or land
for a period of time for the payment of rent
leasing conditions - details in leasing
agreement that borrower must follow
down-payment - the
first large payment of money given before making smaller
regular payments for a purchase (installments)
raised down-payment
requirements - increased the initial large payment that
must be paid
checking each customer's
background - checking the history of a customer
track record -
how well they have done in the past
track record of debt payment - how well a person has paid
back their loans in the past
consumers' purchasing
power - the ability of customers to buy a certain amount
of goods
cope with - deal with a problem
Non-Performing Loan
(NPL), bad loans - a
loan that the borrower is not paying back (or very late paying back)
NPL ratio - the percentage of
loans that are non-performing loans (NPLs)
unprecedented
- has never happened
before
after-sales services -
services for cars such as repair after a car is bought
lure customers -
when a business tries to attract and get new customers
certification
- an process of meeting certain high standards and being issued with
an "certificate" to prove this after an official examination
quality certification by
TMT - an organisation name TMT checks that high standards
have been met and issues a certificate
independent dealers - companies
that sell cars that are not owned by or tied to one brand
an option -
one possible choice or decision
tough lending terms - loans
with more difficult conditions, higher interest rates, shorter pay back
periods, etc
deterred -
extended payment periods
- money loaned for a longer period of time, borrowers have a longer
period of time to pay back loan
high inventories
- have a lot of unsold product
fetch a price - customers
buy the good at this price
(Source: Bangkok Post,
business, STUCK IN LOW GEAR: Used-car
sales are off as much as those of new cars, not for lack of buyers but
lack of finance, Nareerat
Wiriyapong and Yuthana Praiwan, 29/06/2009, link)
govbudgettransparency
Making Thai government
budget and spending more
transparent
By Jon Fernquest
 Increased
government spending makes some people nervous.
One reason:
Taxpayers can't see how the government is spending the money they pay
in taxes.
A Bangkok Post article yesterday looked at how transparent Thailand
is in its government budget and spending compared to other countries.
Thailand
didn't get high marks,
scoring only 40% compared to the highest performers: the UK (88%),
France, South Africa (87%), New Zealand (86%) and the US
(82%) (See full
rankings).
WHERE DOES THE MONEY GO?
Thailand
given low marks for budget
transparency and follow-up,
despite Budget Bureau's best efforts.
By Parista Yuthamanop
29/06/2009
The likelihood of the government incurring
massive debt
with its economic
stimulus
over the next few years has accentuated the importance of easy access
to data on its spending.
The public can
currently use the Budget Bureau's website, http://www.bb.go.th, to find information on
strategy, budget
allocation,
enacted
budget, progress of
budget distribution,
emergency
and tied-over budgets,
and parliamentary
budgetary review.
But Thailand's performance is ranked as poor by the Open Budget
Index in
2008, which focuses on the accessibility
of data to laypeople,
based on questionnaires. The survey by the US-based
International Budget Partnership, a research house
specialising in fiscal
policy,
gave Thailand only 40%.
This
compares poorly with the best performers - the United Kingdom (88%),
France and South Africa (87%), New Zealand (86%) and the United States
(82%).
The report said that
the budget
proposal
gives the public
a "fairly
comprehensive"
picture of the government's plan for taxing
and spending for the coming year.
"The proposal should
be
available
to the public and the legislature prior to being finalised,
at least three months before the start of the budget year to allow
sufficient review and public debate," it said.
But the lack of
mid-year and year-end reports has created difficulties in tracking
how
the budget is being spent during the year. This undermines
public
accountability,
the report said.
But Siwat
Luangsomboon, a
senior economist at the Fiscal Policy Office, said authorities had
performed well in a Public Expenditure and Financial Accountability
survey by the International Monetary Fund, which measured broader
budgeting processes, ranging from comprehensiveness of spending types
and transparency to fiscal risk
management.
The Finance Ministry
couldn't publish year-end and audit reports of the budget because
of
discrepancies
between data on the government's electronic platform and
the figures used by the Office of the Auditor General. The government
has published a "budget in brief" on its website and as a booklet to
make it easy for the public to understand, he said.
The ministry
does not submit a mid-year report to parliament because of budget
relocations
between departments of government agencies.
"Nonetheless,
the constitution calls for the government to inform the public every
six months of transfers of budgets between agencies
or for other
purposes, by the end of the year," said Mr Siwat.
