Archive for July, 2007

Drugs, compulsory licenses : Health Minister wants to go further


Despite a huge controversy about compulsory licensing of medecines (since december 2006)… The Health Minister seems willing to continue on this dangerous path.

I know that the issue is sensitive. And I know also that it seems ethically difficult to be against such policy (who would like to let a child dying of AIDS, because his parents can’t afford a proper treatment ?)…

However, and as usual, we need to see the broader picture, and put aside the easy moral clichés.

First, Thailand used a very specific clause of WTO, to advocate compulsory licensing. Fair enough.

Under World Trade Organization rules, a government is allowed to declare a “national emergency” and license the production or sale of a patented drug without the permission of the foreign patent owner.

But who can reasonably think that Plavix -a blockbuster anti-clotting- is a “national emergency” ? Plavix reduces the risk of coronary diseases, of people who smoke, drink alcohol and/or have bad eating habits…

Then, breaking the IP rights and denying drugs companies to recoup their investments and make profit (to give to shareholders yes, but also to finance new investments and the creation of new drugs) could lead to a very simple fact : they could stop selling their products in Thailand, which could lead to further step back as for public health.

And then, again we should point out the hypocrisy of the thai authorities. The Health Minister said a few month ago that the compulsory license of the first 3 drugs would save 1.8 billions THB. 50 millions USD.
Less than the price of new Boeing 737-800 that the Palace received in april. And much less than the 143 billions for the 2008 military budget (increase of 24%)…

So could we reformulate the problem : Is Thailand willing or not to spend 1.8 billions THB in order to offer proper medical treatments to its people ?

Obviously, the answer is no.

It’s more efficient (even from a political point of view) to attack the foreign drugs companies…

Anyway, the issue is complex.

The Health Minister said that the next target could be… drugs against cancer.

“We have to wait for the right time,” Mongkol said, responding to questions about when the ministry would enforce compulsory licenses for the cancer medicines.

However, he gave an assurance that he would do so before the government’s term ends. “

Why bother to stop there ? I mean, why not issuing compulsory licenses for all the drugs ? As you can see, such a path is rocky, and foreign investors are certainly going to follow this issue… Closely.


“You want an election ? Vote for the Constitution”

Good old blackmail from General Sonthi, Junta’s boss.

“Council for National Security chairman Gen Sonthi Boonyaratglin expressed confidence Friday that the draft constitution would be approved by the majority of the people in the upcoming referendum.

“I believe most people understand this and want the election to take place. If they want to have an election, they must accept the draft,” Sonthi said.”

We are now 3 weeks before the referendum :
-many people didn’t receive their copy of the draft (more than 300 articles to read)
-many people don’t even know that there is a referendum on august 19 (“A recent opinion poll shows that 82% of respondents do not know when the referendum will be held”. Bangkok Post)

GDP for Q2 : +4 or +4.3% ?

One press conference by the same official, 2 differents views…

AFP : “growth Q2 estimated at +4 %”

Thai News Agency : “+4,3 %

First, it’s important to note that it’s a primary estimation. It’s of course impossible to have the exact figures for Q2, 3 weeks after it ended…

Then, if we look at some components… We see that this growth was mainly fueled by governement expenses (that were up already on Q1) and exports. Domestic consumption and investments remain depressed.

Even if exports have shown a very good resilience (despite the THB rise), it’s easy to forecast that this engine has been pushed at its maximum… Very difficult to imagine further growth…

Meanwhile, I repeat my bet : private consumption and investments will remain very weak… Therefore, only one engine could remain for the second semester : government expenses.

And considering the situation in the country, that’s not a healthy sign…

For datas on Q1, click here (BOT datas).

Meanwhile, BOT revises its growth target for 2007 ! From 3,8/4,8 % to 4,5 %.

Business confidence continues to decline

“June’s industrial confidence index declined to 80.9 from 86.1 in the previous month, due to the strong baht as well as slowing domestic consumption, according to the Federation of Thai Industries.”


Domestic consumption still depressed on Q2

Different month, same story : private consumption and business confidence remain depressed.

And every officials continue to look forward an improvement. Before, it was on Q2. Now it’s… on the second semester, “after the elections“… But there is no reason whatsoever that an improvement could occur before 2008. To say the contrary is only wishfull thinking.

Private consumption in June continued to grow at a slower pace, causing the value-added tax to rise at only 0.7 per cent annually, down from 3.3 per cent the previous quarter. Consumption of durable goods continued to shrink as sales of passenger cars during the second quarter of 2007 contracted 7.9 per cent.

6 measures to relax regulations on foreign exchange


The currency drama continues. The Cabinet has approved tuesday a list of 6 measures to “relax regulations on foreign exchange“, in order to curb the rising of THB.

Abolishing the condition that Thai residents who receive foreign currency must sell or deposit the proceeds with financial institutions in Thailand within 15 days.
That’s a good technical decision.
However, it’s unlikely that this could have a large effect. Ask yourself : you are seeing a global trend that is a sinking USD on the world markets… What would you do ? Keep your USD longer ?

Or dump them as soon as possible, because well… next week USD could have fallen even more ?

Meanwhile, USD continues to be punched. Enough to look at the chart of USD Index…

FBA : it could get worse

After the Council of State who wants to strengthen the Retail Act (read here), now it’s the turn of NLA (National Legislative Assembly) to put more pressure on the Foreign Business Act (see the special dossier about this important law, here).

Basically, some of NLA members would like to include a third way to define if a company is “foreign”.

Recap :

FBA 1 : majority of shares
FBA 2 : majority of shares and/or voting rights
FBA 2 with new NLA proposition : majority of shares, voting rights, MANAGEMENT CONTROL !

The important question is now : would it be a “or” criteria, or an “and” criteria ?

Bangkok Post Continue reading ‘FBA : it could get worse’

Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.