Abhisit agree to boost emergency fund

PHUKET : Asian finance ministers have achieved a "substantial breakthrough" in efforts to strengthen regional economic cooperation and mechanisms to safeguard against financial crises.


The ministers of the 10-member Asean group, plus representatives of China, Japan and Korea, yesterday agreed to enlarge by 50% the eight-year-old Chiang Mai Initiative (CMI), a programme established in the wake of the 1997 crisis to provide emergency funds to countries in turmoil.

The reserve pool will be increased to $120 billion (4.3 trillion baht) from $80 billion, with 80% of the funds coming from Japan, China and South Korea, and the rest from the five most economically developed Asean members, including Thailand. The programme would also be upgraded from bilateral agreements to a multilateral pool.

The Asean+3 group also agreed to strengthen regional surveillance and establish an independent monitoring unit. Access to funds under the Chiang Mai Initiative available outside the auspices of the International Monetary Fund would be raised from the current limit of 20% once the surveillance unit becomes fully operational.

Finance Minister Korn Chatikavanij, who co-chaired the weekend meetings with Korean Finance Minister Yoon Jeung-hyun, said full details of the CMI, including member contributions, would be finalised at a May summit in Bali.

Mr Korn said the ministers also stressed the importance of developing the Asian bond markets, and would pursue measures to promote the issuance and demand of local currency-denominated debt instruments.

Ministers also agreed to triple existing capital for the Asian Development Bank to $168 billion from $56 billion to boost its ability to support regional growth.

Mr Korn said the Chiang Mai Initiative would complement the IMF in times of crisis. "The CMI will be a market stabiliser if there is an external event that might impact liquidity in Asia," he said.

"The expansion of the CMI is not designed to replace the IMF. The IMF will continue to have a role in providing surveillance in the [Asean+3 countries] and help provide confidence and assistance if member countries have liquidity problems."

Prime Minister Abhisit Vejjajiva said Asean+3 members also agreed on the importance of maintaining free trade and investment flows.

Indonesian President Susilo Bambang Yudhoyono and Mr Abhisit would highlight's Asean's position on trade at the G-20 summit in early April in London.

"We must be cautious about growing trade protectionism. No country can expect to survive alone," Mr Abhisit said.

He called on Asean members to improve coordination and ensure currency movements were aligned to safeguard against damaging competitive devaluations.

"I believe if everyone looks to devalue to gain a trade advantage, ultimately no one will win," Mr Abhisit said.

Mr Korn said the ministers agreed that the "free flow of trade and investment would be the way towards global economic recovery", and that intra-regional trade should be further strengthened.

Haruhiko Kuroda, the president of the Asian Development Bank, said the enlargement of the Chiang Mai Initiative and move to a multilateral framework symbolised the region's greater success towards economic cooperation.

He hailed the summit as helping make "Asean+3 more vocal in the global financial structure", and said the meeting would prove an "international landmark".

The Phuket conference was the first meeting for Asian ministers since the global economic crisis erupted late last year. The crisis was expected to be a major theme for Asean leaders when they hold their annual meetings later this week at the seaside town of Cha-am, Phetchaburi.

Chinese-American gets Commerce post

Washington (AFP) - President Barack Obama on Wednesday nominated Gary Locke, the first Chinese-American governor in US history, as Commerce Secretary, in his third attempt to fill the key cabinet post.

"I am sure it is not lost on anyone that we have tried this a couple of times, but I am a big believer in keeping at something until you get it right," Obama said as he formally unveiled his choice of Locke at the White House.

"Gary is the right man for this job."

Locke, the grandson of a Chinese immigrant, served as governor of far western Washington state between 1997 and 2005, and carved out contacts with Chinese leaders as he pushed for trade links.

He is Obama's third choice for the key post, after New Mexico governor Bill Richardson withdrew over an inquiry into contracting in his state, and Republican Senator Judd Gregg pulled out over political splits with Obama.

ThailandTOT plan to launch 3G this year

TOT Plc will spend three billion baht to upgrade its 2G network with 500 base stations in Bangkok into 3G and roll out the new services this year.

TOT's 2G network, operated by its 100%-owned ACT Mobile, is leased to Thai Mobile to provide the mobile-phone service on the 1900 MHz bandwidth.

