Many government agencies will operate as usual today, tomorrow and Friday, to minimise the effect on businesses and individuals suffering from transport-related problems and office relocations to avoid central Bangkok’s violence.
However, the Cabinet yesterday approved Prime Minister Abhisit Vejjajiva’s proposal to declare the period a public holiday in the capital.
He reasoned this should apply across the city, because it was possible that demonstrations could spread to other areas, which could cause transportation problems for civil servants.
Share trading will continue as usual today. The morning session of the Stock Exchange of Thailand (SET) will run from 10am to 12.30pm and the afternoon session from 2.30-3.30pm, closing one hour earlier than usual.
The trading hours also apply to the Market for Alternative Investment and the Thailand Futures Exchange.
SET president Patareeya Benjapholchai said the exchange would continue to monitor the situation on a daily basis.
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Business as usual despite more holidays
Foreign direct investment has decelerated markedly in Thailand, but inflows should continue in 2009 and 2010 due to the secular trend to move production away from advanced economies.
Key risks to the outlook are (i) political uncertainty and (ii) the timing of the withdrawal of fiscal and monetary stimulus. Increased political tensions may have a long-lasting impact on investment, and withdrawal of stimulus (in Thailand and the advanced economies) must be precisely timed to avoid macroeconomic imbalances (including new asset bubbles) while also ensuring that the recovery is on a sufficiently solid footing.
Automotive manufacturing in Thailand started 50 years ago after a Japanese company set up operations as an import substitution activity to take advantage of preferential tax and import duty treatment. Laws mandating local content were subsequently introduced, with the limits raised from an initial 30 percent to 40 percent and then 60 percent, to be abolished after the 1997-98 financial crisis. All pickup truck production prior to the 1997/1998 financial crisis was intended for domestic consumption, but companies began exporting after Japanese pickup producers shifted production from Japan to Thailand at the turn of the century. Tax and excise incentives by the Thai authorities encouraged domestic sales of pickups at the expense of cars, and pickups still amount to almost three-fourths of current output. The cost of local labor appears to amount to just 5 percent of the value of output, half the level in the U.S., likely reflecting much lower wages and the high labor component of imported electronics in Thailand. Thanks to the relocation of pickup producers to Thailand, and the spillovers into car manufacturing, automotive production has surged in the past decade, rising from about 145,000 cars in 1998 to 1.4 million in 2008, establishing Thailand as the largest automotive producer in Southeast Asia and the largest producer of light pickup trucks in the world.
Stimulus programs were implemented in Thailand throughout 2009, confirming improved expectations, boosting demand and supporting the momentum of the economic recovery.
Most of the infrastructure development in Thailand has been responsive to demand rather than forward-looking. Availability and accessibility appear to no longer be a challenge. The next step for Thailand is to put more emphasis on quality of service delivery, management, and sound regulation.
About the author
The Office of the Board of Investment is a government agency under the Office of the Prime Minister. Its core roles and responsibilities are to promote valuable investment, both investment into Thailand and Thai overseas investment.