Vorapol
Socatiyanurak, vice chairman for the Economic and Social Advisory
Council, said the government should set up a committee comprising
representatives of different social
segments
to monitor whether the
budget is used properly over the next few years.
Dr Vorapol said
the government's 800-billion-baht borrowing plan would push fiscal
stability to the limit
as it raised public debt to 60% from 40% of
gross domestic product. "Thailand's tax revenue stands at 18% of GDP,
much lower than Japan, which has a high percentage of public debt. The
government cannot be careless
with spending. Importantly, investment
must give reasonable
returns," he said.
"The fact that private
and state enterprises
operate with relatively
poor competitiveness constrains
fiscal revenue."
Meanwhile,
Nitinai Sirismatthakarn, the owner of Economic Development Consulting
Group, said fiscal data were comprehensively available, but scattered
among different agencies.
He said the public
could gauge whether the stimulus package
is beneficial by looking at whether debt per GDP decreases.
transparent
(adjective) -
visible, can be seen by the public, not hidden
transparency (noun) -
a condition or state of
being visible
marks - grades
follow-up - action that continues
and supports what was started earlier (example: to make a sale one must
follow-up all initial contacts)
likelihood - the
possibility that something will happen
incurring massive debt -
borrowing very large amounts of money that you must pay back
economic stimulus -
government spending and tax cuts to get the economy growing again
accentuated
the importance of - emphasized the importance of
budget
allocation - the amount
of the government budget given to some activity
enacted budget - the
budget that has been made into law (by parliament)
progress - work that
has been completed towards a goal
progress of budget distribution -
how much of the budget has been given to the government
agencies and departments that will use it
emergency
budgets - money that
is made available for use in an emergency situation
tied-over budgets -
parliamentary budgetary review -
when members of parliament go over and check what government money will
be spent for and either agree or disagree
performance - how
successful someone is in doing some task
US-based International Budget Partnership - an NGO that collaborates
"with civil society organizations in developing countries to analyze,
monitor, and influence government budget processes, institutions, and
outcomes. The aim of the Partnership is to make budget
systems more responsive to the needs of poor and low-income people in
society and, accordingly, to make these systems more transparent and
accountable to the public." (See website)
Open Budget Initiative -
a global program to "promote public access to budget
information and the adoption of accountable budget systems, includes a
survey that "evaluates whether governments give the public
access to budget information and opportunities to participate in the
budget process at the national level."(See website)
Open Budget Index - a
ranking of countries around the world by transparency of
government budget and spending (See ranking)
laypeople - ordinary
people, not specialists or experts
accessibility of data to laypeople - whether ordinary people can
get the data or learn about it easily
questionnaires - a
written list of questions that many people answer to provide data for a
survey or study
fiscal policy -
government spending and
taxation policy แผนงบประมาณรายปี
budget proposal - giving
a plan future spending
gives a fairly comprehensive picture of - describes all parts and aspects
allow
sufficient review and public debate, available to the public and the
legislature prior to being finalised - give the public the budget and
spending information and let them debate about changes
tracking - following
tracking how
the budget is being spent -
following how government agencies are spending the money budgeted for
them
undermines - weakens
undermines public
accountability -
weakens the ability of the public and taxpayers to find out what is
being done with their money
comprehensiveness - covers
all details of a subject or topic
transparency -
visible, can be seen by the public, not hidden
fiscal risk management - making
sure that the government is always able to pay for the things it needs
to pay for (planning for low revenue years, making sure that money
borrowed does not increase the interest rate paid causing the debt to
balloon)
audit - examine
officially to make sure that money is being used and recorded correctly
auditor - an
accountant who audits the accounting records of a company or government
discrepancies - things
that should be the same but are not the same
a booklet - a small
book
budget
relocations - moving
money from use to another use in the budget
transfers - moving
something from one place to another place
V comprising
X, Y, and Z - V has X,
Y, Z as members or parts
social segments - different
parts of society (example: poorer rural dwellers, richer urban
dwellers)
monitor - regularly
check an ongoing activity or process (to check for problems or collect
information)
push fiscal
stability to the limit -
borrow the greatest amount that you can, before having problems paying
it back
public debt - money
borrowed by the government
careless - not careful
so make mistakes
reasonable returns -
profits that are fair and match expectations, not excessive
state enterprises - companies
owned by the government such as the electricity or railway companies
constrains - limits
state enterprises...relatively
poor competitiveness constrains fiscal revenue - companies owned by the state
cannot compete very well and have low profits
scattered
- spread
over many different places
gauge - measure
olarn
Devalue baht, loans
from state banks, don't raise oil tax
Dr. Olarn Chaipravat's prescription
for Thai economic policy
By Jon Fernquest
 Thai
central bank governor Dr. Tarisa Watanagase was interviewed by
the Bangkok Post earlier this week (Read article).
