FTI seeks more clarity on stimulus plans as industry sentiment slides

The FTI noted that the TISI had dropped from 89.7 points in July to 88.7 in August and 86.1 in September on lower sales, orders and production. Scores below 100 indicate weak sentiment.
The sluggish economy and weak domestic consumption, fierce competition, and liquidity problems have made industries reluctant to invest, while seeking more trade with neighbouring countries, especially Cambodia, Laos, Myanmar and Vietnam, the federation says.
FTI chairman Supant Mongkolsuthree pointed to the motorcycle market as evidence of the slow recovery of the grass-roots economy. In the first nine months, motorbike sales contracted by about 16.7 per cent year on year.
“There is a lack of continuity and connectivity among the government’s stimulus policies,” he said. The military regime, which seized power from the elected government in May, should come up with more policies to stimulate the grass-roots economy along with other measures to provide more support for small and medium-sized enterprises.
He said that besides the fast-track policies to provide direct subsidies and maintenance projects, the government had not provided a clear picture of the next phase of its stimulus. These should include measures aimed at the grass-roots economy and large projects, such as the expected investments in transport infrastructure and the projects of each ministry. This lack of clarity means that domestic investment has still not picked up as much as it should.

Steps for tourism
He also urged the government to come up with measures to support the tourism industry as the high season gets under way by finding ways to encourage more inbound tourists besides the tax measures to boost domestic travel, since a large proportion of tourism revenue is from foreign visitors.
Supant noted that the biggest dip in the tourism industry was in the MICE (meetings, incentives, conferencing and exhibitions) segment. “Companies in Europe and the US are reluctant to arrange big meetings here because of our political set-up, and they have moved their meetings elsewhere, such as the Philippines and Indonesia,” he said.
He said the export sector might not expand at all this year as the global economic recovery remains shaky, along with fighting in the Middle East and the Ebola outbreak in West Africa. Such external factors have contributed to a contraction in the export of automobiles, Thailand’s second-largest export sector.
Weaker-than-expected export performance this year has prompted the FTI to lower its growth projection for 2014 gross domestic product from the previous 2 per cent to the current 1.7-1.8 per cent. “There is a chance that the country’s export sector will experience negative growth this year. The export of cars, which was expanding by around 9-10 per cent in the first seven months of 2014, has contracted in the past two months.”
However, Supant said cross-border export and trading activities were still doing well, with continuous growth in this sector. The government policy to create special trading zones in border areas is a step in the right direction, but it still needs to speed up the amendment of regulations and investment on infrastructure to maintain this momentum.
The FTI has also lowered its projection for total automobile production for the second time this year, from its previous projection of 2.2 million units to 2.1 million, because of slow domestic consumption.