TRIS Rating Affirms Company Rating of “BMA” at “AA+” with “Stable” Outlook

TRIS Rating Co., Ltd. has affirmed the rating of Bangkok Metropolitan Administration, a local government organization, hereinafter referred as “BMA”, at “AA+” with “stable” outlook. The rating is based on the importance of the Bangkok Metropolis (Bangkok) as Thailand’s administrative and economic center, which despite an economic contraction in 2009, the Thai economy is expected to rebound in 2010. The rating also reflects BMA’s reliable tax revenue, consistently sound budgetary performance, and a strong financial profile as it is nearly debt-free and has a large amount of cash on hand. The rating, however, is constrained by the negative impact that the recession is having on revenue collection, the huge capital investments needed for public transportation and infrastructure, and an increasing financial burden from assuming public services delegated from the central government under a decentralization plan. Despite the undertaking of various costly responsibilities, BMA faces a restriction in seeking additional revenue sources. In addition, several issues need to be monitored: the availability of an audited financial report in a timely manner, and the preparations for future fund raising, including the development of a concrete debt management framework.


The “stable” outlook reflects BMA’s reliable revenue sources and conservative budgetary policy. TRIS Rating expects that BMA will continue to receive support from the central government at all times. Nevertheless, BMA should maintain proper financial discipline to ensure sound budgetary performance and a robust financial profile. Leverage, if incurred in the future for capital investments, should be well planned to match BMA’s revenue and debt service ability.TRIS Rating reported that BMA is a local government organization and has the responsibility of providing public services for both residents and businesses in Bangkok. As the capital city of Thailand, Bangkok benefits from its position as the social, political and economic center of the country. In 2008, the Gross Provincial Product (GPP) of Bangkok was the highest in the country, amounting to Bt2.29 trillion or 25% of Thailand’s Gross Domestic Product (GDP). During fiscal year 2005-2008, approximately 93%-95% of BMA’s total revenue was from taxes, both local taxes collected by BMA (20%) and allocated taxes collected by other governmental agencies and remitted to BMA (73%-75%). The major component of local taxes is property tax, which accounts for over 90% of total local taxes. Almost half of the allocated taxes are derived from value added tax, while automobile tax and land transfer fees average at 19%-20% each. Tax revenue is considered a highly reliable source of income for BMA, although the amount varies with the nation’s economy. In 2009, the Thai’s economy was negatively impacted by the global economic crunch and an intensifying political situation, resulting in a significant reduction in allocated taxes. Consequently, for the first nine months of fiscal year 2009, revenue collection accounted for 61% of the total Bt46,000 million budget, and declined 16% compared with the same period last year. However, BMA could revise its expenditures down to 51% of the budget during the same period in order to comply with revenue collection and a balanced budget regulation. BMA’s financial profile remains very strong with high liquidity, virtually no debt, and cash on hand of over Bt20,000 million as at the beginning of fiscal year 2009.

TRIS Rating said, Bangkok is the most developed city in Thailand; however, more investment in public services and infrastructure is needed to serve the expanding population and to facilitate economic growth. Public services, including new projects initiated by BMA and the responsibilities transferred from the central government, require a large amount of funds for project development and ongoing expenditures. In addition to a tax revenue allocation, the central government also grants BMA an annual subsidy. However, these funding sources are somewhat limited and are not sufficient as BMA has planned to invest in many capital-intensive public transportation projects. Currently, BMA’s management is studying the possibility of seeking funding through the capital market to provide more financial flexibility. Incurring new debt in the future may increase the financial risk and weaken BMA’s financial strength. TRIS Rating expects that BMA will put in place a practical debt management framework in order to sustain a liquidity and healthy financial position, at the same time, provide the timely audited financial report.