Disagreeing
with Dr. Tarisa at least
about exchange rates
economist Dr. Olarn Chaipravat
who served as Deputy Prime Minister under Thaksin was featured
in a Bangkok Post interview yesterday (See article below).
Dr. Olarn calls for aggressive government intervention
aimed at:
1.
Baht devaluation
2. Expanding credit and loans in the economy
To expand credit he
calls for 300-billion-baht in new loans by
state banks. Where is this money to come
from? From the Thai government? Is the borrowing
capacity
of the Thai government enough to support such a loan programme? The
Fiscal Policy Office declared yesterday:
...fiscal
policy is at its limits, so that additional spending programmes could jeopardise the
country's long-term financial
position. Under current budget plans, public debt is
projected to jump, from 40% of gross domestic product now, to 60% by
2013, a level last seen during the 1997 economic crisis (Source:
Bangkok Post, Fiscal Policy Office report, 26-06-09, link)
As for baht
devaluation, Dr. Olarn cites the recent Korean example:
The
Korean government and central bank have
intervened in the currency markets to weaken the won, benefiting
exporters and resulting in overall economic growth...
Actually, the Korean
government did not intervene but rather allowed the currency to collapse
and many suffered as a result (Read analysis and article
and The
Economist)
. Dr. Tarisa pointed out in her interview that a weak baht policy would
likewise hurt some industries as well as help some.
Yesterday's report by
the Fiscal Policy Office also notes: "A weaker baht would not
necessarily help exporters increase sales." With weakened global demand
export opportunities have largely dried up.
The world economy is
currently tracking
the Great Depression
(Read article).
Beggar-thy-neighbor competitive devaluations sparked trade wars in the
1930s precipitating the Great Depression (Read article and Eichengreen).
If there are currently no new export markets to be had, then export
expansion can only be at the expense of neighboring countries.
There is also the
BOT's disastrous interventions in foreign currency markets in the run
up to the
1997 Asian Financial Crisis. Would their track record this time around be any
different? BOT governor Dr. Tarisa Watanagase is too prudent
to allow a repeat of 1997.
Dr
Olarn claims that "every 1% decline in the value of the baht would help
create 50,000 new
jobs and boost economic growth by 0.14 percentage points." One can only
ask whether these econometric estimates are really based on a global
recession with collapsed export markets? Probably not.
devalue - take
action to make the currency of a country worth less (depreciate) and
therefore make exports cheaper and more competitive on international
markets
prescription - medicine that a doctor prescribes to cure
an illness
aggressive -
done with great energy and intensity
government intervention - when the government buys and
sells in markets to influence prices and supply and demand
devaluation - when the value of a currency falls and the
export goods of the country become cheaper
capacity - the ability to do something
borrowing capacity - the greatest amount that a
company or government is able to borrow and not have trouble paying back
jeopardise -
create a situation with possible loss
financial position - the
state of the balance sheet of a company, person, or government; what
assets, liabilities, and equity it has
tracking the Great
Depression - following the Great Depression in all its
details
beggar-thy-neighbor
- a policy in which one country wins but another must lose
competitive devaluations
- when countries compete to have the lowest exchange rate to make their
export goods the cheapest
precipitating -
causing
in the run up to -
in the events the happened beforehand
track record
- how well or badly a person has done at a certain job over time
Olarn: Weakening baht
key to growth
Disagrees
with raising oil taxes as well
By WICHIT
CHANTANUSORNSIRI
25/06/2009
Economic
policymakers should aggressively
intervene
in the foreign currency and
credit
markets
to help spur
economic growth,
says the economist and
former deputy prime minister Olarn Chaipravat.
Dr Olarn,
speaking at an economics conference hosted by the Fiscal
Policy
Research Institute,
said this year's budget
deficit
would almost
certainly exceed 400 billion baht, considering the 350-billion-baht
deficit set under the budget
law and
projections that revenues
could
fall short
by at least 200 billion.
