ASEAN KEY DESTINATIONS
Thailand urged to be ready for UK's exit from EU
Experts are calling on Thailand to prepare for the United Kingdom's possible decision to pull away from the European Union after the ruling Conservative Party returned to power the day before yesterday.
They said that though the UK's departure from euro zone would have no direct impact on Thailand, the Thai government should still prepare for changes in trade regulations and uncertainties.
Despite the unexpected outcome for the Conservatives, uncertainty looms over whether Britain will stay in the EU even though prime minister David Cameron promised to hold a national referendum on the subject.
The referendum will most likely be held in 2017 and should follow a re-negotiation with the EU on membership terms.
Earlier, there had been predictions that the vote in Britain would be the closest in decades.
Board of Trade vice chairman Sanan Angubolkul suggested yesterday that Thailand initiate free-trade talks with the UK to ensure access to that market should Britain vote to leave the EU.
He also said it was necessary for Thailand to monitor new policies under the new government closely, as some changes could be introduced.
Chookiat Ophaswongse, honorary chairman of the Thai Rice Exporters Association, said Britain's pullout from the EU would affect the bloc's stability and weaken the euro.
As a result, he would expect Thai exports to face more difficulties as European consumers lowered their spending.
"The weakening of the euro means higher prices for Thai goods. It would also create tougher competitiveness for Thai exports to the EU, though trade with the United Kingdom should not have problems," Chookiat said.
Pimonwan Mahujchariyawong, deputy managing director of Kasikorn Research Centre, said there were no foreseeable direct impacts on Thailand should Britain leave the EU, since it uses the pound sterling and, therefore, its exit would have only a minimal impact on the euro.
She said the only changes that might occur involved trade regulations and the fact that Britain would have to come up with new tariff and non-tariff rules if it leaves the EU.
Kim Eng Securities (Thailand) economist Tim Leelahaphan said the pound sterling had appreciated by 1 per cent after the uncertainty regarding Britain's election died down and the Conservatives' larger-than-expected victory.
Nevertheless, Cameron's austerity measures mean Britain's policy interest rate has the potential to stay at a low level in the coming period.
That would not support the British currency and neither will the uncertainty created by the possible exit from the EU.
"The possible exit would create an uncertainty in the global market, but it should not affect Thailand's fundamentals," he said.
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