THAILAND

Minimum wage rises by 10 baht

            The National Wage Committee voted to increase the daily minimum wage for Bangkok and six other provinces from B115 to B125 (US$4.60-US$5), effective April 1.

            The B10 increase applies to Bangkok and the nearby provinces of Samut Prakan, Nonthaburi, Pathum Thani, Samut Sakhon and Nakorn Pathom and the southern province of Phuket.

            The minimum wage in Ranong and Phang Nga in the South will rise only three baht to B110. In Chon Buri, Saraburim Nakhon Rachasima and Chiang Mai, the minimum wage will increase from B101 to B110. in the remaining 60 provinces, the minimum wage rises eight baht to B102.

            Deputy Permanent Secretary for the Interior Kitti Pathumkaew told the Bangkok Past there would not likely be another minimum wage increase for at least 12 months. He added that there was no heated debate between employers and employee representatives who attended the voting session of the National Wage Committee.

            But Pichai Sueman, an employee representative, told the newspapers that the workers were not fully satisfied with the new wage. “We insisted on getting B130 per day,” he said. “It is clear that with the current B115 per day workers can hardly make ends meet. They manage to survive only by working overtime.”

            The National Labor Council, meanwhile, told The Nation that it would continue to push for an increase in the minimum wage to B145.

 

 

Thailand, Kenya sign key trade agreement

            Thailand and Kenya signed a trade agreement in March that will provide protection for Thais who want to invest in gemstone mining in Kenya.

            Thai Deputy Foreign Minister Surin Pitsuwan signed the agreement in Nairobi with Kenyan Minister of Commerce and Industry KM Mkindia. The two countries have worked on the agreement for five years.

          “This agreement marks an important economic linkage between the two countries,” Mr Surin told a correspondent for The Nation after the signing ceremony. “It will provide the mechanism for fostering greater trade.”

            The agreement gives both countries “most favored nation” status in their trade dealings with each other and call for a joint committee to be set up to boost economic relations.

            Two-way trade between the two nations amounted to US$38 million last year, a 20 percent increase over 1988, according to The Nation. Thailand exports sugar, garments and rice to Kenya and imports trisodium carbonate, wattle extracts and gemstones.

 

 

 

Gemopolis receives OK for bonded warehouse

          The Customs Department issued IGS Co, developer of the Gemopolis jewelry industrial estate, a permit to open a bonded warehouse in March, making Gemopolis Thailand’s first free trade zone for jewelry manufacturing. 

            The bonded warehouse enables factories in Gemopolis to import raw materials and equipment for production of export goods without paying important tariffs or value added tax. They must, however, place a bank guarantee for the due amount of import duties and VAT on goods imported.

            Gemopolis entrepreneurs can also bring the raw materials or merchandise out of the bonded warehouse area with covers the whole production zone of Gemopolis for processing and return them to the area without paying taxes.

            However, taxes will be levied on all goods which entrepreneurs in Gemopolis sell to proprietors operating outside the area designated as bonded warehouse and tax rate applied will be on the basis of raw materials imported.

            Companies at Gemopolis are exempt from taxes on corporate income and dividend earning within a specific period. This combination of tax privileges makes Gemopolis a free tax zone for the diamond gem and jewelry industry, said Vichai Assarasakorn, IGS managing director.

            The first ten self-contained factories in the industrial estate are due to start operation in the middle of this year.

 

 

Diamond exports to rise 10 percent

            Thailand’s exports of polished diamonds are expected to rise 10 percent this year to about B11,000 million (US$400 million), said Thai Diamond Manufacturers Association President Chirakitti Tang.

            The drop in demand from US and Japanese diamond markets last year allowed Thai manufacturers to expand their markets to other regions, including Europe, Mr. Chirakitti said.

            De Beers’ Central Selling Organization recently imposed its 1.5 percent increase in the cost of rough diamonds, which will reflect an increase of three percent in local retail prices of polished diamonds, Mr. Chirakitti said.

 

 

 

Pailin mines open in spite of gem ban

            A Supreme National Council (SNC) ban in gem exports from Cambodia had little effect on Thai miners who continue importing rubies and sapphires from mines they operate in the Khmer Rouge held area of Pailin.

