What's new in business news: August 28, 2013

Stocks continue to fall as foreign investors pull money out, alcohol tax increase & ecocar oversupply looming.

FINANCIAL MARKETS 

Stocks & baht continue to fall

The Stock Exchange of Thailand (SET) retreated for a ninth straight trading day.

The main stock index has lost 7.39% this year, sliding 21.6% from the year's peak in May. The baht weakened to 32.15/20 to the US dollar.

Stock exchanges in Philippines, Indonesia, India, the Middle East and Europe also fell. 

Foreign investors have pulled US$2.2 billion from equity markets in India, Indonesia, Thailand and the Philippines this month.

Panic sales came after the Barack Obama administration vowed to hold Syria's government responsible for using chemical weapons, as its allies moved closer to a decision on retaliatory military strikes.

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TAXES & ALCOHOLIC BEVERAGES

Cabinet backs rise in alcoholic beverages tax ceiling

The cabinet on Tuesday approved a sharp increase in the alcohol beverage tax ceiling.

The govt also proposed to change the method of calculating excise tax for alcoholic beverages, using retail prices or wholesale prices at the last step in the supply chain as the basis for its calculation. Currently, the Excise Department calculates taxes for locally made alcohol beverages based on ex-factory prices and for imported beverages based on CIF (cost, insurance and freight) prices. The change to retail prices to calculate the taxes would result in much higher tax collections.

A special fund will receive 1.5-2% of the total alcohol excise tax take and this fund will support the disabled, help pay for education, and finance other activities of the Excise Department. The initial amount of the fund is expected to be one billion baht.

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AUTOMOBILES

Surplus of eco-cars a new concern

Car makers are wary of an oversupply in the Thai market as the government commits to going ahead with the second phase of the eco-car programme. Manufacturers who were awarded a licence to make eco-cars in the first phase are required to increase annual production to 100,000 vehicles in the fifth year, churning out a huge supply of eco-cars.

Mitsubishi, Honda, Toyota, Nissan and Suzuki joined the first phase, with combined annual capacity of 585,000 cars with seven different models. Nissan began eco-car production in 2010, Honda in 2011, Mitsubishi and Suzuki last year and Toyota this year. 

An eco-car can emit no more than 100 grammes of carbon dioxide per kilometre compared with 120 grammes for existing models. Excise tax for an eco-car is 14% compared with the normal 17% rate, while those compatible with E85 enjoy a 12% rate.

[Read full story here ]