June 16, 2021 Thai Enquirer Summary Economic News • in What
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June 16, 2021 Thai Enquirer Summary Economic News In what could be a double-edged sword, Prime Minister Gen Prayut Chan-o-cha has come out to say that his government will solve the high household debt caused by credit card and personal loans, within 6 months. After the cabinet’s meeting yesterday, the Prime Minister said the cabinet meeting agreed on measures including short-term ones to strengthen the competitiveness of local financial institutions in the long term which included the fact that interest rates would need to go down. He said all related agencies including the Bank of Thailand (BoT) are being ordered to accelerate addressing the debt burden among various groups of people within 6 months. The Central Bank and relevant agencies are required to reduce the interest rate of personal loans, microfinance and nano-finance small-scale debtors, teachers and cooperatives, as well as car and motorcycle leasing businesses. Deputy Prime Minister Supattanapong Punmeechaow reported that Thailand’ss household debt stood at 14 trillion baht in 2020, equal to 89% of gross domestic product (GDP). He said the Prime Minister is worried about people of working age (25-35 years old) whose debt stood at 60%. The government will come up with measures to help financial institutions in the next phase to offer lower interest rates and provide aid measures to help young and retired people who have a debt burden. In response to Prime Minister Gen Prayut Chan-o-cha’s order to the Bank of Thailand to revise the ceiling rate for personal loan and auto loan borrowers, Kanchana Chokphaisansilp, a research director at Kasikorn Research Center (K-Research), said the task is difficult as the Central Bank already slapped ceiling interest rate on personal borrowing by 2-4% on August 1, 2020. As a result, a new set of regulations governing credit cards, the maximum interest rate will be lowered to 16 from 18% per annum at present while on personal loan down to 25% from 28% per annum. The BoT will have to discuss with financial institutions, banks and loan providers before it can seek further interest cap. Shares of commercial banks fell across the board following Prime Minister Gen Prayut Chan-o-cha’s order to the Central Bank to review interest rates for credit cards and personal loans to try to tackle soaring household debt. The move by the BoT and the government could impact the credit card and hire/purchase companies such as Krung Thai Card Plc, Ngern Tid Lor Plc, Aeon Thana Sinsab Plc, Muang Thai Leading Plc, Srisawad Plc not to mention the impact on the commercial banks which have seen their share prices decline. Shares of Kasikorn Bank Kasikornbank (KBank), plummeted the most by 3.85% or 5 baht to close at 125 baht per share; Bangkok Bank (BBL) shares tumbled by 1.63% to 121 baht, with shares of Krung Thai Bank (KTB) falling 0.88% to close at 11.20 baht. Shares of Siam Commercial Bank (SCB) plunged 2.84% to end the day at 102.50 baht while TISCO Bank shares dropped 1.65% to close at 89.25 baht. Shares of financial groups were also a sea of red. Prayut, who seized power in 2014 by staging a coup against Yingluck Shinawatra government, came out to say that as part of the move to resolve the problem would be to increase the number of pawn shops in the country so that people can go and pawn their belongings to get money. To counter this, former Prime Minister Thaksin Shinawatra, late last night came out to say that the government of Prayut should not look at opening more pawn shops as globally there is an effort to lower the number of pawn shops. Thaksin said that the pawn shops are usually for the poor and Prayut should think about increasing the ways to make money and living rather than putting their goods in pawn shops. He added that the pawn shops have very high interest rates and it is detrimental to the wellbeing of the poor people of the country. The Thai Restaurant Association (TRA) is pleading with Prime Minister Gen Prayut Chan-o-cha to extend dining hours of restaurants in the 4 maximum Covid-19 control provinces, namely Bangkok, Nonthaburi, Pathum Thani and Samut Prakan, until 23:00 hrs and the closing hours to midnight. TRA President Thaniwan Kulmongkol said the TRA has submitted a letter to Prime Minister Gen Prayut Chan-o-cha asking him to ease restrictions for restaurant operators under intense financial pressure from the onset of the Covid- 19 pandemic. The association also asked the Prime Minister to allow restaurants to ease dining- in space restrictions to allow 50-80% of restaurant space and allow them to resume