Business sentiment worsened in July as a result of an escalating cost of production, according to a Bank of Thailand survey. The Business Sentiment Index (BSI) in July was only at 45, compared to 46.3 in the previous month. The confidence index in easing production costs declined from 41 to 38.4 in July.
"The increasing cost of production is an important issue, especially when we are looking for private investment. It is the risk that erodes business confidence," said Amara Sriphayak, a senior BOT director.
Amara believed that producers would not pass on rising costs to customers while the economy is still only picking up slowly. Although they have thin margins they cannot mark up prices as they would like.
Economic uncertainty remained in the first rank of all business obstacles. Political instability is of further concern for the real sector, rising to third place from fourth.
Although business confidence is below the confidence level of 50 in July, sentiment has gradually improved. This is indicated by forecasts for the index over the next three months, which has increased from 50.4 to 51.3, from all commercial elements except production costs.
Amara is optimistic that the improving economic conditions, the government's stimulus package as well as the global economic recovery would help bolster confidence here.
According to the BOT, the Manufacturing Production Index (MPI) continued to improve in July, regarding domestic and export markets.
Capacity utilisation picked up in accordance with higher production to 61.6 per cent in July. It rose slightly from 60.2 per cent in June, but remained lower than the normal level of 6870 per cent.
The Private Consumption Index showed an impressive outlook in July in terms of both level and growth.
It expanded 3.4 per cent from previous month, compared with 2.6 per cent in June. It contracted 1.8 per cent from the same period of last year compared to a 2.7percent drop in June.
The government's budget disbursement was 75.2 per cent in contrast to 76.4 per cent last year. However, the amount of money was bigger.
Monday, August 31, 2009
Thursday, August 27, 2009
DECREASE IN CASSAVA OUTPUT SEEN
Cassava production is forecast to drop 7.74 per cent to 27.75 million tonnes next year, due to farmers turning more to fuel crops that bring higher prices, especially sugar cane.
Cassava was planted on 8.29 million rai of land last year, but that is expected to decrease 6.15 per cent to 7.78 million rai.
Of total cassava production, only 2.5 million tonnes will be used to produce ethanol, while the rest will go towards the manufacture of tapioca chips for export and as a pet-food ingredient for the local market.
Many factors have hurt production, including insects, lower rainfall, reduced yield per rai and a flow of cassava from neighbouring countries under the Asean Free Trade Area.
"The drop in production will halt the industry's growth, because there will not be enough raw material for the manufacture of tapioca flour," said Thai Tapioca Trade Association (TTTA) president Seree Denworalak.
As a result, the tapioca-products industry, including flour, starch and chips, will see flat export growth or only a slight drop next year. For instance, the association predicts this year's export of 2.14 million tonnes of tapioca flour will decline to 2 million tonnes next year. Domestic consumption of the product is forecast at 1 million tonnes next year, same as this year.
Seree said the yield per rai for cassava is also forecast to drop 1.68 per cent to 3.56 tonne per rai. The farm price for cassava is quoted at Bt1.60 to Bt1.80 per kilogram.
"The government's guaranteed price is suitable for supporting industry growth and farmers," he said, adding that at that price, exporters could maintain their export competitiveness.
Moreover, cassava growers spend Bt1.28 to produce a kilogram, down from Bt1.46 in the previous harvest season. The drop in the production cost has been in line with a lower oil price.
The TTTA has called for the government to control plant diseases and educate farmers about good strain selection.
Seree said the cassava price could reach Bt2 a kilogram late in the harvest season if the widespread problem of insects was not solved.
Cassava was planted on 8.29 million rai of land last year, but that is expected to decrease 6.15 per cent to 7.78 million rai.
Of total cassava production, only 2.5 million tonnes will be used to produce ethanol, while the rest will go towards the manufacture of tapioca chips for export and as a pet-food ingredient for the local market.
Many factors have hurt production, including insects, lower rainfall, reduced yield per rai and a flow of cassava from neighbouring countries under the Asean Free Trade Area.
"The drop in production will halt the industry's growth, because there will not be enough raw material for the manufacture of tapioca flour," said Thai Tapioca Trade Association (TTTA) president Seree Denworalak.
As a result, the tapioca-products industry, including flour, starch and chips, will see flat export growth or only a slight drop next year. For instance, the association predicts this year's export of 2.14 million tonnes of tapioca flour will decline to 2 million tonnes next year. Domestic consumption of the product is forecast at 1 million tonnes next year, same as this year.
Seree said the yield per rai for cassava is also forecast to drop 1.68 per cent to 3.56 tonne per rai. The farm price for cassava is quoted at Bt1.60 to Bt1.80 per kilogram.
"The government's guaranteed price is suitable for supporting industry growth and farmers," he said, adding that at that price, exporters could maintain their export competitiveness.
Moreover, cassava growers spend Bt1.28 to produce a kilogram, down from Bt1.46 in the previous harvest season. The drop in the production cost has been in line with a lower oil price.
The TTTA has called for the government to control plant diseases and educate farmers about good strain selection.
Seree said the cassava price could reach Bt2 a kilogram late in the harvest season if the widespread problem of insects was not solved.
Choosing the right tools for health messages
Most consumers know what is good for their health but not many are ready to sacrifice taste for nutritious value, revealed a recent study conducted by leading marketing and media research house Mindshare.
Mindshare's business planning director Varidda Voraakom said yesterday that the study on "Health and Wellness Trends" showed that Thai consumers, much like global consumers, were proactive in terms of health and wellbeing. In other words, people no longer wait to fall ill before taking action.
The survey was conducted on 2,000 respondents, aged between 15 and 65, living in Bangkok and its suburbs.
However, the study found that the respondents, divided into three groups, had different ideas when it came to health and wellness. The first group, aged between 15 and 24, know about the importance of being healthy but are not too serious about it. In other words, they prefer taste over nutrition and are much more interested in following the latest fashion trends.
The second group, between 25 and 34 years old, believe that mental and spiritual well-being is just as important as physical health, while the third group, comprised of parents with children aged between five and nine, want to be healthy and hang on to their youth.
Mindshare released the results of this study to producers and marketers in the health and wellness industry, and expects new products in line with Thai lifestyles to be launched next year.
Varidda said it was a challenge for companies interested in entering the health and wellness sector to come up with products and services that are in line with current lifestyle trends.
She advised that firms choose the right media tool to market their products. For instance, she said, products targeted at young people should be advertised via television, magazines and the Internet, while young parents prefer to consume information through online blogs, community sites, webboards and door-to-door advertising leaflets.
"Manufacturers should make their products appear more fashionable to tap youngsters, and launch more health products for young adults and modern parents," Varidda said.
Warin Tinprapa, another business planning director of Mindshare, added that young people were major consumers so producers should concentrate on developing health products to meet the needs of this group.
She noted that the current economic slowdown had only slightly affected health trends in Thailand, and that top-earners still spent a lot of attention to their health.
Besides, the global trend of exercise has persuaded Thai consumers to understand that that an active lifestyle does not just result in good physical health but also helps balance the state of mind.
Mindshare's business planning director Varidda Voraakom said yesterday that the study on "Health and Wellness Trends" showed that Thai consumers, much like global consumers, were proactive in terms of health and wellbeing. In other words, people no longer wait to fall ill before taking action.
The survey was conducted on 2,000 respondents, aged between 15 and 65, living in Bangkok and its suburbs.
However, the study found that the respondents, divided into three groups, had different ideas when it came to health and wellness. The first group, aged between 15 and 24, know about the importance of being healthy but are not too serious about it. In other words, they prefer taste over nutrition and are much more interested in following the latest fashion trends.
The second group, between 25 and 34 years old, believe that mental and spiritual well-being is just as important as physical health, while the third group, comprised of parents with children aged between five and nine, want to be healthy and hang on to their youth.
Mindshare released the results of this study to producers and marketers in the health and wellness industry, and expects new products in line with Thai lifestyles to be launched next year.
Varidda said it was a challenge for companies interested in entering the health and wellness sector to come up with products and services that are in line with current lifestyle trends.
She advised that firms choose the right media tool to market their products. For instance, she said, products targeted at young people should be advertised via television, magazines and the Internet, while young parents prefer to consume information through online blogs, community sites, webboards and door-to-door advertising leaflets.
"Manufacturers should make their products appear more fashionable to tap youngsters, and launch more health products for young adults and modern parents," Varidda said.
Warin Tinprapa, another business planning director of Mindshare, added that young people were major consumers so producers should concentrate on developing health products to meet the needs of this group.
She noted that the current economic slowdown had only slightly affected health trends in Thailand, and that top-earners still spent a lot of attention to their health.
Besides, the global trend of exercise has persuaded Thai consumers to understand that that an active lifestyle does not just result in good physical health but also helps balance the state of mind.
"Creative Thailand" to debut
The government will officially kick off by the end of this month its "Creative Thailand" strategy, an ambitious plan to double the value of the country's creative industries in the service sector to 1.8 trillion baht by 2012.
Deputy Commerce Minister Alongkorn Ponlaboot said the government would allocate 20.13 billion baht from its 1.43-trillion-baht second economic stimulus package to the strategy.
The budget would go to 15 pilot industries including entertainment, software, tourism, education, food and textile.
Under the Creative Thailand policy,the government has set its sights on raising revenue contributions from creative industries in the service sector to 1.8 trillion baht by 2012, or at least 20%of the country's gross domestic product,from 10% or 900 billion baht today.
According to Mr Alongkorn, the budget would be made available to business sectors relating to creative economy from upstream to downstream.
The government is also committed to investing in research and development for creative industries, marketing and commercial activities and to upgrading intellectual property management.
The cabinet last month approved the first national intellectual property strategy including the transformation of state agencies into public organisations to ensure flexible and independent management, similar to the structure of private companies.
Under the plan, each new public organisation would include an independent board of directors, business units, and service units to handle customer requests.
The existing Intellectual Property Centre will be upgraded to the Creative Thailand Institute and action plans and activities will be worked out to underline co-operation with related government agencies and units.
The action plan and activities will cover the three core parts of a creative economy, including a plan to develop and promote potential projects and products in each region and development of 15 focused industrial sectors such as film, music, lifestyle, culture and arts,and the food business.
Deputy Commerce Minister Alongkorn Ponlaboot said the government would allocate 20.13 billion baht from its 1.43-trillion-baht second economic stimulus package to the strategy.
The budget would go to 15 pilot industries including entertainment, software, tourism, education, food and textile.
Under the Creative Thailand policy,the government has set its sights on raising revenue contributions from creative industries in the service sector to 1.8 trillion baht by 2012, or at least 20%of the country's gross domestic product,from 10% or 900 billion baht today.
According to Mr Alongkorn, the budget would be made available to business sectors relating to creative economy from upstream to downstream.
The government is also committed to investing in research and development for creative industries, marketing and commercial activities and to upgrading intellectual property management.
The cabinet last month approved the first national intellectual property strategy including the transformation of state agencies into public organisations to ensure flexible and independent management, similar to the structure of private companies.
Under the plan, each new public organisation would include an independent board of directors, business units, and service units to handle customer requests.
The existing Intellectual Property Centre will be upgraded to the Creative Thailand Institute and action plans and activities will be worked out to underline co-operation with related government agencies and units.
The action plan and activities will cover the three core parts of a creative economy, including a plan to develop and promote potential projects and products in each region and development of 15 focused industrial sectors such as film, music, lifestyle, culture and arts,and the food business.
BIG MANUFACTURERS FIRST TO BENEFIT FROM RECOVERY
The industrial sector and large businesses are benefiting from the recovering economy, while other sectors and small and medium-sized enterprises are still suffering due to lower efficiency and liquidity as well as falling crop prices.
The latest survey by the University of the Thai Chamber of Commerce (UTCC) shows that most businessmen foresee their companies in positive territory in the current quarter and throughout next year.
However, the businesses that are reaping better income growth now are in the manufacturing sector and are large-scale companies.
"Manufacturing and large firms with higher efficiency and strong financial liquidity back-up have been able to adjust themselves with the recovery in growth faster than other sectors," Thanavath Phonvichai, director of the university's Economic and Forecasting Centre, said yesterday.
Profit, sales and production costs in other sectors - notably farming, trading, services and SMEs - are still low, as they have lower efficiency and liquidity.
Yajai Chuwicha, head of the chamber' Business Poll, said most sectors still foresaw low consumer purchasing power, rising oil prices, lack of financial liquidity and lower business efficiency as their main obstacles during a period of slight economic recovery.
In the UTCC survey of 810 business respondents, 47.8 per cent said their turnover in the current quarter was unchanged, 32 per cent said they had a lower return, while 20.2 per cent said their revenue was increasing.
However, most industrial respondents and those from large companies said their income had risen since the middle of the year. Incomes in the farming sector have not increased as yet, while most respondents from other sectors said their revenue was unchanged.
Higher incomes in the industrial sector and in large firms resulted from greater purchasing power, as well as from high efficiency in management, marketing and production.
Saowanee Thairungroj, UTCC vice president for the Research Division, said higher production and raw-material costs, rising oil prices, financial liquidity, logistics problems and an unstable exchange rated as the main negative factors affecting business operations.
An unstable domestic political situation and weak consumer purchasing power were also cited as affecting the country's growth.
She said enterprises were increasingly concerned about rising oil prices in the final quarter of the year.
Survey respondents expect the diesel price to rise to Bt29.50 a litre in the next quarter, whereas the maximum retail price they say they can cope with is Bt27. The exchange rate is expected to be Bt34.50 against the US dollar, but the preferred rate for enterprises is 35.50.
The latest survey by the University of the Thai Chamber of Commerce (UTCC) shows that most businessmen foresee their companies in positive territory in the current quarter and throughout next year.
However, the businesses that are reaping better income growth now are in the manufacturing sector and are large-scale companies.
"Manufacturing and large firms with higher efficiency and strong financial liquidity back-up have been able to adjust themselves with the recovery in growth faster than other sectors," Thanavath Phonvichai, director of the university's Economic and Forecasting Centre, said yesterday.
Profit, sales and production costs in other sectors - notably farming, trading, services and SMEs - are still low, as they have lower efficiency and liquidity.
Yajai Chuwicha, head of the chamber' Business Poll, said most sectors still foresaw low consumer purchasing power, rising oil prices, lack of financial liquidity and lower business efficiency as their main obstacles during a period of slight economic recovery.
In the UTCC survey of 810 business respondents, 47.8 per cent said their turnover in the current quarter was unchanged, 32 per cent said they had a lower return, while 20.2 per cent said their revenue was increasing.
However, most industrial respondents and those from large companies said their income had risen since the middle of the year. Incomes in the farming sector have not increased as yet, while most respondents from other sectors said their revenue was unchanged.
Higher incomes in the industrial sector and in large firms resulted from greater purchasing power, as well as from high efficiency in management, marketing and production.
Saowanee Thairungroj, UTCC vice president for the Research Division, said higher production and raw-material costs, rising oil prices, financial liquidity, logistics problems and an unstable exchange rated as the main negative factors affecting business operations.
An unstable domestic political situation and weak consumer purchasing power were also cited as affecting the country's growth.
She said enterprises were increasingly concerned about rising oil prices in the final quarter of the year.
Survey respondents expect the diesel price to rise to Bt29.50 a litre in the next quarter, whereas the maximum retail price they say they can cope with is Bt27. The exchange rate is expected to be Bt34.50 against the US dollar, but the preferred rate for enterprises is 35.50.
Paddy-rice guarantee prices agreed
The National Rice Policy Committee yesterday decided to guarantee Hom Mali paddy rice at Bt15,300 per tonne and paddy rice at Bt10,000 per tonne.
The committee, chaired by Prime Minister Abhisit Vejjajiva, delayed the decision if the guarantee scheme should limit the the volume per household at 20 tonnes or limit the guarantee value at Bt350,000 per household.
The Bank for Agriculture and Agricultural Cooperatives estimated that the value limit will raise the government's compensation to Bt43 billion from Bt25 billion.
Commerce Minister Porntiva Nakasai said after the 3-hour meeting that the decision is delayed as output from each area differs. The bank and the Agricultural Economics Office will jointly survey the figures.
She admitted that if the volume limit is in place, farmers may earn less than the pledging programme and this may lead to problems. However, if the value limit is in place, the compensation will rise sharply.
She said the issue should be finalised before the price guarantee programme will kick off in October.