TOT board chairman Teerawut Boonyasophon said TOT was confident it could launch the the 3G services in Bangkok this year. It has set up a team to draft the 3-billion-baht upgrade plan, to be submitted to the board for approval soon.

But he said that with the upgrade, the agreement between ACT Mobile and Ericsson/Siemens/Mitsui Consortium would have to be revised, a process that could take five months.

The upgrade of the1900 MHz bandwith under the Thai Mobile brand would complement TOT's 29-billion-baht 3G nationwide network project.

For the nationwide network, he said TOT would act as the network provider and lease it to interested investors who would then provide the services to consumers.

In the latest development, the National Telecommunications Commission agreed to a proposal for CAT Telecom to transfer its right in the 1900 MHz bandwidth to TOT.

Mr Teerawut said that TOT board had agreed to kick off the two 3G projects simultaneously. In the future if the 3G services in Bangkok are not profitable, they could be merged into one project.

TOT spokesman Ratian Srimongkol said that the investment in the 3G nationwide network project would become clearer over the next few months or in April.

He said TOT was currently drafting the 3G business plan to accommodate the investment if everything became clearer.

Information and Communications Technology Minister Ranongrak Suwanchawee said the frequency transfer from CAT to TOT was moving ahead, which boded well for consumers at a time when 3G licences had yet to be granted.

An industry source said that the start-up cost of the 3G nationwide network could be at least 40 billion baht, making it difficult for TOT to assess the break-even point.

The source said that the 29 billion baht budgeted by TOT was just for the 5,200 base stations to be constructed. It does not include the 42% stake worth 2.4 billion baht which TOT has to buy from CAT, plus three billion baht in accumulated debt owed to Samart I Mobile.

Taiwan in recession, GDP shrinks record 8.36%

TAIPEI (AFP) -- Taiwan plunged into recession as the economy contracted a record 8.36 percent in the three months to December due to the global economic meltdown, the government said Wednesday.

The island's key electronics and export sectors have been badly hit by falling overseas demand.

The figure "marked the biggest slump since 1961" when the government started compiling quarterly figures, the Directorate General of Budget, Accounting and Statistics said in a statement.

The agency had previously forecast a contraction of 1.73 percent in fourth quarter gross domestic product, and blamed the global economic turmoil which has hit the important export sector.



Taiwanese workers chant slogans during a protest against massive layoffs


"The pace and scale of the global economic downturn beat our forecast. Taiwan's export and manufacturing sectors suffered a huge setback and the private sector's investment shrank at a fast pace," the agency said.

The export sector, the primary engine of Taiwan's economy, tumbled 19.75 percent while imports fell 22.63 percent.

Chen Tain-jy, head of the Council for Economic Planning and Development, admitted that "Taiwan's economy was moving into recession" after GDP contracted for two consecutive quarters.

The island's economy contracted a revised 1.05 percent in the third quarter, up from 1.02 percent when the figures were first released in November.

For the full-year 2008, GDP edged up 0.12 percent while per capita GDP came in at 17,576 US dollars.

Looking ahead, the agency predicted the domestic economy would contract 2.97 percent in 2009 as overseas demand for electronic-related products -- Taiwan's main exports -- is not expected to pick up anytime soon.

Taiwan's GDP is projected to contract for three more quarters --- 6.51 percent in the first quarter, another 6.85 percent in the second quarter, and 2.67 percent in the third -- before swinging back to a rise of 4.50 percent in the fourth quarter.

"This is likely to be the longest recession in Taiwan's history so far," Shih Su-mei, head of the agency, told reporters.

Shortly after the announcement, Taiwan's central bank announced a further 25 basis point cut to its key interest rate, trimming the benchmark discount rate to 1.25 percent in a bid to boost domestic demand.

The cut is the seventh in four months.

NEW Solar mobile phone shown

Barcelona, Spain - Samsung unveiled the world's first solar-powered mobile phone at an industry show here on Monday where the sector is showcasing the new technology it hopes will drive demand through the economic crisis.

The South Korean manufacturer put its "Blue Earth" phone on display in front of curious crowds at Mobile World Congress, with industry insiders keen to see the mini solar panels located on the back of the phone.




