Thai Airways president : “management was not really allowed to manage”

Let’s say grace… At last, a thai official dares to speak the truth… and even more striking… the president of Thai Airways dares to speak the truth about the national carrier !

Fasten your seatbelt. And look for your life jacket.

The newly appointed head of Thai Airways was in London on a global road show to gather investor support.

“The management had not really been allowed to manage the company,” Mr Piyasvasti said in an unusually frank interview.

“The company had been interfered heavily by the board, by the politicians. That had substantially weakened the management of the company, and our response to the crisis.”

He has been the airline’s president for just four weeks. Mr Piyasvasti said it had taken months of negotiations to secure a strong enough mandate for his new job.

On Monday, the state-owned carrier reported a net loss of $121m (£71.8m) for the July-to-September quarter.

The results were worse than analysts had expected. They forecast another loss in the fourth quarter, traditionally high season for tourism. [...]

Mr Piyasvasti seems an unusual pick to run the national carrier. As a fund manager, he refused to own shares in the airline.

“Thai Airways was a company which did not provide transparent information to investors,” he said.

“Thai Airways management were not able to provide clear directions or policy to investors. Most of the big funds, whether in Thailand or outside Thailand, stayed away from Thai Airways stocks.”
[...]
He said one of the most serious problems was nepotism and favouritism in promotions and in the awarding of contracts.

“When you promote people who have connections but no ability, initially it’s okay, but eventually it weakens the company, Mr Piyasvasti said.

“It reduces the quality of the work. That is what has happened to Thai Airways.” (BBC)

Indeed. A perfect diagnosis.

Let’s put it that way : this guy is a saint. Respect.

But on the other hand… we have to be honest : his chance of success are slim as the space between seats on Thai Airways aircrafts.

That’s the fatal beauty of the whole story : like an airplane losing its engines… you see the ground coming fast. No exit way.

You might ask me : why do I write so often about Thai Airways ? Because of course the company makes the headlines… but also because it’s a perfect symbol of Thailand, it’s a perfect microcosm of what is wrong in this country.

Unfortunately.

Anyway. Best wishes to Piyasvasti. And again : respect.

Mission accomplished : the BOI has saved Thailand from foreign investors

The Board of Investment has agreed to cut down foreigners’ right to hold stakes in sensitive businesses from 100 per cent to 49 per cent in a bid to minimise the impact from the liberalisation of investment in Asean.

“The agricultural activities are listed in Annex 1 of the BOI Act, which the board agreed to revise in terms of size, investment conditions and privileges based on the country’s interest, since Thai operators are not competitive enough to go against other countries,” she said.

The act also does not allow foreigners to hold more than 49 per cent in the forestry and livestock, including aquatic animal, businesses.

“Our limits will not impact on foreigners’ investment because such business activities are normally protected in most agriculture-based countries. We are the first government agency to revise our promotion criteria to protect local people, while other agencies are considering the revision too,” she said. (Nation)

I remind you that the Board of Investment’s goal… is to promote foreign investments in Thailand.

More seriously : we have here another set of winners. Well done guys.

And as usual, we shall give the mic to Abhisit. What does our dashing Prime Minister think about this decision ? Does he agree ? Does he disagree ? I mean he’s the alleged PM… so ? He should have -at least- an opinion.

Since Abhisit was made PM last december, the guy is a master of double speak, double standards. He’s totally schizophrenic.

He makes very nice speeches abroad to push foreign investments, with very nice and sweet words (rule of law, democracy, blabla, you know the full set).  He tries to sell Thailand’s image… And locally, like a fart, we can read such decision taken by the BOI. So ?

Another perfectly normal day in Thailand…

Chart, oil net imports : recovery, but at lower levels

Yes. This is a Green Shoot. And as Green Shoot Amateur and hunter, I know when I see one.

Here is my beloved indicator : oil.

Oil consumption seen through the prism of imports… more precisely net imports (imports minus exports), because Thailand produces and exports oil too.

