Published on December 29, 2007
Here are the top 10 according to the Business Desk.
1 PTT ruling
PTT's victory over the Consumers Foundation, which in 2007 succeeding in aborting the privatisation of the Electricity Generating Authority of Thailand on the same logic, narrowly saved Thailand from an economic catastrophe.
Ahead of the Supreme Administrative Court's ruling, fears mounted that PTT would be forced to return all of its gas transmission pipelines, worth Bt100 billion, to the state and de-list itself from the stock exchange, which would have cut the equity market's capitalisation by Bt1 trillion, or 16 per cent. Stock analysts warned that investors would completely shun the exchange and the economy could suffer dearly.
The court however told PTT to return only three pipelines and their land and rights of way to the state, which were valued at only Bt15 billion. Although PTT would need to pay rent for the pipelines, analysts perceived the expense as not materially hurting its bottom line.
The Finance Ministry so far is optimistic that the other privatised and listed state enterprises will not be subject to similar suits.
2 Oil prices
Geopolitical tension and heavy demand pushed global crude oil prices to record highs - hitting US$96.24 (Bt3,250) a barrel - and retail oil prices here followed. Premium petrol hit Bt32.89 a litre, while regular reached Bt31.59 and diesel Bt29.34. Without the cut of 80 satang per litre in compulsory contribution from diesel oil sales, diesel could have gone over Bt30 a litre.
While local manufacturers are squeezed by higher energy costs, consumers are eyeing higher goods prices amid strong inflationary pressure. Instant noodle prices will shoot up 25 per cent on January 1, the first adjustment in 10 years. Over 100 items are awaiting approval for price hikes while government price ceilings are scheduled to be lifted in 2008.
High oil prices also stimulated demand for and increased prices of fuel crops like corn, tapioca and oil palms. With more and more farmers turning to growing these crops, acreage for food crops is dwindling and food prices could escalate.
3 Strong baht
The sudden closure of garment maker Thai Silp South East Asia Import Export in September and the decision by Union Footwear to shift from manufacturing footwear to distributing IT equipment created concern among the entire business community over the threat of the strong baht to exporters in low-priced competitive areas like textiles and footwear.
While mismanagement was cited as the cause for Thai Silp's demise, Union Footwear - which is changing its name to Union Technology - was made redundant by the emergence of new manufacturers in cheap-labour countries, including Vietnam, India and China. Relying on producing products for other brands, these local companies gave up their market shares to foreign manufacturers. During these times of creeping baht appreciation against the US dollar, they are feeling the pain from low margins and red ink.
These episodes inspired talks on how to increase local exporters' competitiveness, as the baht is likely to strengthen further along with the weakening of the US economy.
Seven carmakers have applied for Board of Investment tax incentives to assemble environmentally friendly vehicles, the so-called eco-cars, in a move that highlights Thailand's status as the Detroit of Asia. The success of the small-car policy was overwhelming despite concerns that Thailand is a limited market and the auto-makers would need to export some of their output.
The auto companies are Asian Honda Motors, Suzuki Motor, Siam Nissan Automobile, Toyota Motor Thailand, Mitsubishi, Volkswagen and Tata Motor (Thailand). The first three have received the BoI's nod while the other four are waiting.
As each project must roll out at least 100,000 units per year, if they start by 2010, the volume would push the total number of vehicles manufactured in Thailand to nearly 2 million, from about 1.4 million units at present.
The BoI expects the total investment in energy-saving cars to exceed Bt60 billion while investment in supporting industries will reach Bt100 billion-Bt200 billion.
5 King Power
King Power International, the exclusive operator of lucrative duty-free shops, was dealt a huge blow when Airports of Thailand cancelled its concession for Suvarnabhumi Airport on grounds that it violated the Public/Private Joint Venture Act. AOT also terminated the contract for King Power to manage over 20,000 square metres of commercial space at the passenger terminal.
King Power then missed its Bt18 billion first-year revenue target by Bt1 billion. Some banks also pressured some banks to cut credit lines totalling Bt5 billion-Bt6 billion.
Ordered by AOT to remove all shops, King Power sought a court injunction to keep them open. The group also asked for damages of Bt68 billion for having its concessions rescinded. While the case is in court, all revenue from King Power is parked at the Civil Court. Due to the controversies, AOT's net profit dropped 90 per cent to Bt1.1 billion from Bt10.4 billion last year.
