THAI-LISTED companies saw net profits surge by 42 per cent last year to 446.51 billion baht (S$19.13 billion) on sales totalling 6.39 trillion baht, the Stock Exchange of Thailand (SET) says.

The top-performing industry groups were resources, finance, and property and construction respectively, with PTT, Siam Cement, PTT Exploration and Production, Bangkok Bank and Siam Commercial Bank as the five most profitable firms.

‘The strength of business sectors and the firms’ ability to adjust their strategies resulted in the companies’ improved operating performance,’ said SET president Patareeya Benjapolchai.

Companies on the SET100 Index posted net profits of 391.02 billion baht, accounting for 88 per cent of listed firms’ net profits, up 46 per cent year on year. Total sales dropped by 16 per cent, but gross profit margins increased to 19 per cent from 16 per cent from a year earlier due to the falling cost of sales.

The resources group, consisting of the energy, utilities and mining sectors, recorded net profits of 158.51 billion baht, a 77 per cent increase over the previous year.

The financial group, comprising the banking, finance and securities and insurance sectors, recorded net profits of 101.38 billion baht, up 12 per cent year on year.

Net profits for the property and construction group totalled 68.24 billion baht, a 54 per cent increase over 2008.

Four of the five remaining groups, excluding non-performing groups, posted profits: technology, 37.37 billion baht (16 per cent); services, 35.87 billion baht (88 per cent); agro and food, 29.62 billion baht (63 per cent); and consumer products, 6.95 billion baht (40 per cent).

The industrial group’s net profits plunged by 50 per cent from 2008 to 6.17 billion baht, due to a 13.37 billion baht loss in the industrial materials and machinery sectors.

Firms listed on the Market for Alternative Investment recorded net profit of 2.22 billion baht last year with total sales of 49.81 billion baht, a 26 per cent and 12 per cent drop over 2008, respectively.

‘The economic recession decreased total sales and net profits of MAI-listed firms in 2009, comparing to previous year,’ said MAI president Chanitr Charnchainarong. ‘However, in the last quarter of 2009, MAI-listed firms’ nets profits rose 69 per cent.’

The results for listed firms held few surprises, said Supavud Saicheua, head of research at Phatra Securities.

‘Thai companies weathered the global slowdown well,’ he said. ‘In part, the companies had a strong balance sheet to begin with and the Thai banks are very well capitalised.’

He said strong earnings growth was forecast for listed companies this year, especially in the banking, property and energy sectors.

Politics remains a risk, as does the country’s reliance on exports to fuel the recovery. The ending of fiscal stimulus in major trading partners could be a concern for the sustainability of Thai economic growth next year, he said.

The suspension of more than 50 industrial investment projects worth hundreds of billions of baht in Rayong province’s Map Ta Phut district will weigh heavily on the market if the deadlock is not resolved within the next year, said Porranee Thongyen, head of research at Asia Plus Securities.

‘Political risk will continue to affect the stock market,’ she said. ‘It raises concerns over Thailand’s economic outlook. We predict gross domestic product growth of 3 per cent this year.’

Phatra Securities maintains an underweight position on the telecom sector following the Supreme Court’s decision to seize 46 billion baht in assets belonging to the family of former prime minister Thaksin Shinawatra for abusing power while in office.

‘The political risks are real but difficult to quantify,’ said Dr Saicheua. ‘In general, we are out of consensus in believing that Thailand’s political divisions are real, deep rooted and will take years to resolve.’

Published March 8, 2010
© The Business Times

The ruling was in fact likely to strengthen claims by Thaksin’s supporters that the court judgement was far from being impartial or free from political motivations, he said.

“This [verdict] completes the coup cycle, but it does not resolve the crisis because the coup cycle has generated a process of contestation, a political transformation that will be ongoing,” he said. “When Thaksin came to power, he unwittingly unleashed forces between his control and beyond his opponents control. Those forces have taken on a life of their own.

