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Thai public balks at Thai Airways’ 60 billion bail out

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A big decision is on the horizon for Thai Airways, the beleaguered national carrier. Crucial decisions are now being discussed which will define the airlines’ future. The airline was still haemorrhaging cash well before the coronavirus crisis started grounding planes from the start of February this year.

Thai Airways’ fortunes have been in a death spiral for the past decade, culminating in looses over the past three years – 2.11 billion baht in 2017, 1.6 billion baht in 2018 and over 12 billion baht last year. At the moment the Thai government has offered another lifeline but is demanding that crucial structural changes must be made as a condition of pouring more cash and loans into the business.

The airline, still grounded until at least the end of this month, has to try and reinvent itself amid the new Covid travel paradigm, a difficult hill to climb for even the world’s most profitable and cashed-up airlines. The private discussions of the restructuring and government loans has now spilled over into the public domain with the government now needing to tread carefully as it navigates responsible use of public monies and the residual love for the national airline.

The opposition, senior government figures, high profile Thai business people and the public are now questioning the government’s pledge to bail out the struggling airline, again.

Even the PM Prayut Chan-o-cha has acknowledged the politically-charged issue will be difficult to navigate whilst many Thais are struggling to feed themselves and the government is contemplating throwing nearly 60 billion baht at a failed business.

The mounting problems facing the national airline hit the headlines in March when Sumeth Damrongchaitham resigned as company president after reportedly failing to get an earlier rehabilitation plan approved.

Earlier this week, the Public Debt Management Office announced that they would be the department to secure a loan for the airline to use as working capital. But the Thai cabinet is yet to approve the bail out loan. The airline would be the first SET-listed state enterprise where the Finance Ministry becomes the loan guarantor.

Thai Airways is buried under a long list of deeply-entrenched problems that span the past decade, from it’s online platform, ticketing and sales, aircraft choices, and controversies over aircraft and engine procurement. The debacle over the use of Rolls Royce engines for its fleet of Boeing 777s is just one of the stories that have stained the reputation of the airline.

In January 2017 a four year investigation by the UK’s Serious Fraud Office came to light. It determined that aircraft engine-maker Rolls-Royce had paid bribes to “…agents of the Thai state and employees of Thai Airways…” in order to secure orders for the Rolls-Royce T800 engine for its Boeing 777-200s. Rolls-Royce admitted to the charge and agreed to pay penalties. The illegal payments of US$36.38 million took place between 1991 and 2005. Bribes were paid in three tranches…

  • 1 June 1991 – 30 June 1992: Rolls-Royce paid 660 million baht (US$18.8 million)
  • 1 March 1992 – 31 March 1997: Rolls-Royce paid US$10.38 million
  • 1 April 2004 – 28 February 2005: Rolls-Royce paid US$7.2 million

The government rejected calls for Prime Minister Prayut Chan-o-cha to use his Section 44 powers to cut through red tape in the investigation of the Rolls-Royce bribery scandal. Response from the Thai government’s National Anti-Corruption Commission to information provided by the SFO, is said to be “tepid” and “…could be more embarrassing than the scandal itself.” – Wikipedia

The purchase of 10 gas-guzzling, long-haul Airbus planes between 2002 and 2004, during the Thaksin administration, were also controversial. The deployment of the aircraft on the non-stop Bangkok-New York route ran up losses of seven billion baht in just three years.

The airline still owns the planes that are unlikely to sell and have been heavily devalued.

The Progressive Movement co-founder (and former PM candidate and leader of the disbanded Future Forward political party) Thanathorn Juangroongruangkit, says the government “would be making a grave mistake if it resorted to using taxpayers’ money to prop up the airline”.

Here are some other key points that Thai Airways , and the government, will need to tackle in the coming months, all whilst trying to get the airline back into the skies.

• Public opposition is mounting to a rescue package for Thai Airways

• Poor performances, financial mismanagement and alleged corruption have weakened trust in what was once the ‘pride of the nation’

• The rescue plan has not been finalised and Transport Minister Saksayam Chidchob says the airline is submitting a revised proposal by the end of May

• The Thai PM reported on the May 12 that the cabinet has still not received a rehabilitation plan for Thai Airways

• This has raised speculation that it could file for bankruptcy, though PM Prayuth Chan-ocha has said all rescue options are to be considered first

• Critics say the company should not rely on taxpayers’ money to fix problems that allegedly include mismanagement and corruption. The public mindset is that this is not a national carrier, but an organisation that is a burden on taxes

• MPs have warned the PM that rescuing the carrier was a “moral hazard”

• The airline, which booked losses of 12.04 billion baht in 2019, last week asked the Stock Exchange of Thailand to allow it to delay submission of its January-March financial statements until August

