What's new in business news: August 23, 2013

What's new in business news: August 23, 2013

TRANSPORT

High-speed rail: Ready to go, but studies question benefits

The planned Bangkok-Hua Hin high-speed train route will go ahead despite warnings it is not worth the investment cost and a draft authorising borrowing to fund the 2-trillion-baht scheme is set for parliamentary deliberation.

Construction of the first phase of the four routes - Bangkok-Phitsanulok, Bangkok-Hua Hin, Bangkok-Rayong and Bangkok-Nakhon Ratchasima - would be completed by 2019. The Bangkok-Hua Hin route would stretch 225 kilometres at a cost of 82 billion baht.

A study showed the Bangkok-Hua Hin route would see an economic rate of return (ERR) of 10.7%, less than the 12% benchmark set by the Transport Ministry.

Another study concluded that some routes would need as many as 41,000 passengers a day or 15 million a year to break even, totals that exceed domestic airline passengers at the moment. High-speed train fares would likely exceed those of low-cost airlines even though it is faster to fly.

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AGRICULTURE

Foreigners to get direct access to rice

The government will let international state enterprises and foreign rice traders buy rice directly in a move to boost sales of the state's huge rice stockpile.

In its best bid to unload 17 million tonnes of rice sitting in warehouses, the state has sold rice stocks mainly through government-to-government (G-to-G) deals and newly allowed general auctions but efforts to sell stockpiled rice have met with tepid sales.

Rice traders have shown lukewarm interest in the rice bidding, with some saying the government-set prices are too high while global demand is weak.

Trust is also an issue, with traders questioning the quality of the stored rice.

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GOVERNMENT

VAT fraud: 18 senior officials colluded with firms

A Finance Ministry inquiry committee has uncovered 18 senior officials suspected of stealing more than 4.3 billion baht from the state through fraudulent value-added tax (VAT) refunds.

The Finance ministry set up a committee to launch a disciplinary investigation into four C-9 officials, but the Revenue Department failed to cooperate with the committee and was reluctant to provide the panel with information on the tax refund fraud.

The Revenue Department claimed it could not provide the information for the other 45 companies because doing so could constitute a violation of Section 10 of the Revenue Code which prohibits taxpayers' information from being disclosed.

The inquiry panel and the Department of Special Investigation (DSI) have investigated 20 companies and uncovered fraudulent tax refunds worth 1.13 billion baht in Samut Prakan province, and illegal tax refunds worth 3.2 billion baht in the Bang Rak area.

The DSI will pursue criminal action against the perpetrators while the Anti-Money Laundering Office (AMLO) will try to retrieve the money cheated through fraudulent refunds.

The tax refund fraud allegedly involves an organised network, with a conspiracy between state officials and private companies.

Farmers and labourers in Phichit and Tak provinces were offered 200-500 baht each to use their identification cards. These ID cards were used to set up companies,open bank accounts and apply for VAT registration with the Revenue Department.

The prices of goods were sometimes hugely inflated hoping to obtain higher refunds.

The revenue department claims it is only a case of the officials being "carelessness" in performing their duties and disciplinary action will not be launched against these officials.

A 2-billion-baht budget was approved last year for the Revenue Department to put in place a cross-check system for tax refund requests, but it has not yet been implemented.

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