The committee, chaired by Prime Minister Abhisit Vejjajiva, delayed the decision if the guarantee scheme should limit the the volume per household at 20 tonnes or limit the guarantee value at Bt350,000 per household.
The Bank for Agriculture and Agricultural Cooperatives estimated that the value limit will raise the government's compensation to Bt43 billion from Bt25 billion.
Commerce Minister Porntiva Nakasai said after the 3-hour meeting that the decision is delayed as output from each area differs. The bank and the Agricultural Economics Office will jointly survey the figures.
She admitted that if the volume limit is in place, farmers may earn less than the pledging programme and this may lead to problems. However, if the value limit is in place, the compensation will rise sharply.
She said the issue should be finalised before the price guarantee programme will kick off in October.
SALES OF BIG-TICKET ITEMS SOAR, BOOSTING US OUTLOOK
US consumers and businesses went on a big-ticket spending spree in July, sending home, car and equipment sales soaring by the largest amount in years.
The sales, detailed in two government reports on Wednesday, confirmed a subtle but marked shift in confidence about the economy. New home sales jumped almost 10 per cent from June, while orders for durable goods like appliances, plances and computers rose nearly 5 per cent in July, the third increase in the past four months.
"It looks like we've hit bottom and we're now slowly trying to dig our way out," said Nigel Gault, chief economist at IHS Global Insight.
Still, it remains unclear whether the growth can be sustained. Though the increases in housing sales and manufacturing last month were dramatic, they came from extraordinarily low levels and were fuelled by temporary government programmes like "Cash for Clunkers" and tax credits for home sales.
Most economists now agree the recession that began in December 2007 has ended or is ending. Some say the US economy is poised to grow strongly in the July-September quarter, but will probably show weaker growth after government stimulus spending tapers off.
Sales of new homes surged to a seasonally adjusted pace of 433,000 in July from 395,000 in June, the Commerce Department said, providing another sign the housing market is bouncing back from the historic bottom reached early this year. Driven by falling prices, the fourthstraight monthly increase was greater than expected. Sales haven't risen so dramatically since February 2005.
While sales are still off nearly 70 per cent from the frenzied peak four years ago, they are still up more than 30 per cent from the bottom in January.
"We can stop worrying about the housing market and start playing closer attention to other issues, such as when credit will start flowing more freely," Joel Naroff, chief economist at Naroff Economic Advisors, wrote in a note to clients.
The improved outlook could help further boost the economy. As home sales rise, builders will gradually need to hire more workers to pour foundations and pave roads, reversing the trend that saw 1.4 million industry jobs shed since the recession began.
"These are crucial elements of a sustainable recovery," David Resler, chief economist at Nomura Securities, wrote in a research note.
Construction job losses have slowed recently, with 76,000 lost in July, about half January's level.
Much like "Cash for Clunkers', homebuyers are rushing to take advantage of a federal tax credit that covers 10 per cent of the home price, or up to US$8,000 (Bt273,000), for first-time owners. Home sales must be completed by the end of November for buyers to qualify.
And there are many deals to be had: the median sales price of $210,100 was 11.5-per-cent lower than levels a year ago, but still up from March's low of $205,100.
Builders and real-estate agents fear that the end of the tax credit could reverse the upward trend. Senator Johney Isakson has introduced legislation to extend it for another year, raise it to $15,000 and make it available to all buyers.
If that doesn't happen, Isakson said in an interview, "the little improvement we have from awful to terrible will go away and it will go back to awful again".
Orders for cars, car parts and aircraft reose more than 18 per cent, helping to drive the durable goods data.
A huge jump in aircraft orders accounted for most of that gain. Also, auo production improved last month as General Motors nd Chrysler reopened many plants that were shut in May and June while the companies restructured and emerged from bankruptcy protection.
The sales, detailed in two government reports on Wednesday, confirmed a subtle but marked shift in confidence about the economy. New home sales jumped almost 10 per cent from June, while orders for durable goods like appliances, plances and computers rose nearly 5 per cent in July, the third increase in the past four months.
"It looks like we've hit bottom and we're now slowly trying to dig our way out," said Nigel Gault, chief economist at IHS Global Insight.
Still, it remains unclear whether the growth can be sustained. Though the increases in housing sales and manufacturing last month were dramatic, they came from extraordinarily low levels and were fuelled by temporary government programmes like "Cash for Clunkers" and tax credits for home sales.
Most economists now agree the recession that began in December 2007 has ended or is ending. Some say the US economy is poised to grow strongly in the July-September quarter, but will probably show weaker growth after government stimulus spending tapers off.
Sales of new homes surged to a seasonally adjusted pace of 433,000 in July from 395,000 in June, the Commerce Department said, providing another sign the housing market is bouncing back from the historic bottom reached early this year. Driven by falling prices, the fourthstraight monthly increase was greater than expected. Sales haven't risen so dramatically since February 2005.
While sales are still off nearly 70 per cent from the frenzied peak four years ago, they are still up more than 30 per cent from the bottom in January.
"We can stop worrying about the housing market and start playing closer attention to other issues, such as when credit will start flowing more freely," Joel Naroff, chief economist at Naroff Economic Advisors, wrote in a note to clients.
The improved outlook could help further boost the economy. As home sales rise, builders will gradually need to hire more workers to pour foundations and pave roads, reversing the trend that saw 1.4 million industry jobs shed since the recession began.
"These are crucial elements of a sustainable recovery," David Resler, chief economist at Nomura Securities, wrote in a research note.
Construction job losses have slowed recently, with 76,000 lost in July, about half January's level.
Much like "Cash for Clunkers', homebuyers are rushing to take advantage of a federal tax credit that covers 10 per cent of the home price, or up to US$8,000 (Bt273,000), for first-time owners. Home sales must be completed by the end of November for buyers to qualify.
And there are many deals to be had: the median sales price of $210,100 was 11.5-per-cent lower than levels a year ago, but still up from March's low of $205,100.
Builders and real-estate agents fear that the end of the tax credit could reverse the upward trend. Senator Johney Isakson has introduced legislation to extend it for another year, raise it to $15,000 and make it available to all buyers.
If that doesn't happen, Isakson said in an interview, "the little improvement we have from awful to terrible will go away and it will go back to awful again".
Orders for cars, car parts and aircraft reose more than 18 per cent, helping to drive the durable goods data.
A huge jump in aircraft orders accounted for most of that gain. Also, auo production improved last month as General Motors nd Chrysler reopened many plants that were shut in May and June while the companies restructured and emerged from bankruptcy protection.
Wednesday, August 26, 2009
Chronicling the lowlights of high finance
The Museum of American Finance was faced with an awkward situation recently: Some of the corporate sponsors of the museum - dedicated to glories of free markets - had, well, failed.
Rather than fretting, the museum tapped its own entrepreneurial spirit and mounted an exhibition -"Tracking the Credit Crisis"- that reveals what the museum's president, Lee Kjelleren, calls the "greed, recklessness and arrogance"of Wall Street.
Probably not what Lehman Brothers,Merrill Lynch or American International Group had in mind when they donated money to the museum.
But in the wake of the financial crisis,attendance at the museum- located at 44 Wall Street, near the epicentre of last year's market meltdown - has risen to about 200 visitors a day, nearly double its tally last summer.(The Metropolitan Museum of Art averages that many visitors almost every 90 seconds.)
And where else can you buy a poster for just $12(410 baht) chronicling the lowlights of the credit crisis - so many,in fact, that it's a five-poster set?
Among the biggest attractions for visitors? The morbid curiosity of a financial train wreck.
"This is about the market crashing,"said Lizzie McNeely,26, a high school teacher from Toronto, as she wandered around the museum one recent afternoon."I am interested in how they are going to represent that."
For the $8(270 baht) price of admission, visitors who have seen enough Van Goghs at the Met and Pollocks at the Museum of Modern Art can get a detailed look at the events that brought the global economy to its knees.
The most popular sections of the exhibition, Kjelleren said, describe socalled toxic assets and how these were exported from the US around the world -"As if the rest of the world didn't already love America enough!"- as well as the dubious role of the ratings agencies in concealing the riskiness of sub-prime mortgages and the securities based on their values.
A film about the crisis includes a photograph of Richard S. Fuld Jr, the vilified former chief executive of Lehman Brothers, being harangued by an angry crowd, including a person holding a sign with the word "Crook" across it.
In curating the installation, Kjelleren said one of the things he wanted to capture was how "dumb" the banks had been about investment vehicles like credit-default swaps."It was dumb, it was more than dumb, and it was occasionally reckless and irresponsible,"he said.
He pointed significantly to a section of the exhibition that discussed the socalled Lehman weekend last September,and the government's decision to allow Lehman Brothers to fail, which Kjelleren characterised as a big mistake.
But he reminded visitors that the museum was all about learning from past mistakes.
One group striding by - five bankers from Goldman Sachs - seemed more focused on avoiding the educational experience of the exhibition devoted to the credit crisis.
John Cirincion,60, one of the museum's volunteer guides, beckoned to them to take a closer look, but the bankers shook their heads.
"We lived it!" one said, as the group headed instead for an exhibition titled "Women in Finance."
The museum presents the global financial crisis employing a video and a dense timeline that catalogues what Kjelleren breathlessly describes as what may have been "the most challenging manmade calamity in modern experience",excluding wars.
The colour-coded timeline depicts crucial events from February 2007 through March 2009 in presenting an overview of the crisis, and provides definitions for important financial terms like sub-prime mortgage.
Kjelleren, a former banker for JPMorgan, said,"The idea was to create an awareness of the nature of the driving forces that affected everybody's lives."
One of the best measures of the scale of the meltdown is not on display, but can be found in museum literature detailing its corporate sponsorships.
Goldman Sachs, Citigroup, Morgan Stanley and Wells Fargo generously opened their wallets here a year ago,long before they became part of Exhibit A in a display on the financial crisis.
And Lehman Brothers and Merrill Lynch are effectively gone, and American International Group is a shadow of its former self. The government now owns nearly 80 percent of that company.
Alina Sichevaya, an 11-year-old whose father works for Credit Suisse, had just completed a week-long finance camp for children at a Camp Millionaire programme in her hometown of Cary,North Carolina. She strode into the gilded halls of the museum and made a beeline for the credit exhibition, staring intently at the giant panels of colour-coded cards.
Though she had just learned at camp about complicated concepts like taxes and depreciating assets, Sichevaya said she found the exhibit "kind of confusing".
"It's a lot of information," she added,as she and her mother, Olga, headed off to catch a sightseeing tour of the Brooklyn Bridge.
Even in the best of times, it was never going to be easy to curate homage to high finance.
Rather than fretting, the museum tapped its own entrepreneurial spirit and mounted an exhibition -"Tracking the Credit Crisis"- that reveals what the museum's president, Lee Kjelleren, calls the "greed, recklessness and arrogance"of Wall Street.
Probably not what Lehman Brothers,Merrill Lynch or American International Group had in mind when they donated money to the museum.
But in the wake of the financial crisis,attendance at the museum- located at 44 Wall Street, near the epicentre of last year's market meltdown - has risen to about 200 visitors a day, nearly double its tally last summer.(The Metropolitan Museum of Art averages that many visitors almost every 90 seconds.)
And where else can you buy a poster for just $12(410 baht) chronicling the lowlights of the credit crisis - so many,in fact, that it's a five-poster set?
Among the biggest attractions for visitors? The morbid curiosity of a financial train wreck.
"This is about the market crashing,"said Lizzie McNeely,26, a high school teacher from Toronto, as she wandered around the museum one recent afternoon."I am interested in how they are going to represent that."
For the $8(270 baht) price of admission, visitors who have seen enough Van Goghs at the Met and Pollocks at the Museum of Modern Art can get a detailed look at the events that brought the global economy to its knees.
The most popular sections of the exhibition, Kjelleren said, describe socalled toxic assets and how these were exported from the US around the world -"As if the rest of the world didn't already love America enough!"- as well as the dubious role of the ratings agencies in concealing the riskiness of sub-prime mortgages and the securities based on their values.
A film about the crisis includes a photograph of Richard S. Fuld Jr, the vilified former chief executive of Lehman Brothers, being harangued by an angry crowd, including a person holding a sign with the word "Crook" across it.
In curating the installation, Kjelleren said one of the things he wanted to capture was how "dumb" the banks had been about investment vehicles like credit-default swaps."It was dumb, it was more than dumb, and it was occasionally reckless and irresponsible,"he said.
He pointed significantly to a section of the exhibition that discussed the socalled Lehman weekend last September,and the government's decision to allow Lehman Brothers to fail, which Kjelleren characterised as a big mistake.
But he reminded visitors that the museum was all about learning from past mistakes.
One group striding by - five bankers from Goldman Sachs - seemed more focused on avoiding the educational experience of the exhibition devoted to the credit crisis.
John Cirincion,60, one of the museum's volunteer guides, beckoned to them to take a closer look, but the bankers shook their heads.
"We lived it!" one said, as the group headed instead for an exhibition titled "Women in Finance."
The museum presents the global financial crisis employing a video and a dense timeline that catalogues what Kjelleren breathlessly describes as what may have been "the most challenging manmade calamity in modern experience",excluding wars.
The colour-coded timeline depicts crucial events from February 2007 through March 2009 in presenting an overview of the crisis, and provides definitions for important financial terms like sub-prime mortgage.
Kjelleren, a former banker for JPMorgan, said,"The idea was to create an awareness of the nature of the driving forces that affected everybody's lives."
One of the best measures of the scale of the meltdown is not on display, but can be found in museum literature detailing its corporate sponsorships.
Goldman Sachs, Citigroup, Morgan Stanley and Wells Fargo generously opened their wallets here a year ago,long before they became part of Exhibit A in a display on the financial crisis.
And Lehman Brothers and Merrill Lynch are effectively gone, and American International Group is a shadow of its former self. The government now owns nearly 80 percent of that company.
Alina Sichevaya, an 11-year-old whose father works for Credit Suisse, had just completed a week-long finance camp for children at a Camp Millionaire programme in her hometown of Cary,North Carolina. She strode into the gilded halls of the museum and made a beeline for the credit exhibition, staring intently at the giant panels of colour-coded cards.
Though she had just learned at camp about complicated concepts like taxes and depreciating assets, Sichevaya said she found the exhibit "kind of confusing".
"It's a lot of information," she added,as she and her mother, Olga, headed off to catch a sightseeing tour of the Brooklyn Bridge.
Even in the best of times, it was never going to be easy to curate homage to high finance.
DON'T COUNT YOUR CHICKENS JUST YET
Economic indicators of recovery look positive, but we must not be carried away by false hope
Like the National Economic and Social Development Board, the Bank of Thailand has been particularly upbeat about the prospects of economic recovery in the fourth quarter and next year. Although weakness will continue into the third quarter, by the time we reach the fourth quarter, and barring any more political crises, the Thai economy will stage a rebound.
Overall, the Thai economy is still registering negative growth of 3.5 per cent this year. But next year the growth will turn positive at 4.5-5 per cent. Gross domestic product will return to the pre-crisis level of the first quarter of 2008, by the fourth quarter of 2010.
We believe that the Bank of Thailand and the NSEDB are being too optimistic. It is too early to say whether we are out of the woods yet. The month of October will be decisive. By that time, companies, banks and the government will have issued balance sheets, so that we really know the health of the global economy.
The financial markets will react accordingly, once the October results come out.
Since the Thai economy still relies heavily on the health of global economic conditions, its growth will continue to be dictated by external factors.
According to Macquarie Equities Research (August 20), the research house remains cautious on the outlook for Asian equities as a whole, because of concern about the state of global consumer demand.
"Developed world consumer spending (ie: external demand) remains very weak, credit availability for US and European households continues to tighten, exporter margins are coming under pressure again, and valuations for the externally exposed sectors are not compelling," it warns.
"Recent data have reinforced that concern. So while some investors have been turning their attention to exporters recently, we caution against this and recommend maintaining a firm focus on companies with domestic growth plays.
Still, the Bank of Thailand has decided to play it safe by keeping its interest rate at 1.25 per cent for the third consecutive month, saying the recovery of the Thai economy is still fragile. The bank's monetary policy committee said global economic and financial conditions have improved in the second quarter, particularly in Asia and Thailand itself.
"Nevertheless the committee views that there is still a high degree of uncertainty about the sustainability of the global economic recovery," Paiboon Kittisrikangwan, assistant governor of the Bank of Thailand, said in statement.
