The industrial confidence index shot up in March for the first time in six months, with sentiment buoyed by a clear election schedule and an expected cut in the policy interest rate by the Bank of Thailand in April.

The Federation of Thai Industries' (FTI) index increased from 82.7 in February to 86.8 last month, against a continued drop in the index since October following the coup, which led to a murky political climate along with chronic baht appreciation.

Industrialists in March sped up their production to cope with the long holiday in April, when Thailand celebrates the traditional New Year.

The survey said that total orders had also risen from an index of 88.4 in February to 100.7 last month because people spent ahead of the Songkran holiday.

FTI vice chairman Adisak Rohitasune said yesterday that the improving confidence was attributable to relatively clearer political conditions, as well as more stable energy prices.

To maintain positive sentiment, industrialists suggested that the government control oil prices, as octane-95 petrol is approaching Bt30 per litre, Adisak said.

"They also want the central bank to further cut the policy rate to 3.5 per cent this year to stimulate investment from local and foreign investors. Moreover, the government should announce an election date as soon as possible to raise confidence," he added.

The Bank of Thailand's Monetary Policy Committee will convene again next month, when it is expected to cut the policy interest rate from 4 per cent to 3.5 per cent amid calls from many sectors for a quick economic boost.

On Tuesday, the central bank revised downward its 2007 economic growth forecast from 4-5 per cent to 3.75-4.75 per cent, in line with declining investment and spending.

The University of the Thai Chamber of Commerce's forecast is also below 4 per cent.

Following the economic slowdown, the manufacturing index slightly declined in the first two months, said FTI chairman Santi Vilassakdanont.

Santi said import value had grown only 2 per cent in the first quarter, indicating that few companies have imported capital goods and raw materials for local production.

"The Commerce Ministry should better check whether machinery imports also declined," he said.

"If they did, that is a negative signal, as it would show that the industrial sector will not expand in the long-term."

Chalida     Ekvitthayavechnukul

The Nation