“The red shirts have grievances, demands and expectations. They see double standards and hypocrisy. They’re taking Gen Prem, Gen Surayud and the establishment to task, and now they’re trying to make their last stand with the Abhisit government.”

While the court’s landmark ruling did break with tradition by showing that rich, powerful Thais can lose in court and have their ill-gotten gains seized, it also sets a benchmark by which the judiciary will be judged.

“In the 60s and 70s military dictators had some assets taken away but that was for corruption and graft, basically [in retribution] for their taking state property and state money. In 1991, it [assets seizure] was also for embezzling state property and money, for taking bribes. But on Friday it was mostly about abuse of power, not straightforward corruption and graft,” he said.

“The implication is that this will set a standard that will test the integrity of the judiciary. Having abuse of power as a benchmark, a yardstick, is a very grey area, all kinds of politicians and privy councillors benefit from their positions. This is going to be tricky down the road and it will reinforce the charges of double standards.”

As a result of last Friday’s ruling, more charges are expected to be levelled at Thaksin, and possibly at some of the officials involved in the decisions where he was found to have abused his power.

Dr Thitinan said such moves would be “used as a legal instrument to keep Thaksin and his associates at bay”.

If the judiciary is independent and fair it will also start taking action against officials in the Abhisit Vejjajiva administration, which has been plagued by allegations of corruption relating to the “Thai Khem Kaeng” infrastructure investment programme, he said.

Thaksin will also take the ruling very personally. He will embark on a “personal vendetta,” said Dr Thitinan.

In the past, much of Thaksin’s rhetoric was deeply connected with his claims to be working for Thailand’s benefit. The ruling has changed this.

“We’re going to see Thaksin for Thaksin now, not Thaksin for Thailand,” he said

The other likely outcome is for the red shirt movement also to be less about Thaksin. Dr Thitinan said the movement now has much more organic forms of funding and mobilisation than in the past. To see it simply as Thaksin’s proxy force denies the complexity of the social and political transformations that are gaining pace in Thailand, he said.

“I think the red shirts will be increasingly more than Thaksin and separate from Thaksin,” he said.

“If the court had taken all of the [Thaksin’s] money away, the red shirts would see it as gross injustice and they would see Thaksin as the figurehead of their movement.

“He got some of his money back, so now the red shirts will be compelled to develop their own agenda, their own leadership, their own vision. At the moment they are lacking in that department … this is the gap that they will be forced to come to terms with.

“So the two main ramifications of the verdict are: one, the personal agenda, Thaksin for Thaksin’s sake; two, the red shirts for the red shirts, more than the red shirts for Thaksin, although it will take some time to separate the two.”

Background: Last Friday, the court’s Criminal Division for the Holders of Political Positions ruled that 46.37 billion baht of 76.6 billion in assets belonging to the Shinawatra family that had been frozen since the military coup be seized. Thaksin, while serving as prime minister from 2001 to 2006, had abused his power and entered into conflicts of interest that benefited Shin Corp, his family’s telecommunications empire, the court ruled.

The court ruled that Thaksin’s policies cost the Thai state 90 billion baht while benefiting Shin Corp.

It is worth noting that the Bank of Thailand valued the damages caused by the anti-Thaksin People’s Alliance of Democracy’s seizure of Bangkok’s two international airports in late-2008 at about 250 billion baht.

None of the PAD’s leadership has been prosecuted for organising the demonstration, as yet.

THE Supreme Court’s landmark ruling to seize 46.37 billion baht (S$1.97 billion) in assets belonging to the family of former prime minister Thaksin Shinawatra is unlikely to have a significant impact on the Stock Exchange of Thailand index or investor sentiment in general, analysts say.

Two grenade attacks on Bangkok Bank branches in the capital late on Saturday did little to allay fears that the ongoing political tensions could bubble over into violence. But despite the incidents, analysts do not expect the verdict to have much impact on trade on the SET when it opens tomorrow after a public holiday today.

