Easy Business News

Market driven changes in the global shipping industry (19-11-08)

Wed, 19 Nov 2008 14:17:08 +0700

shipping

Market driven changes in the global shipping industry

An article on shipping in today's Bangkok Post provides some useful training in applied economics.

Understanding economics and how supply and demand causes changes in market prices is essential for any business person if they want to do a better job managing their business.

In an MBA programme many of the classes are just applied economics, economics made simple for making practical everyday business decisions.

(See photo on right of of panamax ship travelling along the Panama Canal)

applied - how to do things not just ideas, practical not abstract ปรับใช้กับ
step-by-step - do gradually, achieving one goal and then working on the next, achieving this goal, ....(over and over again) ทีละขั้น ค่อยเป็นค่อยไป
panamax ships - ships of the maximum size that will still fit through the Panama Canal (See Wikipedia) เรือบรรทุกสินค้าขนาดใหญ่ที่สามารถผ่านคลองปานามาได้
Panama Canal - a man-made canal in Panama which joins the Pacific and Atlantic oceans. One of the largest and most difficult engineering projects ever undertaken, it had an enormous impact on shipping between the two oceans (See Wikipedia) คลองหรือช่องแคบปานามาที่ขุดเพื่อเป็นทางเดินเรือสินค้าผ่านมหาสมุทรแปซิฟิคไปยังแอตแลนติค เพื่่อช่วยร่นระยะเวลาเดินเรืออ้อมทวีปอเมริกาใต้ นับเป็นผลงานวิศวรกรรมที่ยิ่งใหญ่ที่สุดในโลก

Here is the economics in today's shipping article step-by-step:

First shipping rates fell with decreased demand for shipping...

The recent global economic downturn has reduced worldwide demand for exports.

Demand for shipping goods between countries has also fallen as a result.

As demand for shipping fell, there was an oversupply of ships and a sudden fall in shipping rates (freight rates, shipping costs) (See chart on right):

...the huge supply of ships had partly caused the collapse of the Baltic Dry Index (BDI), the major measure of shipping costs for commodities. The index has plummeted more than 90% from its peak of 11,793 in May this year to about 800 at present.

shipping rates, freight rates - the amount paid to send goods from one place to another อัตราค่าขนส่งสินค้าทางทะเล
Baltic Dry Index (BDI) - the major measure (index) of the cost of shipping goods by ship (See Wikipedia) ดัชนีค่าสินค้าที่ส่งทางเรือ
plummeted - fall by a large amount suddenly (ราคา) ที่ร่วง หรือลดลงมากอย่างรวดเร็ว

Then shipping companies responded by reducing ships in operation...

The profitability and survival of small shipping companies (small bulk carriers) depends on freight rates, the price they receive for the shipping services they sell. If freight rates continued to fall without limit, many shipping companies would simply go out of business.

Facing threats to survival, businesses adjust business operations. One response is to reduce the number of ships in operation. With reduced expenses, the business can survive and make it through bad economic times.

bulk - large amounts เป็นจำนวนมาก เป็นกุรุศ
small bulk carriers - companies that ship large amounts of goods บริษัทขนส่งสินค้าทางเรือ
go out of business - stop doing business, company ends its life ต้องปิดกิจการลง (เพราะขาดทุน)
ships in operation - ships being used to transport goods from one place to another เรือที่ใช้เดินสมุทร ใช้ขนส่งสินค้าอยู่ ณ ปัจจุบัน
make it through bad economic times - do whatever it takes so the company can once again do business when the economy improves ทำทุกวิถีทางเพื่อให้รอดพ้นจากภาวะวิกฤตเศรษฐกิจ

If every company reduced ships in operation by selling ships, then the supply of ships in the second-hand ship market would jump up and prices would fall.

Luckily, there are other more natural ways that the global supply of ships decreases in bad economic times. First, there are a lot of old ships that are near the end of their useful life. Retiring these ships now is an easy way for shipping companies to reduce the number of ships in operation:

About 60% of the global fleet is old with an average age over 25 years. Ageing ships tend to be demolished when market conditions are tough.In October alone, 38 vessels with a combined capacity of 1.3 million deadweight tonnes (DWT) were demolished, bringing the total to 368 ships taken out of the market this year to date...

Second, the global credit crunch has made financing new ships difficult. Only half the new ships being built have received financing, so only half the number of ships planned will actually be built. If banks won't lend money to build new ships, new ships will not be built.

second-hand - good has already been used (being offered for sale again for a second time) สินค้ามือสอง
demolished - destroy completely ทำลายให้สิ้นซาก
deadweight tonnes (DWT) - a measure of how much a ship can carry (ship's carrying capacity), expressed in metric tons (1,000 kg) or long tons (2,240 pounds, about 1,016 kg). น้ำหนักที่เรือสินค้าสามารถบรรทุกสินค้าได้
credit crunch - a period of time when it is difficult to get loans, when there is little credit (loans) ภาวะขาดสภาพคล่อง หรือเิงินหมุนเวียนไม่ได้

Shipping rates then rise with a decreased supply of ships and shipping...

As the worldwide supply of ships falls, the supply of shipping services in international shipping markets also falls.

As the supply of shipping services falls, freight rates rebound and begin to rise again.

Freight rates for shipping by sea are expected to rise in the next three to six months as the supply of ships decreases. There are signs that this is happening already:

...the index [Baltic Dry Index (BDI)] on Monday rose for a fourth straight session in London to 856 points, driven by handysize vessels for loads of less than 40,000 tonnes, and supramax and panamax ships.