As shocking as the CTX scanner scandal was, the charge by the US Justice Department that a Thai official at the Tourism Authority of Thailand took US$1.7 million (Bt57.5 million) in bribes from two Americans in return for $10 million contracts to manage the Bangkok International Film Festival from 2004-2006 caused even more gasps.
Former TAT governor Juthamas Siriwan was not named in the statement, but she served TAT in top positions from 2001-2006. The Justice Department said all the bribes were wired to "the Governor's daughter".
Unlike the CTX scandal, which claimed no victims, the TAT scandal forced Juthamas to resign as deputy leader of the Puea Pandin Party and withdraw her candidacy from the election. She threatened to sue the Justice Department if her name was linked to the scandal, which broke with the arrest of the two Americans, Gerald and Patricia Green.
TAT has formed an investigative panel while police are investigating the case with cooperation from the US Federal Bureau of Investigation.
7 Don Mueang
On March 25, Don Mueang Airport was reopened for domestic flights, though it was earmarked to serve only chartered flights and private jets after Suvarnabhumi Airport opened.
Airports of Thailand now plans to move some international flights to the old airport, which had been in service for more than 90 years, due to earlier-than-expected congestion at Suvarnabhumi. The Cabinet has also not yet approved the Bt68-billion budgeted for the construction of Suvarnabhumi's Phase II.
Star Alliance, which groups 18 leading airlines, voiced strong opposition to the AOT plan.
The Civil Aviation Department is also at odds with the plan, claiming that operating two international airports without transportation links would prevent Bangkok from becoming a regional aviation hub.
8 Foreign Business Act
Commerce Minister Krirk-krai Jirapaet's decision to abruptly withdraw the Foreign Business Bill from National Legislative Assembly debate in August marked the end of a futile attempt by the interim government to amend the Foreign Business Act, which was meant to resolve the issue of nominee shareholders once and for all. After all, the Commerce Ministry's move to amend the foreign business law was prompted by the ambiguity of the wording that led to Temasek Holdings' takeover of Shin Corp, the source of the downfall of then-prime minister Thaksin Shinawatra.
The administration of Prime Minister Surayud Chulanont attempted to amend the Foreign Business Act but ran into a big hurdle, as some ultra-conservative lawmakers were extreme in their desire to tighten the regulations governing foreign investment here. This group of legislators managed to upstage the Commerce Ministry's FBA bill, leaving the foreign business law in limbo. And it's unlikely that the Surayud government can amend the law within its term.
Now the next government is left to decide what to do with the foreign business act. The details of the law will determine just how open or investment-friendly the government is towards foreign investment.
The Retail Business Bill is also waiting for the next government's decision on whether to go ahead with it or table it.
9 Currency Act
The amended Currency Act was withdrawn from National Legislative Assembly at a time when the Bank of Thailand is in dire need of new methods to deal with foreign-exchange losses.
Remarkably, three other bills sponsored by the central bank - the Deposit Insurance Agency Act, the Bank of Thailand Act and the Financial Institutions Business Act - were passed.
Finance Minister Chalongphob Sussangkarn withdrew the fourth bill on worries that the NLA would vote it down. The amendments would allow the Bank of Thailand to make its balance sheet reflect its performance more efficiently and also eliminate its unrealised forex losses.
The losses could deepen on the continued weakening of the greenback to the baht, while US dollars constitute the largest portion of Thailand's foreign reserves. The baht has appreciated against the dollar by 3.3 per cent this year. Except for the 30-per-cent reserve requirement, the baht could have strengthened faster and the unrealised losses could have been greater.
On March 6, the government revoked the broadcasting licence of iTV and took over the channel's employees and assets, following the listed company's failure to pay fines of over Bt100 billion.
Under the supervision of the Public Relations Department, the station was renamed TITV, and is slated to become the Thai Public Broadcast Service when it becomes a public TV station on January 1. Being a public station means it can no longer air commercials and would be funded instead by Bt1.5 billion annually from "sin taxes".
The fiasco could be prolonged, as iTV, the original concession holder for the channel, won the court's approval not to pay those hefty fines. The sum will be negotiated by an arbitration body. The question is, if iTV could come up with the money to pay the fines, would it be legitimate for the government to take ownership of the TV channel and change its course of operations?