Power of Thai' put to work

The flood crisis has created an opportunity to turn business rivalry into a partnership for the common good, say business leaders.

The heads of 12 of Thailand's biggest corporations yesterday announced a plan to pool their resources to help put the flood-ravaged kingdom back on its fleet.

Their "Power of Thai" campaign aims to raise 100 million baht over eight months, with education as the priority.

The programmer was the brainchild of Thapana Sirivadhanabhakdi, the president and CEO of Thai Beverage Plc. Other participants are Advanced Info Service, True Corp, Central Group, GMM Grammy, Muang Thai Life Assurance, ICC International, Bangkok Bank, Major Cineplex, Thai Union Frozen Products, BTS Group Holdings and Mitr Phol Sugar.

"Every time we meet Khun Paiboon (Damrongchaitham) of Grammy or Khun Sara (Lamsam) of Muang Thai Life, we always talk about our businesses and bluff each other," said Sudhitham Chirathivat, executive chairman of Central Group of Companies. 

This is a new dimension. We're not talking about business. What we're doing together is a common attempt to revive Thailand."

Mr Thapana said each business would contribute seed money and fund activities to raise more funds, including producing one million Power of Thai wristbands to be sold at 100 baht each. 

They intend to raise more funds through sales of products bearing the Power of Thai logo.

Isara Wongkusolkij, president of Mitr Phol Sugar, said education was chosen because a better educational system would be essential to building the future.

Apart from sharing resources, the businesses are optimistic about economic growth next year, spurred by heavy government spending on rehabilitation as well as private sector revival efforts.

Sompol Chaisiriroj, vice-president of ICC International, the Saha Group apparel flagship, said businesses would move ahead very quickly with rehabilitation because otherwise they would risk losing opportunities.

This will create more new employment and production.

Thai Rice Exports Seen Plunging on State Buying, Flooding

Nov. 4 (Bloomberg) -- Rice shipments from Thailand, the largest exporter, will drop by half from November to January as a state-buying policy raises costs and flooding disrupts transport, according to the Thai Rice Exporters Association.

Exports may slump to 500,000 metric tons per month from an average of 1 million tons in the first nine months as the state purchases lift local prices and make Thai rice less competitive, Honorary President Chookiat Ophaswongse said yesterday.

Thailand implemented the rice-buying policy at guaranteed prices last month to lift rural incomes even as the worst floods since 1942 wreak damage on farms. Lower Thai exports may benefit Vietnam and India, the second- and third-largest shippers.

“The state policy will cause rice exports to fall by a greater extent than the effect of the flooding,” said Chookiat, who’s traded the staple for about 40 years. About 50,000 tons may be delayed by about a month as floods disrupt waterway and road transport, he said by phone.

The price of 100 percent, grade B Thai rice for export, a weekly benchmark for Asia, was set 1 percent higher at $628 per ton on Nov. 2. It has risen 21 percent since the July election that brought Yingluck Shinawatra’s government to power with campaign pledges that included the rice-buying policy.

Thai shipments may plunge 24 percent to 8 million tons next year, the lowest level since 2006, according to a forecast from the U.S. Department of Agriculture. The projected decline is the biggest in percentage terms since 2005.

Flood Damage

While Thailand has suffered more flood damage than other nations in Asia, the impact on prices from the state-buying program would be more marked than the disaster, according to the International Rice Research Institute in the Philippines. India was expected to increase shipments, Samarendu Mohanty, a senior economist at the institute, said last month.

“Only some small companies should be affected by floods,” Chookiat said. “Most exporters don’t have any problem in delivering,” he said. The floods have spread over 63 of Thailand’s 77 provinces in the past three months, including the main rice-growing region, according to government data.

The floods have damaged 10 million rai (1.6 million hectares) of rice land, mostly in the Chao Phraya River basin, cutting the main harvest to about 19 million tons from 25.1 million tons forecast earlier, Apichart Jongskul, secretary- general of the Office of Agricultural Economics, said Oct. 21. That crop accounts for about 70 percent of annual output.

