Thursday, August 06, 2020

Industry asks govt to inject liquidity as sentiment rises for first time in 4 months

Jun 18. 2020
Supant Mongkolsuthree
Supant Mongkolsuthree
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By The Nation

The Federation of Thai Industries (FTI) has advised the government to inject liquidity into the private sector, after the Industries Sentiment Index rose for the first time in four months.

Supant Mongkolsuthree, FTI chairman, said the industries sentiment index in May rose to 78.4 from the previous month’s 75.9, marking the first rise since the outbreak of Covid-19.

"Economic activity gained positive sentiment after the government eased lockdown measures and reduced the curfew hours," he said.

"Also, businesses' costs decreased after the government issued measures to help those suffering from the Covid-19 impact, and the Monetary Policy Committee (MPC) cut the interest rate to 0.5 per cent."

Businesses remain worried about the economic slowdown, however, as it affects trade, investment, and employment, Supant added.

"Small business entrepreneurs are still facing liquidity shortages and are unable to access loans," he said. "Meanwhile, the strengthening baht has hit Thai export competitiveness."

He also revealed findings of an FTI survey in May of 1,157 businesses covering 45 industries.

"Asked about factors causing uncertainty, 71.2 per cent of respondents identified the economic slowdown due to Covid-19, 47.7 per cent blamed the political situation in the country, 43.4 per cent blamed the baht-dollar exchange rate, and 32.5 per cent the price of fuel," he said.

"Asked about factors that would relieve uncertainty, 17.6 per cent pinpointed loan interest rates."

Supant predicted the Industry Sentiment Index would rise to around 91.5 over the next three months, from 88.8 in April, as economic activity was boosted by relaxation of lockdown measures.

"Meanwhile, purchasing orders from foreign countries have started to grow after many other countries eased their lockdown measures," he said.

He said the government should issue Bt500 billion in soft loans and instruct the Thai Credit Guarantee Corporation to offer more guarantees for small and medium enterprises. Meanwhile small businesses needed more help accessing loans, while government agencies should be promoting use of online systems to provide services, he added.

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