BoT: QR system unveiled

A motorcycle taxi driver stands in front of the board advertising SCB’s QR code payment service which is available for payment to motorcycle taxis in Phahon Yothin area. WEERAWONG WONGPREEDEE.

Consumers will be able to use standardised quick response (QR) code payment on their smartphones to pay for purchases at shops, street vendors and motorcycle taxis starting in the fourth quarter of this year.

Yesterday, the Bank of Thailand teamed up with five international payment networks and financial service providers in Thailand to roll out a standardised QR code for payment.

With the single QR code, merchants can display only one QR code to collect payment. Given the convenience, digital payment is expected to gain a strong footing and hasten the electronic payment era in Thailand.

Thanks to the national e-payment initiative, digital payments have grown at a faster pace and played a greater role in daily purchases in recent years.

QR code payment can be used with credit and debit cards, e-wallet and bank savings accounts.

“As the QR code payment service is an innovative service, each operator will have to test their system in the regulatory sandbox before being launched to the public,” said Bank of Thailand governor Veerathai Santiprabhob.

Siam Commercial Bank (SCB) and Kasikornbank (KBank) are testing out their QR payment systems in the central bank’s regulatory sandbox.

“The implementation of standardised QR code payment will depend on the readiness of each operator. The system is expected to have a public launch in the fourth quarter this year,” he said.

Mr Veerathai said another six commercial banks are in the process of submitting applications to test their QR code payment systems in the sandbox. These banks include state-owned Government Savings Bank, Thanachart Bank, Bank of Ayudhya, Bangkok Bank (BBL) and Krungthai Bank (KTB).

The sandbox tests will focus on the accuracy of transactions, security of the system and customer protection to ensure reliability when it is commercially launched, he said.

QR code payment systems are safer to use as customers don’t need to give a credit or debit card to the merchant, said Mr Veerathai.

“Businesses could also use information from such payments to apply for loans, following the information-based lending that has been adopted in many countries,” he said.

Many banks are eagerly testing their QR code payment in a closed-loop basis at specific places, and they have different choices for payments: pay now with debit, pre-pay with a prepaid system, or pay later with credit cards.

Arak Sutiwong, SCB’s senior executive vice-president, said the bank is testing QR code payment in the sandbox at several locations, particularly Chatuchak weekend market. Chatuchak market is a comprehensive ecosystem for digital payment as it is a high-traffic area for both users and merchants, covering street vendors, merchants and small and medium-sized enterprises.

SCB targets a 20-25% market share in QR code payment in terms of users, merchants, transactions and volume.

The bank’s PromptPay individual customers number 4 million and it wants to reach 6 million by year-end.

Supaneewan Chutrakul, KBank’s first senior vice-president, said the bank aims for 200,000 merchants to accept the bank’s QR code payment in its first phase. Some 2,000 merchants are joining a trial of the bank’s innovative payment service.

Prassanee Ouiyamaphan, executive vice-president of BBL, said the bank will offer a single QR code to both users and merchants. It expects to enter the central bank’s regulatory sandbox next month and roll out digital payment in the fourth quarter this year.

KTB president Payong Srivanich said the bank’s digital payment platform including QR code technology will serve both its existing clients and underserved people, in line with government policy. KTB plans to issue 11.7 million smart cards for the government’s welfare scheme.

Traders optimistic about Gold-D debut

The Gold-D contract offers physical delivery of the gold at expiry.

Gold brokerage firms expect brisk trading volume of Gold-D, a new gold futures product set to commence trading next Monday, as investor appetite has shifted towards safe haven assets amid rising geopolitical tensions.

MTS Gold Futures Co Ltd and Ausiris Futures Co Ltd share the same view that this latest product of Thailand Futures Exchange (TFEX) could possibly exceed daily trade of 10,000 contracts. Existing gold futures products average 20,000-25,000 contracts per day.

“Investors are seeking safe haven assets, with gold as the safest asset class, because of concerns over rising geopolitical tensions and the possibility of a war between North Korea and the US,” said MTS Gold Futures managing director Nuttapong Hirunyasiri. “We expect the Gold-D product will be popular as the contract size is smaller and it allows Thai investors to access the international gold market.”

Ausiris Futures chief executive Boonlert Siripatvanich concurred, saying Gold-D’s trading volume should in line with 10-baht gold futures weighted 152.44 grammes as Gold-D is simple to trade. It is quoted in US dollars but settled in baht, so it can be used for daily speculation.