Last year the world started to feel the pinch of the crisis. The financial turmoil heightened in the final quarter of 2008. In the first quarter of this year, the situation remained bleak. This forced governments all over the world to announce huge stimulus packages. The Thai government has also introduced a series of stimulus measures designed to counter the economic downturn. So it comes as no surprise that the figures for the second quarter began to improve. On Monday, the NESDB reported that the Thai economy grew by 2.2 per cent between the first and second quarter, although it still shrank 4.9 per cent year-on-year. This prompted many to jump to the conclusion that the worst is over and that Thailand is now on a recovery path.
In the US, the sentiment is similar. Ben Bernanke has received a vote of confidence to continue his job as chairman of the Federal Reserve for a second term. Apparently the US does not want to change horses in midstream. Bernanke has been responsible for injecting massive liquidity to save the US financial system from collapsing. He has stopped the bleeding of the US financial system, which has yet to go through any drastic restructuring to see off years of financial bubbles. Unemployment in the US is likely to climb to 10 per cent and the US deficit will reach US$1.5 trillion, somewhat less than the $1.8 trillion projected earlier.
The US government now projects economic growth this year to record minus 2.8 per cent, compared to a positive growth of 2 per cent for 2010 and 3.8 per cent for 2011. Again, this US projection is rather rosy, considering the fact that drastic corporate and financial restructuring has not yet taken place.
In the meantime, Thailand's export-driven economy has been hit hard over the past year by domestic political turmoil that has exacerbated the impact of the global downturn. Protesters loyal to fugitive former premier Thaksin Shinawatra are set to rally in Bangkok at the weekend, just four months after derailing a key Asean summit in April and rioting in the capital. If the political situation deteriorates, chance of improvement in the fourth quarter will evaporate.
Like the National Economic and Social Development Board, the Bank of Thailand has been particularly upbeat about the prospects of economic recovery in the fourth quarter and next year. Although weakness will continue into the third quarter, by the time we reach the fourth quarter, and barring any more political crises, the Thai economy will stage a rebound.
Overall, the Thai economy is still registering negative growth of 3.5 per cent this year. But next year the growth will turn positive at 4.5-5 per cent. Gross domestic product will return to the pre-crisis level of the first quarter of 2008, by the fourth quarter of 2010.
We believe that the Bank of Thailand and the NSEDB are being too optimistic. It is too early to say whether we are out of the woods yet. The month of October will be decisive. By that time, companies, banks and the government will have issued balance sheets, so that we really know the health of the global economy.
The financial markets will react accordingly, once the October results come out.
Since the Thai economy still relies heavily on the health of global economic conditions, its growth will continue to be dictated by external factors.
According to Macquarie Equities Research (August 20), the research house remains cautious on the outlook for Asian equities as a whole, because of concern about the state of global consumer demand.
"Developed world consumer spending (ie: external demand) remains very weak, credit availability for US and European households continues to tighten, exporter margins are coming under pressure again, and valuations for the externally exposed sectors are not compelling," it warns.
"Recent data have reinforced that concern. So while some investors have been turning their attention to exporters recently, we caution against this and recommend maintaining a firm focus on companies with domestic growth plays.
Still, the Bank of Thailand has decided to play it safe by keeping its interest rate at 1.25 per cent for the third consecutive month, saying the recovery of the Thai economy is still fragile. The bank's monetary policy committee said global economic and financial conditions have improved in the second quarter, particularly in Asia and Thailand itself.
"Nevertheless the committee views that there is still a high degree of uncertainty about the sustainability of the global economic recovery," Paiboon Kittisrikangwan, assistant governor of the Bank of Thailand, said in statement.
Last year the world started to feel the pinch of the crisis. The financial turmoil heightened in the final quarter of 2008. In the first quarter of this year, the situation remained bleak. This forced governments all over the world to announce huge stimulus packages. The Thai government has also introduced a series of stimulus measures designed to counter the economic downturn. So it comes as no surprise that the figures for the second quarter began to improve. On Monday, the NESDB reported that the Thai economy grew by 2.2 per cent between the first and second quarter, although it still shrank 4.9 per cent year-on-year. This prompted many to jump to the conclusion that the worst is over and that Thailand is now on a recovery path.
In the US, the sentiment is similar. Ben Bernanke has received a vote of confidence to continue his job as chairman of the Federal Reserve for a second term. Apparently the US does not want to change horses in midstream. Bernanke has been responsible for injecting massive liquidity to save the US financial system from collapsing. He has stopped the bleeding of the US financial system, which has yet to go through any drastic restructuring to see off years of financial bubbles. Unemployment in the US is likely to climb to 10 per cent and the US deficit will reach US$1.5 trillion, somewhat less than the $1.8 trillion projected earlier.
The US government now projects economic growth this year to record minus 2.8 per cent, compared to a positive growth of 2 per cent for 2010 and 3.8 per cent for 2011. Again, this US projection is rather rosy, considering the fact that drastic corporate and financial restructuring has not yet taken place.
In the meantime, Thailand's export-driven economy has been hit hard over the past year by domestic political turmoil that has exacerbated the impact of the global downturn. Protesters loyal to fugitive former premier Thaksin Shinawatra are set to rally in Bangkok at the weekend, just four months after derailing a key Asean summit in April and rioting in the capital. If the political situation deteriorates, chance of improvement in the fourth quarter will evaporate.
Ad recovery boosts Nation Group's revenue
The Nation Multimedia Group expects its revenue to increase 10-15 per cent in the second half, over the Bt1.2 billion recorded in the first six months, thanks to recovering advertising revenue.
Chief executive Thanachai Santichaikul yesterday said the company was seeing signs of recovery in advertising revenue. Many large corporations had begun placing more ads in all of NMG's media channels.
"Our ad revenue showed its highest drop in January, when most firms stopped spending on advertising because they lacked confidence in the country's economy and political situation," he said.
NMG expects to generate more than Bt2 billion in revenue this year. However, jt is still lower than last year, when the group took in Bt3 billion. NMG's first-half advertising revenue fell 26.58 per cent to Bt652 million, from Bt888 million in the same period last year. Revenue from the group's publishing business showed the highest drop, 36 per cent, while income from broadcasting and new media business increased 11 per cent.
Despite the fall, advertising revenue from the company's publishing business contributed 69 per cent of its first-half revenue. Ad revenue is expected to improve in the second half, to a level that is 15-20 per cent below last year's second half. An improvement of that magnitude would leave full year ad revenue 20-25-per-cent down from last year, Thanachai said.
Revenue from the group's broadcasting business, consisting of radio and television, rose 16 per cent year on year in the first half. This will likely increase continuously in the second half, because of two new television programmes the Nation Broadcasting Corporation (NBC) has produced for Channel 11.
Television revenue is targeted to increase 25 per cent from last year.
Thanachai said the group's second-half operating costs were also expected to decline slightly, mainly because of lower paper costs.
Meanwhile, the company is planning to list its two subsidiaries - Nation International Edutainment and NBC - on the Market for Alternative Investment in the fourth quarter. It will consider market sentiment a major factor influencing the listing.
If the two subsidiaries list as planned, NMG will book special revenue from selling part of its existing shareholdings in initial public offerings.
"We're trying to turn the company to profit in the second half after booking a net loss of Bt110 million in the first six months," Thanachai said.
Chief executive Thanachai Santichaikul yesterday said the company was seeing signs of recovery in advertising revenue. Many large corporations had begun placing more ads in all of NMG's media channels.
"Our ad revenue showed its highest drop in January, when most firms stopped spending on advertising because they lacked confidence in the country's economy and political situation," he said.
NMG expects to generate more than Bt2 billion in revenue this year. However, jt is still lower than last year, when the group took in Bt3 billion. NMG's first-half advertising revenue fell 26.58 per cent to Bt652 million, from Bt888 million in the same period last year. Revenue from the group's publishing business showed the highest drop, 36 per cent, while income from broadcasting and new media business increased 11 per cent.
Despite the fall, advertising revenue from the company's publishing business contributed 69 per cent of its first-half revenue. Ad revenue is expected to improve in the second half, to a level that is 15-20 per cent below last year's second half. An improvement of that magnitude would leave full year ad revenue 20-25-per-cent down from last year, Thanachai said.
Revenue from the group's broadcasting business, consisting of radio and television, rose 16 per cent year on year in the first half. This will likely increase continuously in the second half, because of two new television programmes the Nation Broadcasting Corporation (NBC) has produced for Channel 11.
Television revenue is targeted to increase 25 per cent from last year.
Thanachai said the group's second-half operating costs were also expected to decline slightly, mainly because of lower paper costs.
Meanwhile, the company is planning to list its two subsidiaries - Nation International Edutainment and NBC - on the Market for Alternative Investment in the fourth quarter. It will consider market sentiment a major factor influencing the listing.
If the two subsidiaries list as planned, NMG will book special revenue from selling part of its existing shareholdings in initial public offerings.
"We're trying to turn the company to profit in the second half after booking a net loss of Bt110 million in the first six months," Thanachai said.
GROWTH MAY REACH 5% IN 2010
The Monetary Policy Committee (MPC) is optimistic the economy will post an impressive recovery to record growth of 4.5-5 per cent next year, bringing nominal gross domestic product back to the pre-2008 crisis level.
The committee yesterday kept the policy interest rate unchanged at 1.25 per cent, heaving a big sigh of relief that risks to the global and domestic economies have declined.
The global recovery, however, is uncertain, while the domestic political conflict remains a risk.
Inflationary pressure has been low even though oil prices have continued to rise recently. However, high oil prices could become a threat to economic recovery.
"I think we'll be able to step out of the crisis, which will return GDP in next year's fourth quarter to the same level as in last year's first quarter. It means the country's income will have lost opportunities for three years," said Chakramon Phasukvanich, a member of the MPC.
He said the economy would possibly pick up at the end of this year, with a contraction of 3.5 per cent for the entire year, and then expand by 4.5-5 per cent next year.
The Bank of Thailand had previously projected the economy would post positive growth of 3-5 per cent next year, driven by government spending and exports.
Chakramon said Map Ta Put investment projects worth more than Bt200 billion and the government's stimulus package would significantly drive the economy.
The recovery in many export sectors, rising employment, improved business and consumer confidence and retail sales have also pointed to a V-shaped recovery, he said.
Paiboon Kittisrikangwan, Bank of Thailand assistant governor, said the central bank would not formally revise the economic-growth projection until October.
Despite higher-than-expected growth in the second quarter, the bank's latest projection for an economic contraction of 3-4.5 per cent this year therefore remains in place.
The sustainability of the global economic recovery, which relies on the G-3 (the US, Japan and the euro zone) economies, has been in doubt. The financial problems of the US housing sector have continued, which means there has not been a recovery in consumer spending.
In addition, the problems faced by US and Europe financial institutions have not yet been resolved. They could even worsen, said Paiboon, eroding the sustainability of a global recovery.
"There is concern that US consumption, which has driven the global economy, will not be able to pick up on a continuous basis," said the assistant governor.
Chakramon said if the US financial institutions were to function by giving loans to the real sector, the US economy would be back on track.
He said the global recovery currently was at least L-shaped but would not necessarily end up as U- or V-shaped.
The MPC hopes the government's budget disbursement will be on target in a bid to boost the economy, with private investment possibly returning from the middle of next year.
If not, the economy could be in trouble, Chakramon said, adding that political uncertainty continued to be a risk.
Paiboon said the central bank was not yet prepared to say the policy interest rate had reached its lowest level. He said the bank remained ready to tackle any internal and external risk factors.
The committee yesterday kept the policy interest rate unchanged at 1.25 per cent, heaving a big sigh of relief that risks to the global and domestic economies have declined.
The global recovery, however, is uncertain, while the domestic political conflict remains a risk.
Inflationary pressure has been low even though oil prices have continued to rise recently. However, high oil prices could become a threat to economic recovery.
"I think we'll be able to step out of the crisis, which will return GDP in next year's fourth quarter to the same level as in last year's first quarter. It means the country's income will have lost opportunities for three years," said Chakramon Phasukvanich, a member of the MPC.
He said the economy would possibly pick up at the end of this year, with a contraction of 3.5 per cent for the entire year, and then expand by 4.5-5 per cent next year.
The Bank of Thailand had previously projected the economy would post positive growth of 3-5 per cent next year, driven by government spending and exports.
Chakramon said Map Ta Put investment projects worth more than Bt200 billion and the government's stimulus package would significantly drive the economy.
The recovery in many export sectors, rising employment, improved business and consumer confidence and retail sales have also pointed to a V-shaped recovery, he said.
Paiboon Kittisrikangwan, Bank of Thailand assistant governor, said the central bank would not formally revise the economic-growth projection until October.
Despite higher-than-expected growth in the second quarter, the bank's latest projection for an economic contraction of 3-4.5 per cent this year therefore remains in place.
The sustainability of the global economic recovery, which relies on the G-3 (the US, Japan and the euro zone) economies, has been in doubt. The financial problems of the US housing sector have continued, which means there has not been a recovery in consumer spending.
In addition, the problems faced by US and Europe financial institutions have not yet been resolved. They could even worsen, said Paiboon, eroding the sustainability of a global recovery.
"There is concern that US consumption, which has driven the global economy, will not be able to pick up on a continuous basis," said the assistant governor.
Chakramon said if the US financial institutions were to function by giving loans to the real sector, the US economy would be back on track.
He said the global recovery currently was at least L-shaped but would not necessarily end up as U- or V-shaped.
The MPC hopes the government's budget disbursement will be on target in a bid to boost the economy, with private investment possibly returning from the middle of next year.
If not, the economy could be in trouble, Chakramon said, adding that political uncertainty continued to be a risk.
Paiboon said the central bank was not yet prepared to say the policy interest rate had reached its lowest level. He said the bank remained ready to tackle any internal and external risk factors.
Osaka keen on high-tech options
Japanese investment in Thailand is set to surge - with life-sciences and hightech companies, in particular, seeking to expand their presence - from the beginning of next year as the two economies recover from recession.
Both Japan and Thailand will be more stable economically and politically next year, said representatives of the Osaka Chamber of Commerce and Industry (OCCI) during a three-day visit to Bangkok.
Japan will hold an election by the end of this month, while the political uncertainties that have plagued investment in Thailand for years are expected to ease during the rest of the year, OCCI vice-chairman Makoto Kato said yesterday.
"The Japanese economy is coming back from recession and companies will be ready to aggressively invest abroad from the beginning of next year," said Mr Kato, who is accompanying governor Toru Hashimoto and executives of 14 Osaka-based firms as they explore business opportunities in Thailand.
"By then, I think the Thai economy will be also on the recovery path while political issues will see some improvement."
Osaka, with 8.8 million residents, contributes 8% of the Japanese economy with a gross domestic product of $333.5 billion. The city is home to the whitegoods giants Sharp and Panasonic and to other leading Japanese brands such as Daihatsu, Kubota, Suntory, Takeda and Mizuno.
"The new wave of Japanese investment in Thailand will be more in high-tech and value-added industries to avoid rising competition from lower-wage countries.Osaka itself has a strong expertise in life sciences, biotechnology and alternative energies and we are keen to invest here,"said Mr Kato.
Technologies for hybrid vehicles and eco-cars, as well as for electric vehicles,are elements Osaka could deliver to Thai partners, he added.
With 258 of its firms present in Thailand, Osaka is second only to Tokyo for its businesses' investment in Thailand.Japan is also Thailand's largest foreign investor with 130 projects worth more than 30 billion baht approved by the Board of Investment in the first seven months of this year.
Thailand Trade Representative Vachara Phanchet said the time is right for Thai investors to invest in Osaka by forming joint ventures with Japanese partners.
"The Japanese economy is bouncing back from the crisis but is not yet as strong as in the past. This provides a good chance for Thai companies to have greater access for investing there," he said.
Japanese financial institutions, including the Japan Bank for International Co-operation and the Development Bank of Japan, have recently agreed to provide financial support to foreign small and medium-sized companies investing in the country, added Mr Vachara.
Osaka is in the mid-western Kansai region, where bilateral trade with Thailand has increased since the launch of the Japan-Thailand Economic Partnership Agreement in November 2007. Exports from Kansai to Thailand stayed at about $6 billion with imports totalling $3.6 billion last year.
Both Japan and Thailand will be more stable economically and politically next year, said representatives of the Osaka Chamber of Commerce and Industry (OCCI) during a three-day visit to Bangkok.