Man holds the Samsung new Blue Earth phone on show at the Mobile World Congress.
"This type of device would be ideal for developing markets where workers have long hours and don't have access to electricity," commented Nick Lane, chief researcher at consultancy Direct2 Mobile.

"It would also interest consumers with an eye on the 'green' aspects, or companies and their CSR (corporate social responsibility) programmes."

The device is to be launched initially in Europe in the second half of 2009 but is likely to be out of the price range of a worker in the developing world. A Samsung representative said it would be a mid to high-end handset.

A full charge taking 10-14 hours in the sun would offer about four hours of talk time. The phone can also be plugged in to charge, with the solar panels used to top up the battery to extend its power.

Fellow South Korean manufacturer LG Electronics also put a prototype solar-powered phone on display although the handset is not ready for market.

LG showcased a mobile phone-enabled watch, which it said was a world first.

The Mobile World Congress, which runs from Monday to Thursday, is the world's biggest mobile phone show and is set to bring together 60,000 industry insiders from 1,200 companies, according to the organisers, the GSM Association.

As well as the launches and new industry initiatives, the economic crisis has cast a pall over the gathering with cost-cutting the new concern of an industry that has become accustomed to constant growth.

Nevertheless, the chief executive of Russia's Vimpelcom operator, Alexander Izosimov, sought to stress the rosy future of the industry as a whole despite the morose economic climate.

"We are dealing with something that is absolutely guaranteed to expand in the future," he told reporters. "Our growth (as an industry) is absolutely secured."

The chief executive of China Mobile, the biggest Chinese network operator, said that his company had felt the impact of the financial crisis, but he underlined the recession-resistant nature of providing phone connections.

"Even in difficult times, people need to use their mobile phones," CEO Wang Jianzhou told reporters.

All the major network operators such as Vodafone, MTN or Telefonica were present, as well as the major handset makers -- including new entrant Acer, a Taiwanese manufacturer better known for making computers.

Acer unveiled its first range of phones, with the first four high-end models set to go on sale in March or April and another six handsets to follow, marketing manager Sylvia Pan told AFP.

The touch-screen phones were demonstrated mostly in black with a design that resembles the top-selling Apple iPhone.

The move illustrates two trends in the mobile phone industry: the growing attractiveness of the high-end market for "smart phones" and the arrival of traditional laptop computer makers in this segment.

Software giant Microsoft and Finnish handset maker Nokia also announced their responses to the phenomenal success of Apple's AppStore.

Apple launched the AppStore last July, enabling users of its high-end iPhone to download new applications for their devices. The 500,000th download was celebrated at the end of January.

Microsoft hit back with its "Windows Marketplace for Mobile," while Nokia unveiled its "Ovi Store." Both offer the same service as the AppStore, which allows users to personalise their phones with tailored applications.

Like Apple, Microsoft and Nokia will allow outside developers to write applications that can be downloaded on their sites.

In other news Monday, Google got a boost when Chinese manufacturer Huawei revealed only the second mobile phone to integrate the US company's mobile phone operating system called Android.

Rival developers are battling to create the dominant operating system for mobile phones, with Google competing with Microsoft, Nokia and an open-source Linux-based project.

The first phone to use Android was launched last year in October, the G1, made by Taiwan-based group HTC in partnership with German network operator T-Mobile.

Obama targets housing fix

WASHINGTON (AFP) -- US President Barack Obama readied to head west to unveil a new strategy to arrest the epidemic of home foreclosures after his gargantuan economic stimulus plan finally cleared Congress.



Aides to the president -- who Saturday called the 787-billion-dollar package of investment and tax cuts "a major milestone on our road to recovery" -- said he would outline his housing plan in Phoenix, Arizona on Wednesday.

The day before in Denver, Colorado, Obama will sign the stimulus package into law, setting the seal on the first major legislative triumph of his young presidency.

"I think it's safe to say that things have not yet bottomed out," White House spokesman Robert Gibbs told CNN Sunday.

But US states will start getting the stimulus money "relatively quickly," he said, "so they don't have to lay off police officers or firefighters or teachers" and can begin to create jobs in alternative energy.

