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Low interest rates and excess liquidity in Western economies could result in Asia’s markets falling prey to asset bubbles and speculation throughout the coming year, leading international and regional financial experts say.

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…

By GREG LOWE
IN BANGKOK

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. [Read more →]

The year ahead for Thailand´s hotel and resort development sector will witness a rebound from the impact of the global financial crisis, local recession and domestic political turmoil, according to property experts. But while the outlook is less turbulent, growth will remain anaemic and patchy, and project financing will remain tight.

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…

While Phuket and Pattaya´s property markets have boomed over the past few years, with high-rise condominiums and luxury villas projects dotting the respective landscapes, something more moderate has been taking place along the Gulf of Thailand´s western coast.

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…

Preventing foreigners from owning land and property in Thailand does many things: it protects powerful Thai landlords and agricultural monopolies, forces overseas investors to consider setting up shop in other regional markets, drives Thai capital from the country and provides a pool of nationalist bile for tub-thumping politicians to draw on and whip up a frenzy of anti-foreigner sentiment at the drop of a hat.

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

BANGKOK — Cambodian Prime Minister Hun Sen’s recent appointment of Thailand’s former premier, Thaksin Shinawatra, as an economic adviser was the diplomatic equivalent of precision bombing, whose shockwaves have sent relations between the neighboring Southeast Asian nations into a tailspin.

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

Thailand’s National Anti-Corruption Commission turns 10 today.

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…

BILL FACES ROCKY PATH
by Greg Lowe

Government proposals to change land taxation have been cautiously welcomed by the property sector but industry experts say clarification of the bill´s legal definitions are needed and that any new law must be applied evenly and transparently.

Questions, however, have been raised by industry observers over whether the Democrat-led coalition has either the political will or clout to force through the proposed changes which will likely face strong opposition from powerful landlords and land-owning families that include many politicians in their ranks.

On paper the Fiscal Policy Office´s proposals are seen as a positive move away from the existing system, which has been criticised for being opaque, highly subjective and prone to corruption. Read more…

Professor Pakdee Pothisiri has his work cut out.

As one of Thailand’s nine anti-corruption commissioners he is in the front line of the battle against graft in the country’s political and public sectors. But he remains upbeat in the face of the Herculean task that lies in front of him and the National Anti-Corruption Commission (NACC): he is in for the long haul. The battle will not be won overnight. And much of the commission’s success depends on getting the public behind its efforts. Read more…

Developing an Asian rail network to expand trade and economic development within the region will come a step closer this week when a new intergovernmental agreement comes into force.

The Intergovernmental Agreement on the Trans-Asian Railway Network, which commits signatories to co-ordinate the development and operation of international rail routes linking 28 countries, is scheduled to be ratified on Thursday. Read more…