Running
a budget deficit
in
the midst of a global economic contraction was a proper policy
response, one that is being implemented by numerous countries.
"Raising oil taxes,
however, is counter to the government's policies to stimulate growth,"
Dr Olarn said.
The
central bank also should help lift exports in baht terms by
aggressively intervening in the markets to push the baht lower against
major currencies.
State-owned banks
should also lift lending
activity, he said. A 300-billion-baht new loans target for this year
would help ease credit
constraints
faced by key industries, such as
automobiles, electronics and property.
Government efforts to
facilitate lending in the first half proved a
complete failure, he
said. Outstanding
loans 120
billion baht system-wide in the
first quarter and 30 billion in the second. Banks have contractedtightened
lending criteria
over fears of higher risk. And the recession has cut
demand for credit to finance investment and spending.
Dr Olarn
noted that the baht fell to 35.5 to the US dollar in the first quarter
but has since appreciated to around 34.5 in the second.
"What we
should be looking for is a rate of 36 baht to the dollar, weakening to
36.5 in the third quarter and 37 in the fourth quarter. If we can do
this, it would generate another 500 billion baht in export revenues for
the country," he said.
The Bank of Thailand
has steadfastly
refused
to set explicit
currency targets,
and said it will only
intervene
in the markets to smooth volatility.
The baht has
appreciated in recent months thanks to the country's growing trade
surplus
and portfolio
inflows.
Most
economists also expect the
greenback
to weaken in the medium-term as a
result of a significantly weaker debt and fiscal position caused by the
global crisis.
The Korean government
and central bank have
intervened in the currency markets to weaken the won, benefiting
exporters and resulting in overall economic growth, said Dr Olarn.
The
US and Chinese economies have also taken aggressive action to spur
growth,
with the Federal Reserve directly purchasing bonds from the
market to boost liquidity and China directing large state-owned banks
to boost lending to the real sector.
"Thailand faces fewer
restrictions in currency policy if compared with China, which is too
large to really sway the
value of the yuan,"
Dr Olarn said.
But
every 1% decline in the value of the baht would help create 50,000 new
jobs and boost economic growth by 0.14 percentage points, he said.
Inflation would also increase by 0.2 percentage points, as the cost of
imports increase in local terms.
Dr Olarn said a weak baht
policy would increase the cost of energy in local terms, but the
government could choose to reduce oil taxes to lessen the
impact on the
public,
although this policy could potentially widen the
budget deficit.
aggressively - done
with great energy and intensity
intervene - when the government buys and sells in markets
to influence prices and supply and demand
credit markets
- markets
for borrowing money (bonds, commercial paper, bank loans, etc)
spur economic growth
- make the economy grow faster
Fiscal Policy
Research Institute (FPRI) -
non-profit organisation part of Finance Ministry founded in 2001, both
carries out research as well as promotes research (See website and history)
a deficit, a budget
deficit, running a budget deficit - when the government
spends more money than it receives in tax revenue (must borrow to pay
for deficit)
widen the budget deficit
- the budget deficit gets bigger
the budget law -
Thailand's law on the largest sized budget that the government can have
and the largest budget deficit it can have
revenues could
fall short - the money the
company makes is less than the goal
face constraints - be
limited, activity is difficult due to limitations
ease credit constraints
- make the activity less difficult, remove constraints and
limitations
facilitate lending - help companies and
people get loans
outstanding loans
contracted - the amount of loans that have not been paid
back yet decreased
tightened
lending criteria - made it more
difficult to get loan, requirements more difficult to meet
steadfastly
refused - continued to say they would not do it, would
never never agree to do it
explicit currency targets
- an exchange rate announced to the public that a country
tries to achieve
volatility - moving
suddenly and unexpectedly
smooth volatility -
reducing sudden and unexpected movements
intervene in the markets
to smooth volatility - when the government buys and sells
to reduce sudden and unexpected movements
trade surplus
- when a country's exports are greater than imports
portfolio investment - when
investors invest by buying stocks and bonds
Foreign Direct Investment (FDI) - when investors
invest in another country by buying or starting an actual company
portfolio inflows - the portfolio investment entering a
country during a period
the greenback
- the US
dollar
spur
growth - make the economy grow faster
sway the value of the yuan
- change the value of China's currency
a weak baht
- a baht
that is cheaper compared to other currencies
lessen the impact on the
public - make
the negative effects and damage to people less
(Source: Bangkok Post, business,
Olarn: Weakening baht key to growth, WICHIT CHANTANUSORNSIRI,
25/06/2009, link)
smesjapan
Thai EXIM Bank to the
rescue!
