Happy New Year!

Please accept my belated Season’s Greetings. I hope you had a nice Christmas and New Year. May the Year of the Goat bring you peace and joy, good health and wisdom, happiness and prosperity! Many thanks for your lovely Christmas cards and good wishes coming with them. Please forgive me for sending out my Christmas card late this year. Things have been hectic and time flies quickly after one turns 60!

New Year Gifts

Santa Claus came to town in December. Thai farmers were just about to be given title deeds under the land reform program, when the scheme had to be put on hold because of public outcry against the many loopholes that could spell disaster in the long term. The Pak Moon Dam protesters too almost got what they wanted directly from the PM himself, when their demand too was put on hold. Meanwhile the NGO’s went up in arms against the PM’s accusation that they are not acting primarily for the interest of the country. Then there was a small tax break for the country’s 5.8 million taxpayers. Alas in this fair land of ours, 55% of taxpayers are in the THB 0 to 50,000 bracket. Pity the Government is not planning to give any medal to some 70,000 (1.2%) tax payers in the +THB 1 million bracket!

New Year Holidays

Following China’s example to stimulate domestic consumption and true to the Kelleg’s Thainess image of fun, fulfillment, friendliness and flexibility, the Thai Government declared an unprecedented 5 days new year holiday from 28/12/02-1/1/03. Peeved somewhat by the mass media’s annual nicknaming him “Thavada (angel)”, PM Thaksin took 5 days off too for the much needed holiday with his family and friends. In his new year message, PM Thaksin promises to do better in 2003 than in 2002. Wish him, and ourselves too, a lot of luck!

The Thai recovery

Apart from a “voice crying in the wilderness”, the consensus was that the sale of 14,000 cars at the December motor show in Bangkok, was indeed an indication of a stronger than expected economic growth this year, revised now to 4.5%-5%. Export to increase by 11% in volume and 5.8% in USD value. Import up by almost the same percentages. Current account surplus of around USD 6.7 billion. Private investment up by 11.7%. Private consumption remained robust. With so much good news, PM Thaksin announced his plan to prepay the USD 4.8 billion IMF loan during the first half of 2003.

WTO ruling

Thailand was given a short reprieve when WTO decided to allow BOI’s promotion privileges to continue until end of 2003. Should further extension fail to materialize, Thailand will have to phase out promotional privileges for some 1,440 companies, within two years.

New US Treasury Secretary

To save the American economy from further slide, President Bush “sacked” his Treasury Secretary, Paul O’Neill on 6/12/02 and appointed John Snow to replace him. Wall Street reacted nervously on the news.

“As wise as a serpent, as guileless as a dove”

In mid December, former Vice President, Al Gore, announced that he will not run for the Presidency, paving the way for Senator Hilary Clinton to become the first female President in 2004?

UAL went kaput

After two months of an up trend, the world’s stock markets slumped as investors switched to bonds. There were more corporate bad news from AOL, Nokia and Ford too. During the second half of 12/02, United Airline went bankrupt and filed for Chapter 11. Blue chip stocks fell bringing down IBM and the like.

Japanese warship

In an unprecedented move, the Japanese Government could no longer sit on the fence and had to finally send one warship to the Gulf of Arabia to show solidarity with their close ally in the war against Iraq.

Deja Vue

Asian countries were more than disturbed by PM John Howard’s remark that Australians will undertake preemptive attack against terrorists on foreign soil. Anti terrorism is sounding increasingly like anti communism during the Cold War era!

Beating the war drums

One day before the Dec. 8 deadline, Iraq submitted to the UN their 12,000 plus pages of report to confirm they have not been producing deadly weapons. Over 100 UN inspectors went in to make surprise checks on all the suspicious locations. The US, after perusal of the Iraqi documents, declared “material breach” and started to build up tens of thousand of troops in the Middle East, to prepare for “war for the liberation of Iraq”. The questions are “when?” and “how soon it will end?”

Venezuela on hold

During December, Venezuela went on national oil and gas strike against President Calvez who refused to call a fresh election. The Venezuelans even boycotted Christmas shopping! Oil prices shot up dramatically to over USD 31 for fear of a civil war, adding on to the fear of an American invasion of Iraq.

Yemeni’s scuds

Early in December, North Korea’s 15 scud missiles, shipped on unidentified vessels for Yemen, were intercepted by a Spanish frigate in the Arabian Sea. Alas, America’s close ally in hunting down Al Quada, was let off scotch free after promising not to buy any more missiles from North Korea for their own self defense! Clearly the US must remain focused for now.

SK Election

The South Korean presidential election on 19/12/03 was a close call! Roh Moo-Hyun of Kim Dae Jung’s party won the presidential election over the pro-American Opposition candidate, Lee Hoi Chang. Roh promised to continue Kim Dae Jung’s “Sunshine Policy” in a “New era of dialogue and harmony” with North Korea, who through out December went on the offensive with outbursts of threat to reactivate nuclear production.

The last shirts

In December, unemployed Germans protested against Government’s economic policy by sending their “last shirts” to Chancellor Gerhard Schroder. Things got worse during the holiday season when beer in disposable containers was banned and taken off the shelves. Schroder’s spirit was lifted when a much larger order was placed by the Chinese, at the inauguration of the “made in Germany” Maglev speed train in Shanghai.

Japan on the mend

Japan is now advocating weaker Yen to boost their export since they are no longer in a position to use either fiscal or monetary policy to jump start their economy. According to a famous Japanese professor, it will take Japan another 5-10 years to come out of deflation! In the meantime, the government will have to use a mix of fiscal and monetary policy, known as “the Helicopter Money”, to move the Japanese economy as their people learn to adjust themselves to the new economic environment. Meanwhile, Japanese banks are stretching their imagination to “window dress” their balance sheets for the 3/03 fiscal year end.

So ended 2002

Faced with the threat of war in Iraq, a nuclear “outburst” in North Korea and the still struggling world economy, 2002 ended as the third “annus horribilis” for world’s stock markets! For the whole year, the European markets plunged 25%-35%, led by the FTSE which recorded the worst results in 17 years, outdone only by the Nikkei which ended the year at 8,016, worst ever performance in 20 years! The DJ and the Nasdaq plunged to end the year at 8,341 and 1,333 respectively. Oil closed at USD 29 and Gold at a high USD 348. The best performers in 2002 were the South Asian markets: Pakistan, Sri Lanka and India, which jumped 70%-80%, followed by Thailand (+17.3%) and Indonesia (+ 8%). As luck comes in 3, fund managers are hoping that 2003 will bring the much awaited recovery!

Vongthip Chumpani
5/1/03