Kongkiat critical of crisis response
Written by Writer on Saturday, November 8th, 2008
ECONOMY
Kongkiat critical of crisis response
Asia Plus chief calls for faster collective action
NAREERAT WIRIYAPONG
The government has been too slow to introduce collective efforts to counter the impact of the global financial meltdown, business leaders say, warning that the productive sector of the economy will be severely affected next year.
Kongkiat Opaswongkarn, chief executive of Asia Plus Securities, said Thailand should not be complacent about fallout from the global economic recession and that government agencies should speed up collaboration on measures to soothe economic shocks.
“Some measures, for example, relaxing rules for buying treasury stocks and regulations to facilitate mergers and acquisitions in the private sectors could be done immediately,” Dr Kongkiat said at the CEO Vision forum organised by the Federation of Thai Industries.
“Compared to other governments in the US, Europe and Asia, Thailand has been quite slow in introducing effective measures. What they have said to date has yet to take effect or be implemented,” he said. “Thailand is not ready to deal with economic hardships, which I would say are the worst in our lifetime globally. Policies regarding megaprojects and the SMEs are just the same as they did in the past.”
After the Thai stock market collapsed by half from its peak this year, Dr Kongkiat said several industries would be hit hard, especially refineries and building materials. Exports and tourism also face a slump.
Exports of automobiles and electronic goods will decline in terms of value and volume while agricultural product prices are falling, he added.
“I cannot imagine how Thai exports could grow by 10% next year as government agencies forecast,” said Dr Kongkiat.
Tight liquidity and higher competition in other markets mean that exports could fall in 2009, he added.
Some businessmen agree the government’s slow reaction could worsen the crisis, but they also see the upside of the crisis by tapping into the windfall to acquire cheap assets.
Boonyasith Chokwattana, chairman of Saha Group, called on the government and related agencies to cut interest rates for deposits and lending. He also favoured cutting corporate income tax to 20-25% from the current 30%.
He also hopes the Bank of Thailand agrees with letting the baht weaken by about 10% relative to other currencies in the region to boost exports, he said.
“It is vital to make sure that Thai foreign exchange policy is line with that of other countries. Low interest rates would encourage the private sector to invest so they don’t have to borrow money from abroad,” he added.
Mr Boonyasith said that Saha Group, the country’s biggest consumer-goods conglomerate, was ready to shop for ailing companies now for sale.
The group acquired shares of a Japanese joint venture named Bangkok Tokyo Socks, a local sock producer that failed to revive its exports to Japan because of the strong yen.
“We are ready to buy [companies] where opportunity arises and a reasonable price is offered,” he said.
So far, the group has seen minimal impact from the slowdown as it focuses on domestic sales when export prospects are not promising. Sales are expected to increase 10% from last year, with 30-35% of that from exports.
In 2009, it forecasts slow sales growth of 5-6% compared to average annual growth of 10%, noted Mr Boonyasith.
Dr Kongkiat agrees now is the time for firms with cash to buy cheap assets.
“Usually new investments take time, and may not break even in the first two years, but I think buying assets now that are cheap and ready to make a profit makes sense,” he said.
“I think financially strong companies should look at mid-sized or even large firms having financial and marketing problems.”
Bangkok Post
Saturday November 08, 2008