‘I’m not expecting it (the verdict) to have too much effect on anything, maybe a little positive move at best. I think the markets had already priced this result in,’ said John Sheehan of Global Markets Asia, a Bangkok-based investment research house. ‘Given it’s a holiday on Monday the SET might have forgotten by Tuesday. What we saw on Friday was what we were all expecting.
‘On the political risk side I think it’s an isolated result within a bigger play,’ he added.

The ruling is also unlikely to drag further on investor sentiment, which has cooled significantly since the Sept 19, 2006, military coup ousted Thaksin.

‘We still tell people to look at Thailand, and there are investments being made, but since the coup these have tended to be case-by-case deals in specific sectors,’ said David Tuck, head of research at Spectrum OSO (Asia), a corporate intelligence agency.

‘I don’t think this judgement alone is going to patch everything up.’

Most foreign investors are more concerned about the Map Ta Phut deadlock, where a court order has suspended more than 50 industrial investment projects, than the assets case verdict, he said.

Nearly 57 per cent of people surveyed by an Abac Poll on Saturday said Thaksin should accept the court verdict, with about a third saying the ruling was unjust and that the former premier should continue his struggle for justice. But a Suan Dusit Poll, also published yesterday, revealed that more than half of respondents expect the ruling would result in more political turbulence.

Thaksin yesterday snubbed calls by the government and business leaders for all parties to accept the verdict and move on for the sake of the country. He said his treatment by the courts was ‘inhumane’ and plans to appeal the ruling.

Thitinan Pongsudhirak, a political scientist at Chulalongkorn University, said: ‘We’re going to see Thaksin for Thaksin now, not Thaksin for Thailand,’ he said.

The verdict is expected to lead to more charges being levelled against Thaksin. The Information Communications Technology and Finance ministries are launching a probe into concession agreements between state-telecom enterprises and Shin subsidiaries.

Dr Thitinan said the new charges would be used as a ‘legal instrument to keep Thaksin and his associates at bay.’

The pro-Thaksin United Front for Democracy Against Dictatorship is planning a million-strong demonstration in Bangkok on March 14 to call for the Abhisit Vejjajiva administration to step down, raising fears of more unrest. But acting government spokesman Panitan Wattanayagorn said the government and security forces have the situation under control.

‘We have the capacity to maintain peace and order,’ he said. ‘Demonstrations are allowed and they are protected by the constitution, but we need to separate that from radical groups and those that are likely to use violence.’

Published March 1, 2010
© The Business Times

Relatively high interest rates and plentiful opportunities will increasingly spur western investors to look to Asia. The International Monetary Fund forecast the region will have the world’s highest economic growth this year (8.4%) compared to the US (2.7%), Japan (1.4%) and the EU (1.0%), said Kobsak Pootrakul, an economist at the Bank of Thailand’s Monetary Policy Strategy Division.

“The US is not in a position to raise interest rates; there is a lot of liquidity in the system earning 0.25% interest, so investors will look to Asia,” he said, speaking to the Foreign Correspondent’s Club of Thailand. Read more…

GOVERNMENT activity and fiscal stimulus remain key factors driving the Thai economy which is showing strong signs of improvement after a rebound in exports to key global markets, says Finance Minister Korn Chatikavanij.

Mr Korn said the government had performed well in its first year in office by facing down the global and local recessions with short-term stimulus packages totalling 117 billion baht (S$4.96 billion), and the implementation of its 1.47-trillion-baht ‘Thai Khem Khaeng’ investment programme which runs until 2012. But despite strong evidence of recovery, the Thai economy remains vulnerable to global events such as the recent dip in the US stock market, he said.

‘The whole situation remains fragile,’ Mr Korn said. ‘We’re certainly not out of the woods, otherwise we wouldn’t be needing to follow through with these government stimulus packages.

‘The truth is that the economy is still dependent on government activity, frankly too much so. The quicker the private sector can step back into the game, the better for all concerned.’

The Finance Ministry will this year focus on executing the plans it put in place last year, he said. It forecasts GDP will grow 3-3.5 per cent in 2010, from a contraction of 3-3.5 per cent last year.

