Jose Vinals, chairman of Standard Chartered
Jose Vinals, chairman of Standard Chartered

EEC, poll boost mood,StanChart boss says

Economy May 18, 2018 01:00

By Wichit Chaitrong 
The Nation 

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 AMBITIOUS spending plans under the Eastern Economic Corridor (EEC) initiative have boosted investor confidence in the Thai economy, said Standard Chartered Bank (StanChart) chairman Jose Vinals, who also expressed faith in the government’s plan for an election next year.



 As Thailand will hold a general election early next year, that will be very positive for the country, said Vinals, referring to the government’s so-called roadmap for a return to democracy that has been marked by delays in the election schedule.

 “This is something that is a natural and a welcome development, and what we hope is that those elections will take place in a context of full normality. That is something that I think will be very positive for the country,” said the chairman of the UK bank that is known for its Asia and emerging markets focus.

 Aside from the infrastructure investment mostly associated with the EEC, Thailand also needs political stability, more women participating in labour market and improvements in the quality of education to drive the country to achieve a 5-per cent-plus economic growth rate, Vinals said. 

Early this week, he met Deputy Prime Minister Somkid Jatusripitak for discussions on the Thai economy on his first visit to Bangkok since he was appointed chairman of the Standard Chartered Group in October 2016. 

Vinals said that a number of the bank’s clients are interested in investing in the EEC and related infrastructure projects. Such contributions would help to modernise the economy on the path to high-value activities. 

 He said the bank has been in Thailand for 124 years and has made a tangible commitment to continue making contributions to the local economy, especially regarding the EEC projects.

Many corporate clients of the bank are keen on the showcase industrial zone, said Vinals, noting an initial investment interest in infrastructure – such as rail projects – and that over time this would expand to take in property, hospitality, smart cities and other high-technology industries.

 As the bank is one of the top three banks globally for the provision of financing for trade and investment, Standard Chartered will support corporate clients that want to invest in the EEC, he said. The bank operates in more than 60 economies across the world and that positions it well for cross-border services, Vinals said. 

Standard Chartered has a presence in all 10 Asean economies and is well placed to engage in China’s infrastructure-focused Belt and Road Initiative, he said. 

 He said Thailand and the other Asean countries will benefit from a strengthening global economy, which is expected to expand almost 4 per cent this year. He believes Thailand has the potential to grow 5 per cent or more, adding that the country needs to raise its economic expansion from the current 3-4 per cent range in order to improve people’s living standards.

 The US Federal Reserve’s programme for interest rate increases will have a positive effect on the group’s operation if the pace of such rises is gradual. A rise of 50 basis points would increase the group’s revenue by US$300 million, Vinals said. The market predicts that the Fed will increase its benchmark rate three or four times this year. 

 Vinals said he expects the group’s revenue will continue to grow in the double digits this year after the 15 per cent growth booked last year. 

 Britain’s departure from the European Union will have only a very limited impact on the operations of the bank. The bank may add to the staff in its Frankfurt office but avoid layoffs in the United Kingdom, Vinals said. 

 In recent months observers have become more positive over a Brexit deal that may allow the UK to remain in the EU’s customs union. That means the UK could still export goods to Europe under the free-trade provisions of the customs union.

 In regard to financial services, banks in the UK should be allowed to continue to provide services in Europe, Vinals said.

 

 However, if the eventual deal strayed too far from the expectations, that would hurt both sides, he said.

 Europe would lose more on the financial services front because it would be very difficult to build up financial services centre to match the capacity of London’s.

 Conversely, Britain would lose more on the trade side. If the EU has to build a new centre of financial services it would increase the costs for the trade bloc. On the other side of the ledger, the UK would suffer from reduced exports to Europe, Vinals said.