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The State Enterprise Policy Committee, at a meeting yesterday chaired by Deputy Prime Minister Korbsak Sabhavasu, also instructed others with investment projects to raise returns, in order to help strengthen the national fiscal situation, said State Enterprise Policy Office director-general Areepong Bhoocha-oom.

Last year, state enterprises' remittances amounted to Bt101.43 billion out of a combined net profit of Bt122 billion. In 2007, their combined net profits were Bt204.19 billion.

The economic slowdown could further pressure next year's net profits, particularly that of the Electricity Generating Authority of Thailand and telecommunications agencies.

The board also asked the Information and Communications Technology Ministry to talk to TOT and CAT Telecom and jointly set a clear direction for both state agencies in defending themselves in ongoing legal disputes with their own private-telecom concessionaires.

The disputes could involve Bt80 billion in compensation.

Pressure on the state enterprises is heightened, as this year's revenue shortfall could exceed Bt200 billion, due to the economic and political problems.

Saowanee Thairungroj, vice president for research at the University of the Thai Chamber of Commerce, cautioned yesterday at a UTCC seminar that if the tourism industry slumped 30 per cent, Thailand's economy could contract as much as 5.3 per cent this year.

She said the revocation of the emergency decree should lift sentiment and improve the situation in the rest of the year.

To boost the economy, Thailand should also eye new export markets, because the US, Europe and Japan, which together buy 30 per cent of the products, are suffering from the crisis.

Saowanee said the government should also be more active in boosting lending to the economic sector, as 75 per cent of businesses in the latest survey cited liquidity shortages.

She called the government's move to cut the 2010 budget a "wrong signal", because the government should spend more during an economic slowdown. It must also address the slow budget disbursement, with civil servants refraining from approving projects out of fear of political interference.

At a seminar yesterday by the Association of Stock Analysts, Korbsak insisted the economy would recover in the fourth quarter if political conflicts were resolved. However, he said if conflicts continued, House dissolution could take place in the next couple of months, thus delaying planned government spending.

At the "Thai Foreign and Finance Ministers Roundtable" last Friday in Washington, hosted by the US-Asean Business Council and the Asia Society, Finance Minister Korn Chatikavanij admitted to investors that intensifying political problems could worsen the economy, particularly due to the drop in tourist arrivals.

However, he said despite negative impacts on the manufacturing sector, the Thai financial sector remained strong. The government has also relaxed fiscal policies, with Bt1.57 trillion investment planned for 2010-12. Meanwhile, the ratio of public debt to gross domestic product remains low by international standards. This will allow the government to relax fiscal policies further without jeopardising fiscal position.

Most of the 150 representatives of 25 US companies still perceive Thailand as an attractive investment destination and expressed their support at the meeting for the government's restoration of investor confidence through the rule of law.

They agreed that with strong fundamentals, the Thai economy should recover faster than other economies if political reforms and economic policies proceeded as planned.