A new destination for eco-tourists

       Chiang Mai last month carved out a new district, its 25th, and then proceeded to unveil plans to develop and turn it into its latest nature and eco-tourist destination.
       Named after the late Princess Galyani Vadhana the new district,165 kilometres northwest of the provincial town, has a population of 16,000 spread over 21 villages occupying 700-square-kilometres in tambon Ban Chan, Chaem Luang and Mae Dad, said Chiang Mai Governor Amornphan Nimanan.
       The majority of its residents are ethnic Karen, Mong and Lisor hill tribe farmers in employ of royally initiated projects growing vegetable, fruit and other cash crops.
       With pleasant weather all year round,the district is also noted for its vast pine forest around Ban Wat Chan, a village perched at an elevation of 1,000 metres above sea level.
       An existing art and craft centre, now under renovation, will initially serve as the district office, but a new one will be built on an 80-rai plot in tambon Chaem Luang in due course.
       Additionally, there are plans to build a highland sports complex and a herbal study centre for which an allocation of 300 million baht will be sought from the government.
       To get to the new district, take Highway 1095(Mae Malai-Pai) from Chiang Mai town and turn left into ChomchaengBan Muang Rae Road. Alternatively, take a public bus plying the Chiang Mai-Wat Chan route. Tourism memo inked
       The tourism offices of Xishuangbanna in China's Yunnan Province and Chiang Rai have signed a memorandum of understanding to facilitate the movement of tourists and logistics along the 1,800-km-long R3A highway linking Kunming with Bangkok.
       The memorandum signed recently in Chiang Khong district seeks to promote land travel and also calls for low-cost air links between Chiang Rai and Jinghong,the main city of Xishuangbanna, said Chiang Rai Governor Sumeth Saengnimnuan.
       Last year some 1.7 million tourists visited Chiang Rai of which 11 per cent were from China. Their number is expected to increase slightly this year. Bird sanctuary
       A newly-opened tourist centre at Talay Noi, a wetland home to some 43,000 birds representing 187 species, in Khuan Khanun district of Phattalung comes fully equipped with high-speed Internet as well as tourist information available to visitors both in Thai and English.
       October to March is high tourist season in this 285,625 rai wetland area during which migrating birds flee harsh winter in the northern hemisphere to seek refuge around this tropical lake, pulling in avid bird-watchers and nature lovers in droves.
       Apart from bird watching, visitors can observe the lifestyle of fishermen inhabiting the wetland and stop by Krajud Rong Fang to watch a group of housewives weaving lepironia mats, baskets and purses. Airport gets a facelift
       Some 5.3 million passengers transited through Phuket International Airport last year and their number is expected to increase to 6.5 million by the end of this year.
       Preparing for the upcoming high tourist season, the airport is planning to spend 30 million baht to polish up its image and present its best face to the arriving tourists.
       According to its Managing Director Pratheung Sornkum, the money will be used to improve road surface around the airport, car park, toilets, passenger terminals and buy two more X-ray security machines.
       The airport also plans to expand its passenger capacity to 12.5 million annually by 2013.NokAir tie-up
       Low-cost airline Nok Air has joined hands with SF Cinema City to sell air tickets via 13 of the latter's outlets in Bangkok and Phuket.
       Nok Air CEO Patee Sarasin said the arrangement would suit those whose lifestyle revolves around cinemas and shopping malls.
       The airline is offering 100 baht discount to those who purchase a roundtrip ticket with 5-kg extra baggage allowance on the Phuket route, and 50 per cent discount coupons redeemable at Budget Car Rental.
       If the tickets are bought at SF Jungceylon in Phuket or at Central Phuket, buyers get 200 baht discount for a BangkokPhuket round-trip.
       The offer is valid until Nov 30. Adventure race
       The 4th Yara Bangkok Challenge 2009,part of the Amazing Thailand Adventure Race Series already run in Kanchanaburi,Chiang Mai and Samui Island, kicks off Nov 14 in Nong Chok district of Bangkok.
       The event is a test of endurance involving trekking, mountain biking, swimming, and canoeing over a distance of 50 kilometres in which two-man teams compete in a gruelling race that lasts hours depending on physical fitness of the participants. More than 100 teams are expected for the race.
       Visit www.ama-events.com for more information. Big field for regatta
       The 23rd King's Cup Regatta scheduled Nov 28-Dec 5 off Kata Beach promises a big field with boats from Australia,Britain, China and Russia joining local teams vying for honours at an event that heralds the start of high tourist season in Phuket.
       Kevin Whitcraft, president of the organising committee, is hoping some 2,000 high spending international tourists to converge in Phuket for the event which is expected to pump some 40 million baht into the local economy.