After exports collapsed and trade finance along with it...
By Jon Fernquest
 Earlier
this year the exports that have driven growth in Asian economies for
years suddenly collapsed.
When exporters started
having problems, the banks that lend them money (trade
finance)
started to lend less because the loans suddenly looked a lot
riskier.
The Thai government
then intervened to alleviate some of the problems. As economists at VoxEU noted
recently:
"Thailand
will inject
an additional $140 million to the Thai EXIM Bank to increase export insurance. In
addition, $85 million were allocated
to the Small
Business Credit Guarantee Corporation so it can raise
small and medium-sized enterprises' credit
guarantee fund and loans. In response to increasing
demands from Thai exporters, the Thai EXIM Bank also provided risk assessment
services and related trainings. Familiarising small and medium
enterprises (SMEs) with trade
finance instruments is essential as buyer default risk
has increased and SMEs are usually not protected against it " (Source: VoxEU
also Bangkok
Post article)
Japanese SMEs more
hopeful
Aid may expand beyond
export credits
By NAREERAT WIRIYAPONG
AND VICHAYA PITSUWAN
24/06/2009
Thailand is expected
to grant other financial aid to
Japanese small and medium enterprises (SMEs) operating locally in
addition to offered by the export
credit insuranceExport-Import Bank
of Thailand (Exim Bank).
The condition that
companies need to be
at least 51% Thai-owned should be lifted for access to government
loans, said Munenori Yamada, president of the Japan
External Trade
Organisation (Jetro) in Bangkok.
"In Japan, no matter
whether
you are a Japanese or foreign firm you receive the same treatment on
financial assistance from the government," he said.
The Japanese
Chamber of Commerce (JCC) recently asked the Thai
government to help ease
cashflow problems
faced by Japanese SMEs.
The
JCC has officially presented its proposal to government agencies
including the Finance Ministry. It is seeking greater access for
Japanese firms to credit from the Thai SME Bank and the export risk
coverage
from Exim Thailand.
Exim Thailand
yesterday signed an
agreement with the Nippon
Export and Investment Issuance (Nexi) for
trade
risk coverage
for Japanese
affiliates using Thailand as their
export base.
Under the agreement,
Exim Thailand would offer
export
credit insurance
to Japanese firms and Japanese joint ventures
exporting products from Thailand to other countries except Japan.
In
case of payment
default,
arising from commercial or political risk,
Exim Thailand will pay
compensation
of up to 90% of the loss
realised.
"We
expect more measures will be introduced, though it will take time.
Given the large number of SMEs in two nations, If they survive, both
would definitely benefit," Mr Yamada said.
He said Japanese
legislators were now debating a supplement budget for stimulating the
economy, which would pave way for the Japan Bank for
International
Co-operation (JBIC)
and Japan
Finance Corporation (JFC) to financially
assist 7,000 Japanese businesses in Thailand.
Japan also will
ask Asean members meeting in Jakarta next Monday to step up stimulus
programmes in the region through infrastructure development.
"We
would propose faster trade and financial
liberalisation
within Asean
under the Asean
Economic Community (AEC) blueprint which took effect at
the beginning of this year," he noted.
Economic liberalization
In a related
development
foreign investors in Thailand have called for services
industry
liberalisation
to make Thailand more attractive for foreign
direct
investment.
The Joint
Foreign Chamber of Commerce in Thailand
(JFCCT)
has been pressing for service sector liberalisation for some
time and will raise the issue again at its next quarterly meeting with
the Board of
Investment (BoI).
As Thailand faces the
impact of
the global financial crisis, the JFCCT believes some structural changes
in some areas or bold decisions by the government could turn a crisis
into an opportunity.
"Thailand need new
boost and it could come
with liberalisation of the service sector," Nandor von der Lueche, the
JFCCT chairman.
He will raise the
issue at a meeting between JFCCT members and Prime Minister Abhisit
Vejjajiva in mid-July.
Industry
Minister Charnchai Chairungruang said he would seek to discuss the
request with the Commerce Ministry for further development.