Why oil (as the first source of energy) is an important indicator ? Because, without making bad jokes, it’s the motor of the economy. We hate, we love it, whatever, this is a fact and we have to deal with it.

The EPPO (Energy Policy and Planning Office, Ministry of Energy) has updated the figures for september (table 2.1-5, and 2.1-4).

Let’s start with imports, volume and amount.

But as I said, let’s go deeper with net imports (we have to remove exports).

There is a clear hike in september : 616 000 barrels per day in september. But we can see that we are clearly under the levels of 2007 and (mid) 2008. During those years, we hit several months 750 000 barrels per day.

Has Thailand increased its energy efficiency between 2007 and 2009 ? Of course not. Consumption went down because of the crisis (plural… we had many in Thailand : political crisis, then inflation crisis, then the Big Global Crisis etc.)

Same datas, but with the % of change year on year (we compare for instance september 2009 with september 2008 etc.)

It’s even clearer… We went rock bottom last winter, during the Great Panic… and since then we start to go up. Slowly but surely (eventhough I insist, we are at lower levels than before).

With the base effect starting in november… the % y-o-y are going to increase a lot.

So shall we rejoyce ? I doubt it. Because oil (energy) is the biggest weakness of Asia.

Remember Thailand in july 2008… Not so long ago… We were on the verge of catastrophy with oil prices at all time highs… Yeah I know people have short memory…

This collective terror will come back. Later… We had it before in the West (70’s)… It will be a first for Asia…

And one thing is sure : they are not prepared for it.

Chart, foreign currency reserves and US Treasuries : “Gimme more”

Britney Spears ? Nope. The Bank Of Thailand.

Time passes and the BOT pursues with a striking constance -like all the other asian central banks- their suicidal mission : buying US Dollars, mountains of it, and worse  US Treasuries, AKA US debts in US Dollars, in order to save their pathetic exports figures by keeping a weak exchange rate for their currency: it’s the Beggar thy neighbour policy.

US debt in US dollars ? Talk about a double whammy.

And meanwhile… the smart guys (asian too) are buying gold.

Talk about major schizophrenia.

Let’s update our charts.

“Gimme more of less”. What to say else ? More USD and more US Treasuries (US debts).

Yes, the proper word is : “correlation”. This chart is screaming… The Great Correlation.

The key word is : “stability” (apparent, virtual). That’s the fantasy of the thai central bank… But it doesn’t work this way. Because if indeed it’s possible to fool all the people all the time, at one point you face laws of physics…

We can see a lot of efforts (buying a lot of USD) in order to keep the exchange rate USD-THB stable.

We are deep inside the Rabbit’s Hole, Wonderland. It’s the lala economy.

Sustainable ? We will see.

(Source Bank Of Thailand, and US Treasury).

PS : Sorry to repeat myself, over and over… But if you’re looking for some light inside the tunnel… Point your browser to Mish Blog and Calculated Risk Blog. Those people have understood it all… since at least 3 years… Yes, the “crisis”, the “recession”, the “depression” whatever you wish to call it is nothing but new… It was documented, predicted, announced, analysed, dissected… But of course, you didn’t get the chance to read it on Bloomberg or the Wall Street Journal.

Don’t be a clown.

Break your chains.

Tourism : international arrivals down by 30 %… and counting

The Association of Thai Travel Agents (ATTA) projects international tourist arrivals to Thailand through its members will decrease by 38% to 1.5 million this year due to the persistence of global economic problems and local political instability. [...]

In the first 10 months of this year, ATTA reported tourist arrivals through its members dropped by 30% year-on-year to 1.257 million. The lowest point was October with only 89,388. (Bangkok Post)

The figures are adamant. What is more funny are the explanations…

“Initially, we expected October arrivals of 140,000, slightly lower than last year’s 143,746, but the strike by railway workers caused many rail-based tour groups, especially those from Malaysia and Singapore, to cancel their trips,” he said.