Japan will hold an election by the end of this month, while the political uncertainties that have plagued investment in Thailand for years are expected to ease during the rest of the year, OCCI vice-chairman Makoto Kato said yesterday.
"The Japanese economy is coming back from recession and companies will be ready to aggressively invest abroad from the beginning of next year," said Mr Kato, who is accompanying governor Toru Hashimoto and executives of 14 Osaka-based firms as they explore business opportunities in Thailand.
"By then, I think the Thai economy will be also on the recovery path while political issues will see some improvement."
Osaka, with 8.8 million residents, contributes 8% of the Japanese economy with a gross domestic product of $333.5 billion. The city is home to the whitegoods giants Sharp and Panasonic and to other leading Japanese brands such as Daihatsu, Kubota, Suntory, Takeda and Mizuno.
"The new wave of Japanese investment in Thailand will be more in high-tech and value-added industries to avoid rising competition from lower-wage countries.Osaka itself has a strong expertise in life sciences, biotechnology and alternative energies and we are keen to invest here,"said Mr Kato.
Technologies for hybrid vehicles and eco-cars, as well as for electric vehicles,are elements Osaka could deliver to Thai partners, he added.
With 258 of its firms present in Thailand, Osaka is second only to Tokyo for its businesses' investment in Thailand.Japan is also Thailand's largest foreign investor with 130 projects worth more than 30 billion baht approved by the Board of Investment in the first seven months of this year.
Thailand Trade Representative Vachara Phanchet said the time is right for Thai investors to invest in Osaka by forming joint ventures with Japanese partners.
"The Japanese economy is bouncing back from the crisis but is not yet as strong as in the past. This provides a good chance for Thai companies to have greater access for investing there," he said.
Japanese financial institutions, including the Japan Bank for International Co-operation and the Development Bank of Japan, have recently agreed to provide financial support to foreign small and medium-sized companies investing in the country, added Mr Vachara.
Osaka is in the mid-western Kansai region, where bilateral trade with Thailand has increased since the launch of the Japan-Thailand Economic Partnership Agreement in November 2007. Exports from Kansai to Thailand stayed at about $6 billion with imports totalling $3.6 billion last year.
NAMING OF NEW TOP OFFICIAL DEFERRED
The Commerce Ministry will seek Cabinet approval next week for the appointment of a new permanent secretary, a C-11 position for which Internal Trade Department director-general Yangyong Phuangrach is now the sole candidate.
The matter was taken off the agenda for yesterday's Cabinet meeting, as the Bhum Jai Thai Party wanted the name of the new permanent secretary of the Transport Ministry to be approved at the same time.
A source close to Commerce Minister Porntiva Nakasai said the Democrat Party had promised to give full authority to Bhum Jai Thai to appoint the heads of both ministries. The offer has been made in exchange for Bhum Jai Thai's non-intervention in the Democrats' authority to appoint a new national police chief.
The source also said Yangyong had strong support for highest position, as he is the most senior of the C-10 officials at the Commerce Ministry.
"Porntiva has favoured Yangyong for his energetic attempts to boost domestic economic growth," the source said.
The other main candidate for the top bureaucratic job at the ministry was Rachane Potjanasuntorn, director-general of the Department of Export Promotion (DEP).
However, he is one of the 44 defendants in the rubber-sapling corruption case, on which the court has delayed its final judgement to September 21.
Applied-law graduate Yangyong has served more than three decades as a distinguished civil servant in the Commerce Ministry.
Yangyong has the ability to compromise, as well as extensive experience in the ministry's many departments. He is an expert in commercial law and played a vital role in international negotiations under the World Trade Organisation and in intellectual-property cases.
Yangyong is also a former director-general of the Intellectual Property Department.
Previously, he told the media that if he were appointed to the post of permanent secretary, he would seek to balance the Kingdom's economic growth by aggressively promoting domestic consumption instead of relying solely on exports.
"I will continue to promote export growth, which is a key economic driver, as well as stimulating domestic spending and trying to ease the cost of living," said Yangyong.
Following an upcoming reshuffle of C-10 officials, Rachane is seen as having high potential to replace Yangyong at the Internal Trade Department.
A senior ministry source said Rachane had extensive experience in international trade and should be able to adapt his knowledge and skills to promote domestic growth.
Srirat Rastapana and Pimpapaan Chansilpa, both female and the current deputy permanent secretaries of the ministry, are on a shortlist to become the next director-general of the DEP.
The matter was taken off the agenda for yesterday's Cabinet meeting, as the Bhum Jai Thai Party wanted the name of the new permanent secretary of the Transport Ministry to be approved at the same time.
A source close to Commerce Minister Porntiva Nakasai said the Democrat Party had promised to give full authority to Bhum Jai Thai to appoint the heads of both ministries. The offer has been made in exchange for Bhum Jai Thai's non-intervention in the Democrats' authority to appoint a new national police chief.
The source also said Yangyong had strong support for highest position, as he is the most senior of the C-10 officials at the Commerce Ministry.
"Porntiva has favoured Yangyong for his energetic attempts to boost domestic economic growth," the source said.
The other main candidate for the top bureaucratic job at the ministry was Rachane Potjanasuntorn, director-general of the Department of Export Promotion (DEP).
However, he is one of the 44 defendants in the rubber-sapling corruption case, on which the court has delayed its final judgement to September 21.
Applied-law graduate Yangyong has served more than three decades as a distinguished civil servant in the Commerce Ministry.
Yangyong has the ability to compromise, as well as extensive experience in the ministry's many departments. He is an expert in commercial law and played a vital role in international negotiations under the World Trade Organisation and in intellectual-property cases.
Yangyong is also a former director-general of the Intellectual Property Department.
Previously, he told the media that if he were appointed to the post of permanent secretary, he would seek to balance the Kingdom's economic growth by aggressively promoting domestic consumption instead of relying solely on exports.
"I will continue to promote export growth, which is a key economic driver, as well as stimulating domestic spending and trying to ease the cost of living," said Yangyong.
Following an upcoming reshuffle of C-10 officials, Rachane is seen as having high potential to replace Yangyong at the Internal Trade Department.
A senior ministry source said Rachane had extensive experience in international trade and should be able to adapt his knowledge and skills to promote domestic growth.
Srirat Rastapana and Pimpapaan Chansilpa, both female and the current deputy permanent secretaries of the ministry, are on a shortlist to become the next director-general of the DEP.
Full recovery "could take six to 12 months"
Full economic recovery will likely take six to 12 months, as government stimulus spending begins in earnest in the fourth quarter, says M.R. Chatumongol Sonakul,the chairman of the Bank of Thailand.
He said exports had begun to improve with the global economy, but cautioned against hopes of a sharp turnaround.
"It will likely take six to 12 months before the Thai economy fully recovers.The contraction in consumption, in-vestment and imports will gradually decline, while exports gradually improve.It probably won't be until late this year before the government's stimulus funds enter the economy," he said.
The government has earmarked nearly 1.5 trillion baht for the three-year Strong Thailand investment programme.
M.R. Chatumongol played down fears of a "double-dip recession", saying he believed the worst was over for the crisis.
He said exports had begun to improve with the global economy, but cautioned against hopes of a sharp turnaround.
"It will likely take six to 12 months before the Thai economy fully recovers.The contraction in consumption, in-vestment and imports will gradually decline, while exports gradually improve.It probably won't be until late this year before the government's stimulus funds enter the economy," he said.
The government has earmarked nearly 1.5 trillion baht for the three-year Strong Thailand investment programme.
M.R. Chatumongol played down fears of a "double-dip recession", saying he believed the worst was over for the crisis.
Thai firms to boost dollar bond sales
Thai companies will increase sales of dollar bonds as limited investor demand for baht securities forces them to seek funding elsewhere, according to Standard Chartered Plc.
"Thai companies are at a crossroads right now," said Ratch Sodsatit, executive vice-president and capital markets head of the London-based bank's Thai unit."Domestic liquidity is not strong enough for them and tapping the dollar market in a big way will be key to solving that."
Thai companies have sold 288.7 billion baht ($8.5 billion) worth of local currency notes this year, passing the 270.3 billion they raised in all of 2008,according to data compiled by Bloomberg. Sales rose as lending by Krung Thai Bank, Siam Commercial Bank and nine other Thai banks shrank 3.2%,driven by a reduction in loans to companies and small businesses, Citigroup said in a note on Aug 20.
Petroliam Nasional Bhd, the Malaysian state-owned oil company known as Petronas, sold $4.5 billion worth of bonds on Aug 6 in the biggest dollar issue by an Asian company outside Japan this year, Bloomberg data show.PTT Plc, Thailand's biggest energy company, is in talks with banks for a sale that may be of similar size, said Mr Ratch.
PTT is well-placed and highly likely to tap the dollar-bond market because it is a long-dated issuer and, in many cases, the limit in terms of the percentage local investors can hold of them has been reached, he said.
"Thai institutional investors are buying only the safest debt, making the dollar bond market increasingly important for riskier borrowers," he added.
"The market has shifted over the past year and mutual funds are staying away from anything rated less than A-minus."
Individual investors, jaded by bank deposit rates as low as 0.8%, are the most active buyers of corporate debt in Thailand, he said.
A ranking of A- is the seventh-highest investment grade from Standard &Poor's, the New York-based ratings company.
Easy Buy Plc, the consumer finance company controlled by Japan's Acom Co, sold 3.5 billion baht worth of threeyear notes on July 24, paying a 4.9%coupon. The securities were priced to yield 250 basis points more than benchmark rates and 95% of the offer was taken up by individuals, said Mr Ratch.
Standard Chartered Bank (Thai) is ranked seventh among Thai corporate bond sales this year with a market share of 4.3%, Bloomberg data show.
"Thai companies are at a crossroads right now," said Ratch Sodsatit, executive vice-president and capital markets head of the London-based bank's Thai unit."Domestic liquidity is not strong enough for them and tapping the dollar market in a big way will be key to solving that."
Thai companies have sold 288.7 billion baht ($8.5 billion) worth of local currency notes this year, passing the 270.3 billion they raised in all of 2008,according to data compiled by Bloomberg. Sales rose as lending by Krung Thai Bank, Siam Commercial Bank and nine other Thai banks shrank 3.2%,driven by a reduction in loans to companies and small businesses, Citigroup said in a note on Aug 20.
Petroliam Nasional Bhd, the Malaysian state-owned oil company known as Petronas, sold $4.5 billion worth of bonds on Aug 6 in the biggest dollar issue by an Asian company outside Japan this year, Bloomberg data show.PTT Plc, Thailand's biggest energy company, is in talks with banks for a sale that may be of similar size, said Mr Ratch.
PTT is well-placed and highly likely to tap the dollar-bond market because it is a long-dated issuer and, in many cases, the limit in terms of the percentage local investors can hold of them has been reached, he said.
"Thai institutional investors are buying only the safest debt, making the dollar bond market increasingly important for riskier borrowers," he added.
"The market has shifted over the past year and mutual funds are staying away from anything rated less than A-minus."
Individual investors, jaded by bank deposit rates as low as 0.8%, are the most active buyers of corporate debt in Thailand, he said.
A ranking of A- is the seventh-highest investment grade from Standard &Poor's, the New York-based ratings company.
Easy Buy Plc, the consumer finance company controlled by Japan's Acom Co, sold 3.5 billion baht worth of threeyear notes on July 24, paying a 4.9%coupon. The securities were priced to yield 250 basis points more than benchmark rates and 95% of the offer was taken up by individuals, said Mr Ratch.
Standard Chartered Bank (Thai) is ranked seventh among Thai corporate bond sales this year with a market share of 4.3%, Bloomberg data show.
Second term for Fed chief
Praising him as the man who shepherded the United States past the worst economic crisis since the Great Depression, President Barack Obama yesterday proposed a second term for Federal Reserve Chairman Ben Bernanke.
"Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and outsidethe-box thinking that has helped put the brakes on our economic freefall,"Mr Obama said.
The widely expected move had no significant impact on financial markets in Asia and Europe, with investors more focused on whether a global economic recovery was really under way.
Mr Bernanke, whose appointment to a new four-year term must be confirmed by the Senate, has pushed US interest rates to near zero and flooded financial markets with hundreds of billions of dollars to stem a credit crisis and turn back recession.
Investors have given Mr Bernanke,whose current term expires on Jan 31,2010, high marks and had widely anticipated his reappointment, although an announcement was not expected until later this year.
Analysts suggested that Mr Obama was aiming for stability by moving up the announcement.
"Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and outsidethe-box thinking that has helped put the brakes on our economic freefall,"Mr Obama said.
The widely expected move had no significant impact on financial markets in Asia and Europe, with investors more focused on whether a global economic recovery was really under way.
Mr Bernanke, whose appointment to a new four-year term must be confirmed by the Senate, has pushed US interest rates to near zero and flooded financial markets with hundreds of billions of dollars to stem a credit crisis and turn back recession.
Investors have given Mr Bernanke,whose current term expires on Jan 31,2010, high marks and had widely anticipated his reappointment, although an announcement was not expected until later this year.
Analysts suggested that Mr Obama was aiming for stability by moving up the announcement.
IRPC gives up on refining business
IRPC Plc, a petrochemical manufacturer and oil refiner affiliated with PTT Plc,has decided to focus solely on the petrochemical business now that the increasing popularity of alternative fuels has dimmed the prospects of its refinery.
"We've decided to move ahead to achieve our goal of being a leader in integrated petrochemical business. The refining unit will still be running only to serve our petrochemical units," said chief executive Pailin Chuchottaworn.
Dr Pailin pointed out that IRPC's business strategy needed to be improved as part of its plan to rehabilitate the company's performance, which has underperformed in recent years.
Atikom Terbsiri, senior executive vice-president for corporate strategy planning, said the refining industry was facing sluggish demand and a surge in supply, clouding the outlook of the industry.
Factors curbing the demand include the global economic slump and the fast adoption of alternative fuels to replace conventional fuels, estimated to reach 20% in the future. Furthermore,large refinery players are entering the global market.
"Under such a circumstance, refining margins are under pressure. Given both external and internal factors, we decided to change direction," Mr Atikom said.
IRPC's new business strategy aims to transform its operation into the topquartile integrated petrochemical complex in Asia by 2014.
The strategy involves improving production capacity, adding value, reducing cost, maximising asset value and investing in high-margin products.
More investment is planned for the petrochemical unit to increase efficiency and expand the capacities of highmargin and high-growth products such as acrylonitrile-butadiene-styrene (ABS)and polypropylene.
It also plans to commercialise its ports and tank facilities through possible joint-venture investments.
Its 11,000 rai of unutilised land mainly in Rayong, Songkhla and Chiang Mai provinces, would be developed as industrial land serving local industries and some of the plots may also be sold.
"To implement these plans, a $1.2-billion investment is planned over the next five years from our own generated cash flow. More loans will be sought if this is not enough as our lever-age is relatively low. Our debt-to-equity ratio is only 0.3 times," Mr Atikom said.
Dr Pailin said the undeveloped assets had been a drag on the company's performance. He hopes the new business strategy will improve the company's return on invested capital (ROIC)to three times the current level in the next five years.
"Our ROIC is currently at 8-9%. Compared to our peers, we have the capacity and potential to improve. So the target is to achieve a 23% return by 2014. This goal is possible when our initiatives are accomplished," he said.
The executive expects crude prices,at $72 a barrel in Dubai, to stay at this level until the end of the year although short-term fluctuations cannot be ruled out.
Crude prices at these levels will continue to suppress refining margins but the petrochemical industry is benefiting from improving demand in China, a trend also likely to continue until yearend.
In any case, he expects an improvement in performance in the third quarter and further gains in the last quarter if petrochemical product prices continued to improve.
IRPC shares closed yesterday on the SET at 3.44 baht, unchanged, in trade worth 102.6 million baht.
"We've decided to move ahead to achieve our goal of being a leader in integrated petrochemical business. The refining unit will still be running only to serve our petrochemical units," said chief executive Pailin Chuchottaworn.
Dr Pailin pointed out that IRPC's business strategy needed to be improved as part of its plan to rehabilitate the company's performance, which has underperformed in recent years.
Atikom Terbsiri, senior executive vice-president for corporate strategy planning, said the refining industry was facing sluggish demand and a surge in supply, clouding the outlook of the industry.