Meanwhile Gibbs, underlining that Obama will have signed an ambitious economic bill within just four weeks of taking office, denied that the president's promise of bipartisanship had taken a hit.

"He's going to continue to reach out to Republicans, and he's hopeful that Republicans will start to reach back," he said on CBS television.

But Republicans, chafing already at the price tag of the largest package of government spending in US history, signaled more fights ahead as Obama prepared to take on the stricken housing and financial markets.

Senator Lindsey Graham cited estimates that half a trillion dollars could be needed to fix the property sector, whose tailspin from boom to bust has crippled much of Wall Street and ignited the broader economic crisis.

After the first round of a banking bailout and now the stimulus bill, "it makes it harder for everybody here to go back to the public and say, 'Please give us more money, because we seem irresponsible'," he said on ABC News.

Senator John McCain, Obama's vanquished rival for the presidency, said on CNN: "These are the worst, most difficult challenges, foreign and domestic, perhaps we have faced certainly in our lifetimes.

"So let's start over now and sit down together."

The stimulus package won just enough support from Republican senators to clear the Senate late Friday after a party-line vote in the House of Representatives.

In his weekly radio address Saturday, Obama said the bill will "lay a new foundation for our lasting economic growth and prosperity" by saving or creating more than 3.5 million jobs and enacting investments for the long haul.

Next up is the housing market. Officials said Friday that two US banks -- JPMorgan Chase and Citigroup -- and mortgage finance giants Freddie Mac and Fannie Mae had imposed moratoriums on home foreclosures.

Treasury Secretary Timothy Geithner last week unveiled a plan that could use as much as 2.5 trillion dollars to aid banks, unfreeze consumer credit markets and stem the home mortgage crisis.

But with nearly 10,000 families a day reportedly falling into foreclosure, only a sketchy public-private investment fund was cited under Geithner's plan to buy up troubled mortgage-backed securities held by the banks.

And with just 50 billion dollars so far devoted by Geithner for foreclosure relief, many believe Obama will have to come back to Congress for more funds after his announcement in Arizona this week.

"I don't think it will be enough," Democrat Barney Frank, who chairs the House committee on financial services, told CBS Sunday.

But he added his belief that Obama has "a good set of plans coming forward to begin to reduce foreclosures."

Making his debut on the world stage, Geithner Saturday briefed fellow G7 finance ministers on his recovery strategy at emergency talks in Rome, and called for coordinated global action to forestall a repeat of the crisis.

"We will work closely with our colleagues in the G7 and the G20 to build consensus on reforms that match the scope of the problems revealed by this crisis," Geithner said, ahead of Group of 20 talks in London in April.

the answer to crisis

IT depts need to be more business-focussed,



Today's dynamic business environment is driving banks to align their IT investments with business strategy and revisit outsourcing policies and the ability to multi-source IT services will be an important skill for businesses.




Kasikorn Bank’s headquarters.
Information technology can help business to overcome the global economic crisis in two ways, by helping to create innovation and to control costs, according to Kasikorn Bank's CEO Banthoon Lamsum in his recent presentation to the Thailand ICT Management Forum, organised by the Thailand Management Association, entitled "Crisis is Opportunity."

"Investment in technology has to be aligned with business strategies. Maximising IT alone is not formula for success, rather it is how IT is adopted into the processes and management."

The CEO continued that IT is not just a technical issue. IT people have to understand business and marketing. For KBank, its internal IT staff always speak in the same language as business and every project is about what the customers want and what has to be done to meet those customer requirements in the face of competition. Its strategy is for a balanced investment between business requirements and demands from IT.

Kasikorn Bank's executive vice-president of the systems division, Teeranun Srihong added that the key skill for today's corporate IT managers is managing multi-sourcing to leverage the various vendors' expertise that are available in the market.

At the beginning of 2003, the company decided to take on a global partner for IT and focus on its core competency of banking. This led to the IBM outsourcing deal which is set to last 10 years and covers both infrastructure and operations and resulted in hundreds of Kbank staff being transferred over to IBM, explained Kbank's vice-president for IT operations, systems division, Worathep Aramkul.