Increased Planting

After the waters recede, farmers are expected to increase planting and bring total production in 2011-2012 to about 30 million tons, compared with 34.5 million tons in the previous season, Apichart said.

India, the world’s second-largest producer, allowed private companies to export non-basmati rice for the first time in more than three years in July after state-run stockpiles reached a record. Exports next year may total 4.5 million tons, 61 percent more than in 2011, USDA forecasts show.

“Orders have been very small since India lifted export restrictions,” Korbsook Iamsuri, president of the Thai rice shippers’ group, said by phone. “We don’t have clear details how soon the transport system will return to normal.”

Global rice production may gain to 482.4 million tons of milled grain in 2011-2012 from 466.6 million tons last year, according to a revised forecast from the United Nations Food & Agriculture Organization yesterday.

“Prospects for this year’s crop have improved in the main paddy-producing countries in Far East Asia,” the agency said, forecasting “strong production growth in spite of the devastating floods in several countries in South East Asia.”

Rice for January delivery fell 0.5 percent to $16.06 per 100 pounds in Chicago today, declining for the sixth day.

Despite Floods, Thai Central Banker Remains Upbeat on Recovery

A Thai man on a mattress paddles along the Chao Phraya River which runs through Bangkok, Thailand.

Thailand's central bank governor says he is optimistic the country's economy will recover in early 2012 from the floods still threatening Bangkok. The governor's upbeat outlook comes as government authorities discuss mulch-billion-dollar recovery and reconstruction plans.

Thailand's most severe floods in 50 years have now claimed 437 lives, affected more than three million households across three quarters of the country's provinces. The estimated financial damage is already in the billions of dollars. The waters have so far inundated almost 10,000 factories, including several industrial estates, north of the city with loss of 660,000 jobs.

While the pace of the inundation has slowed in Bangkok, millions of cubic meters of often fetid water is still advancing to the financial and business districts.

Despite the damage and ongoing concern in Bangkok, Thai central bank governor Prasarn Trulratvorakul says economic recovery is possible if the waters recede by early December and domestic spending is revived.

Speaking to journalists, Prasarn expects private consumption to lead the rebound in early 2012.

"We still believe there will be recovery next year provided that the flood situation starts to improve by early December," said Prasarn. "We should see Thailand staging a respectable comeback on the back of domestic demand revival. I would like to stress again that Thailand's fate will depend upon her success in reviving domestic demand."

The floods have led the central bank to slash Thailand's expected annual growth rate by half to 2.6 percent. The World Bank expects the Thai economy to contract in the final quarter by close to two percent.

Hard-hit factories outside Bangkok account for almost 20 percent of national industrial production.

Vikas Kawatra, head of institutional broking at Kim Eng Securities, says reviving the industrial sector should be a government priority.

"Broadly speaking the priorities should be first to fix the industrial sector so factories can start resumption of work and then comes the next step of making sure that this doesn't repeat, doesn't happen," said Kawatra. "It's a long term process."

Agriculture production in the country's central plains has also been affected. The Rice Exporters Association expects rice exports to fall because of logistical problems in flooded areas. There are also concerns that as much as a quarter of the rice crop could be affected.

For now, tens of thousands of people are already dependent on food and water handouts.

Aid workers and politicians visiting flood-hit areas are met by crowds of anxious people.

This week local businessman Somchai Pattanont traveled by boat along the Chao Phraya River to deliver aid to monks at a temple. Somchai fears it may take two years to recover.

"The country is in for trouble for a long, long time, about one or two years," said Pattanont. "Many factories of the foreign factory [owners] are destroyed, [the floods] destroyed many factories. So [in] one or two years everything will be better. [But] the people upcountry, upcountry [everything] is destroyed. No money, no food, no rice, trouble. The government will have to pay a lot of money, a lot."

For now, Thai authorities are still focused on the short term challenge of draining the enormous pool of water north of Bangkok into the Gulf of Thailand.