ASEAN KEY DESTINATIONS
December 19, 2007
The Bank of Thailand has insisted it will not end the 30 per cent reserve requirement, saying the measure helps boost the stability of the baht.
BoT assistant governor Suchada Kirakul said the baht had become more stable since the capital control measure was initiated on December 18 last year.
The range of the currency's strength was reduced from 16.6 per cent prior to the issue of the measure to 7.4 per cent, less than half the previous spread.
It had also eased the volatility of the baht and reduced the foreign capital inflow from US$13.62 billion last year to $6.96 billion during the January-September period this year.
She said the central bank will not yet call off the 30 per cent withholding measure, but it will ease the application of the measure to help reduce the cost to the private sector.
Included are an exemption of the reserve requirement and the purchase of a fully-hedged contract for an offshore loan in an amount of not exceeding $1 million with a loan repayment of one year or up, and relaxation of rules and regulations governing the deposit and transfer of foreign currencies to facilitate and boost services.
In addition, local individuals are allowed to invest directly or lend more to businesses overseas.
For instance, a parent company in Thailand is able to invest or lend to its subsidiaries and associates overseas altogether in an amount of not exceeding $100 million per annum instead of the $50 million per annum allowed previously.
Listed companies on the Stock Exchange of Thailand are allowed to make overseas investments in unlimited amounts.
Also, the amount of money permitted to buy property overseas will be increased to no more than $5 million per year from the current $1 million per year.