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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (9077)	8/10/1999 10:59:00 PM
From: Dayuhan	Read Replies (1) \| Respond to of 9980

Curious to hear any reactions to these IHT pieces: Thais Unveil $3 Billion Bid To Stimulate Economy By Thomas Crampton International Herald Tribune BANGKOK - Thailand unveiled a long-delayed $3 billion spending package on Tuesday, one that is intended to stimulate the economy through a combination of tax cuts, housing mortgages and corporate loans. Although sizable, analysts said the impact of the package would not be felt as quickly as that of the previous Thai stimulus package, which was introduced in May and involved sending funds directly through government channels. ''You can hardly call $3 billion bad for the economy,'' said Sriyan Pietersz, head of research at SG Asia Credit in Bangkok. ''But since many of these measures involve tax reductions and future funding rather than the handing out of money, we will only see an impact in the second half of next year.'' Tax cuts of as much as 10 percent will affect import duties on more than 500 items and will reduce government revenue by about 5 billion baht ($132.7 million) next year, according to the Finance Ministry. Imported raw materials account for up 40 percent of Thai exports. The cuts are aimed at lifting exports, which have lagged as competition increased from China, India and the Philippines. ''We will eventually see the benefits of tariff cuts, but companies will need to work through current inventory first,'' Mr. Pietersz said. The package also aims to address the credit crunch that has crushed corporate Thailand. The economic crisis has wiped out the banking system that helped fuel a decade of rapid national development. The package made public Tuesday includes 23.2 billion baht to support small, midsize and large enterprises through separate programs. A $500 million fund supported by the World Bank's investment arm, Industrial Finance Corp., will buy equity and give loans to large that are undergoing restructuring. Called the Equity Fund, it can be expanded if need be to $1 billion The Thai government will hold a 20 percent stake in the fund, and 20 percent will be sought from Thai investors. The IFC will own 15 percent, with the remainder to come from foreign investors. For midsize enterprises, the Asian Development Bank is helping set up a $100 million Thailand Recovery Fund. Japan's Overseas Economic Cooperation Fund has also shown interest in joining the fund, which is intended to invest in highly competitive enterprises. The Thai Ministry of Finance will contribute 1 billion baht to kick off fund-raising for what will be a 10-year closed-end mutual fund to provide equity capital to small businesses. To support Thailand's ailing real estate sector, the National Housing Authority plans to spend 15 billion baht on buying half-finished condominiums and houses built for low or middle income earners. Analysts estimate that the outlay could absorb up to 15 percent of the excess housing. Japan Reports a Feeble Recovery TOKYO - The Japanese economy remains ''in a severe state'' but is getting a boost from government spending and growing regional demand, the Economic Planning Agency said in a report issued Tuesday. In its monthly report for August, the agency said increasing exports to Asia were helping to lift industrial production. But the agency said the number of people working continued to fall, with the jobless rate reaching a record of 4.9 percent in June. The economy is improving somewhat, an official in the agency's research bureau said, but ''we can't say that it won't go down.'' Government spending on construction projects, tax breaks and bank bailouts over the past two years helped the economy expand 1.9 percent in the first three months of 1999, ending five quarters of contraction. Revised growth figures to be released Friday may add or subtract 0.2 percentage points from that figure, said Taichi Sakaiya, the head of the agency. More pump-priming lies ahead. The report says the government is ready to spend money left over from last year's budget and to introduce a second supplementary budget if necessary. At least 10 trillion yen ($87 billion) of projects is needed to keep spending from tailing off, Mr. Sakaiya said.