• This is not the first time the company has tried to rehabilitate its business model. In 2015 it attempted a similar process by streamlining operations, routes and its fleet in an effort to offset increasing competition. But the key structural issues – old fleet, hemorrhaging finances, top-heavy management and union problems – were not addressed

SOURCES: SCMP | Bangkok Post | Andrew Wood | SET

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Coronavirus (Covid-19)

New rules for Thai cinemas to re-open in Phase 3

Jack Burton

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New rules for Thai cinemas to re-open in Phase 3 | The Thaiger
PHOTO: Yahoo News

As part of Phase 3 of the easing of Emergency Decree restrictions enacted to fight the spread of Covid-19, cinemas will be allowed to reopen on June 1 (though many operators are unlikely to do so as food and drink are their main revenue source and the movie companies say there are currently no new movies to release…)

The Centre for Covid-19 Situation Administration has released the rules for the reopening, designed to help encourage social distancing and prevent any possible spread of the virus

The rules are…

  • No eating or drinking in the movie theatre. Patrons can eat concession food outside the viewing room, but the cinema must have a properly spaced eating area that encourages social distancing, with partitions
  • A maximum of 2 people can sit next to each other. Others must be spaced out at least 3 seats apart. People must not be seated directly in front or behind others
  • Film festivals and nonstop screenings are prohibited
  • Cinemas must be fully sanitised and cleaned after every viewing
  • Masks must be worn at all times during a film
  • Cinema staff will be asked to enforce the rules about eating, drinking and social distancing

SOURCES: The Pattaya News | Nation Thailand

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Economy

Top 10 countries for investment in Covid era – World Trade Group

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Top 10 countries for investment in Covid era – World Trade Group | The Thaiger

“Where to invest?”. Where is the next ‘good thing’ as the world starts to look to opportunities and new business models? Looking around the world, and perusing stock markets, there continues to be some traditional businesses failing but others thriving during the Covid-19 era.

Investors look to countries with economical and political stability when choosing to invest money and unveil new businesses. Whilst global depression, drops in GDP, bankruptcy, and a realignment of trade and supply chains swirls around us, there will be emerging opportunities too. According to London Post, CEO World Magazine and the World Trade Group, some countries are very fortified to withstand an economic crash.

“They have a lot of internal growth drivers with minimal affiliation with global markets. They will be the least affected. The best countries to invest in 2020 are these fortified countries.”

Their report lists four unique factors motivate an individual or a business entity to invest in a country. These are the country’s natural resources, markets, efficiency, and strategic assets.

The London Post has used this information and parameters to compile The 2020 Best Countries to Invest In ranking based on a broad list of ten equally weighted attributes: corruption index, tax environment, economical stability, entrepreneurial freedom, innovativeness, skilled labor force and technological expertise, infrastructure, investor protection, red tape, and quality of life.

Somehow, and perhaps surprisingly to people who run businesses in Thailand, the Land of Smiles has scraped into the Number 2 position. 4 of the recommended Top 10 countries are in south east Asia.

1. Croatia

The country’s growth is amazing because in 2019, it was ranked 25 positions lower in this list. The European country’s stable economy, coupled with an entrepreneurial and innovative population, has made foreign investors very optimistic about the “progressive business environment”. In the first quarter of 2019, Croatia had a whooping foreign direct investment of more than $389 million.

2. Thailand

Thailand occupies the second position on the 2020 Best Countries to Invest In ranking. The country has been able to capitalise on trade tension between the US and China. In the first nine months of 2019, the country received a 69% increase in the total value of Foreign Direct Investment applications, as compared to 2018. 65% of these applications were led by the automotive, electronics and electrical, and digital sectors. The growth of the Thai market and momentum indicators remain strong. Forbes listed the country as the 8th best-emerging market of 2020.

3. The United Kingdom

The UK is economically stable and has a skilled labour force and technological expertise. It is the sixth country attracting inflow of foreign direct investment. In the first 7 months of 2019, the US and Asian tech firms invested $3.7 billion in tech companies in the country, thus surpassing the $2.9 billion invested in the previous year.

“Despite Brexit, the UK remains the fifth largest economy in the world and has an industrialised and competitive market.”

4. Indonesia

With about 650 listed equities and a market cap exceeding $500 billion, Indonesia boasts of one of the largest Asian stock markets. The report claims the Indonesian consumer market is largely undiscovered, hence its huge potentials.

“The robust economy and heavy investment in transportation and infrastructure make this country worthy of your investment. The only downside is that non-citizens are limited to only leasehold properties.”

5. India

According to the UN, India was one of the top 10 countries with the highest inflow of foreign direct investment. India has been in the top 5 of the best countries to invest in since 2019.

