SSO caught in the crossfire

The financial implosion in the US has already had a major impact on a number of organisations and firms here, including the Social Security Office, the Government Housing Bank and some exporters.

Workers yesterday demanded the Social Security Office (SSO) board quit over the Bt40-million loss inflicted by the collapse of Lehman Brothers.

Boonsom Thawichit, president of the Saraburi Workers' Group, said the SSO's directors should be held responsible for investing in high-risk international stocks, especially since this was not the first time. The SSO took a Bt300-million hit from holding BankThai shares.

The SSO should also be reorganised for more member participation in decision-making, he said, adding that labour organisations would closely monitor the SSO and ask the board to postpone approval of Bt19-billion investment in other countries that is set to be proposed on Monday.

GH Bank president Khan Prachuabmoh said the bank's securitisation plan would be put on indefinite hold.

"We have delayed this plan several times as the market conditions are unfavourable. But we're ready to launch it any time the market is ready for it," he said.

Khan expects the crisis, heightened by the collapse of investment bank Lehman Brothers, will lead to higher cost of offshore funds, as overseas financial institutions will clamp down on lending. Thai businesses would then seek local funding, which could push up domestic rates.

GH Bank will not raise its loan rates even though spreads have been squeezed as deposit rates are raised to compete against commercial banks. Higher rates would hurt many home-buyers, he said. Lehman's downfall is expected to put financial pressure on its clients in Thailand, including Grande Asset Hotels and Property.

However, the developer insisted that its operating and construction plans would feel little impact, and it is exploring new funds to ensure timely completion of the Regent Residences, Regent Hotel and Crowne Plaza Hotel in Bangkok.

Atip Bijanonda, president of the Thai Condominium Association, said that as the US may need to cut interest rates to facilitate debt restructuring at home, rates here could follow suit or stay at the current level. Local lending rates would be raised only when domestic liquidity dries up.

Still, the US crisis would make it harder for real-estate firms to raise capital, while investment could dry up if Thailand's export sector starves from slackening demand abroad.

Atip also anticipated a fall in individual property investment in light of the meltdown of the local stock market, which wiped out a good chunk of the wealth of many investors.

Textile exporters in the North fear that at least 5 per cent of their 2008 export orders could evaporate, said Vikorn Phromchana, chairman of the Lanna Textile Association.

Although only 5 per cent of Thai-land's textiles go to the US, Lehman's collapse could reverberate around the world, as the investment bank's units are scattered over many nations. 

Nattapong Harnphatchaikul, chairman of the northern handicraft manufacturers and exporters association, said the fallout is imminent since about half of handicrafts are shipped to the US.

This would worsen the finances of manufacturers, which have already suffered from a 10-per-cent drop in export orders over the past eight months. Last year, they enjoyed a growth rate of 3-5 per cent.