JTBF Mission to Thailand 2010 (2/01-2/04)

Visit to Bank of Thailand

reported by Hiroshi Motomura (Chief of Finance Committee, JTBF)

Following is a summary of interview with Governor Tarisa.

1. We referred to our interview with Mr. Mr. Korn Chatikavanij (Ministry of Finance) and his comment that Thai economy still requires economic stimulus measures. Governor Tarisa added her views as follows.
2. Thai economy is recovering with faster pace than expected. We expect it continue. While under-valued Chinese yuan is a big challenge to competitiveness of Thai products, mass media may be overstating negative impact of baht appreciation. It is 4.5% stronger than previous year. Compared to 2-3 % of other Asian currencies, rather strong indeed but moving within a same trend. Export is also expanding but depends on GDP of export countries. Volatility of currency exchange is concerned, of which stabilization is considered an important subject.
3. Yesterday, we announced relaxation of control on capital outflows, namely helping Thai companies invest overseas (by withdrawal of upper limit) and raised investment limit to $50 billion from $30 billion. And also exporters would be allowed to unwind foreign exchange hedging transactions freely. The Bank of Thailand would carefully monitor how these actions will affect Baht Currency.
4. In coping with financing problems of SME, we allocated a 30 billion Baht facility to guarantee up to 75% of a non-collateral loan, of which 24 billion is already spent. Total outstanding loan balance of commercial banks to SME as of Dec. 2009 has shown “positive” compared with previous year. We view it a encouraged sign.
5. In regard to baht appreciation, we would learn from Japan’s countermeasures taken against the past yen appreciation after Plaza Accord. It is also suggestive that Japanese enterprises shifted a part of operations to outside. It is a time that Thai enterprises start to assess similar countermeasures.

To sum up an interview with Governor Tarisa, I think we shared a part of her deep considerations as to seeking best possible solutions in coping with baht appreciation, financing problems, empowerment of Thai enterprises and so on.

As we were leaving Governor’s office, I happened to find pictures of past 20 governors on the wall of dark hallway. It looked as if all of them were sending encouraging cheers to the first lady Governor Tarisa.