ASEAN KEY DESTINATIONS
Business plea for Thai action
"As foreign exchange is now a major threat, businesses see it as essential that the government declare an urgent national agenda to co-ordinate with all relevant parties and the private sector to find a solution," said TCC vice-chairman Phongsak Assakul.
The chamber proposed more taxes on foreign investment capital, beyond the 15 percent capital-gains tax on bonds, to narrow the gap on returns between Thailand and other countries. It also wants the central bank to delay any increase in its key interest rate.
However, Finance Minister Korn Chatikavanij yesterday reiterated his opposition to more aggressive action.
The baht closed yesterday at 29.80/84, up from 29.88/92 Wednesday.
"If the baht rose at roughly the same level as rival countries' currencies, it would be acceptable, but it has not," said Mr Phongsak.
"For the longer term, the government should also promote the import of machinery with lower tariffs to improve production quality and upgrade production competitiveness of the country." The TCC would also like state enterprises and Thai corporations to receive more encouragement to invest abroad.
While businesses are urging tougher central bank action, the Bank of Thailand has been examining its core approach.
The central bank recently hired consultants to assess its monetary policy framework. They found the policy was effectively anchoring inflation and enhancing the central bank's independence from the government.
However, one consultant conceded that the focus on inflation may cause a conflict with foreign exchange rate stability. The central bank may be tempted to lower the policy interest rate in the wake of strong capital inflows, which would lead to asset price bubbles.
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