Grand festival to celebrate His Majesty the King's 82nd birthday on Dec 5

       More than 200,000 visitors are expected to attend a grand festival designed to celebrate and homour His Majesty the King, the world's longest reigning monarch, who will be celebrating his 82nd birthday on December 5.
       The opening ceremony will be held on December 1, but the entire festival well run from November 30 to December 10 at the Ratchaphruek 2006 Garden in Chiang Mai.
       His Majesty the King ascended the throne in June 1946 and was crowned in May 1950.
       Organised by the Tourism Authority of Thailand(TAT), the Agriculture and Cooperatives Ministry, and the Chiang Mai provincial administratiion, the festival is expected to attract thousands of Thais, resident expats, and international visitors.
       Juthaporn Rerngronasa, TAT deputy governor for marketing communications, said TAT was proud to host such a grand event for our beloved King.
       The event is designed to honour His Majesty and to publicise and promote tourism to Northern Thailand, especially the Ratchaphruek 2009 Garden.
       "It fits in perfectly with our plans to diversify our range of destinations, and encourage visitors to travel around the country to help raise the incomes of rural people," he said.
       The festival will help boost domestic tourism, increase hotel occupancies in Chiang Mai, and give extensive exposure to North Thailand, projected to be a bridgehead for Thailand's future economic development plans and links with the Greater Mekong Subregion.
       The official opening ceremony will be on December 1, with parades from all four regions of Thailand. Prime Minister Abhisit Vejjajiva will deliver the opening address and then take part in releasing 999 Kom Loi (Sky Lanterns). This will be followed by classical dances from the four regions with 99 performers from each region.
       The number nine is consdered luckey for the Thai people. A slight variation of its pronunciation also means "progress" or "advancement" in Thai.
       Highlight of the festival will be on His Majesty's birthday on December 5 with the lighting of thousands of candles, offering of prayers and blessings for his good health and singing congratulatory songs, followed by a fireworks display and a light and sound show.
       Throughout the festival, visitors will view a horticultural exhibition of flowers, trees and fruits, and sales and competitions of agri-products, handicrafts and village-made souvenirs.
       Orchid lovers will find this festival of special interest.
       The Ratchaphruek Garden was built for the Royal Flora Ratchaphruek 2006,. an international horticultural expo, held in Chiang Mai as part of the celebrations commemorating the 60th anniversary of His Majesty the King's accession to the throne. Roughly 2.5 million plants and flowers, including some rare species of orchids, were on display at that expo, which had over two million visitors.
       Chiang Mai is the economic, communications, cultural, and tourism centre of Northern Thailand. In recent years, it has undergone considerable economic development but still retains its historic heritage. It is also becoming increasingly well-known as a centre of traditional Thai massage, meditation, health, and wellness spas.

