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Collateral flexibility planned
Bangkok Post – 18 November 2008
WICHIT CHANTANUSORNSIRI
The Fiscal Policy Office is pushing for the passage of a new collateral law that would allow businesses greater flexibility in managing liquidity and assets.
Somchai Sujjapongse, the director-general of the FPO, said the legal reforms would help businesses use assets such as inventories, raw materials and mortgaged land as collateral.
''We hope to give businesses greater flexibility and options in converting assets to working capital,'' he said.
The FPO, which has completed a draft act, will propose the new law to Finance Minister Suchart Thada-Thamrongvech for consideration by the cabinet.
Policymakers are concerned that companies are facing greater constraints on their liquidity due to the global credit crunch. Local banks have also been tightening their lending procedures and cutting back credit lines in response to the slowing global economy.
The FPO currently forecasts that economic growth will slow to between 3% and 4% in 2009, from an estimated 5% this year.
Dr Somchai said growth could reach the upper range of the forecast at 4% in 2009 with added fiscal spending to help offset slowing private investment and consumption.
In any case, authorities say employment figures show the labour market remains healthy despite weak sentiment and the slowing economy.
Unemployment currently stands at 1.5% of the 35-million labour force, a far cry from the 4.6% figure posted at the peak of the 1997-98 economic crisis.
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