Factors curbing the demand include the global economic slump and the fast adoption of alternative fuels to replace conventional fuels, estimated to reach 20% in the future. Furthermore,large refinery players are entering the global market.
"Under such a circumstance, refining margins are under pressure. Given both external and internal factors, we decided to change direction," Mr Atikom said.
IRPC's new business strategy aims to transform its operation into the topquartile integrated petrochemical complex in Asia by 2014.
The strategy involves improving production capacity, adding value, reducing cost, maximising asset value and investing in high-margin products.
More investment is planned for the petrochemical unit to increase efficiency and expand the capacities of highmargin and high-growth products such as acrylonitrile-butadiene-styrene (ABS)and polypropylene.
It also plans to commercialise its ports and tank facilities through possible joint-venture investments.
Its 11,000 rai of unutilised land mainly in Rayong, Songkhla and Chiang Mai provinces, would be developed as industrial land serving local industries and some of the plots may also be sold.
"To implement these plans, a $1.2-billion investment is planned over the next five years from our own generated cash flow. More loans will be sought if this is not enough as our lever-age is relatively low. Our debt-to-equity ratio is only 0.3 times," Mr Atikom said.
Dr Pailin said the undeveloped assets had been a drag on the company's performance. He hopes the new business strategy will improve the company's return on invested capital (ROIC)to three times the current level in the next five years.
"Our ROIC is currently at 8-9%. Compared to our peers, we have the capacity and potential to improve. So the target is to achieve a 23% return by 2014. This goal is possible when our initiatives are accomplished," he said.
The executive expects crude prices,at $72 a barrel in Dubai, to stay at this level until the end of the year although short-term fluctuations cannot be ruled out.
Crude prices at these levels will continue to suppress refining margins but the petrochemical industry is benefiting from improving demand in China, a trend also likely to continue until yearend.
In any case, he expects an improvement in performance in the third quarter and further gains in the last quarter if petrochemical product prices continued to improve.
IRPC shares closed yesterday on the SET at 3.44 baht, unchanged, in trade worth 102.6 million baht.
Tuesday, August 25, 2009
ASIA'S PROSPECTS FOR RECOVERY ARE GOOD, IF IT IS WARY OF EASY MONEY
In the second and final part of his interview with Nation editor-in-chief Suthichai Yoon, Nobel laureate Joseph Stiglitz explains why he has confidence in Asia amid hard times in America.
Why did [the Americans] have a double standard? Is it because Obama could have faced some serious political consequences if he didn't bail out the banks?
Well, they tried to sell the idea that if you play by the rules of capitalism, the whole thing will fall apart. To me, if you have good governance, it will make the economy grow. Now, what happens is, you have a system where you've given out hundreds of billions of dollars and everybody wants it - the car companies, the car suppliers. Everybody would say why do you give it to them, but what about us?
So we have a double standard between Asia and America and we have a double standard in America. We fired GM's president but the guys on Wall Street who got us into this mess, we haven't done anything about them. So we've all these double standards which are undermining confidence in the government. It gives you a smell of corruption. Corruption American's style, but it's still corruption.
President Obama's excuse is that if we let the financial institutions fall, the whole world economy will collapse.
Here again we see the double standard. In the case of GM and Chrysler he saved the companies but not the shareholders. He could have done that with banks, but that's playing by the rules of capitalism, which he chose not to play. For no good reason.
Why is that?
They tried to tell us a story. The story was you would create panic. This is the tactic the Bush administration perfected every time they wanted something, [like] the war on terror. Well, we continue that, but now it isn't the fear of terrorism, it's the fear of financial meltdown. If you took a moment to look at it, if we had debt for equity swap and watched the shareholders fall, you play the rules of capitalism. People would have had more confidence in the companies because the money is not going out to the shareholders.
So is Obama a socialist?
Oh, defenitely not. Quite the contrary. It's not socialism because socialism cares about people, ordinary people but we're giving money to the rich system. This is old-fashioned corporate welfarism. It's the same thing that Bush did, saving the corporations. What we do in the US is we put the bank first and we don't do very much about the people who are in their homes. We said if we pour enough hundreds of billions dollars into banks, maybe ordinary Americans would benefit, maybe that will happen.
Does it happen?
No. It doesn't happen.
You sometimes advocate government intervention. So why are you against Obama's intervention?
There wasn't any government intervention, absolutely not. The private sector has totally failed. We should have had government intervention much earlier without the failure. The irony is that, in the name of keeping government out of the market, we wound up with the biggest intervention in the market. So the mistakes of the free markets economics like Greenspan's has led to the largest role of government in America in its history, so you have to appreciate the irony of the situation. We should have had intervention that makes sure we get the quickest recovery with the least cost. Which means for instance that if we gave money to the banks, we would get claims on the banks that would compensate us.
That's not the case now?
Studies show that if we gave a dollar we got back 67 cents, and the more recent ones put it at 25 cents. We were cheated, and it was very clear that the people who were negotiating for us were working for the banks not for American taxpayers. If they were working for a private company, they would have been fired.
Back to Asia, the Thai prime minister said we are recovering with a V-shape start. Do you agree?
Yes, all the evidence suggests that. America is likely not to have a robust recovery, so if Asia is going to have a robust road, it has to change its model. It cannot be as dependent on exports to the US. This is the problem that Asia as a whole has to face. Not every country in Asia exports to the US - some export to China, but many exports to China become Chinese exports to the US. So, the Asian system is very dependent on exports to the US. That has to change.
What would you advise the Thai PM?
Economies in Asia are dynamic. So, Asia is always doing very well, and now the big challenge is to increase the domestic base - investment and consumption - and to open to but not be dependent on the US. The other point is, it's a very difficult time because the US and some other countries are flooding the world with liquidity. Understandable, because they want to make sure that they don't suffer from problems. But we have a global financial system while liquidity is being decided at the national level. You provide liquidity to American firms but they do not spend in America, and they do sell it out. They look for the best economies in the world, in Asia, but now the problem is that too often they simply look for easy opportunities - real estate, commodities. Another bubble [will] distort the economies in Asia. You have to protect yourself against the mismanagement of financial policies in US.
Be careful. You may be getting the easy money, but it's overnight money. You don't build robust growth based on easy money. You have to say, if they come in for a longer-haul investment, that is great. But for speculation, well, it's not interesting. We'll tax you. We'll tax you with capital gains. You have to recognise how dangerous hot money can be; you really have to remember the lesson of 97. It's worth it for the money to come in only if it improves the productivity of the economy.
So would you specifically advise Thailand to be less dependent on the US market?
That's right, and become more focused on the region and to continue your stimulus package for the country and all the lines that you've done. You have to try to fill in the gap until the region or the world recovers. But beware of the flood of liquidity coming from the West and use the full arsenal of tools that you have in your disposal. Don't buy into the notion that the market knows best. Don't buy into the notion that you only have one instrument, that is interest rates. You have many instruments. Use every one that you can so the government has both the opportunity and the responsibility to insulate the country from the volatility that comes from abroad.
Why did [the Americans] have a double standard? Is it because Obama could have faced some serious political consequences if he didn't bail out the banks?
Well, they tried to sell the idea that if you play by the rules of capitalism, the whole thing will fall apart. To me, if you have good governance, it will make the economy grow. Now, what happens is, you have a system where you've given out hundreds of billions of dollars and everybody wants it - the car companies, the car suppliers. Everybody would say why do you give it to them, but what about us?
So we have a double standard between Asia and America and we have a double standard in America. We fired GM's president but the guys on Wall Street who got us into this mess, we haven't done anything about them. So we've all these double standards which are undermining confidence in the government. It gives you a smell of corruption. Corruption American's style, but it's still corruption.
President Obama's excuse is that if we let the financial institutions fall, the whole world economy will collapse.
Here again we see the double standard. In the case of GM and Chrysler he saved the companies but not the shareholders. He could have done that with banks, but that's playing by the rules of capitalism, which he chose not to play. For no good reason.
Why is that?
They tried to tell us a story. The story was you would create panic. This is the tactic the Bush administration perfected every time they wanted something, [like] the war on terror. Well, we continue that, but now it isn't the fear of terrorism, it's the fear of financial meltdown. If you took a moment to look at it, if we had debt for equity swap and watched the shareholders fall, you play the rules of capitalism. People would have had more confidence in the companies because the money is not going out to the shareholders.
So is Obama a socialist?
Oh, defenitely not. Quite the contrary. It's not socialism because socialism cares about people, ordinary people but we're giving money to the rich system. This is old-fashioned corporate welfarism. It's the same thing that Bush did, saving the corporations. What we do in the US is we put the bank first and we don't do very much about the people who are in their homes. We said if we pour enough hundreds of billions dollars into banks, maybe ordinary Americans would benefit, maybe that will happen.
Does it happen?
No. It doesn't happen.
You sometimes advocate government intervention. So why are you against Obama's intervention?
There wasn't any government intervention, absolutely not. The private sector has totally failed. We should have had government intervention much earlier without the failure. The irony is that, in the name of keeping government out of the market, we wound up with the biggest intervention in the market. So the mistakes of the free markets economics like Greenspan's has led to the largest role of government in America in its history, so you have to appreciate the irony of the situation. We should have had intervention that makes sure we get the quickest recovery with the least cost. Which means for instance that if we gave money to the banks, we would get claims on the banks that would compensate us.
That's not the case now?
Studies show that if we gave a dollar we got back 67 cents, and the more recent ones put it at 25 cents. We were cheated, and it was very clear that the people who were negotiating for us were working for the banks not for American taxpayers. If they were working for a private company, they would have been fired.
Back to Asia, the Thai prime minister said we are recovering with a V-shape start. Do you agree?
Yes, all the evidence suggests that. America is likely not to have a robust recovery, so if Asia is going to have a robust road, it has to change its model. It cannot be as dependent on exports to the US. This is the problem that Asia as a whole has to face. Not every country in Asia exports to the US - some export to China, but many exports to China become Chinese exports to the US. So, the Asian system is very dependent on exports to the US. That has to change.
What would you advise the Thai PM?
Economies in Asia are dynamic. So, Asia is always doing very well, and now the big challenge is to increase the domestic base - investment and consumption - and to open to but not be dependent on the US. The other point is, it's a very difficult time because the US and some other countries are flooding the world with liquidity. Understandable, because they want to make sure that they don't suffer from problems. But we have a global financial system while liquidity is being decided at the national level. You provide liquidity to American firms but they do not spend in America, and they do sell it out. They look for the best economies in the world, in Asia, but now the problem is that too often they simply look for easy opportunities - real estate, commodities. Another bubble [will] distort the economies in Asia. You have to protect yourself against the mismanagement of financial policies in US.
Be careful. You may be getting the easy money, but it's overnight money. You don't build robust growth based on easy money. You have to say, if they come in for a longer-haul investment, that is great. But for speculation, well, it's not interesting. We'll tax you. We'll tax you with capital gains. You have to recognise how dangerous hot money can be; you really have to remember the lesson of 97. It's worth it for the money to come in only if it improves the productivity of the economy.
So would you specifically advise Thailand to be less dependent on the US market?
That's right, and become more focused on the region and to continue your stimulus package for the country and all the lines that you've done. You have to try to fill in the gap until the region or the world recovers. But beware of the flood of liquidity coming from the West and use the full arsenal of tools that you have in your disposal. Don't buy into the notion that the market knows best. Don't buy into the notion that you only have one instrument, that is interest rates. You have many instruments. Use every one that you can so the government has both the opportunity and the responsibility to insulate the country from the volatility that comes from abroad.
PROFITS MAY RISE, BUT WHAT ABOUT PEOPLE?
Economic recovery figures mean nothing if mass unemployment is not addressed
So much has been said about V, W or L shapes regarding how the world is doing economically. But Nobel laureate Joseph Stiglitz hit the nail on the head when he insisted that those possible recovery trends will amount to nothing if the most important element of the economy is overlooked. Labour, he said, still faces the unemployment menace and it will be a travesty to laud industries boasting fresh profits that resulted from massive layoffs.
Stiglitz may be regarded by some as a doomsayer, but this particular analysis of his confirms him as a humanist. Unemployment, he warns, has reached staggering levels in the United States and is expected to rise even further. His stand during his Bangkok visit last week was clear: If people have to suffer, how can we say things are on the up, no matter how good figures on Wall Street read?
The US government has been too dominated by the influences of the financial market, which brought on the current global crisis, but which is trying to apply its own measurements on how bad or good things are. This attitude has in fact spread beyond America. "Economic survival" often refers to those who aren't really affected by a bad economy. "Survival" is a term monopolised by those who will manage to survive anyhow.
That's the old model, which is struggling to maintain its part in the status quo. It's all about the survival of the big fish. If you are a junior worker, you may have to be sacrificed so that richer people can "survive". If layoffs improve the financial figures of your company, the management will be lauded for effective cost cutting. And that's if the analysts are kind, because otherwise it will be called the riddance of excess rather than cost cutting.
America will be feeling the pinch of a new economic order that is taking shape to challenge the Wall Street formula. Up to 15 per cent of Americans could lose their jobs, and that will defy whatever recovery statistics the other side may try to produce. Peaceful co-existence between flawed capitalism and the American public will be severely tested, after mutual benefits have evaporated.
Labour is heavily linked to consumption. Workers are what make the real world. We can't expect the "real economy" to be improving when people, discouraged by job insecurity, cut back on their spending to prepare themselves for the worst. They are what make real demand, and if capitalism still ignores this truth and keeps its focus on self-serving data, the "rebound" will be fake and short-lived.
Capitalism has arguably rewarded many wrong people, like those who were cunning enough to turn mega debts into triple-A assets in the middle of the US bubble. Those wrong people somehow came to be the driving force of our world, the world we believed was ours. Housing projects flooded the market because they wanted them. Bad debts were good debts because they said so. We were told to put our life savings in the hands of strangers half a world away because they believed it was the way things should be. We trusted everything they said when it came to what was important and what was not.
The illusional "leverage" has failed and the real leverage, the work force that drives the real world, has been overlooked. And according to Stiglitz, the Obama administration is now in danger of falling into the same old trap. The overriding mentality remains that if you can get the financial market fixed, everything will be fine and you will get away with murder.
The bottom line is, no system can be solid if it is weak at the bottom, and flaws in capitalism have created a huge gap between the elite and those whose only fault is that they invested with their labour in all products. Capitalism gave so much importance to the "brains", with their ability to innovate, that the brains finally became aloof and detached themselves from reality.
We have reached the stage where the arms and legs are saying "Enough", that we live or die together. Unemployment, the suffering of those at the bottom, will decide the success or failure of efforts to solve the current crisis. Delusion - that things are improving, whereas job security is actually non-existent - will only prolong the illness. It will be like the one last good dream of a patient in a coma before it's all over.
Whether it will be a V, or W, or L, or wobbly L should have to do with how everything non-Wall Street is doing. In other words, if the patient can lift his arms and kick the air with his legs, it will be a surer sign of recovery than signals sent from the brain that everything is okay.
So much has been said about V, W or L shapes regarding how the world is doing economically. But Nobel laureate Joseph Stiglitz hit the nail on the head when he insisted that those possible recovery trends will amount to nothing if the most important element of the economy is overlooked. Labour, he said, still faces the unemployment menace and it will be a travesty to laud industries boasting fresh profits that resulted from massive layoffs.
Stiglitz may be regarded by some as a doomsayer, but this particular analysis of his confirms him as a humanist. Unemployment, he warns, has reached staggering levels in the United States and is expected to rise even further. His stand during his Bangkok visit last week was clear: If people have to suffer, how can we say things are on the up, no matter how good figures on Wall Street read?
The US government has been too dominated by the influences of the financial market, which brought on the current global crisis, but which is trying to apply its own measurements on how bad or good things are. This attitude has in fact spread beyond America. "Economic survival" often refers to those who aren't really affected by a bad economy. "Survival" is a term monopolised by those who will manage to survive anyhow.
That's the old model, which is struggling to maintain its part in the status quo. It's all about the survival of the big fish. If you are a junior worker, you may have to be sacrificed so that richer people can "survive". If layoffs improve the financial figures of your company, the management will be lauded for effective cost cutting. And that's if the analysts are kind, because otherwise it will be called the riddance of excess rather than cost cutting.
America will be feeling the pinch of a new economic order that is taking shape to challenge the Wall Street formula. Up to 15 per cent of Americans could lose their jobs, and that will defy whatever recovery statistics the other side may try to produce. Peaceful co-existence between flawed capitalism and the American public will be severely tested, after mutual benefits have evaporated.
