BUSINESS NEWS:

Foreign automakers clash on E85 v. Eco-car policies

Representatives from the local auto business and the Thai Industries Federation are scheduled to meet the newly-appointed Industry Minister to discuss the state E85 fuel policy.

The Thai Automotive Industry Association and the Federation of Thai Industries will meet Industry Minister, Mingkwan Sangsuwan, on Wednesday to welcome him to the new post.

They will also discuss different opinions from European and Japanese automakers regarding the government’s energy policy.

Association President, Suparat Sirisuwannangkura, said while Japanese companies want the government to gradually implement its policy the European operators call for an immediate and hefty tax cut on E-85 engines.

The Thai government has earlier announced special tax bracket of 25-30% for engines that run on E85 fuel which consists of 85% ethanol and 15% of benzene. The announcement has prompted European automakers to express their interest in importing such an engine into the country.

And last year the military-appointed government officially announced state support to eco-car production with a low excise tax rate of 17% which quickly attracted Japanese car companies to plan their production lines with an expected launch of this engine from the year 2010.

With such a clash in state policies, it is expected that more active E-85 promotion could lead those interested in eco-car project to move their fund worth more than 30 billion baht elsewhere according to people familiar with the issue.

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EXIM Bank hopeful 2008 Thai export growth of 20%+

Thailand’s Export-Import Bank is now confident that this year’s export growth rate would surpass the government’s 12.5% projection.

Export-Import Bank of Thailand expects the country’s export growth rate in 2008 to top 20%.

The Commerce Ministry initially forecast the expansion rate at 12.5%.

EXIM Bank said Thailand has survived the critical time during the first half of this year with an average export growth rate of 23.1%.

It added since the beginning of 2008 the world economic condition has been sluggish and the nation’s trading partners were not quite actively trading while oil price was surging but Thai export value still rose to 87.2 billion dollars.

It credited record-high agricultural prices easing world trade competition and the baht value that hit its 10-year high earlier this year for such an impressive expansion.

However it warned that in 2009 Thai exporters should brace themselves for more volatile world economy and risks of higher inflationary pressure.

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Polled analysts predict smaller Q208 GDP than in Q1

The latest poll by Reuters news agency has estimated that the local economic growth rate in Q2-08 would end up smaller than 3 months ago.

Ahead of the Bank of Thailand’s release of July economic data next week, Reuters news agency has recently asked 6 selected analysts about their opinions towards the Thai economic performance in Q2-08.

And it found they believed that Thai GDP growth rate would slow down due to weaker domestic demand with this trend likely to continue into the latter half of 2008 as inflation and slow exports to major market take a toll.

An average estimated economic growth rate for Q2-08 is 5.7% compared with 6% registered in Q1-08.

And analyst from Capital Nomura Securities also suggested that the government’s economic stimulus measures would push Thai GDP up by 0.4 percentage point this year.

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BoT: “No vast capital movement yet; baht still move in line with regional currencies”

The Thai central bank is confident recent capital movement has still been in check and not led to serious baht fluctuation.

The Bank of Thailand’s Senior Director, Pongpen Ruengvirayudh, said that recent capital mobility has been induced by foreign investors’ active selling of their holdings on the local stock market.

However the situation is still under control and is not of any worries, Pongpen stated.

Since the beginning of this year, foreign investors’ net sell of Thai stocks totaled 92.3 billion baht.

The BoT’s Senior Director added that the central bank would be keeping a close watch on the baht movement and would only intervene when the situation calls for it.

Earlier this morning, central bank governor, Tarisa Watanagase, also assured that the baht has still been moving in line with regional currencies.


SET MONITOR:

The Thai stock market fell marginally led by profit-taking in energy, banking and property shares

The Stock Exchange of Thailand’s main index fell nearly 6 points to 691.3 with light volume of 8.6 billion baht or about 255 million dollars.

Foreign investors were the biggest net seller of 814 million baht which is around 24 million dollars followed by local institutions of 243 million baht or 7 million dollars.

Retail investors registered a total net buy of some one billion baht. That’s approximately 31 million dollars.

The SET Composite index shed nearly 1% on worries over local political uncertainty after the Election Commission decided to postpone its ruling on the fate of the People Power Party until next month and also following losses in overseas stock markets.

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