            The SNC, the umbrella group for all four political factions of Cambodia, decided to impose the ban in February, in spite of objections from the Khmer Rouge. The decision also banned mining activity in an attempt to cut a key source of income to the Khmer Rouge guerilla group and force them to follow the terms of peace accord they signed two years ago.

            Thousands of independent Thai miners cross the border into Cambodia daily to mine gems in Khmer Rouge territory. Two years ago, large Thai mining concerns moved in heavy equipment to further exploit the gem-rich areas of Pailin and Samlot.

            The Cambodian mines have yielded more than US$100 million since 1989, which is split between the Thai miners and Khmer Rouge. The Thai military is reportedly paid a 10 percent fee for overseeing the border trade.

 

 

Gesswein sells Italian metal finishing system

            Gesswein (Thailand) is importing a high polishing system by the Italian firm Metal Finishing which it will sell to Thai manufacturers at the same price it is available in Italy, said Giuseppi Troisi, president of Gesswein (Thailand).

            “Right now in Thailand factories reach this high polishing level by using about 200 filing people,” Mr. Troisi said. “It’s a lot of people and a lot of wastage because all of the gold is transformed into a very fine dust that flies everywhere. The production is consistent and has a low capacity.”

            While some factories here are using metal finishing technology, many are not doing it properly, Mr. Troisi said. “We are not just selling a machine, but also the know-how to use the equipment properly. It’s a complete system.”

            The total investment for a large factory would be a maximum of US$20,000, while a scale-down system for all small factory would cost a minimum of $4,000, said Conselvan Paolo, sales manager for Metal Finishing.

            “If somebody is interested in our system we would go to their factory and study their production. Then we can tell them what kind of package would be best for them,” Mr. Paolo said.

 

 

Thai Burma factory opens in Rangoon

            The newly-founded VES Co, the first company in Burma (Myanmar) to manufacture jewelry for the international market, moved into its new factory in Rangoon in January.

The Thai-Burmese joint venture factory can support 100 employees, all of whom will be trained by Thai experts. Initially the company will produce inexpensive items for sale to tourists and possibly the Burmese.

Kham Vannaxay, the company's French-trained general manager, believes the joint venture will soon be ready to enter the international gem and jewelry trade.

"Myanmar's rubies and sapphires are the best in the world," Mr. Kham said. "When we combine that the hard working and easily trained Myanmar workers, I think we'll be able to successfully compete in any market. It's easier to compete if we make more expensive jewelry. Design and quality become important, not just price. We also make more money, and we can pay our workers better salaries."

 

 

 

 

 

Murder, jewel theft stir international flap    

After weeks of intensive news coverage in the Bangkok media of soured Thai-Saudi Arabia relations - including dramatic photos of Saudi Charge d'Affairs Mohamed Said Khoja waving a pistol - a truce of sorts has been reached between the two countries.

The problems stem from the three incidents in 1990, including the murders of three Saudi diplomats who were gunned down on a Bangkok street, followed by the disappearance of a prominent Saudi businessman after he was taken from his home for questioning by the Thai police. The same year, Thai worker Kriangkrai Techamong was convicted by a Thai court of stealing B500 million (USS20 million) worth of jewelry from a Saudi Arabia palace where he was employed. Mr. Kriangkrai completed his term in a Thai jail and was released last year.

After Thai police returned the stolen jewelry to Saudi Arabia, the Saudis said much of it was fake duplicates of the originals. Pol Lt-Gen Chalor Kerdthes and two other Thai policemen who led the investigation were charged with embezzlement but the missing jewels remained a mystery.

The Saudi government, upset by the lack of progress on the three cases, stopped issuing visas in recent months for Thai workers seeking employment in Saudi Arabia. It also threatened to close its embassy in Bangkok.

One of the Saudi demands was for the return of Mr. Kriangkrai to Saudi Arabia to re-enact the crime and perhaps shed some light on the whereabouts of the missing jewelry. The Thai Interior Ministry pressed Mr. Kriangkrai to travel to Riyadh, and even offered to issue him a diplomat passport.

Several letters to the editor from Saudi residents in Thailand appeared in Bangkok newspapers, warning that Mr. Kriangkrai would surely face amputation of his hand or beheading if he returned to Riyadh. Mr. Kriangkrai steadfastly refused to go, although at one point it was reported that his family was willing to see him off to Saudi Arabia if the Thai government would pay them B3 million (USS100,000).