DEMOCRATS IN HOT WATER

       The largest scandal ever during this Democrat-led government has forced Deputy Prime Minister Korbsak Sabhavasu to resign as board chairman of the Sufficiency Economy Office for Community Development.
       His brother, Prapote Sabhavasu, later stepped down as the office's deputy director.
       The brothers are unlikely to be the last political casualties of this scandal as an internal investigation is being conducted within the Democrat Party while the opposition Pheu Thai Party is closely examining the project for traces of irregularities.
       Mechai Viravaidya, once known as "Mr Condom" who is credited with Thailand's successful birth control, has been appointed to take over from Korbsak as the agency's board chairman. The move is viewed as an attempt to reduce pressure on the ruling Democrat Party and the coalition government it leads.
       Prime Minister Abhisit Vejjajiva, leader of the Democrat Party, appointed a working group headed by senior party figure Charoen Kanthawong to investigate the alleged irregularities and find out whether any party member had been involved.
       "VICTIM OF A SMEAR CAMPAIGN"
       In opting to resign, Korbsak explained that he was a victim of a political smear campaign. "If a politician remains the board chairman, the enemies will never stop their political attacks. So, it's better to find a person who has nothing to do with politics to assume the job. He can devote his time to doing the job," Korbsak said.
       He admitted there were irregularities in the project, which encourages communities to invest in programmes for their residents under the royal philosophy of Sufficiency Economy.
       "I can't prevent people from being corrupt. I don't think this is the only project [with the corruption problem]. My decision to quit reflects my intention that benefit should go to the project and not myself," he said.
       He did not make it clear whether the political campaign in question came from inside or outside his Democrat Party.
       Party figures have blamed junior officials in the project and coordinators from communities for the irregularities, in which expensive products offered by certain private companies were favoured to be used in community programmes.
       Charoen, who heads the Democrat working group investigating the project's irregularities, said that his panel had questioned the party figures involved with the project and the private companies offering their products for sale to the community programmes.
       "We are concluding the findings and making a report to be submitted to the party leader," he said.
       Charoen said the party figures questioned denied any irregularities, saying there were only a limited number of choices as there were only a handful of companies offering their products for sale. They said the companies had been familiar with the communities as they had come to the areas since the villages were under the SML (small, medium, large) project in the government of Thaksin Shinawatra.
       Charoen said his panel had raised questions that about the small number of competing suppliers and that the companies appeared to have inside information about funds approved to communities. "They knew even before the community leaders that funds were approved," he added.
       A source in the Democrat probe team said that traces of irregularities were found in the project, particularly in programmes involving the purchase of solar-powered water-vending machines and solar-powered street lamps for Bangkok communities.
       The opposition is also closely monitoring the project. Anudit Nakornthap, a Pheu Thai MP for Bangkok who is part of the committee scrutinising the spending of funds for the project, also pointed out there was something fishy about the purchase of solar-powered water-vending machines.
       He said the opposition was collecting evidence before referring the matter to the National Anti-Corruption Commission and other relevant state agencies.
       OPPOSITION WATCHING CLOSELY
       The opposition MP said the project's irregularities pointed to "policy corruption by the government" as the problem appeared to take place at all levels. He said the programmes that chose to buy certain products were given funding easily while those planning to use other products failed to get approval for funding.
       The term "policy corruption" was first used during the Thaksin government.
       "This practice simply makes money for the merchants and the people involved. The project does not benefit the communities as it is clear that the implementation of the project does not follow the philosophy of Sufficiency Economy," said the opposition MP.
       Before Korbsak resigned as the project's board chairman, he met Auditor-General Jaruwan Maintaka and sought an investigation by the Auditor-General's Office into the alleged irregularities.
       The resignation of Korbsak and his brother, as well as the appointment of Mechai as the new board chairman and the internal probe by the ruling party may have helped reduce some of the pressure on the government. But this scandal is likely to be a serious threat to the government's "clean" image, and could eventually hurt its stability, if it fails to find the culprits.
       THE SCANDAL AND ITS FALLOUT
       HOW THE SCAME WORKS
       When a community propess its projects to the agency, corrupt officials prepare a parallel project proposal. After the proposal is approved, the officials switch their own project for the community's project. The approved budget is for the project proposed by the corrupt officials.
       Local politicians influence the community's choice of project. Decisionmakers in the community are persuaded by the politicians to pick a project that requires products sold by a particular company. the company then offers to sell its product to the cmmunity without any competitor, which makes it easy for the company to sell at an inflated price. The project is then examined and approved by the agency's officials.
       Many project proposed by communities are identical and require products, such as fertiliser, from the same company evenn though there are other supplies offring the same product.
       THE PROGRESS REPORT
       The programme targets some 80,000 communities all oer the country. About 63,000 communiites have submittted their project proposals and the Sufficiency Economy Office for Community Development has approved 31,000 of them. those projects require funding of Bt8.4 billion, or 40 per cent of the entire programme's Bt21 billion budget.