But domestic political tensions continue to pose a significant threat to the economy. In the last 18 months, protests from both pro and anti-government groups have led to airport seizures, the forced cancellation of an Asean summit and riots on the streets of Bangkok, the economic impact of which is estimated in the hundreds of billions of baht by the Bank of Thailand.

While tensions have eased considerably, the deep political divides show no sign of abating and may escalate in the run up to a Feb 26 Supreme Court ruling on the seizure of 76.6 billion baht of assets belonging to former prime minister Thaksin Shinawatra, who is a fugitive from Thai justice.

‘The situation is much improved from a year ago, but we’re still below our potential and unless we get that resolved, we will continue to underperform,’ said Mr Korn.

The minister, who previously said the current political strife could take a decade to resolve, said many of the current problems were due to ‘certain cultural tendencies’ and educational and economic standards.

The government is introducing welfare policies and progressive taxation which are in part aimed at reducing the inequality that has fuelled the unrest.

The Finance Ministry plans to introduce a rates-based land and property tax and a wealth tax to be levied on the top 10 per cent of earners. Free education, universal healthcare and income guarantee schemes are already in place.

The ministry is also drawing up a national savings fund which will provide pensions to about 24 million self-employed people who are not eligible for the Government Pension Fund.

Its Financial Services Master Plan seeks to address the fact that 20 to 30 per cent of Thais do not have access to formal financial services, which drives them into the hands of loan sharks. While the progressive policies may help take the edge off Thailand’s political problems, investors are increasingly concerned about regulatory risks relating to a court ruling which suspended more than 60 industrial projects, worth more than 300 billion baht, in Map Ta Phut on the Eastern Seaboard.

Japanese businesses, the biggest investors in Thailand, have warned the government that they will invest elsewhere if the matter is not resolved within five months.

The ministry has also started a review of the restrictive Foreign Business Act to increase investment in the country, but Mr Korn conceded that he would face resistance from those with ‘vested interests’.

Published February 1, 2010
© The Business Times

Occupancy levels in Thailand´s main destinations were hit hard in the first nine months of 2009, according to the latest research by Jones Lang LaSalle (Thailand).

Bangkok´s five-star sector fell by 26.8 per cent year-on-year to 49 per cent, four-star properties dropped by 25.6 per cent to 51.9 per cent, while Phuket City contracted by 12.6 per cent to 58.4 per cent. Revenue available per room (Revpar), the industry benchmark for the financial performance of a property, declined more sharply as operators slashed room rates to boost occupancy. Bangkok´s five-star sector fell by 36.3 per cent to Bt2,394, four-star hotels slid by 35.7 per cent to Bt1,335, and Phuket City dropped by 25.6 per cent to Bt2,296. Read more…

Hua Hin, which was established as the country´s first beach resort by King Rama VII in the 1920s, has been undergoing its own cycle of growth. But unlike the breakneck pace of construction at the more popular, better-developed seaside destinations, on the surface the town´s property sector appears to be something of a slow-burner.

Property experts say this helps create a more sustainable market. While the town has not experienced the boom of its cousins, the risk of any corresponding bust is much reduced. A less developed infrastructure and longer travel times from Bangkok has created a smaller but more loyal stream of tourists and buyers. Read more…

What it does not do, however, is support the development of a sustainable and competitive local economy. Read more…

But as the dust settles, observers say it is unclear who actually benefited from the increased tensions between Thailand and Cambodia. Read more…

A member of the public peruses documents detailing the assets and liabilities of former ministers in the Thaksin government, as released by the National Counter-Corruption Commission.

Its very existence is testament to the endemic corruption that continues to erode local political, economic and social institutions; it is also symbolic of a commitment to tackle the graft that hampers the country’s development and weakens the rule of law.

Graft is commonplace here, from paying off police for bogus traffic offences and making “donations” to school teachers to get basic educational services for school kids, to high-level corruption allegedly involving senior state officials in the procurement of fire trucks and the building of airports. Read more…