Thailand's exports to Japan dropped significantly about a month ago when Japan was slipping into a recession. Many are optimistic that exports will soon pick up again because Thai exports to Japan are mostly essential food commodities such rice, starch, and sugar that people need to buy whether there is a recession or not (low income elasticity of demand).

rebound - start increasing again, after decreasing (ค่าขนส่ง) เพิ่มขึ้นอีกครั้ง หลังจากมีการปรับลดราคาไป
signs of X - something that shows that event X is happening (even though you can't actually see event X happening) ส่งสัญญาณ
vessels - ships เรือขนาดใหญ่
supramax ships, handymax ships - a ship between 35,000 and 60,000 metric tonnes of deadweight (DWT) (See Wikipedia) เรือที่มีระวาง 35,000 ถึง 60,000 ตัน
handysize vessels - a ship with a deadweight of 15,000–35,000 tons, there is no well-defined or widely accepted size sector below 15,000 tons.เรือขนาดย่อม ที่ระวาง 15,000 ถึง 30,000 ตัน
panamax ships - ships of the maximum size that will still fit through the Panama Canal (See Wikipedia)
optimistic - feel that the future will be good มีทัศนคติที่ดี มองเหตุการณ์อย่างมีหวัง
pick up - activity starts increasing จะปรับดีขึ้น
low income elasticity of demand - amount of good that people buy changes very little with price changes (See Wikipedia) สินค้าที่ผู้บริโภคต้องซื้อหา มีการปรับราคาขึ้นลงเล็กน้อย

(Source: Bangkok Post, business, 19-11-08, Jutha: Small bulk carriers reviving as fleets shrink, NAREERAT WIRIYAPONG, link)

What is really happening in Thailand's rice sector: Professor Somporn of Kasetsart University lays the record straight (17-11-08)

Mon, 17 Nov 2008 18:01:21 +0700

ricecritique

What is really happening in Thailand's rice sector?
Economist Somporn Isvilanonda of Kasetsart University lays the record straight

By Jon Fernquest

Yesterday's business section in the Bangkok Post featured a concise summary of the rice price support situation in Thailand as it currently stands.

The article is based on an interview with Kasetsart University economics professor Somporn Isvilanonda.

Here is the article in full:

Taxpayers hurt too, warns KU economist

PARISTA YUTHAMANOP
Monday November 17, 2008

The government will lose tax money and ruin the domestic rice market if its guarantee prices for rice continue to be much higher than market rates, according to Somporn Isvilanonda, an economics professor at Kasetsart University.

The guarantee should be equal to the market price or slightly above it, says Prof Somporn.

The Somchai Wongsawat government has endorsed the guarantee price to farmers for main-crop paddy at 12,000 baht per tonne. But it has not yet decided whether to continue its mortgage scheme for second-crop paddy.

The previous government under Samak Sundaravej offered 14,000 baht a tonne earlier this year when world rice prices were soaring. Now its successor faces huge losses as rice prices have fallen 50% since April.

The government's rice inventories have swollen to four million tonnes as farmers defaulted on contracts. Officials have failed to unload the stocks because few buyers are willing to offer prices anywhere near what it would take to cover the government's costs.

The previous government had an opportunity to profit from its rice inventories if it sold the rice when the world market price topped $900 per tonne, compared to $590 currently, Prof Somporn said.

More headaches are in store if authorities continue to buy up second-crop paddy. The mortgage scheme that began this month called for purchases of eight million tonnes of paddy, which could create 4.5 million tonnes of white rice when milled.

A state stockpile of nine million tonnes would exceed one-third of the country's annual output and seriously distort the market, the economist said. In addition, it would destroy past efforts to create local reference prices, as farmers would prefer to mortgage crops at higher prices.

Market intervention can be an effective short-term measure when prices are highly volatile. But the guarantee should equal the market price or be only slightly above it, Prof Somporn said.

Farmers in well-irrigated areas are expected to profit by 2,000 baht a tonne from the existing mortgage scheme, given 8,000 baht in costs and the 2,000 baht that mills deduct for drying, he said.

(Source: Bangkok Post, 17-11-08, Taxpayers hurt too, warns KU economist, PARISTA YUTHAMANOP, link)

Vocabulary:

rice price supports - the government system of buying rice from farmers at or above the market price, to protect farmers from low prices at harvest time การพยุงราคาข้าว
lay the record straight - explain the true situation เปิดเผยตัวเลขจริง
guarantee prices - prices that the government guarantees to farmers ประกันราคา
paddy - rice ข้าวเปลือก
a mortgage scheme - the government programme of buying part of the rice crop at a guaranteed price at or above the market price การจำนองข้าวเปลือก
a successor - the person in a position after you leave the position ผู้ที่จะมาดำรงตำแหน่งต่อ
swollen inventories - very large amounts stored (too much) เก็บสินค้าไว้เป็นจำนวนมากเกินไป
unload the stocks - sell the large amounts you are storing นำสินค้าในโกดังออกมาขาย
cover costs - the money is enough to pay the costs of doing it เพื่อให้คุ้มต้นทุน
a state stockpile - a large amount of rice stored by the government ปริมาณข้าวเปลือกที่รัฐบาลมีไว้ในคลัง
distort the market - buy, sell, or set prices so that are not determined by supply and demand anymore ทำการซื้อขายสินค้าหรือกำหนดราคาเพื่อป้องกันไม่ให้ราคาถูกกำหนดด้วยอุปสงค์อุปทานมากไป
local reference prices - the prices used locally to calculate the prices of other goods ราคาซื้อขายในท้องตลาด
mortgage crops - the rice grown to be sold in the government "mortgage scheme" ข้าวในโครงการจำนองข้างเปลือก
market intervention - when the government buys, sells, or controls prices in a market การแทรกแซงกลไกตลาดโดยรัฐบาล
volatile - value moving up and down by large amounts unexpectedly การแกว่งขึ้น-ลงของราคาอย่างมาก

Thailand's export outlook bleak (14-11-08)

Fri, 14 Nov 2008 19:34:11 +0700

thaiexports

Thailand's export outlook bleak

By Jon Fernquest

[Update: Thailand's auto industry is already facing reductions in work hours (read Bangkok Post article) a clear sign that the industry is expecting reduced exports from Thailand, due to reduced purchasing power from a global economic recession and reduced availability of auto loans from a global credit crunch]

In the face of a major global economic recession the outlook for Thai exports next year does not look good.

Worst case predictions range from zero to 0.2% growth.

Earlier this year commodity prices reached all-time highs worldwide.

Sharp declines in commodity demand and prices during the second half of the year have had a negative effect on Thai exports. Automobiles are an exception so far ( Read article).

outlook - how good or bad things it seems things will be in the future ภาพรวม อนาคต
bleak - looks bad สิ้นหวัง
economic recession - a period of greatly reduced economic activity and income ภาวะเศรษฐกิจตกต่ำ
worst case - the worst that could possibly happen ที่เลวร้ายที่สุด
all-time highs - a record, the highest ever ที่สูงสุดเป็นประวัติการณ์
exception - something that does not follow the general rule ยกเว้น
so far - up to this point in time จนกระทั่งปัจจุบันนี้

Farm exports have been hit bad. Earlier this year high prices for agricultural commodities such as rice, cassava, palm oil, and corn spurred overproduction. Record high price supports for rice, which actually amount to subsidies since they are far above market prices, could lead to sustained overproduction if subsidies continue to provide incentives for overproduction.

