TRANSPORTATION
New plan: medium speed trains, not high speed
The government will switch its railway investment from high-speed to medium-speed trains following strong criticism about the cost-effectiveness of the scheme.
Medium-speed trains capable of 250 kilometres per hour carry a lower investment cost than high-speed trains and are suitable for product shipments.
A 1.435-metre standard gauge railway track for the railways will be used that can conveniently connect with China and Europe. Rail shipments to China will take 15 days rather than 45 days by sea. The Chinese government is planning to build a rail link through Turkey to Germany.
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TAXES
Cheaters targeted in changes to alcohol tax collection
Proposed changes to the collection methods for the alcohol beverage tax and an increase in the tax ceiling aim to prevent operators from under-declaring liquor costs.
Operators have been quoting production prices which are lower than actual prices and using final retail and wholesale prices instead of the current out of the factory prices to calculate taxes will help solve this problem.
The excise tax collection for many products, including alcoholic beverages, have nearly hit their legal ceilings now so the increase is needed to prepare for the long-term.
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ECONOMICS
Industrial output hit by electronics slump
(Summary of Reuters story in Bangkok Post business page B2 paper edition)
Recent low factory output and exports indicates Thailand’s mild recession, that began in the second quarter, might not end so quickly.
Hit by weak electronics and autos, industrial output in July dropped 4.54 percent from a year earlier. Thailand is a regional hub and export base for automobile manufacturing and is second in the world for computer hard disk drive production.
The economy is experiencing a fourth straight month of contraction in manufacturing.
Economic data to be released this week provide more indication of a slow economy such as a widening current account deficit as exports and foreign investments slow. The central bank’s data for July to be released on Friday is also expected to show consumption and investment remain low.
Rising household debt could reduce consumption and economic growth in the third quarter.
A retreat by foreign investors as they prepare for the U.S. Federal Reserve to reduce monetary stimulus has also put further pressure on local financial markets and led to a weaker baht (32.25 per dollar) which should help exports.
Thailand’s central bank is not worried about capital outflows because of the country has high levels of accumulated foreign exchange reserves. The baht is also still moving in line with the currencies of Thailand's trading partners.