Gold-D is a gold futures contract, which is a physical settlement futures contract based on gold bar with 99.99% purity.

Physical delivery is obligated at expiry of the contract. Only physical gold stored in designated vaults appointed by a clearinghouse will be allowed for such physical settlement.

Investors will also have longer access to trading each day. Night trading will begin at 7pm instead of 7.30pm, while the new pre-order session will start from 6.45pm. The closing time will be extended from 10.30pm to 11.55pm.

“The spot gold price jumped to US$1,326 (44,023 baht) on Tuesday and broke the resistance level of $1,300 (43,160 baht) for the third time this year. This confirms an upward trend for the remainder of this year,” said Mr Boonlert.

Gold prices were on the rise following the spot gold market prices hitting a record high twice even before North Korea’s recent missile test, he said.

Ausiris Futures projects the short-term resistance level for gold prices at $1,326 (44,023 baht), with medium-term and long-term resistance levels expected at $1,345 (44,654 baht) and $1,375 (45,650 baht).

The local gold price quoted in the local currency is forecast at 21,000 baht as there is pressure from the weakening dollar against the baht, said Mr Boonlert.

Influential factors affecting gold price movement are the response by the US government towards North Korea, US President Donald Trump’s economic policy, Mr Trump’s threat of a possible US government shutdown related to border wall funding and elections in Europe, he said.

Mr Nuttapong said the market should keep an eye on these influential factors, especially geopolitical tensions, as gold prices will continue rising if the US-North Korean conflict intensifies.

But if tensions de-escalate and the US Federal Reserve hikes rates, then gold prices may decline, he said.

Fast-moving consumer goods see sluggish growth

The survey shows consumer goods in the first half this year grew in the lowest rate in the past decade. WISIT THAMNGERN

The sales of fast-moving consumer goods (FMCG) grew by just 1% in the first half, the lowest rate in the past decade, says market research firm Kantar Worldpanel Thailand.

The consumable products in the category cover those which are sold quickly and are inexpensive, including non-durable goods such as soft drinks and processed foods.

The company’s new business development director, Aitsanart Wuthithanakul, said the growth of Thai FMCG sales has been sluggish this year because of the slow economic recovery, weak commodity prices and lower farm income affected by last year’s drought crisis.

“Moreover, while the government is trying to boost domestic consumption, household debt remains a strong barrier,” Mr Aitsanart said.

Household debt in Thailand is 80%, much higher than the 40-60% range reported in Taiwan, Indonesia and Singapore.

But the research house expects the situation to improve as the debt burden from the first-car buyer scheme eases. The five-year ownership lock-up for cars bought under the scheme began expiring late last year, resulting in more spending.

Mr Aitsanart said the hardship economy had caused people to be cautious in spending.

“They buy lower volume from fewer categories, shopping less often and paying less,” he said. “They choose to buy necessary products, forgoing unnecessary ones.

“Consumer behaviour has changed. Urban households shop less often but can spend more per trip, while rural households shop more frequency with smaller budgets each time. The latter, therefore, prefer buying smaller product packages.”

The constraints on household spending have affected several grocery product categories.

Sales in three major product categories — household goods, personal care, and food and drinks — dropped significantly in the first half.

But sales of some ingredients and raw materials such as rice and coconut milk rose, suggesting that many consumers have cut their dining-out budgets and are cooking at home instead. In-store promotions are also luring in more shoppers.

The survey found that shoppers in the first half spent the most at traditional trade channels, though the percentage of shopping via this channel gradually declined as consumers shifted to shopping at hypermarkets, convenience stores and online channels.

“Online shopping remains small but is accelerating,” Mr Aitsanart said. “It has huge potential as a future growth driver.”

Sales via online channels increased to 3.89 billion baht in the first half, up from 67 million in 2012.

Mr Aitsanart said 75% of online shopping is for personal care products.

Some 10% of Thai households are forecast to shop via online channels this year, up from 7.3% in 2016.

South Korea is currently the global leader in online shopping, thanks to urbanisation, free delivery and a high smartphone penetration rate, among other factors.

PPP panel OKs joint projects

A Purple Line train stops at Tao Poon Station. The PPP committee has approved the new Purple Line route between Kanchanaphisek Outer Ring Road and Tao Poon under a budget of 128 billion baht. PORNPROM SATRABHAYA

The Public-Private Partnership (PPP) Committee has approved a five-year strategic plan for joint investment projects worth 1.62 trillion baht, a move to accelerate infrastructure investment amid budget constraints and sharpen the country’s competitive edge.

