The National Economic and Social Development Board's chief yesterday voiced grave concern about the private sector's reluctance to increase investment even though factories are running at near to full capacity. He said the situation could lead to economic stagnation, should demand pick up.

Speaking at a seminar titled "Steering the Thai Private Sector Through the Global Crisis Towards Energy Sustainability", NESDB secretary-general Ampon Kittiampon said the private sector should go ahead with its investments and need not worry about state budget spending.

"Though the current government is a caretaker one, it has enough budget from the existing fiscal year to inject into the economic system," he assured representatives of private companies gathered at the event in Cha-am.

However, company representatives on the panel did not complain about delayed budget disbursement. Rather, they pressured the government for clear-cut economic and energy policies to give them an idea about how they should proceed with their investments.

The seminar raised the curtain for further discussions in Cha-am today between the private and public sectors, amid increasing signs of an economic slowdown.

Pairote Arnamwat, marketing director of Cementhai Industry Co Ltd, said that for his industry a clear-cut export policy was necessary before a company could decide whether to invest in a new cement plant. He complained that the government lacked a clear policy on whether it wants to promote the export of cement.

"Besides its flip-flop policy, the government should lift its price control scheme now that it is negotiating for free-trade agreements. If the government wants to liberalise the economy, all companies should be allowed to operate in a free environment for a stronger presence," he said.

He added that the cement industry had been affected by higher energy prices that have raised production costs by Bt300 per tonne. While prices have been under strict control and machinery needs to be upgraded, the company also suffers from lower demand for cement due to the delayed mega-project investments.

"We don't want to invest in a cement plant for export purposes. We'll invest only to respond to domestic demand. Moreover, to export cement is not an easy thing. We need time to prepare ourselves. Therefore, the government should not flip-flop over this, so that we can come up with the right production strategies during a time of crisis," Pairote said.

Somkiat Anurat, chairman of the Thai Chamber of Commerce's fishery and related industries committee, urged the government to control the number of fishing boats in order to reduce fuel consumption.

Right now, fishing boats in the Gulf of Thailand number 61,000 and due to the huge number, most come back with their freezers filled no more than 40 per cent. Many boats have therefore stopped operations, fuel prices having raised their operating costs by 50 per cent.

"If the number of boats is reduced to 33,000, that could reduce fuel consumption by 400 million litres a year and ensure high profitability," Somkiat said. "Meanwhile, the remaining boats could be shifted to serve other purposes, such as transportation or tourism. The government needs to be clear about what it wants to do."

Water transportation is also favoured by Issara Vongkusolkij, chairman of the Board of Trade's logistics development plan and president of Mitr Phol Sugar Co Ltd.

"Of total fuel consumption, 66.6 per cent is consumed by the transportation sector, and 86.43 per cent of that is by land transportation. Better rail and water transport would help enormously," he said.

As a net oil importer, Thailand has been hard hit by soaring crude prices. With global oil prices having risen to US$60-$65 (Bt2,310-Bt2,500) per barrel, compared to some $50 last year, the NESDB had to revised downward its 2006 economic growth projection from 5 per cent in March to 4.5-5.5 per cent in April and 4.2-4.7 per cent in June.

Ampon said rising oil prices still posed a grave threat to business. Currently, the private sector is not importing more steel and machinery, although capacity utilisation has expanded to 80-90 per cent. Companies are focused on enhancing staff performance instead.

Unless the private sector increases investment, the NESDB is concerned it will not have enough capacity to produce goods for export and to meet local consumer demand. Such a scenario would exacerbate deteriorating economic conditions.

Many companies have revised their profit growth target, while exporters anticipate a lower trade value due to the stronger baht. 

Watcharapong Thongrung

The Nation