Flash floods wreak havoc in 3 districts

       Flash floods are continuing to devastate Kanchanaburi, with three districts suffering their worst flooding in a decade.
       More than 7,000 households in Lao Khwan, Huay Krachao and Bo Phloi districts have been lashed by days of heavy rain and run-off from the Chong Krueng and Chong Kruad mountain ranges. Over 50,000 rai of farmland and more than 300 local roads have been damaged.
       Many areas in the three districts remained inundated yesterday with floodwaters rising to 120cm.
       Kanchanaburi governor Roengsak Mahavinitchaimontri yesterday inspected flood-hit areas in Huay Krachao and handed out 1,000 relief kits to residents.
       Bangkok has been placed on maximum alert as the city expects to face a very high tide today.
       City Governor MR Sukhumbhand Paribatra yesterday said flood prevention measures had been put in place to protect the inner city during the high tide.
       The city administration has spent over 300 million baht to build embankments along the Chao Phraya River to prevent flooding in Samphanthawong, Bangkok Noi and Tha Prachan areas. About 70km of embankments have been built.
       The tide is expected to peak at 1.80m at 8am today.
       City clerk Pongsak Semsant yesterday told people living along Klong Bangkok Noi to brace themselves for flooding.
       An embankment could not be built in the area as 35 of the 250 households were encroaching on the canal, Mr Pongsak said. Authorities are negotiating with owners to remove the houses to pave the way for the building of a 1km-long embankment from Arun Amarin bridge to Bangkok Noi bridge.
       Flooding that hit Nakhon Ratchasima,Chaiyaphum, Buri Ram and Surin last week caused about 132 million baht in damage to farm land and public utilities in the four northeastern provinces.
       Wallop Theppakdi, head of the office for disaster prevention and mitigation in Region 5, said more than 122,000 rai of farmland in Chaiyaphum were badly damaged by last week's flooding.

