Thailand

Thailand’s newly-minted central bank governor said Monday that the country’s economy is entering a difficult transition, and that he stands ready to tailor the bank’s policies to support more growth while strictly managing price pressures, the Wall Street Journal reported today.

Britain's second-biggest steelmaker SSI UK said on Monday it plans to mothball its Redcar plant in northeast England and axe about 1,700 jobs, calling its future into question and deepening a crisis in the British steel sector. The loss-making company, a unit of Thailand's biggest steelmaker Sahaviriya Steel Industries (SSI), has been hit by a slump in steel prices this year ST-CRU-IDX, which it expects will continue in the short term. The Redcar plant, SSI's only British operation, employs 2,000 people directly, meaning it plans to axe nearly its entire workforce.

Sahaviriya Steel Industries has reached an agreement with its creditors to enter debt-restructuring for the massive Bt50 billion it owes them and has pulled the plug on its upstream plant in Britain as part of its strategy to keep its core business in Thailand afloat, The Nation reported. "The huge loss of the UK base is crimping the cash flows of SSI in Thailand, so we had to keep the hot-rolled coil steel business in Thailand going by opening negotiations with lenders," Win Viriyaprapaikit, president of SSI, said yesterday.

A nasty consumer debt hangover awaits Thailand, as recently highlighted by EM Squared. Over the past decade, Thais have binged on auto financing and unsecured loans, to the extent that nominal household debt doubled between 2008 and 2014, and debt has reached 80 per cent of GDP*. Consumption growth has stalled, and neither consumers nor the country’s banks can stomach much more. Yet for many in Thailand, the situation is even more precarious than official figures suggest.

Multinational companies drawn to Southeast Asia by hopes of a long consumption boom are witnessing a reversal of fortunes in its three biggest economies as shoppers lose their mojo, the Financial Times reported. Household debt, sluggish wage rises and political uncertainties are dragging on spending growth in Thailand, Indonesia and Malaysia.

Thailand's military-led government has approved a restructuring plan for Thai Airways International PCL in a bid to restore profitability to the national carrier's operations, a senior government official said on Monday, Reuters reported. State-controlled Thai Airways is one of the major state companies to undergo reform after the military seized power from an elected government in a May coup. The restructuring includes measures to cut operating costs, boost revenue and sell some non-core assets, said Kulit Sombatsiri, director general of the State Enterprise Policy Office.

Din Ruenmeesang spends about half his monthly income making minimum payments on his seven credit cards and multiple bank loans. That isn’t stopping the 33-year-old from borrowing again to buy a new car next year. Spenders like Din are making it hard for Thailand’s central bank to cut interest rates even as Southeast Asia’s second-largest economy struggles with weakening growth. Thai household debt has more than tripled in a decade to a record high 83.5 percent of gross domestic product, and lower borrowing costs may exacerbate that.

The junta that seized power in Thailand four months ago has used martial law and a crackdown on its critics to subdue the politically polarized country, the International New York Times reported. But it may have more difficulty handling a fragile economy. Household debt is at a record high in Thailand, exports are flat, the number of tourists is well below last year’s count and experts say low levels at dams across the country are foretelling a severe water shortage. The central bank predicts economic growth of 1.5 percent this year.

Thailand revealed plans Tuesday to provide $312 million in loans to help its financially strapped farmers, many of whom are in debt to loan sharks, in the latest step by the military junta to help boost the economy, The Wall Street Journal reported. Loan sharks, who charge as much as 60% in interest a year, have thrived amid growing household debt, which rose to 82.3% of gross domestic product this year. Economists are concerned Thailand's high household debt will reduce consumption, a major engine driving the country's economic growth.

Bankruptcy cases, both personal and commercial, have shown signs of rising due to the economic slowdown this year, the The Nation reported today. As of October, the Legal Execution Department had 264,232 cases with assets for sale valued at up to Bt3.47 trillion. In the last fiscal year ended September, the department succeeded in settling 25,717 cases by mediating between debtors and creditors and selling assets for Bt33.14 billion out of an estimated value of Bt33.23 billion. For this fiscal year, the department targets to clear at least 150,000 cases.