The idea of decoupling is basically that Asian economies become less dependent on exports to the US by diversifying their exports to other markets that have their own independent sources of wealth. The Middle East with its oil wealth was an obvious region of the world to place one's hopes on.

These hopes were dashed when oil prices collapsed along with commodity prices in general.

spur - cause กระตุ้นให้ ทำให้เกิด
spurred overproduction - caused producers to produce too much ก่อให้เกิดการผลิตเกินกำลังความต้องการของตลาด
price supports - when the government purchases crops at harvest time to guarantee farmers a certain minimal price การพยุงราคาสินค้า
subsidies - when the government pays part of the cost of some activity to encourage it เงินช่วยเหลือจากรัฐ
sustained - continued over a long period of time ประคองไว้
sustained overproduction - producing too much for long periods of time การผลิิตสิ้นค้าล้นตลาดเป็นเวลานาน
provide incentives for - give rewards to encourage certain types of behaviour ให้ผลตอบแทนกับ
decoupling - the idea that "European and Asian economies, especially emerging ones, have broadened and deepened to the point that they no longer depend on the United States for growth, leaving them insulated from a severe slowdown there, even a fully fledged recession" (Read IHT article and Economist's View)
dependent on - need in order to survive or succeed ขึ้นอยู่กับ
diversifying - creating a mix of many different kinds of things, others will succeed even if some fail ความหลากหลาย
hopes were dashed - what they thought and wished would happen, didn't happen ความหวังเลือนหายไป
in general - what usually happens (not including exceptions) โดยทั่วไป

Keeping the exchange rate competitive at the Bank of Thailand.

The baht has been depreciating recently. There have been calls from the export sector for an even weaker baht to counteract reduced demand due to the global economic recession.

The baht is now near 35 to the US dollar and has fallen by 3% to 4% this year as a result of steady capital outflows.Capital flows are currently stable, capital inflows, new investments in the banking sector, have balanced the outflow of funds from the stock market that have caught most peoples' attention.
To ensure Thailand's exchange rate and exports remains competitive with other Asian countries the Bank of Thailand has stated that it will:

* Ensure that the baht moves in line with other regional units to minimise the impact on export competitiveness.

* Monitor exchange rate movements to ensure that the baht remains competitive versus other regional currencies.

depreciating - when a currency loses its value and becomes cheaper (this makes the countries exports cheaper) การลดลงของค่าเงิน
weaker baht - (same as depreciating) เงินบาทอ่อนตัว
counteract - work against, work in the opposite direction of ลดผลกระทบ
capital outflows - investment money flowing out of the country การไหลออกของเงินตราต่างประเทศ
X moves in line with Y - X follows Y, X moves in a way determined by Y ที่เกิดตามมา
export competitiveness - how attractive a country's exports are compared to those from other countries (the exchange rate helps determine the competitiveness of export prices that can be offered) ความน่าลงทุนของประเทศในสายตานักลงทุนต่างชาติ
monitor exchange rate movements - follow exchange rate movements (to make sure there is no problem) จับตาดูการเลื่อนขึ้นหรือลงของอัตราแลกเปลี่ยนเงินตราระหว่างประเทศ

The baht has not been much weaker or stronger than other currencies. The baht has been weaker than the strongest Asian currencies, the Chinese yuan, Japanese yen and Singapore dollar. The baht has been stronger than the weakest Asian currencies: the Korean won, Indonesian rupiah and Philippine peso.

The real effective exchange rate weighs the baht against the currencies of major trading partners after inflation.According to the REER the baht has lost some competitiveness in recent months. The REER stood at 89.78 in September, compared with 89.14 in August and 94.90 in May.

Real Effective Exchange Rate (REER) - the value of the currency relative to currencies of countries it trades with:

"The weighted average of a country's currency relative to an index or basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade balances, in terms of one country's currency, with each other country within the index.

This exchange rate is used to determine an individual country's currency value relative to the other major currencies in the index, as adjusted for the effects of inflation. All currencies within the said index are the major currencies being traded today: U.S. dollar, Japanese yen, euro, etc.

This is also the value that an individual consumer will pay for an imported good at the consumer level. This price will include any tariffs and transactions costs associated with importing the good. (Source: Investopedia glossary; see also BOT paper in Thai, statistical series at BOT, BOT short description and a primer by economist Menzie Chinn).

(Source #1: Bangkok Post, business, Zero export growth possible next year, PHUSADEE ARUNMAS, 14-11-08, link)

(Source #2: Bangkok Post, business, BOT: Baht must remain competitive, PARISTA YUTHAMANOP, 14-11-08, link)

Thailand's only licensed margin loan provider near bankruptcy (11-11-08)

Wed, 12 Nov 2008 13:13:40 +0700

tfsc

Thailand's only licensed margin loan provider near bankruptcy

Ever hear of TFSC Securities in Thailand?

TFSC Securities is the only firm licensed in Thailand to provide financing for securities purchases (a margin loan, purchasing on margin). The firm was founded back in 1996 and the last time the company made the news was back in 2004 when it was active in offering employees state enterprises financing to make purchases in employee stock option programmes (ESOP) (Bangkok Post, B3, 09-04-04).

The securities financing provided by TFSC includes both margin loan refinancing and securities repurchase agreements. Unlike stock brokerages which depend on commissions for revenues TFSC "had only two sources of revenue: interest earnings from margin loans and returns from its investments." Most stock brokerages have "suffered relatively little from the crisis overall."

Many brokers now offer margin loans to investors so TSFC is not the only firm providing this function. Because it is not essential anymore, TSFC's days may be numbered.