The incident also affected European visitors who bought rail packages, as they simply moved to other countries.

Mr Surapol added that the greatest plunge in visitors came from South Korea, whose arrivals dropped by 56.5% to 70,526, followed by Japan, off by 38.4% to 135,202, and Finland, down by 37.9% to 8,095.

Do you know a lot of european tourists buying “rail packages” to visit Thailand from another country (we are talking here about international arrivals)… ?

Anyway, let’s be serious. The Green Shoots Mania hasn’t “touched” the masses of international travelers. Obviously.

The party is over. They need money to pay back the banks bailouts, to pay for the insane keynesian policies of all the government in the world, many lost their job, their house, and they are burried under debts (public and private)… so they have less money for the bagatelle, AKA some holidays in Thailand to get their skin burned by the tropical sun, eventhough they love it.

And ask yourself : will they have a higher income tomorrow compared to today ? And compared to yesterday ? It’s all about income, AKA solvent demand.

This a basic principle that the clowns don’t want to understand. Income. Income. Solvent demand. Jobs. And debts.

A “jobless recovery” like they say is nothing more than a pathetic oxymoron. There is no sustainable recovery, only a statistical fart as far as GDP is concerned, and a propaganda fantasia sold by corrupted politicians, totally burned out, scared of their own shadow.

And there won’t be any recovery, while developed economies are still destroying jobs.

Banking system, thai understanding of “liberalisation” : “foreign banks can open 2 more branches”

BoT pushes liberalisation under new plan, writes Bangkok Post.

As any normal human being, you would feel excited. So you decide to continue to read. And gradually, you feel baffled and eventually you end up in tears. That’s the beauty of Thailand : a perpetual source of exercise for our zygomatic muscles.

Ready ?

Thailand’s new financial master plan will offer greater opportunities for foreign banks, says Bank of Thailand governor Tarisa Watanagase. [...] The central bank’s second financial-sector master plan would gradually liberalise the sector from 2010-14. [...]

From 2012-13, the central bank will allow greater competition within the sector, starting by allowing foreign banks to open up to two branches in addition to their head offices.

Do you know, as of september, what is the total number of branches of commercial banks in Thailand ?

5 673.

I repeat : 5 673

I know, the proper word is : “surreal”.

(source BOT, FI_CB_060_S2)

So after giving a huge, astronomical boost to foreign banks (allowing them to open 2 more branches)… then come the final blow :

The central bank has no plans to offer new universal banking licences, seeing the current 15 banks as enough for the country’s needs.

Voila. The words “competition” and “liberalisation” in Tarisa’s mouth mean : “we don’t need more banks”.

Surreal. Just surreal. But so tasty. Viva Tarisa !

PS : since I study Thailand, there is one great mystery I was unable to solve : do they really believe the non-sensical words coming out of their mouth… Or do they really think that foreigners are totally and definitely stupid ? To this day, I’m still wondering…

Exports in september… Recovery ? The suckers, once again, fail to look at the details

Even ThaiCrisis has been fooled ! I use the infamous word “Green Shoots” after the first publication of the total amount of exports for september.

Abhisit was proud to pronounce the “R” word. Recession ? Amid an ocean of artificial pleasures (and potent Lala drugs) during the Asean Meeting, it was more like “Recovery”. Same for the so called Commerce Minister. And of course, the stupid journalists answered “sir yes sir” (and I put Bloomberg in the same basket as Bangkok Post and Nation).

First the headline :

-exports reached 503 billions THB in september, against 448 billions in august. Year on year (compared to september 2008), it’s a decrease of 8,4 %. Far better than the -16 % recorded in august.

Source Bank Of Thailand.

But as usual, we need to look at the details…

What caused this surge in september, compared to the previous month ? The car industry ? The IT industry ? Agriculture ? Such factors would without any doubt fuel the “recovery” theory. Right ?

But what do we see instead ?