Mr
Charnchai also noted that the new One Start
and One Stop Service Center
for foreign investors was expected to open by September.
The
centre aims to be the only facility
investors need for dealing with
applications involving many agencies, with shorter approval times as a
result.
trade finance -
banking services that support the business operations of exporters (See
Wikipedia
also see US
government trade finance guide)
intervened -
became involved in an activity (to solve problems and fix things)
alleviate problems -
reduce suffering from problems, solve problems
export credits
- government support for exporters including: direct credits/financing,
refinancing, interest-rate support, export credit insurance and
guarantees, and deferred invoicing
export credit insurance,
export insurance - insurance designed to guarantee that
an exporter will be paid for his/her goods after delivery, protect
exporters against commercial and political risks, (note: responsibility
for collecting payment from the company that imports the goods in
another country, or the company's agent, rests with the underwriter of
the export)
Export-Import Bank of Thailand, Exim bank -
government bank established in 1993 to support both Thai investors
overseas as well as local investors in business relating to export or
business which earns or saves foreign exchange (See website)
inject - put
into
allocated to - given
to
Small Business Credit
Guarantee Corporation (SBCG) - a Thai company established
in 1991 to provide "credit guarantees for viable small enterprises
which do not have enough collateral to enable them to obtain sufficient
credit from the financial institutions" (See website and list
of similar companies in other countries)
credit guarantee fund - money
set aside by the government to guarantee loans (pay back loans for
business people who cannot pay them back themselves)
risk assessment - evaluating risks and estimating how big
they are
instrument - a legal document
trade finance instruments - a legal document used in trade
finance
buyer default risk
- when buyers of your product do not pay you for it
Japan External Trade Organisation (JETRO) - the
Japanese export promotion agency (See Bangkok website)
Japanese Chamber of
Commerce (JCC) - the organisation representing Japanese
companies operating in Thailand
cashflow - the
movement of money into and out of a business
cashflow problems - when
there is more money going out of a business than coming in so difficult
to meet everyday business expenses (working capital)
ease cashflow problems - having enough cash on hand to
meet business expenses (working capital)
export risk coverage, trade risk coverage
- insurance to protect from problems when exporting goods
Nippon Export and
Investment Insurance (Nexi) - a major Japanese
provider of export credit insurance (See website)
an affiliate - a
company connected with another larger company in some way
Japanese affiliates using
Thailand as their
export base - Japanese companies producing goods in
Thailand for export
joint ventures - a business that
is owned and ran by two or more companies (rather than one company)
payment default
- not paying on time, late with payments
pay compensation - pay
money to someone who has been damaged or lost money in some way
the loss realised
- the money
that the company lost (and was recorded in their accounting records)
Japanese Bank for International Co-operation (JBIC)
- a bank owned by the Japanese government, founded in 1999 to "promote
economical cooperation between Japan and oversea countries, by
providing resources to foreign investments and by fostering
international commerce. It also has a major role in promoting Japanese
exports and imports, and the country's activities overseas" (See Wikipedia)
Japan Finance Corporation
(JFC) - the parent company of JBIC, a policy-based
financing institution
step up -
increase (intensity of activity)
step up stimulus
programmes - more government spending and tax cuts to get
the economy growing again
liberalisation -
relaxing rules in an industry, making the rules governing an activity
less strict
financial liberalisation -
relaxing the rules in the financial sector (for banks and stock firms)
services industry
liberalisation -
reducing regulations in service industries
a blueprint - a
plan
Asean
Economic Community (AEC) - a plan for the econmic
integration of ASEAN states by 2015 with a gradual elimination of
barriers to trade and investment in the region (See introduction
and description
[scroll down])
Foreign Direct Investment (FDI) - when a foreign
company invests directly in a business in a country (in a "portfolio
investment" an investor only holds stock)
Joint Foreign Chamber of Commerce
in Thailand
(JFCCT) - an organisation that joins together 22
foreign chambers of commerce and 3 business associations in Thailand
(Read description)
Board of Investment (BOI) - the Thai government
agency responsible for providing incentives to encourage investment in
Thailand (See website)
(Source: Bangkok
Post, business, Japanese SMEs more hopeful Aid may expand beyond export
credits, NAREERAT WIRIYAPONG AND VICHAYA PITSUWAN, 24/06/2009, link)
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