Vocabulary:
securities - financial assets for investors: stock shares, bonds, derivatives สินทรัพย์ เช่น หุ้น พันธบัตร
a margin loan - a loan for part of the purchase price of stock shares
purchasing on margin - borrowing money to purchase stock shares
securities repurchase agreements, securities lending trades - to temporarily obtain securities for a purpose such as: 1. covering short positions, or 2. for use in complex financial structures.
a broker, a stock brokerage - a firm that sells and buys stocks for investors and offers financial advice โบร๊คเกอร์
a commission - money received for selling something for another person (a percentage of the purchase price) ค่าคอมมิชชั่น เงินส่วนแบ่ง
days may be numbered - may not have long to live เหลือเวลาอีกไม่นาน ใกล้จะล้มแล้ว

TFSC lost large amounts of money when stock share prices collapsed on the on the Stock Exchange of Thailand in recent weeks:

The decline has affected not only TSFC's investment portfolio in stocks and unit trusts, but has also cut into the value of collateral pledged against its margin loans, forcing it to set aside provisions against losses.

Tris Rating on Friday cut its rating for TSFC from A to BBB- and placed the company on a negative watch due to deteriorating fundamentals. Unrealised losses on securities investment totalled 525 million baht as of June, and Tris expects the company to slide into a loss for the year due to higher provisioning requirements and further losses on its securities portfolio.

The Securities and Exchange Commission [SEC] said TSFC shareholders are currently in talks about a possible recapitalisation. The TSFC is 10.73% owned by the ministry, 37.5% by commercial banks and 16.42% by 19 brokers. Other shareholders include the SET, two finance companies and a number of finance companies closed since the 1997 crisis...

Areepong Bhoocha-oom, the director-general of the State Enterprise Policy Office, said the ministry was awaiting a restructuring plan from the TSFC before deciding whether to participate in a recapitalisation...

He said a number of options were available, including a rights issue to existing shareholders, a placement with a new partner or the issue of preferred shares to raise capital.

Vocabulary:
an investment portfolio -the collection investments belonging to a person or company เงินทุน
a unit trust - an open-ended investment fund with a value that directly reflects the value of the underlying assets, divided into units which vary in price with the value of assets in the fund, open-ended means the fund can expand and contract, when new money is invested new units are created that match the current unit buying price การลงทุนร่วม
collateral - property or some other valuable asset that you promise to give to a lender if you cannot pay back money that you borrowed ทรัพย์สินผูกพันตนเพื่อเอาไว้หักชำระหนี้หากไม่ชำระหนี้นั้น
pledge - promise สัญญา
cut into the value of collateral pledged against its margin loans - นำสินทรัพย์มาหักชำระหนี้
set aside - keep for a special use in the future ที่กันไว้เพื่ออนาคต
provisions against Y - money kept in case bad event Y happens เงินสำรอง
set aside provisions against losses - keep money to use if their losses in the future จัดสรรเงินสำรองไว้
higher provisioning requirements - required to set aside more money in case of an emergency สัญญาที่ระบุให้เงินประกันหุ้นในราคาสูง
a rating, a credit rating - a number assigned to a company or person that measures the likelihood that they will not pay back money they borrowed การจัดอันดับ
placed the company on negative watch - start watching the company closely for events that might have a bad effect on the company ทำให้บริษัทมีภาพรวมที่เป็นลบ ทำให้เครดิตบริษัทเสียไป
fundamentals - the underlying health of a company or economy (that will determine whether it is profitable and survives in the long-run) ที่สำคัญ ที่เป็นตัวกำหนดความมั่นคงของบริษัท
deteriorating fundamentals - when the underlying health of a company gets worse ทำให้เสียความมั่นคง
unrealised losses - losses that will occur in the future (have not occured yet but will occur) ผลเสียที่แอบแฝง ผลเสียที่อาจคาดไม่ถึง

a securities portfolio - the collection of securities that an investor owns
Securities and Exchange Commission (SEC) - the government agency in charge of monitoring securities markets for wrongdoing
recapitalisation - increasing the owner's equity of a business, the contribution of owners to the funding and financing of the business
a state enterprise - a company owned by the government
a restructuring plan - a plan for reorganizing a failing business so it can continue to operate
a rights issue, a rights issue to existing shareholders - when new shares are offered for sale to existing shareholders usually at a lower price than the current market price
a placement, a placing - when new stock shares in a company are made available for sale to people or organisations

common shares - stock shares in a company providing a regular payment and return on investment (dividend) that is a percentage of the company's profit and the right to vote for board members หุ้นสามัญ
preferred shares - stock shares in a company that provide regular fixed payments (dividends) without voting rights but paid before common shares if there is bankruptcy หุ้นบุริมสิทธิ
an issue - offering stock shares or bonds for sale สั่งขายหุ้น
an issue of preferred shares - offering preferred shares for sale สั่งขายหุ้นบุริมสิทธิ
raise capital - raise new investment money in a business by owners, increase equity of company หาเงินมาลงทุนเพิ่ม

(Source: Bangkok Post, business, Finance Ministry may exit TSFC, NUNTAWUN POLKUAMDEE and WICHIT CHANTANUSORNSIRI, 10-11-08, link)

Cambodia working hard to increase rice exports

Mon, 10 Nov 2008 18:54:14 +0700

ricecambodia

Cambodia working hard to increase rice exports

By Jon Fernquest
Cambodia aims to join the ranks of the top world rice exporters.

The world's top rice exporters just happen to be Cambodia's neighbors. In 2007:

9.5 million tonnes - Thailand
4.5 million tonnes - Vietnam
450,000 tonnes - Cambodia

If Cambodia rice exports via Thailand are included Cambodia's rice exports supposedly increase to 600,000 to 800,000 tonnes a year.

Cambodia's goal is a very ambitious, perhaps too ambitious, target of eight million to 15 million tonnes of rice exported by 2015, just six years.

Is this goal reasonable?

Better irrigation systems, logistics systems, and storage systems in Cambodia will all be necessary to to reach these ambitious production targets. Japan and Korea are assisting Cambodia with irrigation investment. Cambodia currently invests about $49 million per year. Middle Eastern countries have also made big investments. The small states of Kuwait and Qatar invest because they are interested in securing future food supplies.

To achieve their ambitious goals Cambodian rice farmers need to: 1. increase rice yields per hectare on existing land under cultivation, and also 2, increase the amount of land under cultivation.

