Thailand's finance minister surprised markets yesterday by announcing that new capital controls would remain in effect, insisting that the measures have helped exporters and steadied the baht.
"Based on our analysis, the 30 percent reserve requirement has helped the export sector to survive and the baht is now at about 36 to one [US] dollar, which is good," Finance Minister Pridiyathorn Devakula told reporters.
Reserve requirements imposed in the middle of last month effectively lock up for a year 30 percent of any fund inflows coming into Thailand for financial investment.
Analysts had widely expected the government to ease the rules, and the announcement sent share prices sliding, with the Stock Exchange of Thailand composite index down 1 percent after the morning session.
The capital control rules had sparked a stock market crash last month, prompting authorities to allow an exemption for investments in shares. Other types of investments remain under the new rules.
The rules were designed to control the baht's rapid rise and Pridiyathorn insisted that they were helping Thai exporters by stabilizing the currency at around 36 to one US dollar.
The export sector accounts for some 60 percent of Thailand's economic output.
"The sector that really attracts direct investments is exports. Of the two types of investment, to invest in setting up a company in Thailand or to invest in the Thai stock market, we have to prefer the first type of investment," Pridiyathorn said.
He spoke after a study by the Japanese Chamber of Commerce found that the 1,200 Japanese businesses operating in Thailand were concerned that the rules would raise the cost of doing business here.
"I have met with Japanese investors who reassured me that they are not leaving and will maintain their investments here," he said.
But Sukhbir Khanijoh, senior market analyst at Kasikorn Securities, warned the capital control rules were damaging investor confidence in Thailand.
"While the minister insisted that the measure has given a boost to exports, the economic damage is much higher in terms of confidence and massive losses in the stock market," he said.
"Pridiyathorn said the rules would bring about benefits over the longer term to the Thai economy. Today, there are no new investments and we might have to wait for about a year for the measure to generate positive outcomes," he said.
The controls have helped steady the baht's rise, but has not weakened the Thai currency as much as the market had expected, said Wiriya Lappromrattana, head of research at Kiatnakin Securities.
"The baht has been trading within a narrow range and not strengthened further since the rule was announced," Wiriya said.
"The currency has become more stable, trading between 35 to 36 to the dollar," she said, adding that the market had expected the baht to slide to 36.50.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS