Prasarn Trairatvorakul: Recent challenges and the way forward Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Japanese Chamber of Commerce Dinner Talk, Bangkok, 22 March 2012. *  *  *  Good evening, Distinguished guests, Ladies and Gentlemen, I would like to thank the Japanese Chamber of Commerce for inviting me to speak again at this special annual event. Each of these years has brought us yet more economic surprises and challenges. In 2010, the world economy grew surprisingly fast and the Thai economy promptly rode on the wave of global recovery. Then last year, the European sovereign debt problem erupted and depressed the global economic environment, while at home both of our economies were badly hit by devastating natural disasters that took a heavy human and economic toll. In Thailand, the damage from the floods was indeed severe. Output loss was estimated to be around 3.2 percent of GDP and economic activity contracted sharply by 9 percent year-on-year in the last quarter of 2011. Manufacturing and agricultural outputs as well as exports were severely dented. The automobile industry, which was just recovering from the supply chain disruptions following the earthquake and tsunami in Japan, was hit especially hard. But as you are well aware, shocks from natural disasters are temporary in nature. They tend to be followed by rapid resumption of economic activity as things get back on track, as was the case with Japan in the aftermath of the earthquake.
Almost $ billion of bonds were issued in the first three quarters of this year, establishing a new high when compared to the previous record of about $ billion over the same period in 20114. Over the longer term, emerging Asia’s bond markets are expected to grow 18-fold from $ trillion in 2009 to $ trillion in 20305. 7. There is therefore great scope for financial intermediaries in Asia to play a key role in financing Asia’s future growth, channelling surpluses to meet the region’s needs, and facilitating closer integration of trade and financial markets in the region. DBS, with its extensive network in Asia, is well-poised to be at the forefront of these trends. DBS has done well in this respect - for instance, DBS ranks amongst the top 5 mandated arrangers of Asia Pacific syndicated loans (ex-Australia and Japan). In Singapore, DBS is also part of a bank consortium led by Temasek Holdings to provide long-tenor financing to Singaporebased corporates in infrastructure projects in Asia Pacific. Role of local banks in Singapore’s financial system 8. Even as our local banks like DBS expand into the region to ride on Asia’s growth, it is important that they remain deeply rooted in Singapore, their home market. They have been and will continue to be a crucial part of Singapore’s financial system. Local banks have an important role to play in safeguarding Singapore’s financial stability, particularly in times of crisis.