Cambodia has to catch up with the much higher yields of its Asian neighbors:

6-8 tonnes per hectare - China
3.5 tonnes per hectare - Thailand
2.6 tonnes per hectare - Cambodia
2.5 tonnes per hectare - India

Investment in irrigation is perhaps the biggest measure needed to increase yields. Currently, 1.6 million hectares of 2.6 million under cultivation are irrigated. This lack of water on a large percentage of the land limits the number of rice harvests possible during the year. In Cambodia many farmers only have a single crop. In both Thailand and Vietnam both have much better irrigation which can support as many as three crops per year.

New rice growing techniques are also important, making a doubling of yields possible. For an innovative rice farmer named Sok Sarin in southern Cambodia "better irrigation, training in how to select seeds and cheap fertiliser made from wild plants and animal or bat droppings have more than doubled the yield from his rice fields to 3.4 tonnes per hectare from 1.5 tonnes."

Cambodia has an estimated six million hectares in potential farmland. There are still areas with large amounts of unworked land in the northeast of the country and the former battlefields of the northwest which are still mined. Irrigation would make more of Cambodia's huge freshwater inland lake, the Tonle Sap, able to be cultivated. There are up to 800,000 hectares of potential farm land. Right now water levels cannot be controlled: "In the rainy season, there's too much, which damages rice plants, in the dry season too little."

(Source: Bangkok Post, business, Ek Madra, Reuters, 08-11-08)

Vocabulary:

join the ranks of - join the group of top performers เข้าร่วมในการจัดอันดับที่ดีที่สุด
ambitious - goals are very high and difficult to achieve (perhaps even too high to be achieved) ทะเยอทยาน
irrigation - artificial application of water to the soil usually for assisting in growing crops, using canals to take water from one place such as a river to fields far away from the river (See Wikipedia) การชลประทาน
logistics - moving goods from place to place (transportation), coordinating movements, and storing goods in warehouses until needed or sold (See Wikipedia) การขนส่งสินค้า
secure - get, make sure the country has ให้ได้มา
securing future food supplies - make sure the country has enough food to eat สำรองอาหารให้พอกับความต้องการ
yields - how much crop a farmer gets from farming one hectare of land ผลผลิต
under cultivation - growing crops on the land ที่กำลังให้ผลผลิต
a measure - an action taken to solve a problem มาตรการ
animal and bat droppings - the waste material from Animals and bats มูลสัตว์ มูลค้างคาว
potential X - could become X in the future อาจจะเป็น ..... ได้
freshwater - no salt like the sea น้ำจืด

Where did the "free" education for poor kids go? that Prime Minister Somchai promised... (06-11-08)

Thu, 06 Nov 2008 17:35:15 +0700

Where did the "free" education for poor kids go?
that Prime Minister Somchai promised...

"Free education" is not really free in Thailand.

When Prime Minister Somchai started out as education minister earlier this year, he promised free education:

The Education Ministry has agreed in principle to cover all costs under the 12-year free education scheme, and to extend free schooling to cover two years of kindergarten as well. Education Minister Somchai Wongsawat said yesterday the free education scheme must not contain hidden costs for parents

Small expenses that aren't small at all for poor people inevitably creep back in, making "free" education not free at all:

Parents had complained that their children do not actually go to school for free, as they have to foot the bills for charges such as laboratory and computer use, and extra-curricular activities.
The government gives state schools annual subsidies under the 12-year free education policy. But most schools claim the subsidies are inadequate and pass costs they are unable to absorb onto parents.

The plans earlier this year for free education were a call for immediate action:

Mr Somchai said the education scheme would now cover all extra costs and the all-inclusive programme could begin as soon as the next academic year in May, instead of being progressively introduced over the next three years.

Despite these calls to action, in the end nothing happened.

Vocabulary:

agreed in principle - in general agree with it, but do not know the details yet and whether it will really be possible ที่เป็นที่ตกลงกันตามนโยบาย ไม่ได้ลงรายละเอียด
cover all costs - all costs are paid for ครอบคลุมค่าใช้จ่ายทั้งหมด
inevitably - certain to happen, cannot be prevented or avoided อย่างเลี่ยงไม่ได้
creep back in - return slowly ค่อยๆ กลับมาใหม่
foot the bills - pay the bills ชำระค่าใช้จ่ายต่างๆ
charges - a payment that has to be made for something เงินที่เรียกเก็บ
extra-curricular activities - school activities outside of normal school activities (such as sports, music, dances, festivals, or field trips) กิจกรรมนอกหลักสูตร
pass costs onto parents - instead of paying for it, make the parents pay for it ผลักภาระค่าใช้จ่ายให้ผู้ปกครองรับภาระไป
calling for immediate action - asking people to do this right now without waiting ขอให้จัดการทันที
all-inclusive - includes everything รวมทุกอย่างเข้าด้วยกัน
progressively introduced - introduced slowly over time ค่อยๆนำมาใช้
a call to action - formally asking people to take action to solve a problem เรียกร้องให้แก้ไขปัญหา

Sanitsuda Ekachai described the deplorable situation that continues to exist today in her weekly Bangkok Post column today:

To start with, free compulsory education is only free in the letter of the law; the state schools are poorly funded and are in dire need of extra cash. Parents still have to pay for books, stationary, sports and scout uniforms, computer classes and the so-called "donations".

The Education Ministry pretends this is not happening while the parents turn their anger towards the schools, believing that the whole thing means corruption. For many poor children, it means having to forego schooling altogether or dropping out mid-way.

Also problematic is the Education Ministry's policy to close small community schools and to build secondary and high schools in bigger communities only.

Thailand has high literacy and high primary school attendance (98%) but after primary school children get pulled out of school for various reasons.

As Sanitsuda Ekachai observes, of children who enter the "free" 12-year compulsory government education programme "only 88 per cent of primary school pupils make it to lower secondary and a mere 69 per cent to higher secondary."

How much education children typically get depends on the region of the country that they come from. Large sections of the northeast (Isan) lag behind the rest of the country. This can be seen in the map in the 2007 UN Human Development Report for Thailand) which notes:

The top fifth of the population by income receives over half of all public spending on higher education. Higher education has expanded at the expense of vocational education, which is the type most needed by industry.

When "free" education actually entails fees that a poor family cannot afford, poor parents make the calculation whether it would be better economically for the family if the child went to work instead.

This may mean work around the house doing chores, on the farm or in a family business (for example, ironing clothes in a family-run laundry), or perhaps outside the home in a factory or even, in some families, a brothel or Karaoke club (i.e. commercial sexual exploitation of children).

