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Asean to reduce developmental gaps to bring the Asean Economic Community into effect in 2015

The Asean Economic Ministers’ meeting on Thursday agreed to press on with the plan to reduce developmental gaps in a bid to bring the Asean Economic Community into effect in 2015.

Aishwarya Gupta

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The Asean Economic Ministers’ meeting on Thursday agreed to press on with the plan to reduce developmental gaps in a bid to bring the Asean Economic Community into effect in 2015.

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Asean to reduce developmental gaps

Political unrest and the shutdown of the two airports in Bangkok in late November severely affected tourism and consumer confidence in Thailand. Real GDP is projected to contract by 3 percent in 2009, as the global outlook remains negative and external demand continues to contract. The fiscal stimulus and monetary expansion implemented by the authorities are likely to partially mitigate the impact of the slowdown, allowing growth to resume in the fourth quarter of 2009 assuming a better outlook for the global economy in 2010.

However, significant downside risks remain should political instability resurface in Thailand and the global decline proved more protracted or steeper than now expected
Export volumes are projected to contract 16 percent in 2009 after a 6 percent expansion in 2008. Exports of services, more than half of which were accounted for by tourism receipts (around 8 percent of GDP) will also be heavily impacted by the slowdown in arrivals from advanced countries (40 percent of total tourists). Accordingly, exports of services are projected to contract by 6.6 percent this year. Import volumes should contract more than exports due to businesses running down inventories and a contraction in overall investment and consumption of imports. Net foreign demand will nevertheless contribute negatively to growth since in real terms exports represent a much larger share of GDP than imports.
External debt service ratios are manageable at 5.4 percent of Thailand’s exports overall. Total external debt was under 60 percent of international reserves at the end of 2008. The Thai financial sector is basically sound and has been largely insulated from the immediate impact of the global financial crisis, but increasing pressure from the slowdown on companies will be passed to banks. The average capital adequacy ratio amounted to about 14 percent at end-2008. Net NPLs declined during 2008 to 2.9 percent of total assets. While this trend is set to reverse during 2009, banks appear to have enough room, at least in the short-term, to cope with higher NPLs. There is adequate liquidity in the domestic banking system, but banks have become more cautious given that credit quality is expected to deteriorate. Credit expanded by 9 percent in 2008, initially due to higher demand for working capital, then as a consequence of large domestic firms switching from foreign to domestic borrowing. Credit growth slowed in January, and the ratio of loan to deposit decreased to 86
from 90 percent, suggesting some room for future loan growth.

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Asean to reduce developmental gaps

The Thai government announced an economic stimulus program totaling 117 billion baht ($3.34 billion). The program included a host of short-term measures to boost household consumption and assist lower-income families. The government is now preparing a second stimulus package worth 1.6 trillion baht ($45 billion). Among other initiatives, this package focuses on public investment in infrastructure projects, which the government hopes will help create 1.6 million jobs. “The infrastructure investments, if implemented, will help generate growth and improve Thailand’s competitiveness,” said World Bank. “However, it is worth noting that financing for infrastructure has been available for the past few years. What has suppressed investment was not funding, but rather political and institutional constraints.” While the impact on the real sector has been larger than expected, the global crisis has not shaken the Thai financial sector. The World Bank attributed this to Thailand’s strong macroeconomic fundamentals; low external debt coupled with high international reserves; and a sound financial sector, which has undergone a series of reforms following the 1997 crisis.

For the year 2008, the Thai economy decelerated from the previous year, particularly in the last quarter where global economic downturn and internal political unrest adversely affected manufacturing production and tourism. Nonetheless, farm income still expanded well from higher major crop production and price compared to the previous year.

The impact of the global financial crisis on the Thai financial sector, on the other hand, has so far been limited.Although risk-sensitive indicators have risen since Lehman Brothers announced its bankruptcy on September 15 th they have been lower in Thailand compared to those in its East Asian peers – prior to the airport closure. Credit default swaps (CDS) spiked in line with global conditions and the stock market is down over 50 percent year-to-date. These were however, less than those in other East Asia economies.

Commercial banks’ loan growth next year will likely be in a single digit after registering 11.2 percent growth as of October this year.

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Foreign capital still heads to Vietnam

As many as 798 projects added a combined over 5.11 billion USD to their investment capital, down 23 percent year-on-year in project number but up 6.8 percent in value.

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Hanoi (VNA) – The total amount of foreign investment poured into Vietnam this year to September 20 reached 21.2 billion USD, equivalent to 81.8 percent of the same period last year, reported the Ministry of Planning and Investment.

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Inclusive business models offer relief for ASEAN businesses hit by COVID-19

Inclusive businesses provide goods, services, and livelihoods on a commercially viable basis, to people living at the base of the pyramid making them part of the value chain of companies as suppliers, distributors, retailers, or customers.

Asean News

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Inclusive business models offer relief for ASEAN businesses hit by COVID-19

BANGKOK, 29 September 2020 – The Third ASEAN Inclusive Business Summit convened today with government officials and business leaders advocating for inclusive business strategies that support micro, small and medium-sized enterprises (MSMEs) to recover from economic setbacks during the COVID-19 pandemic in the South-East Asia region.

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In the Dragon’s Shadow: Southeast Asia in an Age of Rising Chinese Power

As China’s economy has surged and its leadership has asserted its power abroad, each country of Southeast Asia has been presented with a thorny challenge: how to benefit from the Chinese renaissance while safeguarding its sovereignty over the long term

Boris Sullivan

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The 11 nations of Southeast Asia stand uniquely exposed to the rising power of the new China: three share borders with the world’s most populous nation, and five are directly impacted by its claims over the South
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Wed 28

Vend ASEAN(Bangkok)Vending Machine & Self-service Facilities Expo 2020

October 28 @ 8:00 am - October 30 @ 5:00 pm BMT
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Vend ASEAN 2020

October 28 @ 10:00 am - October 30 @ 6:00 pm BMT

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