Former Thai prime minister Chartichai Choonhaven, who was in office during all three of the cases, poured oil on the flames of Thai-Saudi relations when he said that "Thailand is not s colony of Saudi Arabia" and does not have to meet Saudi demands.

Finally, Thai-Saudi relations cleared in early March when the Thai Interior Ministry concluded that an international terrorist group called Jund al-Haqq was responsible for the murder of the Saudi diplomats. The Interior Minister also announced that Pol Lt-Col Somkid Boonthanom would be charged in connection with the disappearance of the Saudi businessman, who is presumed dead.

As for the stolen jewelry, charges against Pol Lt-Gen Chalor were dropped, although several other officers remain under investigation.

 

 

Thai, Laos, Vietnam land link proposed

A proposed highway network linking the northeast of Thailand with Laos and Vietnam would make Thai imports of Vietnamese and Lao wood, minerals and gemstones more convenient, as well as boosting Thai exports of consumer goods to Laos and Vietnam, according to a study by the Thai Transport and Communications Ministry.

 

The Bangkok Post reported the proposed highway network would include:

A 280-kilometer route from Nakorn Panom Province in Thailand's northeast through Kham Muan District, Laos, to the planned deep-sea port in Hon La, Vietnam;

A 600-kilometer long route from Mukdahan Province in Thailand through Savanaket District, Laos, to Hue, Vietnam;

A 600-kilometer long route from Thailand's Ubon Ratchatani Province through Pakse, Laos to Danang, Vietnam.

 

 

Elevator plunge kills seven at Gems Tower

Seven construction workers died and one was seriously injured in February when an elevator plunged 12 floors at the Gems Tower, a 40-storey gem trading building under construction on Charoen Krung Rd near Oriental Hotel.

Police said that nine workers got on the elevator to go to work at the building site at 8am. When the elevator reached the ninth floor, one of the workers said he smelled something burning and asked to get off.

The lucky worker told police that after he got off he heard a screeching noise and then the loud crash of the elevator hitting the ground. Police said the motor to the elevator was disconnected and the iron sling snapped causing the carriage to fall.

            Wattana Engineering Co, which is building the project, will likely face penalties for the accident. The amount of compensation to be paid to relatives of each victim is likely to be about B100,000 (US$4,000), according to a spokesman from the Labor Welfare and Protection Department.

 

 

Alan Jobbins to assist AIGS

          Alan Jobbins, editor of the Journal of Gemology, has accepted a position as chief consultant to the Asian Institute of Gemological Sciences in Bangkok.

            Mr. Jobbins is a director and chief examiner of the Gemological Association and Gem Testing Laboratory of Great Britain, and has been a lecturer in post-diploma gemology for more than 25 years at the London Guildhall University. He was curator of minerals and gemstones at the Geological Museum, London, for 35 years.

 

 

BOI approves factory for Pacific Display Co

          Pacific Display and Packaging received Board of Investment approval in January to invest B6.1 million (US$244,000) in a factory to produce jewelry boxes and displays at Samut Prakarn. The factory will employ 100 people with an annual capacity of 1.2 million pieces, 90 percent of which will be exported.

 

 

ABN Amro seeks Thai diamond desk

          ABN Amro Bank, the Dutch banking group which commands 45 percent of the world’s diamond financing, has asked Thai banking regulators to allow it to set up a “diamond desk” as part of its application for an offshore banking license.

            ABN Amro, along with many other foreign banks, has tried for years to acquire license to operate a full-scale banking service in Thailand. ABN Amro opened a representative office in Bangkok two years ago and is now using its diamond financing knowledge as a bargaining chip to gain an offshore banking license.

            “Bangkok is emerging as a diamond cutting center,” Clyde Albrecht, ABN Amro’s chief representative told The Nation. “What we’d like to do is add Bangkok to the list of our international diamond financing service.”

            About 35 companies manufacturing diamonds in Thailand could benefit from the bank’s proposed “diamond desk,” Mr. Albrecht said. “We want to finance the flow of stones. It requires special expertise. We have a long history in the business.”

 

 

Thai credit card users on the rise

          Visa card holders in Thailand increased by 30 percent last year, according to Tony Conway, Visa International’s manager for Thailand.