The job of truly free education remains undone. The important questions remain unanswered:

Yet, there remains many more questions that the Education Ministry must answer. Like how to make free education really free, how to support schools better financially and technologically, and how to improve the quality of vocational education so that university degrees are not the only tickets to good, satisfying jobs.

Read more Bangkok Post articles about education.

(Source #1: Bangkok Post, op-ed section, Sanisuda Ekachai, link)
(Source #2: Read Bangkok Post, 29-02-08, link).

Vocabulary:
deplorable - very bad and unacceptable น่าตำหนิ เลวร้าย
compulsory - required, must do because the laws says you must ภาคบังคับ
compulsory education - education that you must receive by law การศึกษาภาคบังคับ (ที่กฎหมายบัญญัติไว้)
the letter of the law - what the law says you must do (often different from what people actually do) ที่กฎหมายบัญญัติไว้
in dire need of - need very much เป็นที่ต้องการอย่างมาก
stationary - paper, envelopes, and other materials used for writing อุปกรณ์เครื่องเขียน
so-called Y - they are called Y, but may not actually be Y ที่เป็นที่รู้กันว่า
so-called "donations" - they are called "donations" but not actually "donations" เงินเรี่ยราย ในที่นี้หมายถึง เงินที่ทางโรงเรียนเรียกเก็บจากผู้ปกครอง
forego - decide not to have something that you would like to have ล่วงหน้าไปก่อน
forego schooling altogether - stop going to school completely ออกจากโรงเรียนโดยปริยาย
dropping out - stop going to school ออกจากโรงเรียน
literacy - the ability to read and write อ่านออกเขียนได้
primary school - education for students age 5 to 11 โรงเรียนประถม
attendance - going regularly to school or work, being at school or work for the required number of hours การเข้าเรียน
pulled out of school - a family stops their child from going to school ครอบครัวบังคับให้เด็กออกจากโรงเรียนเพราะไม่มีิเงินส่งเสีย
chores - tasks that have to be done regularly at home such as cleaning, washing, and ironing งานบ้าน
commercial sexual exploitation of children - when a family sends their daughters to brothels (For other examples see Wikipedia) ขายบริการทางเพศ
vocational education - education that provides the training and skills necessary for a job (for example, motorcycle repair or cooking in a restaurant) โรงเรียนอาชีวศึกษา
a ticket to Y - a way of achieving the goal of Y เป็นใบเบิกทาง

Thai auto exports remain strong and "decoupled" so far (03-11-08)

Mon, 03 Nov 2008 17:21:14 +0700

autoexports

Thai auto exports remain strong and "decoupled" so far

With all the talk of a global recession one would expect Thai automobile exports to be down.

So far, the impact of the global financial crisis on Thai auto exports has been minimal.

"Overseas orders have not declined."

Decoupling?

The destination of exported vehicles helps explain why auto exports are still growing strong.
For example, "no vehicles from Thailand are shipped to the United States where the financial crisis is most severe. "

Thai auto exports may be a successful example of so-called "decoupling" where an economy lessens its dependence on exports to the US, the market that fueled export-driven growth in Japan, South Korea, and now China:

Shipments elsewhere grew impressively. Auto exports to Australia, accounting for 25% of the total, grew 12% while those to Asia accounted for 24% and grew by 51% due mainly to car market growth in Malaysia and Indonesia.

The Middle East accounts for 17% of exports and they grew by 17%, while Central and South America, which hold a 12% share, saw exports jump 91%.

Europe, where financial crisis is also severe, still imported 3% more Thai vehicles during the period. Europe accounts for 12% of the total.

In the near future the European Union will start using a low duty for auto imports from Thailand under the so-called Generalised System of Preferences (GSP) as it has in the past. When this happens, exports to Europe are expected to increase, especially pickup trucks.

First nine months of the year: So far so good

Auto exporters won't know the full long-term impact of the financial crisis until they receive future orders in December or January.

Forecasts rose from 770,000 to around 791,000 vehicle exports for the year, based on high exports in the first nine months of the year.

Compared to last year (year-on-year) auto exports rose 21% year-on-year to 600,000 vehicles during the first nine months.

(Source: Bangkok Post, SANTAN SANTIVIMOLNAT, business, 03-11-08, link)

Vocabulary:

a recession - a period of reduced economic activity, a phase of the business cycle with falling business activity (See Wikipedia) ภาวะเศรษฐกิจถดถอย
impact - effect ผลกระทบ
the impact of X on Y - the effect of X on Y, how X changes Y ผลกระทบที่มีต่อสิ่งหนึ่ง
the impact of the crisis - the effect of the crisis ผลกระทบจากวิกฤตการณ์
the long-term impact of Y- the effect that Y has over a long period of time ผลกระทบระยะยาว
the full impact of Y - all the different ways that Y changes things over long periods of time ได้รับผลกระทบทุกด้านในระยะยาว
vehicles - machines with an engine used to carry people or goods from place to place ยานพาหนะ
decoupling - the idea that "European and Asian economies, especially emerging ones, have broadened and deepened to the point that they no longer depend on the United States for growth, leaving them insulated from a severe slowdown there, even a fully fledged recession" (See Wikipedia and read recent article on the end of decoupling)
the dependence of X on Y - the need that X has for Y in order to survive or succeed การอาศัยหรือขึ้นอยู่กับสิ่งใดสิ่งหนึ่งเพื่อความอยู่รอด (ในที่นี้หมายความว่า รายได้ส่วนใหญ่มาจากการส่งสินค้าออกไปอเมริกา)
lessens its dependence - change so that X does not need Y to survive ลดการส่งสินค้าออกไปยังอเมริกาเพื่อลดความรุนแรงที่จะเกิดจากปัญหาภาวะเศรษฐกิจในอเมริกา
export driven growth - trade and economic policy that generates industrialization and growth in an economy thtrough the development of export industries, characteristic of the development of the national economies of the Asian Tigers: Hong Kong, South Korea, Taiwan, Singapore, and China in the post World War II period, opposite of Import Substitution Industrialization (ISI) (See Wikipedia on on the industrial policies of South Korean president Park Chung Hee) การเติบโตในส่วนของตลาดสินค้าส่งออก
grew impressively - grew by a large amount that made you admire it เติบโต หรือเพิ่มขึ้นอย่างมากมาย
low duty for imports - low tax paid on imports into a country การเก็บอากรสินค้าขาเข้าต่ำ
Generalised System of Preferences (GSP) - an exemption from tariffs for developing countries, an exemption from the rules of the World Trade Organization (WTO) that obligates WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favored" trading partner (See Wikipedia)

<

Fed Swap lifeline to emerging market banks (30-10-08)

Thu, 30 Oct 2008 20:18:53 +0700

currencyswaps

Fed swap lifeline to emerging market banks

By Jon Fernquest

Two days ago George Soros suggested: "the central banks at the centre [of the world financial system] should open large swap lines with the central banks of qualifying countries at the periphery [of the world financial system]" (See Financial Times, 28-10-08, link).

