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Bank of Thailand lowers growth projection to 2.6%

The Bank of Thailand (BoT) lowered its Gross Domestic Product (GDP) growth projection for 2011 significantly from 4.1 to 2.6 per cent, factoring in the country’s estimated Bt140 billion damage losses, owing to the widespread flood, Assistant Governor Paiboon Kittisrikangwan said.

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citibank Bangkok downtown Sukhumvit

The Bank of Thailand (BoT) lowered its Gross Domestic Product (GDP) growth projection for 2011 significantly from 4.1 to 2.6 per cent, factoring in the country’s estimated Bt140 billion damage losses, owing to the widespread flood, Assistant Governor Paiboon Kittisrikangwan said.

The central bank’s Monetary Policy Committee (MPC) considered and assessed current economic data and the country’s flood situation until Oct 19. Mr Paiboon explained that the floods have affected manufacturing activities at six industrial estates, excluding Bangkadi Industrial Park, in the central provinces of Ayutthaya and Pathum Thani.

citibank Bangkok downtown Sukhumvit

Many Banks have closed in dowtown Bangkok to avoid Flooding risk, and also because Government has declared special public holidays

As the flooding continues, Lat Krabang Industrial Estate in eastern Bangkok may be affected. If floodwaters spread into inner Bangkok, the cumulative impact on trade, tourism and related sectors is likely to be prolonged, and more severe than previously expected. However, provided that the flood situation concludes by the end of the year, the MPC expects domestic growth to recover in 2012 with key support from reconstruction spending, together with fiscal stimulus through the government’s direct spending and additional measures such as the rice pledging scheme and the minimum wage increase.

Under the baseline scenario, the MPC projects the Thai economy to grow by 4.1 percent in 2012 on the back of domestic demand recovery, the strength of which will make up for some anticipated loss in export momentum due to the global slowdown. (MCOT online news)

The industrial operators whose operations have been damaged by the flooding will be provided with soft loans and other forms of assistance.

The Ministry of Finance will allocate 250 billion baht to assist and rehabilitate entrepreneurs and industrial estate developers. Out of this amount, 20 billion baht in credit will be extended to small and medium-sized enterprise (SME) operators through the SME Development Bank of Thailand.

The remaining 230 billion baht will be extended to entrepreneurs and industrial estate developers through commercial banks and government-owned financial institutions.

In addition, 4.5 billion baht in credit will be offered to the Industrial Estate Authority of Thailand for use in rehabilitating damaged industrial estates. A budget of 500 million baht will be set aside to launch a project to rehabilitate the workplaces of SME and “One Tambon, One Product, (OTOP)” program operators. The project aims to bring about quick recovery to help them resume their businesses as soon as possible.

The affected entrepreneurs will be allowed to extend the period of paying their water supply and electricity bills. They will also be provided with an exemption for import duties on machinery and equipment to replace damaged ones. In order to ease possible shortages of automobiles because some car factories have been hit by floods, the Ministry of Finance will consider reducing import duties on automobiles and auto parts, as well.

Since 660,000 workers might not be able to work because their workplaces have halted operations, the Government has come up with measures to provide skill training for them, with financial support from the Government during their training. A number of employees will also be sent to work at the factories that are in need of more workers.

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

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Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

What measures has SET taken to support listed companies’ compliance with ESG standards?
PAKORN PEETATHAWATCHAI:

PAKORN: When we first began promoting ESG-compliant investments, we were met with little interest. We attributed this to a lack of clear data to showcase the economic benefits of ESG investment, and perhaps limited clarity as to what constitutes a sustainable or ESG-compliant investment. The launch of the THSI list and, subsequently, the SETTHSI Index, was designed to address this. Our most recent data, comparing returns for the SETTHSI Index with the broader SET and SET100 indices from April 2020 to April 2021, underscores the economic benefits of these investments: the group compliant with ESG standards outperformed the other two indices on every data point. 

As of May 2021 Thailand was home to CG and ESG assets under management totalling BT54.8bn ($1.7bn) across 50 funds – up from 23 funds in 2019. Meanwhile, of the BT187.1bn ($5.9bn) raised in green, social and sustainability bonds since 2018, BT136.4bn ($4.3bn) was raised in 2020 – 83% from the government and the remainder from development banks and private players. This rising demand, in a move to manage risk and generate returns, has been complemented by growing supply and promotion: supply from ESG-compliant businesses aiming for resiliency and sustainable growth, as well as promotion from regulators highlighting investment opportunities with good CG and SD practices. Indeed, the pandemic has been a catalyst in shifting the view of ESG compliance from a luxury to a requirement in the new normal.

In what ways can enhanced standard-setting and regulatory mechanisms overcome the remaining barriers to improved ESG performance?

PAKORN: A multi-stakeholder approach is crucial for enhanced ESG performance – not only in Thailand, but around much of the globe. This can also help to address the standout incumbent challenge: access to reliable, wide-ranging ESG data. For example, the 2020 update to the 56-1 One Report established clear ESG standards and triggered online and offline capacity-building programmes to support listed firms’ compliance. SET is developing an ESG data platform with a structured template to promote the availability of comparable data, maximise value added from corporate sustainability disclosures, and foster collaboration between the business value chain and stakeholders. This is expected to support Thai companies along their ESG journey in an economically sustainable way, result in a greater number of sustainability-focused products and services, drive sustainable investing in the Thai investment community and ultimately “make the capital market work for everyone”, as outlined in the SET’s vision.
 

 

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Economics

Youth unemployment hits new highs in Thailand due to COVID-19 restrictions

BANGKOK, Thailand (ILO news) – Joblessness among young men and women in Thailand has reached a level unseen in recent years due to the impact of the COVID-19 pandemic, according to a new brief from the International Labour Organization (ILO).

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Coronavirus disease 2019 (COVID-19) WHO Thailand Situation Report - 22 February 2021

The Thailand labour market update  found that youth employment fell by 7 per cent in the first quarter of 2021 (from the fourth quarter 2019). The youth unemployment rate increased by 3 percentage points for both men and women, reaching a high of 6 per cent and 8 per cent, respectively.

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