Labour is heavily linked to consumption. Workers are what make the real world. We can't expect the "real economy" to be improving when people, discouraged by job insecurity, cut back on their spending to prepare themselves for the worst. They are what make real demand, and if capitalism still ignores this truth and keeps its focus on self-serving data, the "rebound" will be fake and short-lived.
Capitalism has arguably rewarded many wrong people, like those who were cunning enough to turn mega debts into triple-A assets in the middle of the US bubble. Those wrong people somehow came to be the driving force of our world, the world we believed was ours. Housing projects flooded the market because they wanted them. Bad debts were good debts because they said so. We were told to put our life savings in the hands of strangers half a world away because they believed it was the way things should be. We trusted everything they said when it came to what was important and what was not.
The illusional "leverage" has failed and the real leverage, the work force that drives the real world, has been overlooked. And according to Stiglitz, the Obama administration is now in danger of falling into the same old trap. The overriding mentality remains that if you can get the financial market fixed, everything will be fine and you will get away with murder.
The bottom line is, no system can be solid if it is weak at the bottom, and flaws in capitalism have created a huge gap between the elite and those whose only fault is that they invested with their labour in all products. Capitalism gave so much importance to the "brains", with their ability to innovate, that the brains finally became aloof and detached themselves from reality.
We have reached the stage where the arms and legs are saying "Enough", that we live or die together. Unemployment, the suffering of those at the bottom, will decide the success or failure of efforts to solve the current crisis. Delusion - that things are improving, whereas job security is actually non-existent - will only prolong the illness. It will be like the one last good dream of a patient in a coma before it's all over.
Whether it will be a V, or W, or L, or wobbly L should have to do with how everything non-Wall Street is doing. In other words, if the patient can lift his arms and kick the air with his legs, it will be a surer sign of recovery than signals sent from the brain that everything is okay.
MYSPACE BUYS ONLINES MUSIC SENSATION ILIKE IN US$20-MILLION DEAL
MySpace has announced it is buying online music discovery hotspot iLike and plans to expand the service to other forms of entertainment such as games and films.
Financial terms of the deal were not disclosed, but technology blogs said inside sources had valued the deal at about US$20 million (Bt683 million).
"The iLike acquisition advances our relentless pursuit of innovation and the need to create new distributed social experiences in music and beyond," said MySpace CEO Owen Van Natta.
Since being founded two years ago by brothers Ali and Hadi Partovi, iLike has become a favourite way for people to find new music, live performances and concert tickets.
"MySpace is trying to recapture relevance from Facebook and attempting to use iLike to broaden its potential customer base and create a more viable future," said Enderle Group analyst Rob Enderle in Silicon Valley, California.
"It isn't a bad idea. iLike is a well-regarded property, and catching Facebook organically is likely not in the cards."
It appears iLike was under pressure from investors eager to reap profit, said Michael Gartenberg, vice president for strategy and analysis at market-research firm Interpret.
"It was a way for them to get out," Gartenberg said of iLike's backers.
"These guys were the high-flying Web 2.0 company, and they sold for a lot less than their perceived valuation not long ago."
The value of iLike had recently been pegged at more than $50 million. People can visit iLike's website or install the start-up's applications at Apple's online iTunes shop or social networks, including Facebook, MySpace, Bebo, hi5 and Orkut.
iLike says it has 55 million users.
Gartenberg believes iLike's dependence on other websites as stages for its applications proved to be a weakness.
"It's a problem any time you are totally dependent on someone for your core platform," Gartneberg said. "The dependence on Facebook really was an issue."
MySpace expects to close the iLike deal quickly land said there were no plans to yank the service from archrival Facebook.
"iLike is a great application across many social networks, and we expect to extend that," Van Natta said.
iLike will remain based in Seattle, Washington. MySpace indicated it was eager to apply iLike discovery and sharing technology to other entertainment areas, such as video grames and film.
"It's humbling moment for Ali and me," iLike's founding brothers said.
"Having built the most popular music services on the other social networks, we never imagined that we'd someday team up with MySpace, and we're excited to see what we can accomplish as one team."
The iLike.com website and applications will continue to operate as they always have "except that we'll be working to make them even better," the brothers wrote.
iLike said it would continue testting a service selling digital music downloads and that its goal was eventually to enable people to "impulse buy in-page" from anywhere they could access the Internet.
"Launching another store is going to be challenging in a universe that is so dominated by Apple and iTunes," Gartenberg said. "But we are still in the early stages, where no one is willing to roll over and concede the market to anyone." News Corp-owned MySpace has focused on connecting music-makers and song lovers since being eclipsed last year by Facebook as the world's most popular social-networking service.
"By itself, this donesn't do what MySpace needs done, but as par;t of a larger acquisition strategy and blended with targeted inprovements, this could eventually work," Enderle said. "I worry, however, that this may be less a part of a broader strategy, which hasn't been articulated, and more of a Hail Mary pass to make it look like they are doing something strategic. If it is the latter, this won't end well at all."
Financial terms of the deal were not disclosed, but technology blogs said inside sources had valued the deal at about US$20 million (Bt683 million).
"The iLike acquisition advances our relentless pursuit of innovation and the need to create new distributed social experiences in music and beyond," said MySpace CEO Owen Van Natta.
Since being founded two years ago by brothers Ali and Hadi Partovi, iLike has become a favourite way for people to find new music, live performances and concert tickets.
"MySpace is trying to recapture relevance from Facebook and attempting to use iLike to broaden its potential customer base and create a more viable future," said Enderle Group analyst Rob Enderle in Silicon Valley, California.
"It isn't a bad idea. iLike is a well-regarded property, and catching Facebook organically is likely not in the cards."
It appears iLike was under pressure from investors eager to reap profit, said Michael Gartenberg, vice president for strategy and analysis at market-research firm Interpret.
"It was a way for them to get out," Gartenberg said of iLike's backers.
"These guys were the high-flying Web 2.0 company, and they sold for a lot less than their perceived valuation not long ago."
The value of iLike had recently been pegged at more than $50 million. People can visit iLike's website or install the start-up's applications at Apple's online iTunes shop or social networks, including Facebook, MySpace, Bebo, hi5 and Orkut.
iLike says it has 55 million users.
Gartenberg believes iLike's dependence on other websites as stages for its applications proved to be a weakness.
"It's a problem any time you are totally dependent on someone for your core platform," Gartneberg said. "The dependence on Facebook really was an issue."
MySpace expects to close the iLike deal quickly land said there were no plans to yank the service from archrival Facebook.
"iLike is a great application across many social networks, and we expect to extend that," Van Natta said.
iLike will remain based in Seattle, Washington. MySpace indicated it was eager to apply iLike discovery and sharing technology to other entertainment areas, such as video grames and film.
"It's humbling moment for Ali and me," iLike's founding brothers said.
"Having built the most popular music services on the other social networks, we never imagined that we'd someday team up with MySpace, and we're excited to see what we can accomplish as one team."
The iLike.com website and applications will continue to operate as they always have "except that we'll be working to make them even better," the brothers wrote.
iLike said it would continue testting a service selling digital music downloads and that its goal was eventually to enable people to "impulse buy in-page" from anywhere they could access the Internet.
"Launching another store is going to be challenging in a universe that is so dominated by Apple and iTunes," Gartenberg said. "But we are still in the early stages, where no one is willing to roll over and concede the market to anyone." News Corp-owned MySpace has focused on connecting music-makers and song lovers since being eclipsed last year by Facebook as the world's most popular social-networking service.
"By itself, this donesn't do what MySpace needs done, but as par;t of a larger acquisition strategy and blended with targeted inprovements, this could eventually work," Enderle said. "I worry, however, that this may be less a part of a broader strategy, which hasn't been articulated, and more of a Hail Mary pass to make it look like they are doing something strategic. If it is the latter, this won't end well at all."
Businessmen dampen recovery hopes
Business leaders have warned local companies against excessive optimism from improving global and Thai economic indicators, as uncertainties remain while some key sectors have yet to improve.
In the worst case, Thai gross domestic product in the fourth quarter may see no increase from last year and global recovery is still uncertain, said Pramon Sutivong, former chairman of the Thai Chamber of Commerce and the Board of Trade.
"Improving economic figures being released are the result of stimulus packages introduced globally. We are hoping the gradual global rebound will keep its momentum throughout the rest of the year to drive the economic recovery by the first quarter of next year onwards,"said Mr Pramon.
"But as long as confidence among consumers across the globe has yet to revive, the world's economic climate will remain worrisome," he said in a forum on human capital hosted by Siam Cement Group (SCG) yesterday.
The global economy - and especially export-driven economies like Thailand - will see much slower recovery from the current recession than from the 1997 Asian financial crisis, said Mr Pramon.
But some sectors have bounced back.The automotive industry, for example,is now projected to lose 10% in the latter half, versus the contraction of nearly 30% recorded in the first six months.
"If so, the industry would decline 20%on average for all 2009, which is not bad when the global economy is severely hit by recession," said Mr Pramon, also the chairman of Toyota Motor Thailand.
Kannikar Chalitaporn, the president of Siam Commercial Bank, cautioned about economic challenges in the next six months, noting that the tourism sector has yet to rebound from the crisis.
"Europe will recover more slowly than the US, which has seen consumption decline considerably. Even though Southeast Asia has become a major destination of Thai-made goods, the region still relies on exports to the US and Europe," she said.
Tourism, which accounts for 6% of the Thai economy and employs hundreds of thousands, has yet to see bookings recover for the final quarter, normally the high season, she said.
Santi Vilassakdanont, chairman of the Federation of Thai Industries, said the Abhisit Vejjajiva administration's economic stimulus is projected to drive the Thai economy to resume positive growth in the first quarter of next year.
"However, political stability still matters for business confidence. As well,economic stimulus programmes must be implemented in transparent and effective ways," said Mr Santi.
Mr Pramon said political changes,either a house dissolution or the resignation of Prime Minister Abhisit, could dampen prospects for the Thai economy.
"Changing the premier would not help end the conflicts and it actually wastes a lot of time," he said."Mr Abhisit is not stupid, and I think he is the best choice for the country at the moment."
In the worst case, Thai gross domestic product in the fourth quarter may see no increase from last year and global recovery is still uncertain, said Pramon Sutivong, former chairman of the Thai Chamber of Commerce and the Board of Trade.
"Improving economic figures being released are the result of stimulus packages introduced globally. We are hoping the gradual global rebound will keep its momentum throughout the rest of the year to drive the economic recovery by the first quarter of next year onwards,"said Mr Pramon.
"But as long as confidence among consumers across the globe has yet to revive, the world's economic climate will remain worrisome," he said in a forum on human capital hosted by Siam Cement Group (SCG) yesterday.
The global economy - and especially export-driven economies like Thailand - will see much slower recovery from the current recession than from the 1997 Asian financial crisis, said Mr Pramon.
But some sectors have bounced back.The automotive industry, for example,is now projected to lose 10% in the latter half, versus the contraction of nearly 30% recorded in the first six months.
"If so, the industry would decline 20%on average for all 2009, which is not bad when the global economy is severely hit by recession," said Mr Pramon, also the chairman of Toyota Motor Thailand.
Kannikar Chalitaporn, the president of Siam Commercial Bank, cautioned about economic challenges in the next six months, noting that the tourism sector has yet to rebound from the crisis.
"Europe will recover more slowly than the US, which has seen consumption decline considerably. Even though Southeast Asia has become a major destination of Thai-made goods, the region still relies on exports to the US and Europe," she said.
Tourism, which accounts for 6% of the Thai economy and employs hundreds of thousands, has yet to see bookings recover for the final quarter, normally the high season, she said.
Santi Vilassakdanont, chairman of the Federation of Thai Industries, said the Abhisit Vejjajiva administration's economic stimulus is projected to drive the Thai economy to resume positive growth in the first quarter of next year.
"However, political stability still matters for business confidence. As well,economic stimulus programmes must be implemented in transparent and effective ways," said Mr Santi.
Mr Pramon said political changes,either a house dissolution or the resignation of Prime Minister Abhisit, could dampen prospects for the Thai economy.
"Changing the premier would not help end the conflicts and it actually wastes a lot of time," he said."Mr Abhisit is not stupid, and I think he is the best choice for the country at the moment."
GROUPS AGAINST MAJOR TOBACCO EVENT
Anti-smoking groups hit out yesterday at news that the tobacco industry plans to stage a major conference in Bangkok, saying the move would have an adverse impact on efforts to limit smoking.
Action Smoking and Health Foundation and its allies said they opposed Tabinfo Asia 2009 being held in Thailand.
"We should not be silent over this event as they [the tobacco industry] will be doing something bad for our country," secretary general of the Association, Dr Prakit Watheesathokkij said. "We need to disclose what they will doing here."
He spoke at a seminar titled "Warning about new threats from the tobacco industry", held by the Tobacco Control Research and Knowledge Management Centre yesterday (and today) in Bangkok.
Tabinfo Asia 2009 is the tobacco industry's biggest event. It will be held at Impact Arena Exhibition Centre in Nonthaburi from November 11 to 13. Over 2,000 people from 100 tobacco companies are due to attend.
Asia and Australia have 57 per cent of the international tobacco market. This year's event will highlight how to do business in countries where ads for tobacco products are banned. Attendees will also discuss new tactics and new innovations to develop a nicotine delivery system, artificial flavouring and strategies to create a "society" of smokers and people doing business online via Twitter.
Prakit said: "Even though they do not target general people to attend the event, these are the methods they are trying to use to inform the public that cigarettes are general products which can be shown at the exhibition. Indeed, this product kills over five million people around the world per year."
He said tobacco companies would also display their new cigarette packs and allow those who go to smoke inside the exhibition hall, despite the fact Thai law banned the display of cigarettes in all kind of places and only allowed people to smoke in specific areas.
The WHO Framework Convention on Tobacco Control, signed by 168 countries and legally binding in 165 countries, also prohibits governments and officials around the world which sign the convention from being involved in activities organised by tobacco companies, as it could cause conflicts of interest and signal an acceptance to tobacco industries.
Prakit also warned Thailand Tobacco Monopoly, which will have staff at the event, to stop the organiser holding the exhibition as multinational tobacco companies could attend and it could boost smoking.
The event was held in Brazil last year and met with protests by local people, which caused the organiser to scale down plans from a big exhibition to a small-scale function instead.
About 30,000 Malaysians protested at the event when it was held there in 2005.
"We will not stop them from organising such an event but we can tell the public about the new tactics they will use to try to lure people to smoke cigarettes," Prakit said.
Anti-smoking groups had set up a special committee to watch and monitor moves by the tobacco industry.
Public Health Minister Witthaya Kaewparadai said he would ask the Department of Disease Control to team up with the Department of Excise to study the event to see if it will violate Thai laws.
Action Smoking and Health Foundation and its allies said they opposed Tabinfo Asia 2009 being held in Thailand.
"We should not be silent over this event as they [the tobacco industry] will be doing something bad for our country," secretary general of the Association, Dr Prakit Watheesathokkij said. "We need to disclose what they will doing here."
He spoke at a seminar titled "Warning about new threats from the tobacco industry", held by the Tobacco Control Research and Knowledge Management Centre yesterday (and today) in Bangkok.
Tabinfo Asia 2009 is the tobacco industry's biggest event. It will be held at Impact Arena Exhibition Centre in Nonthaburi from November 11 to 13. Over 2,000 people from 100 tobacco companies are due to attend.
Asia and Australia have 57 per cent of the international tobacco market. This year's event will highlight how to do business in countries where ads for tobacco products are banned. Attendees will also discuss new tactics and new innovations to develop a nicotine delivery system, artificial flavouring and strategies to create a "society" of smokers and people doing business online via Twitter.
Prakit said: "Even though they do not target general people to attend the event, these are the methods they are trying to use to inform the public that cigarettes are general products which can be shown at the exhibition. Indeed, this product kills over five million people around the world per year."
He said tobacco companies would also display their new cigarette packs and allow those who go to smoke inside the exhibition hall, despite the fact Thai law banned the display of cigarettes in all kind of places and only allowed people to smoke in specific areas.
The WHO Framework Convention on Tobacco Control, signed by 168 countries and legally binding in 165 countries, also prohibits governments and officials around the world which sign the convention from being involved in activities organised by tobacco companies, as it could cause conflicts of interest and signal an acceptance to tobacco industries.