In other words, the US should open currency swap lines with emerging market economies (See map on right with emerging market economies in blue and fully developed economies in red).

This is exactly what happened today.

The US central bank (The Fed) opened large swap lines with the central banks of four economies:

1. Brazil - Banco Central do Brasil
2. Mexico - Banco de Mexico
3. South Korea - Bank of Korea
4. Singapore - Monetary Authority of Singapore
(Source: Federal Reserve Announcement, 29-10-08, link)

Why?

"These facilities...are designed to help improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining U.S. dollar funding in fundamentally sound and well managed economies."

Basically, outflows of investment funds from emerging market economies and their currencies back to the safe haven of the US dollar have "created massive demand for dollars and a reduction of liquidity in other currencies."

These swap lines will expand foreign- exchange reserves and help stabilize the currency markets in these countries.

The swap lines restore liquidity and avoid a vicious negative spiral.

How?

Dani Rodrick presents what he calls the "emerging market dilemma"

* A banking crisis calls for cutting interest rates (easy money policy)
* An exchange-rate crisis calls for hiking interest rates (monetary tightening).
* When you have both sorts of crises what do you do?

He quotes the well-known book of current Fed Chairman Ben Bernanke on the recession economy of the 1930s:

A particularly destabilizing aspect [during the crisis] was the tendency of fears about the soundness of banks and expectations of exchange-rate devaluations to reinforce each other... An element that the two type of crises had in common was the so-called "hot money," short-term deposits held by foreigners in domestic banks. On one hand, expectations of devaluation induced outflows of the hot-money deposits (as well as flight by domestic depositors), which threatened to trigger general bank runs. On the other hand, a fall in confidence in a domestic banking system (arising, for example, from the failure of a major bank) often led to flight of short-term capital from the country, draining reserves .... Other than abandoning the parity altogether, central banks could do little in the face of banking and exchange-rate crises, as the former seemed to demand easy money policies while the latter required monetary tightening.

He continues:

Include corporates along with domestic banks among the affected entities, change the language to take into account that what is at stake is not a draining of reserves but uncontrolled currency depreciation, and you have a pretty good description of the dilemma faced by most EMs [Emerging Markets] at the moment.

(Source: Dani Rodrick's Blog, 28-10-08, link)

Vocabulary:

the center - in any country there economic and political centers (e.g. Bangkok) ศูนย์กลาง
the periphery - far away from the center ขอบเขต ขอบนอก
at the centre (of the world financial system) -
at the periphery (of the world financial system) -
mitigate X - make something bad, less serious, dangerous, or painful บรรเทา ทำให้เบาบางลง
mitigate the spread of difficulties in obtaining U.S. funding ลดผลกระทดหรือปัญหาในการได้เงินลงทุนจากอเมริกา
sound - healthy แข็งแรง
fundamentally sound and well-managed economies เศรษฐกิจที่มีการบริหารจัดการอย่างดีและมีรากฐานที่แข็งแรง
a lifeline - emergency action, save a person from drowning in the water and dieing ช่วยชีวิต

an emerging market economy - a better way to say advanced developing economy (See Wikipedia)

a currency swap - when two sides exchange a large amount of money in two different currencies for a period of time as well as the interest payments on these sums of money การสว๊อปเงินในสกุลกต่างๆ
liquidity - the ability to reduce assets to cash quickly by selling them without losing money (when confidence collapses and everyone is selling this is difficult) สภาพคล่อง
a reduction of liquidity มีสภาพคล่องน้อยลง

foreign exchange reserves - foreign currencies held by a country's central bank เงินตราต่างประเทศที่มีสำรองไว้ในธนาคารแห่งประเทศไทย
stabilize currency markets - prevent exchange rates (price of currency) from moving up and down a lot by large amounts (volatility) รักษาอัตราแลกเปลี่ยนไว้ให้อยู่คงที่
a vicious negative spiral - when things get worse and worse, each bad situation creating the conditions for more and worse bad situations วงจรอุบาทก์

a dilemna - a difficult choice between two alternatives ภาวะวิกฤต
Dani Rodrick - well-known development economist and public intellectual at the John F. Kennedy School of Government at Harvard (See Wikipedia and blog)

a banking crisis - a loss of confidence in the banking system with people trying to withdraw their money from the system (bank runs) and banks prefer to keep their funds in cash rather than lend them out วิกฤตทางธนาคาร
an exchange rate crisis - when a currency becomes less valuable (depreciates) uncontrollably making it difficult for a country to pay back its foreign loans and obtain the foreign currencies such as the dollar necessary to do business วิกฤตค่าเงินตราต่างประเทศ
easy money policy - monetary policy by the central bank that tends to increase the money supply and credit in the economy, usually by reducing interest rates, this tends to increase economic activity in the economy and lead to higher growth but higher inflation
monetary tightening - monetary policy by the central bank that tends to reduce the money supply and credit in the economy, usually by raising interest rates, this tends to reduce economic activity in the economy and lead to lower growth and reduced inflation

hot money - investment money that enters countries quickly and leaves quickly looking for profit opportunities (speculation) การเก็งกำไร
induce - cause ก่อให้เกิด
flight - run away from a place หนีออกไป
draining reserves - under the old system of fixed exchange rates banking system reserves such as gold flowed from one country to another to settle trade imbalances.
what is at stake - what could be lost or gained อยู่ในความเสี่ยงว่าจะได้หรือเสีย
uncontrolled currency depreciation - when the value of a currency falls continuously and cannot be controlled การที่ค่าเงินบาทลดต่ำลงจนควบคุมไม่ได้

Corn price supports set at 8.5 baht, versus 4 baht on world markets, corn imports banned (29-10-08)

Wed, 29 Oct 2008 17:24:43 +0700

Corn price supports set at 8.5 baht,
versus 4 baht on world markets,
corn imports to Thailand banned

By Jon Fernquest

Corn (maize) farmers in the North and Northeast have been staging protests this week demanding price supports for their crops.