A surge of the category… “Pearl, Precious Stone and Jewelry”. Yep ladies and gentlemen, a surge of 45 % in one month… And an increase of 55 % compared to september 2008. Talk about a wild Green Shoot !

Here we go again… Exactly like what happened last february… Someone is sucking out gold from Thailand, and Thailand is eager to please.

Now ask yourself : is it healthy ? Can we like the clowns at the government talk about “recovery” ?

Does the fact of selling gold creates… any jobs ?

Attracted by high gold prices and probably because they badly need cash.. thai people are selling their gold. And then this gold is exported. Is it healthy ? Other people in the world (China)… are buying gold. Who do you think are the smartest ?

Abhisit can turn 99 times the (golden) spoon in the rice bowl and throw away some incantations (“recovery”, “recovery”) we are not out of the wood yet.

I repeat : not yet.

The recovery could come… but the facts remain stubborn : not yet.

Chart, exports : at last, a Green Shoot… – 8,5 % in september

At last ! A Green Shoot…

And, obviously -8,5 % in september (year on year) is better than the -25 % we had in july.

The Commerce Ministry has released the first data for exports in september : 14,99 billions USD.

Imports fell 17,9 % at 12,92 billions USD.

The Bank Of Thailand will publish the details on october 31.

A classic comment (from an economist in Singapore), in line with the doxa.

When base effects kick in in November, we will probably see stronger headline numbers. Exports will continue to get better. (Forbes)

Base effect… In november last year exports in value dropped like a stone. Therefore, the % of difference with november 2009 is likely to be less “uggly”.

http://www.bangkokpost.com/business/economics/157696/exports-imports-down-in-sept

To face debts, Thai Airways plans to raise… capital

Thai Airways International, Thailand’s largest airline, plans to issue shares next year to raise funds for repaying short-term debt, its newly appointed president said on Monday.

Piyasvasti Amranand did not say how much money the flag carrier will raise. But 29 billion baht ($869 million) of debt matures next year, he added.

Kosin Sripaiboon, a senior analyst with UOB Kay Hian Securities, said he expected Thai Airways to raise almost 20 billion baht ($600 million), or issue 800 million new shares, half of its current registered capital of 1.7 billion shares.

The carrier has a total debt of 160 billion baht [4,8 billions USD]

“We need to raise capital because we have a lot of short-term debt to be repaid,” Piyasvasti said.

“We are also trying to convert our short-term debt to longer maturities. As the long-term debt has a maturity of six years, that doesn’t match our funding for plane procurements,” he told reporters on the first day of his top job. (Reuters)

Let me translate what the new president seems to have discovered on his first day on the job : Thai Airways is broke. Speak about a discovery !

Let’s review the titles of some of my articles about the national carrier.

-Thai Airways : “The situation has deteriorated from bad to worse “...
-Thai Airways : is there any captain on (the) board ?
-If… if… if and if… Thai Airways will return to profits
-No cash to pay new airplanes, airports closure, economic downturn… Thai Airways is crashing
-Peter Principle : desperate Thai Airways relies on… government officials to fill its aircrafts and seeks 1 billion USD
-Thai Airways : tales of the daily corruption

You have an image coming to your mind ? Yes, you’re right : a crashing airplane.

Sure… we could blame the high oil prices in 2008… the political crisis… the flu… then the recession… then the extraterrestrials, etc. This is exactly what the new president is doing.

Long gone are the days when Thai Airways was so terribly exotic… when tourism increased every year… when the reputation of the airline was a rising star…

Those externals factors had a cruel effect : they expose the company, naked, in front of the whole world. It’s impossible to lie anymore, to hide behind a reputation and a never ending tourism growth. The party is over. Now it’s time to pay, and the smart money is unlikely to answer the call.

Thai Airways is a public company (the thai government is the first shareholder), baddly managed, indebted, overstaffed, with an old fleet, acting like a reservoir of privileges for many lunatics in unform (the cousin, the maid, the mia noi of General X, colonel Y etc.), frozen in time, rapped and abused over and over by politicians, and unions too.