Prakit also warned Thailand Tobacco Monopoly, which will have staff at the event, to stop the organiser holding the exhibition as multinational tobacco companies could attend and it could boost smoking.
The event was held in Brazil last year and met with protests by local people, which caused the organiser to scale down plans from a big exhibition to a small-scale function instead.
About 30,000 Malaysians protested at the event when it was held there in 2005.
"We will not stop them from organising such an event but we can tell the public about the new tactics they will use to try to lure people to smoke cigarettes," Prakit said.
Anti-smoking groups had set up a special committee to watch and monitor moves by the tobacco industry.
Public Health Minister Witthaya Kaewparadai said he would ask the Department of Disease Control to team up with the Department of Excise to study the event to see if it will violate Thai laws.
Monday, August 24, 2009
OUT OF THE WOODS?
The world is emerging from a deep slump but can it last? By Tom Raum in Washington
Turnabouts in European and Asian economies, along with recent gains in the US, are raising hopes that the worldwide recession is drawing to a close. Thats not to say the coast is clear.
The brightening outlook in Europe and Asia and the improvement in US credit markets and indicators reflect heavy government stimulus spending.Many analysts question whether the top economies can sustain recoveries after stimulus measures and easy-credit policies have run their course and in the absence of significant new consumer spending, especially among Americans.
Its not clear that these economies can continue to move forward without stimulus, said Mark Zandi, chief economist for Moodys Economy.com.And thats in part why stock markets across the globe are nervous.
It will be difficult for other countries to pull out of recession until the US, still one quarter of the world economy, starts growing, he said.
After a frightening free-fall across Europe in late 2008, France and Germany,the continents two largest economies,reported recently that they had grown slightly in the second quarter of 2009.Other major European countries reported they were still struggling, but with generally improved figures over late 2008 and earlier this year.
China, Japan, Hong Kong, Singapore and South Korea have also reported rebounds as government stimulus efforts across the globe have begun to show results.
Russia, among the hardest hit of major economies as oil prices slumped and many foreign investors fled the country,appeared to be stabilising.
Meanwhile, in the United States, the Federal Reserve said the worlds largest economy appeared to be levelling out and many economists see a secondhalf rebound.
It all adds up to an improving picture ahead of an economic summit next month in Pittsburgh of the worlds top 20 industrial and developing economies.
It is the third such meeting of all the major economic players, after one convened by former President George W.Bush in November in Washington, and one held earlier this year in London. It is the first to be held recently as economies appear to be improving.
But until American consumers begin spending again, and so long as jobs are still being lost, the durability of any re-covery is questionable. Major retailers reported this week that US consumers are continuing to rein in spending on all but basics.
Despite slight recent improvements in many US economic statistics, many consumers have not seen a change in their lives.
So many jobs have been lost nearly seven million since the recession began in December 2007 that the unemployment rate will remain high long after the economy begins to rebound.
Many out-of-work Americans have lost unemployment and severance benefits and are depleting their savings. Others are saving more and spending less, still shaken from the worst economic downturn since the Great Depression of the 1930s.
This is going to be the mother of all jobless recoveries, said Allen Sinai, chief global economist for Decision Economics, a consulting firm.
Japan, the worlds second-largest economy, grew 0.9% in the second quarter, or April to June, compared with the prior quarter as export sales picked up after the countrys deepest slump since World War II, the Japanese government reported earlier this week. It was the latest major economy to report upbeat second-quarter results.
Japans return to growth thanks to a 6.3% uptick in exports along with government stimulus measures marked the end of a yearlong recession.
But the development, along with recent news that other major economies had resumed economic growth or were stabilising, did not impress investors as global stock markets sank and then zigzagged amid fears by jittery international investors that the recoveries were not sustainable.
In the United States, the gross domestic product contracted at a 1% pace in the April-June quarter, after plunging 6.4% in the January-March quarter, the worst in 27 years, and falling by 5.4% in the fourth quarter of 2008.
The latest statistics suggested the recession is in its final stages, and some believe it may have already ended.
Still, economists are mixed on the pace of recovery. Many barriers clearly stand in the way of a quick rebound.
Noting Chinas fast bounce it posted more than 6% growth in the first half of 2009 Peter Morici, a business economist at the University of Maryland and a critic of President Barack Obamas economic recovery plans, said:China has a $400-billion stimulus package, and its economy is firing on all cylinders.President Obama has an $800-billion stimulus but prospects for the US economic recovery are fragile.
Other economists are guardedly optimistic. And Lawrence Summers, the top White House economic adviser, predicts a substantial return to normalcy in the coming months.
While acknowledging we have a long way to go, he notes that most forecasts for GDP growth in the second half of the year are now positive.It is reasonable to say that we are in a very different place than we were six months ago; that the sense of free-fall, of vertical decline,has been contained, he added.
Turnabouts in European and Asian economies, along with recent gains in the US, are raising hopes that the worldwide recession is drawing to a close. Thats not to say the coast is clear.
The brightening outlook in Europe and Asia and the improvement in US credit markets and indicators reflect heavy government stimulus spending.Many analysts question whether the top economies can sustain recoveries after stimulus measures and easy-credit policies have run their course and in the absence of significant new consumer spending, especially among Americans.
Its not clear that these economies can continue to move forward without stimulus, said Mark Zandi, chief economist for Moodys Economy.com.And thats in part why stock markets across the globe are nervous.
It will be difficult for other countries to pull out of recession until the US, still one quarter of the world economy, starts growing, he said.
After a frightening free-fall across Europe in late 2008, France and Germany,the continents two largest economies,reported recently that they had grown slightly in the second quarter of 2009.Other major European countries reported they were still struggling, but with generally improved figures over late 2008 and earlier this year.
China, Japan, Hong Kong, Singapore and South Korea have also reported rebounds as government stimulus efforts across the globe have begun to show results.
Russia, among the hardest hit of major economies as oil prices slumped and many foreign investors fled the country,appeared to be stabilising.
Meanwhile, in the United States, the Federal Reserve said the worlds largest economy appeared to be levelling out and many economists see a secondhalf rebound.
It all adds up to an improving picture ahead of an economic summit next month in Pittsburgh of the worlds top 20 industrial and developing economies.
It is the third such meeting of all the major economic players, after one convened by former President George W.Bush in November in Washington, and one held earlier this year in London. It is the first to be held recently as economies appear to be improving.
But until American consumers begin spending again, and so long as jobs are still being lost, the durability of any re-covery is questionable. Major retailers reported this week that US consumers are continuing to rein in spending on all but basics.
Despite slight recent improvements in many US economic statistics, many consumers have not seen a change in their lives.
So many jobs have been lost nearly seven million since the recession began in December 2007 that the unemployment rate will remain high long after the economy begins to rebound.
Many out-of-work Americans have lost unemployment and severance benefits and are depleting their savings. Others are saving more and spending less, still shaken from the worst economic downturn since the Great Depression of the 1930s.
This is going to be the mother of all jobless recoveries, said Allen Sinai, chief global economist for Decision Economics, a consulting firm.
Japan, the worlds second-largest economy, grew 0.9% in the second quarter, or April to June, compared with the prior quarter as export sales picked up after the countrys deepest slump since World War II, the Japanese government reported earlier this week. It was the latest major economy to report upbeat second-quarter results.
Japans return to growth thanks to a 6.3% uptick in exports along with government stimulus measures marked the end of a yearlong recession.
But the development, along with recent news that other major economies had resumed economic growth or were stabilising, did not impress investors as global stock markets sank and then zigzagged amid fears by jittery international investors that the recoveries were not sustainable.
In the United States, the gross domestic product contracted at a 1% pace in the April-June quarter, after plunging 6.4% in the January-March quarter, the worst in 27 years, and falling by 5.4% in the fourth quarter of 2008.
The latest statistics suggested the recession is in its final stages, and some believe it may have already ended.
Still, economists are mixed on the pace of recovery. Many barriers clearly stand in the way of a quick rebound.
Noting Chinas fast bounce it posted more than 6% growth in the first half of 2009 Peter Morici, a business economist at the University of Maryland and a critic of President Barack Obamas economic recovery plans, said:China has a $400-billion stimulus package, and its economy is firing on all cylinders.President Obama has an $800-billion stimulus but prospects for the US economic recovery are fragile.
Other economists are guardedly optimistic. And Lawrence Summers, the top White House economic adviser, predicts a substantial return to normalcy in the coming months.
While acknowledging we have a long way to go, he notes that most forecasts for GDP growth in the second half of the year are now positive.It is reasonable to say that we are in a very different place than we were six months ago; that the sense of free-fall, of vertical decline,has been contained, he added.
BOTTOM-UP APPROACH TO DEVELOPMENT BETTER
Villagers should be encouraged to collectively fix goals for their own community's development, implement their own means to achieve them and choose metrics to measure the results, a seminar heard last week.
A bottom up approach to development by local people themselves should replace the heavy reliance on the top-down approach directed by the government or academics in Bangkok, Paiboon Wattanasiritham, a prominent figure in community development, told the Nation Conference.
Paiboon is an adviser to two communities in Ratchaburi, west of Bangkok.
While the government each year sets a target for economic growth and lays out many indicators to measure it, villagers of Tambon Baanluak in Photaram and Tambon Hnongpanjan in Baankha choose to determine their own goals and methods of achieving them and key indicators for making assessments, he said.
For example, each community has several objectives, such as the physical and mental health of its members, unity, adequate income, no drug abuse, participation in community affairs, preservation of local culture, and honest and accountable leaders.
Then the community designs and implements the means to attain them.
For example, to achieve well being in health, public health volunteers have to educate the people and organise regular medical check-ups. And a campaign to promote proper behaviour is launched.
Villagers can use statistics from local hospitals on patient visits as a key indicator to measure the success or failure of their collective efforts. This procedure over time should enhance their problem-solving skills.
"It takes time … I don't believe in frog jumps," Paiboon said, referring to the trial-and-error process initiated and implemented by villagers.
Over the past decade, people have started to grasp the concept of community development after 20 years of efforts to promote it. "Thousand of communities have implemented their own development scheme," he said.
Jayati Ghosh, economics professor at Jawaharlal Nehru University, argued that in the market economy, the poor do not benefit even in boom times. The boom is a problem, leading to excessive exploitation of nature, which results in the high pollution of air and water resources and eventually climate change, she said. Internationally, developing countries export cheap products and credit to developed countries. Migrant workers also provide cheap labour to advanced countries, she said. "The poor subsidise the rich," she said.
Current economic development plans also create all the wrong incentives by emphasising short-term returns rather than long-run sustainable development. For example young talents in India aspire to work in the finance industry in order to make a fast buck while India lacks professionals in basic research, she said.
Governments should discipline the market, particularly the financial market, she added.
A bottom up approach to development by local people themselves should replace the heavy reliance on the top-down approach directed by the government or academics in Bangkok, Paiboon Wattanasiritham, a prominent figure in community development, told the Nation Conference.
Paiboon is an adviser to two communities in Ratchaburi, west of Bangkok.
While the government each year sets a target for economic growth and lays out many indicators to measure it, villagers of Tambon Baanluak in Photaram and Tambon Hnongpanjan in Baankha choose to determine their own goals and methods of achieving them and key indicators for making assessments, he said.
For example, each community has several objectives, such as the physical and mental health of its members, unity, adequate income, no drug abuse, participation in community affairs, preservation of local culture, and honest and accountable leaders.
Then the community designs and implements the means to attain them.
For example, to achieve well being in health, public health volunteers have to educate the people and organise regular medical check-ups. And a campaign to promote proper behaviour is launched.
Villagers can use statistics from local hospitals on patient visits as a key indicator to measure the success or failure of their collective efforts. This procedure over time should enhance their problem-solving skills.
"It takes time … I don't believe in frog jumps," Paiboon said, referring to the trial-and-error process initiated and implemented by villagers.
Over the past decade, people have started to grasp the concept of community development after 20 years of efforts to promote it. "Thousand of communities have implemented their own development scheme," he said.
Jayati Ghosh, economics professor at Jawaharlal Nehru University, argued that in the market economy, the poor do not benefit even in boom times. The boom is a problem, leading to excessive exploitation of nature, which results in the high pollution of air and water resources and eventually climate change, she said. Internationally, developing countries export cheap products and credit to developed countries. Migrant workers also provide cheap labour to advanced countries, she said. "The poor subsidise the rich," she said.
Current economic development plans also create all the wrong incentives by emphasising short-term returns rather than long-run sustainable development. For example young talents in India aspire to work in the finance industry in order to make a fast buck while India lacks professionals in basic research, she said.
Governments should discipline the market, particularly the financial market, she added.
CREATIVITY HOLDS THE KEY FOR THAILAND
Thailand needs to capitalise on its cultural heritage and creative abilities in its recovery from the global economic crisis, leading economists told a conference recently.
The international conference on "Asia: Road to New Economy" was held at the Plaza Athenee Hotel by The Nation and Asia News Network.
In his talk on "Reinventing Thailand," Apirak Kosayodhin, adviser to the prime minister and former Bangkok governor, described the emergence of a new global trend characterised by a knowledge-based society with strong innovation and creative skills.
He noted that as the country recovers from the global economic crisis, political issues and the 2009 influenza epidemic, it needs to focus more on its human capital, educational standardisation, and technology and innovation skills to drive the knowledge-based society.
The new focus would also take into account factors such as cultural heritage, urbanisation, greater international mobility and connectivity, health and safety, the ageing society, good governance and climate change.
Thailand, particularly upcountry areas such as Isaan and the North, possess an exceptionally rich cultural heritage that can provide the basis for various creative- and tourism-related economies, he said.
There is a need for more investment to drive Thailand's creative potential, he said. The major components of the creative economy are "cultural heritage; arts - including the visual and performing arts; media - including printing, film and broadcasting; digital content; and functional creation including fashion, design, jewellery and architecture".
Knowledge-based communities are important in sustainable local development, he said. Close ties between these rural private sector entities and local universities would facilitate research and development spending in the creation of innovative new products and services.
The "sufficiency economy" theory of His Majesty the King was "an important factor in sustainable development that can lead to an improved quality of life", he said.
Thailand's DNA needs to be redesigned with competitive science and technology skills, more innovation and out-of-the-box thinking, and broader entrepreneurial skills across a greater class range. "We need to drive the creative mindset across a balance of skills," he added.
Stephen Spratt, director of the Centre for Future Economy at the New Economics Foundation, said social equality is the key to maximising the public benefit, human well-being and social value in economic development, rather than purely striving for GDP growth.
Thailand should place less reliance on single-sector development, such as exports to a limited number of markets, he said.
Instead, the country should re-orient exports to Asian consumers, increase value-added production and put more effort into education and skills development.
Internally, it should focus more on domestic production and encourage stronger education and skills development, particularly among SMEs, he added.
The international conference on "Asia: Road to New Economy" was held at the Plaza Athenee Hotel by The Nation and Asia News Network.
In his talk on "Reinventing Thailand," Apirak Kosayodhin, adviser to the prime minister and former Bangkok governor, described the emergence of a new global trend characterised by a knowledge-based society with strong innovation and creative skills.
He noted that as the country recovers from the global economic crisis, political issues and the 2009 influenza epidemic, it needs to focus more on its human capital, educational standardisation, and technology and innovation skills to drive the knowledge-based society.
The new focus would also take into account factors such as cultural heritage, urbanisation, greater international mobility and connectivity, health and safety, the ageing society, good governance and climate change.
Thailand, particularly upcountry areas such as Isaan and the North, possess an exceptionally rich cultural heritage that can provide the basis for various creative- and tourism-related economies, he said.
There is a need for more investment to drive Thailand's creative potential, he said. The major components of the creative economy are "cultural heritage; arts - including the visual and performing arts; media - including printing, film and broadcasting; digital content; and functional creation including fashion, design, jewellery and architecture".
Knowledge-based communities are important in sustainable local development, he said. Close ties between these rural private sector entities and local universities would facilitate research and development spending in the creation of innovative new products and services.
The "sufficiency economy" theory of His Majesty the King was "an important factor in sustainable development that can lead to an improved quality of life", he said.
Thailand's DNA needs to be redesigned with competitive science and technology skills, more innovation and out-of-the-box thinking, and broader entrepreneurial skills across a greater class range. "We need to drive the creative mindset across a balance of skills," he added.
