POLITICS HOLDING BACK THAI RECOVERY

       Corporate giants yesterday warned the government that continued political unrest was acting as a major drag on the country's economic growth while the rest of Asia powers ahead in the world arena.
       The global economy is entering into a show of economic rebound but the recovery will take two years to be seen, they said.
       However, there are some good signs for the local economy.
       Interest rates will not be raised until late next year, oil prices will not fluctuate like in the past few years, and the government's second stimulus package will disburse Bt190 billion-Bt200 billion of the total Bt1.43 trillion next year to enhance domestic consumption.
       In particular, the emergence of new economic powers, including China and India, has prompted developed countries, including the US and those in the European Union, to move trade and investment to Asia. They believe Asia will be the first region to overcome the global financial paralysis.
       Panellists at a seminar in Bangkok on the "Global Trading Outlook 2010" pointed out that international trade is driving the country's economy.
       The government should prepare measures to create networks to take advantage of the seamless trade through free-trade agreements, they said.
       Charumporn Chotikasatien, a vice president at Siam Commercial Bank, said the five major growth engines next year would be agriculture, manufacturing and manufacturing-related services, hotels and restaurants, transportation and other services.
       No factors have come into view on the horizon to force the government to raise interest rates.
       "Consumers will enjoy low interest rates until the end of next year," he said.
       However, the stronger baht against the greenback will hurt all exports. It is the result of capital inflows from the West to Asia, the world's main manufacturing belt. This shift will pull up Asia from the crisis before other regions.
       As businessmen venture to new potential markets abroad, particularly the Middle East, the bank plans follow them to serve their new operations.
       "Exploring new export markets calls for risk insurance. The government should take care of the transactions and commercial banks will facilitate the export letters of credit," he said.
       Surong Bulakul, senior executive vice president for international trading at PTT, said the worldwide slump had dampened both oil consumption and price speculation.
       The Organisation of Petroleum Exporting Countries is also afraid that the serious concerns over global warming will make the international community more aware of alternative energy, electric cars and hydrogen power.
       "Opec is worried about the security of oil demand, which cautions them not to do anything to pull up the price and to stabilise production," he said.
       The oil price is also closely related to the geopolitical situation, but now there are no negative factors to push up prices.
       PTT predicts that the crude-oil price will average US$75 (Bt2,500) per barrel this year.
       Kalin Sarasin, managing director of SCT, said traders had to keep a close eye on major factors, particularly the political situation, government spending, international cooperation through free-trade agreements and the G-20, and diverse global market opportunities.
       China and India will be spotlighted in global trading next year. China's economy is predicted to grow by 8 per cent and investments in property and corporations are rising as exports take up the slack from weakening government investment.
       India's government spending will increase by 36 per cent next year, focusing on infrastructure, job creation and improving the livelihood of the poor.
       The business risk factors include fluctuating commodity prices, unstable exchange rates, political unrest, credit risk and the high risk of entering into new markets, he said.
       Sumate Tanthuwanit, president of leading logistics operator Ngow Hock Agency, said the top 10 shippers had faced a combined loss of about $3 billion since the collapse of Lehman Brothers in September last year. They will not reduce service fees but will increase them to survive.
       Container demand has dropped by 9.14 per cent from a year ago. Demand is expected to increase by 2.25 per cent but the supply of ships will shoot up by 15 per cent next year, he added.