A perfect cas d’ecole. A negative show case.

So who is going to buy this generous offer ? Shares from Thai Airways ? To invest now in an airline, and in Thai Airways, would be just suicidal.

The thai government ? Broke too.

And what about dilution ?

But eventually, of course, someone will pay : the thai people.

Chart, gvt’s revenues : -8,8 % for fiscal year 2009

End of september, end of the fiscal year for the thai government. Data have been updated on the website of the Finance Ministry.

Result ?

Total revenues (gross) : 1 674 billions THB, -8,8 % compared to the previous fiscal year (october 2007 to september 2008)
Corporation taxes : -14,8 % (392 billions THB)
Personal income taxes : -3,5 % (197 billions THB)
VAT : -10,8 % (at 343 billions THB)

And we are talking in current THB… So factor in inflation plus the several “stimulus” packages… that’s weak.

What about september alone ?

The VAT is at -10 % compared to september 2008. That’s better than august (-16 %). Corporation taxes take a hit at -82 % (128 billions THB).

Corporation taxes should remain under pressure.

Exchange rate Drama : more non sense coming from so called “exporters”

The Exchange Rate Drama is unfolding. And some lala businessmen are crying like babies.

Thailand’s exports are unlikely to achieve 10% growth next year if the government leaves the baht’s appreciation unchecked, exporters warn.

“Ongoing baht strength will harm Thai shipments and weaken our competitiveness,” said Pornsil Patchrintanakul, deputy secretary-general of the Board of Trade.

Mr Pornsil was one of a group of leading executives from more than 50 trade associations who on Monday met with Veerasak Jinarat, the vice-minister for Commerce.

The baht, quoted Monday at 33.35 to the US dollar, is currently trading at a 14-month high and is up 4.4% since January.

Exporters said the baht has appreciated significantly faster against the dollar than competing currencies such as the Chinese yuan or the Vietnamese dong, hurting Thailand’s trade competitiveness. (Bangkok Post)

Who is Mister Pornsil ? A guy who has a very simple view of business : rewards and no risks.

His only ability to sell something outside Thailand is to rely -not on merit, talent, intelligence, better products, courage and why not luck-… but on cheap currency.

In the ideal and lala world of Pornsil, international trade would be someting like that :

-Hello mister foreign buyer. I sell to you 1 kilo of rice, 1 t-shirt and 1 air conditioner… let’s see total cost 200 USD… Special price for you. I will get 252453456533 millions THB thanks to the exchange rate. It’s magic. Yeah that will do. I could buy 17333 condos for my daughter, my nephew, my maid and mia noi. And maybe 6536 BMW cars. Pink color. Okay khrap ?

When the USD – which is the only currency that matters as far as exports are concerned (read my article here)- when the USD is falling… then small fry people like Pornsil start to freak out.

Not even 1 minute, Pornsil is able to think that a lower USD will lower the huge oil bill Thailand has to pay every month, and the bills for many other raw materials and parts imported. And therefore, will lower the costs of many businesses… Hence, the costs of exporters !

I mean it’s Economy 101. Minus 101 should I say. First grade school level. But obviously, it’s too complicated for Pornsil’s 2 neurons brain.

Furthermore, Pornsil is unable to understand that if his pathetic export company is selling less It’s not because another country can give a better price thanks to a better exchange rate… But instead, because DEMAND (solvent demand) HAS BEEN REDUCED… The crisis, hello ? The recession ? Oh my god… I forgot that Abhisit told us that the economic crisis was over. My mistake. One point for Pornsil.

Again, it’s way too complicated for all those clowns.

Last but no least, I would like to refresh your memory, with a (now) famous statement from Tarisa, our dear BOT governor. January 2009. Like an eternity away.

“Comparing the baht against the dollar does not represent the whole picture.”

Cheers Tarisa. You’re a winner.