But today, the situation has already changed. IT is no longer just about back-end tools, but is now the core engine to deliver business services directly to the customer through new channels such as Internet banking. This has led to the bank having to revisit its IT outsourcing policy.

The plan is for more in-sourcing for areas that have a close interface with business and this means that the bank has to weigh up the costs of developing manpower and upskilling staff not just in IT, but also financial analysis compared against outsourcing vendors who can take the project on.


Currently, Kbank has around 200 to 250 internal IT staff with responsibility for security, helpdesk and strategic planning in IT. Moreover, the bank is using a variety of outsourcing vendors covering the areas of application development and management, enterprise infrastructure and network. AT present, the bank uses both international and local vendors in different areas selected by their expertise, such as Atos Origin, Progress Software, G-Able, DataOne, Datacraft and Wipro.

"Over the past few years, we have learned that if we outsource in some areas, we may have lost the opportunity to learn some expertise and knowledge which may be essential for our business, such as Internet banking. It also creates some risk to rely on one vendor only," Worathep said.

"In addition, when we sign outsourcing contracts, it is important to set the key performance indicators for each other. IT outsourcing vendors have to be able to translate expectations from customers, expressed in business terms, together with those from the IT department such as business sense and cost savings."

Worathep also explained how Kbank bridges the gap between business and IT with a new IT organisational structure which has a new role of "Relation Manager." This is a dedicated IT person who communicates with business divisions to explore and evaluate how IT can meet business requirements as well as expectations.

IT managers in many organisations have to transform themselves to be able to focus not just on how to get the job done, but to become a service manager focusing on business results. They have to understand that IT plays a major role in enabling business and is not just a backend support tool anymore. In this highly competitive environment, IT has to consider the people skills, flexibility and comparative advantage of each approach.

Asked if vendors offer new business models such as joint partnerships and co-investment to provide new services through revenue-sharing, Worathep said that there are still many issues to consider, such as the type of service, reliability of the service and anything else that may risk the bank's reputation or customer information.

One of the most challenging aspects when selecting an outsourcing partner is to find people with the qualifications and skills to deliver the standards demanded by customers. Technical capability is only one part, mindset and attitude are also important, explained the general manager of IBM Solutions Delivery which provides service to Kasikorn Bank, Suras Lertpoompunya.

IBM Global Solutions Delivery has to plan and build its employees' expertise in order to meet the requirements of the customer and keep in communication with the customer to fine tune the relationship. Every year, both sides have to evaluate the service milestones whether they meet the expectations set or not. "Thailand has a good talent pool, but there is still a shortage of software architects, project managers and business consultants," Suras noted.

THE FINAL SHOPPING FRONTIER

Brands slug it out on the supermarket floor where more crucial buying decisions are made than people may realise
By: Woranuj Maneerungsee
Published: 16/02/2009 at 12:00 AM
Newspaper section: BusinessHas this ever happened to you? You plan to buy instant coffee brand N but end up with brand M or, in the end, get nothing.

If so, you are in the majority. According to a recent study by the marketing service agency OgilvyAction in Bangkok office, 61% of shoppers make their final decisions in the store.



Conducted last month, the Shoppers' Decisions Made in Store (SDMIS) survey found that people will spend more carefully during a downturn. Stores have been the final battleground where brands fight to win shoppers' minds, says Ogilvy managing director Mitch Webber.

Every aspect of marketing is important in a slowdown and investing in brands should not be overlooked, he said. Companies that build their brands will end up in a stronger position.

"But I must say, in a critical time like this, shopper marketing (strategies to convince consumers in the store) is also important or even more important since half of shoppers make their decisions in stores. ... That is an open opportunity for all brands."

In addition, shopper marketing is more measurable and a lot cheaper than other marketing strategies.

Mr Webber and his team have investigated topics such as how people respond to product displays on shelves. They set up product layouts that go beyond standard point-of-sale materials and promotions.

Shopping behaviour has been studied for many years, which is why supermarkets look very similar. For instance, the magazine and book corner in a modern store is positioned as a "chill zone" to cool down consumers who will spend more time around it.

Supermarkets bake pre-prepared items and frozen dough to create a smell of freshly baked bread, which makes people hungry and encourages them to buy both bread and other foods.