            “The country remains one of the fastest-growing markets for Visa in the dynamic Asia-Pacific region,” Mr. Conway said in a press release.

            American Express, however, takes a more cautious view of the rapid rise of credit card holders in Thailand, according to a report in the Bangkok Post.

            A survey conducted two years ago among credit card holders showed the average number of cards held by one person was 2.5. Aggressive marketing by bank card and charge card issuers has caused that number to rise so that the average number of card held by credit card holders is 3.5 to 4, according to an American Express spokesman in Thailand.

            Staporn Sirisinha, director of the Travel Management Service & Corporate Card division of American Express (Thailand), said this trend could damage the economy in the long run.

            “People will be induced to spend beyond their means and what would happen next is that they would not be able to repay such debts,” Mr. Staporn told the Bangkok Post. “If more and more people default on their debt repayments, banks or credit card-issuing companies could suffer.”

            He added that American Express is not in a hurry to expand its credit card business in Thailand and has tried to concentrate on quality clients.

 

 

Thai leaders blast US for trade threat

            Prime Minister Chuan Leekpai, keynote speaker at a US-Thai Leadership Council meeting, used the occasion to blast a US threat of the trade sanctions against Thailand, according to a report in the Bangkok Post.

            “I do not believe in the value of adopting unilateral actions in the sphere of bilateral or multilateral relations,” the prime minister told the Thai and US business and political leaders present.

            The US has given Thailand until April to effectively enforce intellectual property rights and patents or face action under Section 301 of the US Trade Act. The issue sparked intense debate at the three day, US-Thai Leadership Council meeting, organized by the Washington-based Center for Strategic and International Studies and the Ban Chang Group.

            Thailand’s former Prime Minister Anand Panyarachun also spoke out against US trade protectionism at the meeting, while sharply criticizing the US for neglecting Southeast Asia in its foreign policy.

            “America should be careful,” Mr. Anand cautioned, “Its trade problems with this region – by its own admission – are partly caused by economic shortcomings at home. If we wish to apportion blame clearly the US cannot afford to cast the first stone.”

            While Mr. Anand praised President Bill Clinton’s emphasis on domestic reforms as a primary means for reviving US competitiveness, he voiced concern over the US president’s policy to make trade a priority element of American security, the Bangkok Post reported.

 

 

AFTA to slash jewelry tariffs

          Under the ASEAN Free Trade Agreement (AFTA), Thailand’s 60 percent import tariffs on jewelry will be gradually reduced over the next 15 years to five percent or less for ASEAN members. Initial cuts will occur between the first and second quarter of this year, a customs official in Bangkok said.

            Designed to boost trade among its member countries, the Association of Southeast Asian Nations (ASEAN) is comprised of Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

            Despite freeing trade within ASEAN, the Thai government is reluctant to open its doors further to allow a tariff-free exchange of merchandise in the jewelry industry for its stronger competitors outside of ASEAN. Thai companies are still unable to officially attend the Basel fair in Switzerland because of Thailand’s import duties on jewelry.

            Thanan Maleesriprasert, advisor to the Thai Gem and Jewelry Traders Association (TGJTA), said the government has yet to realize the strength of the Thai industry.

            “We can produce any kind of stone, so we can meet any competition, but the government doesn’t understand,” Mr. Thanan said. “The government thinks the import duty protects us, but we don’t need it, we can compete.”

            Mr. Thanan is optimistic that with the gradual reduction of tariffs within ASEAN, the Thai government will expand its policy to include other countries as well.

            “The association is looking beyond Asia, but the government is only easing within AFTA. That’s a start,” Mr. Thanan said, adding that the TGJTA will continue to push the government to reduce or eliminate duties on jewelry for all countries.

            AFTA members will hold a meeting in the first quarter of this year to decide on initial reductions. Custom officials estimate that the current 60 percent import duty on jewelry will be reduced to 30 percent for ASEAN members in the first quarter.

            AFTA officials will also decide whether to reduce the 35 percent import duty on silver to 30 percent.

            Currently, pearls have a 25 percent duty and platinum has a 35 percent import duties on ASEAN members is a step toward free trade, it will probably not have an impact until the tariffs falls below ten percent and until duties are removed from all countries.