A wet week for the Governor

       It was good to see Bangkok's Governor wading through floods and getting his boots wet this week as he coordinated the efforts of city planners and irrigation engineers in draining off excess water from the inundated eastern suburbs. Equally welcome was MR Sukhumbhand Paribatra's apology and acceptance of responsibility because the floods had got out of control, causing inconvenience and traffic jams for much of the week.
       Backing this was the promise of a better drainage system for the worst affected area. Bangkok's citizens are used to promises but not to polite apologies and requests for forgiveness, so this pledge has the authority of a policy commitment that we should be able to trust.Countless millions of baht have been spent by taxpayers in recent decades on flood prevention safeguards including dykes, heavy-duty pumps, dredging, floodgates,sandbags and other drainage projects in an effort to make such appearances by the Governor unnecessary.
       But sometimes just too much water gets dumped on the city in too short a time and there is nowhere for it to go. Drainage Technology Department directorNarong Airasubkunakorn claimed that this week's rains had been the heaviest in 25 years but this seemed to overlook the havoc wrought by what were then termed "the heaviest rains in a thousand years" during Maj-Gen Chamlong Srimuang's tenure as city governor.
       In the aftermath of that deluge a couple of decades ago, questions were raised about the wisdom of having turned so many of the city's canals into roads, given that much of Bangkok is below sea level. Mr Narong's point of reference was presumably the great flood of 1983 when a sizable part of Bangkok was submerged and boats were seen making their way along Silom,Ploenchit, parts of Sukhumvit and other roads. That is what happens when floodwaters have nowhere to go.Nowadays they head for the eastern suburbs, much to the horror of those living there.
       This is also the time of year when city officials tend to point an accusing finger at construction projects for creating subsidence, worsening flooding and hampering drainage, but they should not forget that they were the ones who signed off on them, often without ensuring that the necessary infrastructure to service them was in place. They would also do well to review the measures taken to improve and clear out drainage systems and get pumps in working order ahead of this week's heavy rains. And start to plan for what might happen once construction of the infrastructure mega-projects begins.
       More misery appears to be on the way for residents of the eastern suburbs next week, with high tides and heavy rains due to coincide. Those in the "inner city"are protected to some extent by the encircling flood control barriers and dykes. Unfortunately, this means that a disproportionate and unfair portion of the capital's average annual rainfall of 150cm (59 inches) will end up getting pushed out into the already soaked eastern suburbs. This is why it is essential that the promised improvements to the drainage system get the utmost priority. If for some reason they do not, then enthusiasm for paying high municipal taxes might start to wane.
       The obvious problem facing Bangkok is that it is too close to the water - and getting closer all the time.This is caused by the excessive extraction of ground water over many years. Given that Bangkok is a human settlement built on a layer of clay, the dangers of groundwater extraction should have long been obvious.This has to stop. The solution is obvious but enforcement has been repeatedly postponed and Bangkok continues to sink. We are rapidly running out of time to fix this.

800m baht earmarked to limit flooding

       The Bangkok Metropolitan Administration plans to spend 800 million baht on improving the drainage system along Srinakharin Road after serious flooding yesterday.
       Bangkok Governor MR Sukhumbhand Paribatra said the drains along a 6.5km stretch of the road between the Phatthanakan and Sri-udom intersections on Sukhumvit Soi 103 would be improved.
       The work will take about two years.MR Sukhumbhand said part of Srinakharin Road was built by the Rural Roads Department without a modern drainage system before it was transferred to the BMA.
       A heavy downpour yesterday morning flooded several major roads in Bangkok,causing traffic jams across the city.
       The situation was particularly serious on Srinakharin Road where floodwaters were from 30cm to 50cm high.
       "I ask for forgiveness from Bangkokians for the slow drainage of floodwaters from many areas," MR Sukhumbhand said."That was because the torrential rainfall on Monday night required six to eight hours to drain from the roads."
       In nearby Samut Prakan province, floodwaters on certain streets off Sukhumvit Road were as high as 80cm. The areas became impassable to small vehicles.
       In Nakhon Ratchasima's Phimai district, the overflowing Moon River submerged more residential areas yesterday.
       Flood officials said the water level in the Moon rose by 10cm, affecting more than 300 households in Phimai.
       The average flood level in the district is 50cm, while the highest level recorded yesterday was one metre. There was a shortage of drinking water in many of the flooded areas.
       The flooding in Phimai for more than a week has seen more than 50 residents develop skin and foot diseases, officials said. No agency has come forward with assistance despite repeated pleas for help.
       Si Sa Ket's Sila Lat district was also hit by heavy flooding, with the flood level as high as one metre in some places. About 2,000 rai of farmland in tambons Nong Bua Dong and Kung have been swamped.
       Phitsanulok governor Preecha Ruangjan yesterday declared Bang Rakam district a disaster zone as the flooding has spread and covered about eight tambons. Almost 40,000 rai of farmland has been affected.
       The Meteorological Department yesterday issued a warning that Kanchanaburi, Ratchaburi and Phetchaburi provinces could be hit by flash floods as more rain is forecast.
       Flooding has already hit two districts - Huay Krachao and Lao Khwan - in Kanchanaburi.
       In Huay Krachao district, flooding has affected about 200 households and damaged more than 10,000 rai of farmland.
       In Lao Khwan district, all seven tambons are under water.