But shopper marketing aims at a deeper relationship with consumers. The brand engagement is much more involved. It is about connecting with and influencing consumers. It doesn't matter what consumers plan to buy, the right engagement can nudge them to another brand. "We can nudge you but cannot trick you," explains Mr Webber. "You won't forgive the brand if we try to play a trick. The less you care about the product, the more we can change your interest."



Mr Webber says he can't reveal everything his team has done for clients because of business confidentiality. But one success story he can share is how OgilvyAction three years ago worked with Coca-Cola on product displays at Tesco Lotus.

Instead of displaying products in a traditional way, on the soft drink shelf, Coca-Cola was put in between products that go well it, such as chips, ready-to-eat meals and - as Thais love Coke as a mixer - whisky.

The result? Coke sales rose and so did the sales of the categories displayed next to it. The success of this approach led Pepsi to apply it too, said Mr Webber.

"But the real winner was Tesco Lotus, since it could sell space at a better price," he said with a grin.

Another strategy he recommends is for retailers to provide a wider range of products in one zone - in particular for mothers, who are the biggest customer group. For example, supermarkets could put all ingredients for cake baking in one place, which would be convenient and time-saving.

In the latest SDMIS survey, 600 shoppers were interviewed: half at hypermarkets such as Carrefour, Big C and Tesco Lotus, 200 at Tops Supermarket and 100 at 7-Eleven convenience stores. Of the total, 32% made decisions on quantity in the store (see chart) and 19% bought more than they had planned.

In a recession people think about value and price, says Mr Webber. But some categories are exceptional. The brand does matter for products with which people have high involvement, such as skin care, shampoo, soft drinks, beer, coffee and cooking oil. "But people don't care much about the brand when it comes to talcum, for example."

The survey found that 21% of shoppers made decisions about brands in the store. Of these, more than half switched brands and the rest only decided which brand to buy in the store.

Mr Webber says the survey has given him and his team new insights into how supermarkets can most influence category, brand and quantity decisions.

Consumers, he believes, make choices at supermarkets because the whole shopping environment is more engaging and inviting.

People also spend more time in supermarkets than in hypermarkets, which is an opportunity for the former to increase sales. Some researchers report that when shopping times increase by 1%, sales rise by 1.3%.

"I would like to speak to Big C, Tesco and Carrefour, who forget that people love shopping with fun. Don't make it like a warehouse. It's time for the big stores to bring back fun to shopping," says Mr Webber.

Vietnam revived to lift rice prices

Thailand is reviving talks with Vietnam this week on ways to stabilise rice export prices, which are now well below the record of US$1,080 per tonne seen in April 2008.

Deputy Commerce Minister Alongkorn Ponlaboot, accompanied by representatives from the Thai Rice Exporters Association and Thai Farmers Association, are in Vietnam from today to Wednesday to discuss the issue with the deputy trade minister and the Vietnam Food Association.

According to Mr Alongkorn, Thailand and Vietnam, which account for up to 50% of the world's rice exports, should work closely together to stabilise prices.

''Thailand and Vietnam should jointly set strategic rice prices that will be used as the world's rice reference prices,'' he said. ''For instance, we may set the rice export prices together at no less than US$700 per tonne which reflects production costs and a certain rate of profit to make it fair to farmers who are mostly still poor.''

Thailand and Vietnam export about 15 million tonnes each year, 8-10 million tonnes from Thailand and the rest from Vietnam. The global rice trade averages 30 million tonnes a year.

However, Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said an agreement was unlikely to materialise as Vietnam's rice market is controlled by a socialist government.

''In our visit last November, we proposed Vietnamese exporters bump up the minimum export price by another $50-60 per tonne to shore up prices, but they said they could not do that as everything is the government's decision,'' said Mr Chookiat.

''The negotiation should be done on a step-by-step basis, focusing first on the joint agreement on rice production control in each country. Once the supply of each country gets too big, it will be tough for any talks, as each will need to rush to dispose of its stockpiles.''

Thai white rice cound not compete with Vietnamese grain now, as Thai government intervention has made rice prices relatively high. Benchmark 100% B grade white rice is quoted by Thai exporters at US$610 per tonne, $170 higher than that from Vietnam.