Stephen Spratt, director of the Centre for Future Economy at the New Economics Foundation, said social equality is the key to maximising the public benefit, human well-being and social value in economic development, rather than purely striving for GDP growth.
Thailand should place less reliance on single-sector development, such as exports to a limited number of markets, he said.
Instead, the country should re-orient exports to Asian consumers, increase value-added production and put more effort into education and skills development.
Internally, it should focus more on domestic production and encourage stronger education and skills development, particularly among SMEs, he added.
BRINGING BACK MEMORIES OF 1997
The lifestyles of the rich and famous are up for sale at the Marketplace of the Formerly Rich By Nina Suebsukcharoen
Disturbing memories of the Asian economic meltdown of 1997 are flooding back with the revival of the Marketplace of the Formerly Rich by Benz Thonglor at its seven-storey building in the chic Thong Lor neighbourhood of Bangkok.
However, there is a big difference this time. Company president Wasant Pothipimpanon says that this time around, it is mostly businesses selling surplus inventory, including
jewellery, used high-end watches earlier destined for the US and antiques.
Of course there are also second-hand Mercedes-Benz saloons for sale too but these are being sold by private individuals who are saddled with too many belongings, and not out of financial desperation as happened during the last economic shake-up.
"I am clearing goods for the private sector and those people who have accumulated too many things," says Mr Wasant."These people brought in their stuff to sell for fun but they are not in trouble yet, they haven't reached that point. Right now it is companies and not private individuals that are in trouble."
However, Mr Wasant is very pessimistic about the general outlook and expects households to face more financial woes very soon.But he believes that Thais are born to buy and think it is a loss of face to sell one's possessions."It's not like farang - they have garage sales, they aren't ashamed, they try to sell when they move house."
He blames the banks and their unreasonably tight credit policies for the problems that many businesses are currently facing, noting that they have gone beyond just pressuring executives to not giving them any additional loans at all."I talk to bankers but I don't understand their philosophy."
As Mr Wasant sees it, if a company wants to borrow money against a building worth 100 million baht, banks will only give 50% of that value today although previously they gave 80%, or even 100% if the borrower's credit was good. Those who had previously borrowed against a building and repaid, say,80% of the loan over seven years will not get additional credit even if the building today has appreciated in value by 50%, he says.
Mr Wasant himself ran into this problem with his building, which is worth 300 million baht. He had previously borrowed more than 200 million against it, but reduced the loan to around 100 million baht over a seven- to eight-year period. He asked the bank whether he could borrow more against it for working capital but was turned down. He asked whether he could take out a second mortgage with another bank and was again rebuffed.
"So I had to find 100 million baht from elsewhere to clear [the original loan] and then I moved to another place and got 250 million baht. But at that time, finding 100 million baht to clear it was difficult. Businesses have plunged into this trap and are stuck there.
"I don't understand banks today, they have my 100 million baht back but now have to find new parties to release the money to,maybe 10 parties at 10 million baht each and the assets placed as collateral may not be as good as this one. I don't know what goes on in their heads."
Mr Wasant maintains that the Thai economy need not have deteriorated so much,regardless of what has been taking place elsewhere. Again he blasted bankers for dragging the country down by not adapting foreign economic theories to Thai conditions. In other countries, if a loan against a building turns bad, they have other options besides seeking a court-ordered seizure, which could take five or six years. Instead, they could sell the building and lease it back.
"I go to the bank with my 300 million baht building, I transfer it to the bank, it's a sale and I lease it back with a buy-back option. If I don't buy it back they can seize it without having to sue. Why is this not in place in Thailand?"
Mr Wasant also pointed to another key difference between today and the 1997 crash,which is that the latter hit very suddenly like an earthquake, while this time it is more like a flood but with the waters slowly rising.This has given businessmen time to adjust and move on but some have scaled back their businesses and are not investing anymore. The reduced business activity in turn means less revenue for the government which needs money to help farmers and those who are jobless.
Mr Wasant says the government could promote the sale of goods by restructuring tax collection with automobiles a prime example. Vehicles are currently taxed as they leave the factory, not when they are registered by their owners as occurs elsewhere. This approach deters foreigners from buying.
"Here we collect beforehand because we are afraid we won't be able to collect anything at all. This makes it expensive for people coming from overseas. The tax on a car sold for four million baht is three million baht. If I could park a car here for sale at only one million baht, a foreigner might buy it and take it home."
However it is reassuring that today's economic situation is not as bad as in 1997, with the price of second-hand saloons being sold at the Benz Thonglor fair one indicator. Back in 1997 Mr Wasant recalls selling a 2.4 million baht car for 1.6 million baht and throwing in a house to sweeten the deal. The discounts at the current fair are around 10-15% below the market price, basically the amount saved by cutting out a second-hand dealer.
Mercedes-Benz saloons continue to be big local favourites based on the perception of durability and fuel efficiency - up to 19 kilometres on a litre of diesel, he says.
While the cars are pricey - the cheapest new one at Benz Thonglor costs 2.5 million baht - one can get a 15-year-old vehicle in passable condition for just 300,000 baht.
"Fifteen years old but still a good car, a 15-year-old Benz is still perfect, but Japanese cars can't run after 15 years. While already 15-years-old, a Benz can easily operate for another 10 years."
Disturbing memories of the Asian economic meltdown of 1997 are flooding back with the revival of the Marketplace of the Formerly Rich by Benz Thonglor at its seven-storey building in the chic Thong Lor neighbourhood of Bangkok.
However, there is a big difference this time. Company president Wasant Pothipimpanon says that this time around, it is mostly businesses selling surplus inventory, including
jewellery, used high-end watches earlier destined for the US and antiques.
Of course there are also second-hand Mercedes-Benz saloons for sale too but these are being sold by private individuals who are saddled with too many belongings, and not out of financial desperation as happened during the last economic shake-up.
"I am clearing goods for the private sector and those people who have accumulated too many things," says Mr Wasant."These people brought in their stuff to sell for fun but they are not in trouble yet, they haven't reached that point. Right now it is companies and not private individuals that are in trouble."
However, Mr Wasant is very pessimistic about the general outlook and expects households to face more financial woes very soon.But he believes that Thais are born to buy and think it is a loss of face to sell one's possessions."It's not like farang - they have garage sales, they aren't ashamed, they try to sell when they move house."
He blames the banks and their unreasonably tight credit policies for the problems that many businesses are currently facing, noting that they have gone beyond just pressuring executives to not giving them any additional loans at all."I talk to bankers but I don't understand their philosophy."
As Mr Wasant sees it, if a company wants to borrow money against a building worth 100 million baht, banks will only give 50% of that value today although previously they gave 80%, or even 100% if the borrower's credit was good. Those who had previously borrowed against a building and repaid, say,80% of the loan over seven years will not get additional credit even if the building today has appreciated in value by 50%, he says.
Mr Wasant himself ran into this problem with his building, which is worth 300 million baht. He had previously borrowed more than 200 million against it, but reduced the loan to around 100 million baht over a seven- to eight-year period. He asked the bank whether he could borrow more against it for working capital but was turned down. He asked whether he could take out a second mortgage with another bank and was again rebuffed.
"So I had to find 100 million baht from elsewhere to clear [the original loan] and then I moved to another place and got 250 million baht. But at that time, finding 100 million baht to clear it was difficult. Businesses have plunged into this trap and are stuck there.
"I don't understand banks today, they have my 100 million baht back but now have to find new parties to release the money to,maybe 10 parties at 10 million baht each and the assets placed as collateral may not be as good as this one. I don't know what goes on in their heads."
Mr Wasant maintains that the Thai economy need not have deteriorated so much,regardless of what has been taking place elsewhere. Again he blasted bankers for dragging the country down by not adapting foreign economic theories to Thai conditions. In other countries, if a loan against a building turns bad, they have other options besides seeking a court-ordered seizure, which could take five or six years. Instead, they could sell the building and lease it back.
"I go to the bank with my 300 million baht building, I transfer it to the bank, it's a sale and I lease it back with a buy-back option. If I don't buy it back they can seize it without having to sue. Why is this not in place in Thailand?"
Mr Wasant also pointed to another key difference between today and the 1997 crash,which is that the latter hit very suddenly like an earthquake, while this time it is more like a flood but with the waters slowly rising.This has given businessmen time to adjust and move on but some have scaled back their businesses and are not investing anymore. The reduced business activity in turn means less revenue for the government which needs money to help farmers and those who are jobless.
Mr Wasant says the government could promote the sale of goods by restructuring tax collection with automobiles a prime example. Vehicles are currently taxed as they leave the factory, not when they are registered by their owners as occurs elsewhere. This approach deters foreigners from buying.
"Here we collect beforehand because we are afraid we won't be able to collect anything at all. This makes it expensive for people coming from overseas. The tax on a car sold for four million baht is three million baht. If I could park a car here for sale at only one million baht, a foreigner might buy it and take it home."
However it is reassuring that today's economic situation is not as bad as in 1997, with the price of second-hand saloons being sold at the Benz Thonglor fair one indicator. Back in 1997 Mr Wasant recalls selling a 2.4 million baht car for 1.6 million baht and throwing in a house to sweeten the deal. The discounts at the current fair are around 10-15% below the market price, basically the amount saved by cutting out a second-hand dealer.
Mercedes-Benz saloons continue to be big local favourites based on the perception of durability and fuel efficiency - up to 19 kilometres on a litre of diesel, he says.
While the cars are pricey - the cheapest new one at Benz Thonglor costs 2.5 million baht - one can get a 15-year-old vehicle in passable condition for just 300,000 baht.
"Fifteen years old but still a good car, a 15-year-old Benz is still perfect, but Japanese cars can't run after 15 years. While already 15-years-old, a Benz can easily operate for another 10 years."
RECESSION TAKING A TOLL ON PHILANTHROPY, TOO
Thais must find better channels for their donations than being obsessed with building temples We may be hearing lots of gloomy news about how companies in the auto and other industries have downsized or gone bankrupt in the United States, but one of the less publicised aspects of the impact of the economic recession is how it has affected non-profit foundations and museums in America.
The picture may not be as bleak as General Motors or AIG but it is still worrying, especially when considering that it will likely have repercussions for the developing world, as well.
In June, the Ford Foundation, the second largest in America, announced it was offering buy-outs to one-third of its 550 employees "to reduce expense and avoid cutting its grant-making", The Chronicle of Philanthropy, a US-based journal, reported.
The journal quoted Ford Foundation vice president for communications Marta L Tellado as saying: "We did substantial savings and belt-tightening but unfortunately the economic environment remains really volatile."
Ford, which is also active in Thailand, eliminated 30 staff positions overseas, and also closed down its offices in Hanoi and Moscow in an attempt to save US$40 million (Bt1.36 billion).
The Chronicle of Philanthropy also reported how other foundations are facing a similar predicament. Among them is the Robert Wood Johnson Foundation in Princeton, New Jersey, which is another grant-giving foundation, specialising in improving people's health. It is offering 105 of its 250 staff an "early-retirement incentive programme" as it faces a 27-per-cent drop in assets since 2008. The travel budget has also been cut in half and its small office in Washington DC closed.
While the stock market has been rallying, one of the foundation's executives was quoted as saying: "Our assets will not, in virtually any scenario we imagine, get back to where they were for quite a while."
Another big name, the Kellog Foundation, has resorted to closing down its overseas offices in Sao Paolo and Pretoria as its assets declined by almost 22 per cent since last year to $6.3 billion.
On the museum front also, cutbacks are the order of the day. New York's Metropolitan Museum of Arts cut 14 per cent of its staff, USA Today reported on July 23. This comes as its endowment, membership and corporate sponsors dwindled.
There are similar stories at the Getty Museum in Los Angeles, which is facing a 27-per-cent drop in its endowment. The Detroit Institute of Art, a museum in one of the hardest-hit cities in the US, cut $3 million of its operating cost and reduced staff.
Looking at the situation, it is quite clear that America's well-established Protestant ethic and the culture of giving generous endowment has taken a significant blow.
It will have a considerable impact on the world as these organisations are finding it harder to support their various altruistic projects not just in the US but also overseas.
With all the talk of the rise of China, one must bear in mind that there is yet to exist any similar philanthropic foundations of similar magnitude and ambition as those currently found in the US. In fact, Japan has a far more established tradition of not just giving dole but being a partner in social transformation, with heavyweight bodies like the Toyota or Nippon foundations being active around the world, Thailand included.
We can only hope the situation in the US will soon improve and that the private sector in an emerging superpower like China will quickly learn to shoulder some of the burden and responsibilities that the Americans have been bearing. But that will take a new crop of rich, educated and global-minded Chinese, who are more in tune with the notions of international and global responsibilities and solidarity.
As for Thailand, too much money is being donated to temples. We need to consider how any endowments can be better channelled to things that are not mere concrete edifices but into intangible areas, which will enhance people's knowledge, skills and quality of life.
More incentive is needed for rich Thais to donate their money and land for altruistic causes, and the government should seriously ponder the matter. It has been proved in many prosperous societies that philanthropic work and activities are vital to ensuring a caring and cultured society.
It's a shame for Thailand that we have done very little for our poorer neighbours in the region. This is something we can definitely improve on, even in this tight economic situation.
The picture may not be as bleak as General Motors or AIG but it is still worrying, especially when considering that it will likely have repercussions for the developing world, as well.
In June, the Ford Foundation, the second largest in America, announced it was offering buy-outs to one-third of its 550 employees "to reduce expense and avoid cutting its grant-making", The Chronicle of Philanthropy, a US-based journal, reported.
The journal quoted Ford Foundation vice president for communications Marta L Tellado as saying: "We did substantial savings and belt-tightening but unfortunately the economic environment remains really volatile."
Ford, which is also active in Thailand, eliminated 30 staff positions overseas, and also closed down its offices in Hanoi and Moscow in an attempt to save US$40 million (Bt1.36 billion).
The Chronicle of Philanthropy also reported how other foundations are facing a similar predicament. Among them is the Robert Wood Johnson Foundation in Princeton, New Jersey, which is another grant-giving foundation, specialising in improving people's health. It is offering 105 of its 250 staff an "early-retirement incentive programme" as it faces a 27-per-cent drop in assets since 2008. The travel budget has also been cut in half and its small office in Washington DC closed.
While the stock market has been rallying, one of the foundation's executives was quoted as saying: "Our assets will not, in virtually any scenario we imagine, get back to where they were for quite a while."
Another big name, the Kellog Foundation, has resorted to closing down its overseas offices in Sao Paolo and Pretoria as its assets declined by almost 22 per cent since last year to $6.3 billion.
On the museum front also, cutbacks are the order of the day. New York's Metropolitan Museum of Arts cut 14 per cent of its staff, USA Today reported on July 23. This comes as its endowment, membership and corporate sponsors dwindled.
There are similar stories at the Getty Museum in Los Angeles, which is facing a 27-per-cent drop in its endowment. The Detroit Institute of Art, a museum in one of the hardest-hit cities in the US, cut $3 million of its operating cost and reduced staff.
Looking at the situation, it is quite clear that America's well-established Protestant ethic and the culture of giving generous endowment has taken a significant blow.
It will have a considerable impact on the world as these organisations are finding it harder to support their various altruistic projects not just in the US but also overseas.
With all the talk of the rise of China, one must bear in mind that there is yet to exist any similar philanthropic foundations of similar magnitude and ambition as those currently found in the US. In fact, Japan has a far more established tradition of not just giving dole but being a partner in social transformation, with heavyweight bodies like the Toyota or Nippon foundations being active around the world, Thailand included.
We can only hope the situation in the US will soon improve and that the private sector in an emerging superpower like China will quickly learn to shoulder some of the burden and responsibilities that the Americans have been bearing. But that will take a new crop of rich, educated and global-minded Chinese, who are more in tune with the notions of international and global responsibilities and solidarity.
As for Thailand, too much money is being donated to temples. We need to consider how any endowments can be better channelled to things that are not mere concrete edifices but into intangible areas, which will enhance people's knowledge, skills and quality of life.
More incentive is needed for rich Thais to donate their money and land for altruistic causes, and the government should seriously ponder the matter. It has been proved in many prosperous societies that philanthropic work and activities are vital to ensuring a caring and cultured society.
It's a shame for Thailand that we have done very little for our poorer neighbours in the region. This is something we can definitely improve on, even in this tight economic situation.
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