“The Asian giant has invested so much in research and development and, and she is among the top countries having a comparatively skilled workforce.”

6. Italy

Italy is one of the top countries attracting investors in 2020. This level of economical stability, its robust manufacturing sector, and the country’s stable political environment make it a good choice for investment.

7. Australia

Australia boasts of more than 25 years of continued economic growth. It is the 9th country with the most direct foreign investment in 2020. Australia has been in the top 10 for ten years now.

8. Vietnam

Like Thailand, Vietnam has capitalised on the trade tension between China and the US.In recent years China’s southern neighbour has gradually risen to become a formidable manufacturing hub. This growth became even more evident when multinational corporations like Samsung began relocating are from China into Vietnam.

9. Latvia

Latvia boasts of macroeconomic and political stability as well as good accessibility to large markets and a very business-friendly environment, according to the report. The government encourages investors by offering them a wide variety of advantages. Investors are offered significant cost advantages, including real estate expenses, competitive tax rates, and competitive labor.

10. Singapore

Aside from being the 10th best country to invest in 2020, Singapore is also the 10th country attracting the most foreign investments. Singapore’s strong economic outlook has made many investors very optimistic. The country’s world-class business-friendly environment is one major attribute attracting investors.

SOURCE: London Post

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Expats

Foreigners with work permits to be allowed back into Thailand on case by case basis

Jack Burton

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Foreigners with work permits to be allowed back into Thailand on case by case basis | The Thaiger
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Foreigners with work permits or permission from the Labour Ministry (and other some other government agencies) will be allowed to enter the country after registration, under phase 3 of the lockdown relaxation, which begins Monday. The Foreign Ministry made the announcement today.

The Foreign Ministry has told Thailand’s foreign chambers of commerce about the relaxation. Eligible foreign nationals are invited to apply at Thai Embassies in their home countries. They must have health insurance covering Covid-19 treatment valued at at least 3 million baht and a health certificate. They will also be subject to 14 day quarantine on entry to Thailand, either in a state facility or in a private facility, at their own cost.

“Permission to enter does not cover all groups as, we are proceeding step by step.”

Here are the details of the letter sent to all foreign chambers of commerce in Thailand…

1. The Royal Thai Government’s invocation of the Emergency Decree on Public Administration in Emergency Situations BE2548 (2005) (No I) dated 25 March BE2563 (2020) to control the outbreak of the Coronavirus Disease (Covid-19), closes the entry into the Kingdom of non-Thai nationals, in accordance with the laws on communicable diseases and immigration. However, clause 3 of the Regulation issued under the said Emergency Decree, also allows non-Thai nationals who either possess a valid work permit or have already been granted permission from a Thai government agency to work in the Kingdom, to apply for permission to enter the Kingdom.

2. It is, however, requested that only those in urgent need to enter the Kingdom submit an application for entry. The Ministry of Foreign Affairs, in consultation with the Board of Investment and the Ministry of Labour, will consider all requests for entry on a case by case basis, taking into account urgency and economic importance, among others.

3. The procedure for non-Thai nationals who wish to submit an application for entry are as follows:

3.1 Contact the Royal Thai Embassy or the Royal Thai Consulate-General in their country of departure to apply for ‘Certificate of Entry into the Kingdom of Thailand” at least 10 working days before the date of intended departure. The applicants must present:

(1) a copy of his work permit or copy of a letter of permission issued by a Thai Government agency (in most cases, by the Ministry of Labour) to work in Thailand;

(2) a valid health insurance policy covering all expenditures of medical treatment, including Covid-19 worth at least 100,000 US dollars.

3.2 The Thai Embassy/Consulate-General will forward the application to the Ministry of Foreign Affairs in Bangkok. If the application is approved, the Thai Embassy/Consulate-General will be instructed to issue the “Certificate of Entry into the Kingdom of Thailand” and appropriate visa to the applicant.

4. At the port of departure/embarkation (eg airline check-in counter), the approved applicant is required to present (I) a “Certificate of Entry into the Kingdom of Thailand” issued by the Royal Thai Embassy Consulate-General; (II) a completed and signed “Declaration Form” obtained from the Embassy/Consulate-General; (III) a “Fit to Fly Health Certificate” issued no more than 72 hours before departure; and (IV) health insurance covering all expenditures of medical treatment, including Covid-19, while traveling to Thailand in an amount of at least 100,000 US dollars.

5. Upon entry into the Kingdom, non-Thai nationals will be subjected to a 14-day state quarantine at a government-designated Alternative State Quarantine (ASQ) facility at their own expenses, and obliged to comply with the government’s disease prevention measures pursuant to clause 11 of the Regulation issued under Section 9 of the said Emergency Decree.

SOURCE: Nation Thailand

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