This week the government simultaneously banned all corn imports into Thailand while setting aside 11.12 billion baht to buy Thai corn and tapioca to protect Thai farmers from declining world prices.

Farmers will be protected from having to compete with cheaper imported corn.

Who will pay for this government corn subsidy to farmers?

1. Thai consumers paying higher prices for their corn?

2. Taxpayers, if the government decides to absorb the cost itself?

Falling corn prices worldwide

World corn prices have fallen along with all commodity prices as a world recession kicks into gear.

Large volume corn (or maize) importers such as Malaysia, Indonesia and Vietnam have been switching to cheaper corn from Brazil and India.

This has been driving the price of corn down:

Domestic corn prices fell to 7.0 baht per kilogramme in October, down from 8.50 baht in September and a year-high of 12.50 baht per kg in August. Thai corn for export is being offered at around US$300 per tonne compared with $240 for Indian and Brazilian corn.

Current world market prices do not cover the production costs of Thai farmers:

The average production cost for corn is 5.83 baht per kilogram but the current market price of corn is slightly above 4 baht per kilogram (4.5 baht for livestock feed) (See previous article)

One third of the crop will be bought up for 8.5 baht per kilogramme, higher than both world prices and production costs:

[the government] plans to buy up to 500,000 tonnes out of the total 1.5-million-tonne output from corn farmers at 8.50 baht per kilogramme in a bid to support prices.
Authorities expect to spend about 4.9 billion baht including 666 million for operating costs such as insurance and silo rentals in the intervention programme from Nov 1 to Dec 30.

Biofuels corn and tapioca influenced by oil prices

Corn and tapioca are both used as biofuels all over the world and therefore substitutes for oil.

Earlier this year, the prices of these biofuel crops, as well as the food products they are used in, were driven up by increased oil prices.

When the price of oil decreases as it has recently, the price of biofuels such as corn and tapioca would also be expected to decrease as they have

In the future the price of both corn and tapioca is likely to be highly dependent on the price of oil (See chart showing the influence of biofuel production and oil prices on crop prices).

In the long-run government energy policy will most likely have to be coordinated with agricultural policy.

Tapioca price supports

"According to Mr Yanyong, the pledging price for tapioca was set at 1.80 baht per kg, and would be raised by five satang per month during the intervention period from Nov 1 until April 30.

The government aims to buy five million tonnes of tapioca from total production of 27 million tonnes. About 6.2 billion baht would be spent on the tapioca intervention scheme.

The state-owned Bank for Agriculture and Agricultural Co-operatives (BAAC) will be asked to lend for both pledging schemes [price support programme], he said.

Pornsil Patcharintanakul, president of the Thai Feedmeal Manufacturers' Association, suggested that the pledging scheme ensure that it benefits farmers directly.

He said authorities had to come up with supervisory and inspection measures to prevent traders or farmers from exploiting the scheme by using produce imported from neighbouring countries."

(Source: Bangkok Post, business, 29-10-08, link)

Vocabulary:

maize - corn (See Wikipedia) ข้าวโพด

staging protests - gathering a lot of people in one place to protest something, to express disagreement with something เดินขบวนประท้วง

price supports - government policy to keep prices at a certain level, to protect producers from decreasing prices การประกันราคาสินค้า(ทางการเกษตร)

simultaneously - at the same time as ในเวลาเดียวกัน เกิดขึ้นพร้อมกัน

set aside - keep for a special future use (See glossary) จัดสรร (งปประมาณ) ไว้

a subsidy - money given by the government to pay for part of the costs of something เงินชดเชย เงินทดแทน

kicks into gear - really starts working (like a car shifting into low gear to go up a hill) เริ่มส่งผลกระทบ

driving the price of corn down - causing the price of corn to decrease ทำให้ราคาข้าโพดตกต่ำ

cover the production costs - pay for the production costs คุ้มต้นทุน

livestock feed - food used to raise cows for meat อาหารสัตว์

biofuels - agricultural crops such as corn, tapioca, and sugar that are mixed with gasoline to create cheaper fuel for cars (See Wikipedia) เชื้อเพลิงที่ผลิตจากการกลั่นน้ำมันจากข้าวโพด มันสำปะหลัง เพื่อผสมกับน้ำมันทั่วๆ ไป

substitutes for oil - can be used instead of oil (to do the same thing) ทดแทนน้ำมัน

driven up - caused to increase เพิ่มขึ้น

coordinated with - work together in a pre-planned way สอดคล้องกับ

Bank for Agriculture and Agricultural Co-operatives (BAAC) - the Thai government agricultural bank ธกส

exploit - use unfairly for one's own gain (See glossary) ตักตวงผลประโยชน์

exploiting the scheme - using the scheme (programme) unfairly for one's own gain ตั้งโครงการไว้หาผลประโยชน์

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Cambodia working hard to increase rice exports

Where did the "free" education for poor kids go? that Prime Minister Somchai promised... (06-11-08)

Where did the "free" education for poor kids go? that Prime Minister Somchai promised...

Thai auto exports remain strong and "decoupled" so far (03-11-08)

Thai auto exports remain strong and "decoupled" so far

Decoupling?

First nine months of the year: So far so good

Fed Swap lifeline to emerging market banks (30-10-08)

Fed swap lifeline to emerging market banks

Vocabulary:

Corn price supports set at 8.5 baht, versus 4 baht on world markets, corn imports banned (29-10-08)

Corn price supports set at 8.5 baht, versus 4 baht on world markets, corn imports to Thailand banned

Falling corn prices worldwide

Biofuels corn and tapioca influenced by oil prices

Tapioca price supports

Vocabulary:

What is really happening in Thailand's rice sector?
Economist Somporn Isvilanonda of Kasetsart University lays the record straight

Where did the "free" education for poor kids go?
that Prime Minister Somchai promised...

Corn price supports set at 8.5 baht,
versus 4 baht on world markets,
corn imports to Thailand banned