Finally, the soon-to-be-implemented second phase of the financial sector master plan will further improve efficiency of the banking sector through reduction of regulatory costs, enhanced legal and information infrastructure, and new competition introduced in orderly manner through phased deregulation and liberalization. 2  BIS Review 118/2008  Fourth, the private sector has shown much resiliency and adaptability. For example, in response to the appreciation of the baht, exporters have made increasing uses of foreign exchange hedging instruments. At the same time, the increasingly diversified export market structure has provided Thai exporters with cushions against the current slowdown in major advanced economies. As another example but perhaps more relevant to today’s audience, our listed companies no longer over-leverage their balance sheets, turning instead to equity and retained earnings as major sources of funds. Fifth, Thailand is among the world’s top places when it comes to the ease of starting and operating businesses. The recent report, “Doing Business 2009,” by the World Bank upgraded Thailand by six places. Despite all the storms we have faced, we are now ranked at 13th place out of 181 countries (4th in Asia after Singapore, Hong Kong, and Japan). According to the report, Thailand led other reformers in the region with improvements in four areas – Registering Property, Protecting Investors, Paying Taxes, and Trading across Borders. As investors, you may be interested to hear that one of the cited reform measures is amendments to the Thai Securities and Exchange Act to strengthen minority shareholder rights.
Oil prices have fallen much lower than what we had anticipated during our last round of economic forecast in July which had headline inflation projection in the range of 7.5-8.8% for the year. The fall in oil prices adds on top of the temporary favorable price impact from the government’s six-months-six-measures program which was not included in time for the forecast and will together be a major factor in our October forecast round. The fall in oil prices is also expected to have a significant impact on economic growth which was forecasted to be in the range of 4.8%-5.8% for this year. Unfortunately, the impact of the escalated political tension was also something we had not anticipated. In particular, the damage it has inflicted on the tourism sector will significantly shave off one significant source of external revenue the economy has relied on. Still, we see the economy’s growth momentum to remain in tact. Here I am not alone in believing so. The latest SET’s CEO Survey released last week showed that the majority of listed companies’ CEOs remained confident in the growth prospect of the Thai economy. Obviously, this is a difficult time for the economy. But you have to remember that we are no strangers to difficult challenges, some much worse than what we are facing. Most importantly, as I repeatedly said on different occasions, Thailand possesses strong economic fundamentals and room for maneuvering the right policy mix that makes us resilient against economic shocks. Allow me to elaborate on some of these.