alcohol sales and consumption. Restaurant association asked if they have good measures can they sell alcohol but this has to be recommended by the MoPH TRA added that as many as 50,000 restaurants have been shut and another 50,000 are set to close soon. They have also asked for a few other things such as Asked for other issues That owner of building or department stores should lower the rent for the restaurants by 50% for a period of 3-months Give a tax break for a period of 1-year Extend the collection of VAT by 6-months Not to collect land taxes by the owners of the restaurant owners Lower the price of water and electricity by 30% for a period of 6- months Pay 50-50 for the labour charges for a period of 6-months. The government and the business owners pays 50% each. The Centre for Covid-19 Situation Administration (CCSA) came out to say that any such decision would be dependent on the recommendations by the Ministry of Public Health. The CCSA says may look at relaxing the restaurants on Friday The Central Bankruptcy Court approved a rehabilitation plan of Thai Airways International Plc (THAI) at a hearing yesterday after 2 creditors voiced their objections to the plan. The next step for the airline is, as announced by THAI’s acting president Chansin Treenuchagron, to seek a new capital of 50 billion baht over the next 3 years from both the government and private financial institutions to boost its liquidity so the struggling airline will be able to stay afloat and expand its operations. Upon the court’s approval for its rehab plan, the airline will be overseen by a team of plan administrators including former THAI CEO Piyasvasti Amranand, Pornchai Thiravech, Siri Chirapongphan, Kraisorn Barameeauychai and Chansin himself. Chai Iamsiri, who is in charge of THAI’s finance and accountancy, admitted that the airline badly needs a capital injection of 25 billion baht from the public sector and another 25 billion baht from the private sector, because its current cash flow will not last through this year. In order to obtain the required loans, Chai said THAI may have to use its head office on Vibhavadi Rangsit highway and other properties as collateral. The Facebook “Surathai”, a webpage of community liquor producers and distributors, has invited operators of restaurants, entertainment venues and related-occupations, to join a rally at 09:00 hrs today at the parliament complex to call for the government to provide relief measures, citing the impact of strict lockdown measures during the spread of the outbreak. BTS Group has come under fire from netizens after it issued a ban on delivery service operating on BTS sky train stations. Covid-19 News After the fiasco of Moo Prom application that was to register the people above 60-years of age for vaccination of AstraZeneca shots got back on track the new application ‘Thai Ruam Jai’ for the people between 18-59 has now gone offline. Moo Prom that was put off over the weekend has now returned and vaccine allocation has now been pushed to this segment. A total of 140,000 people were put off the list over the weekend for the Moo Prom application (age 60+) A total of 170,000 people have been seen their vaccine plans put in question in the Thai Ruam Jai application (age 18-59) The vaccination speed picked up yesterday after having barely been over 100,000 doses throughout the country over the weekend. Monday saw 323,060 doses administered, Tuesday’s data will be released later today Total of 2,410,663 doses have been administered since June 7th when the nationwide vaccination plan was launched. Total vaccines administered since February 28, 2021 is at just over 6.5 million doses. Thailand has administered about 6.5 million vaccine doses in total with over 4.7 million people, accounting for merely 6.8% of total populations who received their 1st jabs and only 1.75 million, 2.5%, of the population being fully vaccinated. This means that as many as 467,445 doses over the next 200 days to achieve the 100 million doses to be administered by the end of the year. Thailand’s Covid-19 caseload topped 200,000 with 3,000 new cases reported in the past 24 hours and 19 new fatalities. A new cluster of infections has been detected at a construction worker camp in Bangkok’s Bangkok Noi district. A prominent medical expert has warned against the planned reopening of the country for foreign visitors in Phuket under the Phuket Sandbox scheme on July 1 as too soon while the Centre for Covid-19 Situation Administration (CCSA) hinted at easing further restrictions to allow more businesses to resume operations at its meeting on June 18, citing a steady decline of new infections amid more recovery of patients.