Under the five-year strategic plan through 2021, 94% of the 1.62-trillion-baht budget will involve transport infrastructure and overall logistic costs will be cut by 2-3 percentage points from 13-14% of GDP once the projects are completed, said Ekniti Nitithanprapas, director-general of the State Enterprise Policy Office.

The transport projects under the five-year PPP strategic plan will be divided into two groups: projects for which the government wants the private sector to play a role in, such as high-speed trains, rail systems in Bangkok and ports for shipping goods, and projects in which the government encourages the private sector to invest, such as airport and motorways.

Mr Ekniti said 600 billion baht worth of projects under the fast-track PPP scheme will be a part of the 1.62-trillion-baht strategic PPP plan.

The PPP panel has already approved projects under the fast-track PPP scheme worth 900 billion baht. Those projects include several electric trains: the Purple Line between Kanchanaphisek Outer Ring Road and Tao Poon (128 billion baht) and the Orange Line’s eastern and western sections (221 billion baht), as well a route connecting Phuket airport and Chalong Circle (31 billion baht) and another project in Chiang Mai.

Mr Ekniti pointed to differences between the Private Investment in State Undertakings Act of 2013 and the amended draft bill, with the latter to focus on basic and public infrastructure projects while any projects that use state land will be classified as PPP projects under the current law.

The bill will eliminate red tape and bottlenecks to encourage the private sector to jointly invest in infrastructure projects, while anti-corruption remains a focus, he said.

Mr Ekniti recently said that risk- and return-sharing provisions will be included in an amended draft to ease investor concerns over joint investments under the PPP scheme.

Under the Private Investment in State Undertakings Act, either the private or the public sector must take on all risk associated with PPP projects, as the act does not state risk- and return-sharing principles.

With state budget constraints, accelerating joint investment under PPP projects is crucial to achieve the 12th Economic and Social Development Plan, which requires PPP worth 47 billion baht each year.

Investment budget spending on track to meet year’s goal

Investment budget disbursement is on track to achieve a target of 87% for this fiscal year after 79% of the annual budget has been doled out, the head of the Fiscal Policy Office (FPO) said yesterday.

As of Aug 25, 63% was disbursed if the 190-billion-baht mid-year budget is included, said Krisada Chinavicharana, director-general of the FPO.

The government has set an investment budget of 548 billion baht for this fiscal year, ending Sept 30.

Mr Krisada said 83.2% of the 2.73-trillion-baht annual budget expenditure for fiscal 2017 had been taken out as of Aug 25, compared with the year’s target of 96%.

For the mid-year budget, he said 64% was already drawn down and that a 27-billion-baht repayment to treasury reserves accounted for the majority.

Amid tepid private investment and domestic consumption, state investment and spending have served as crucial engines in driving the country’s economic growth.

The National Economic and Social Development Board (NESDB) said recently that Thai GDP rose 3.7% year-on-year in the April-June period after expanding 3.3% in the first quarter.

The rise marked a 17-quarter high since 5.2% growth in the first quarter of 2013. In the first half, the economy grew 3.5% year-on-year.

The stronger-than-expected growth prompted the government’s think tank to raise its 2017 forecast range to 3.5-4% from 3.3-3.8% projected in May.

In a related development, the government mustered 1.91 trillion baht in revenue for the 10 months to July, 6.75 billion baht or 0.4% above the target but 3.1% lower than a year earlier.

The lower revenue collection for the first 10 months of this fiscal year could be attributed to a series of factors: a lack of extra revenue collected from telecom spectrum auctions, income realisation of government bond premiums, and tax payments from the Government Lottery Office recorded over the same period a year ago. Revenue from excise taxes on fuel and beer, and corporate income tax exceeded targets.

Revenue collection is also expected to achieve its target of 12.34 trillion baht this fiscal year, he said.

The Revenue Department’s tax collection fell short of the mark by 60.3 billion baht or 4.1% to 1.4 trillion, he said. Value-added tax was 41.2 billion baht or 6.3% lower than the target and petroleum tax missed its goal by 24.8 billion baht.

Corporate income tax surpassed its target by 16.9 billion baht or 4.1%.

Excise tax amounted to 465 billion baht, exceeding the target by 6.37 billion baht or 1.4%.