Published on January 29, 2006
BOT explanation of baht’s appreciation against US dollar spun in favour of Thaksin
Re: “Baht’s rise due to Shin deal – BOT”, Business, January 20. As reported, it appears that Bank of Thailand (BOT) governor Pridiyathorn Devakula and Finance Minister Thanong Bidaya are intentionally misleading Thai people about the reasons for the appreciation of the Thai baht against the US dollar. The baht/US dollar exchange rate is flexibly managed by the BOT at the broad instruction of the Ministry of Finance, ie, a managed floating-exchange-rate system pegged to a basket of currencies: the euro, US dollar, and the yen. The daily determination of the baht/dollar exchange rate is secretly determined by the BOT in regular consultation with the Ministry of Finance.
This means that the rise of the baht against the dollar since January 4 has been independently determined by the BOT, ie, it has nothing to do with alleged large inflows of capital to purchase Shin shares. No supply-demand relationship between the dollar and the baht is in action as far as Shin shares are concerned. However, think carefully: Singapore’s Temasek Holdings does not have to wire money to Thailand because it can deposit the agreed US dollar amounts at Shin’s bank account in a Singapore bank. This is easily done, as Singapore is a major international financial centre. Moreover, it is a bad financial management practice to wire such a large amount into Thailand as this money eventually will be wired back to Singapore later. In effect, Temasek’s money is very unlikely to have ever arrived at any banks in Thailand for the purchase of Shin shares. However, to protect Prime Minister Thaksin’s political image in Thailand against accusations of being responsible for the flight of capital of from Thailand to Singapore, ie, selling his assets in Thailand in exchange for money directly deposited in Singapore, the BOT and the Ministry of Finance may have gradually but significantly “re-valued” the baht against the dollar while possibly “cooking up” conflicting reasons for the appreciation of the baht against the dollar. To confirm my points, starting from January 4, the baht has gradually but significantly appreciated against the dollar independently of Temasek’s takeover of Shin shares, and long before the BOT’s policy-rate hike of January 18. Thai people in general have good hearts and kind spirits. However, they are often taken for a ride by the crooked politicians, who appear to believe that most Thai people are inherently stupid! Now the political [and economic] situations in Thailand are similar to the 1950s, when government revenues were used as if they were private funds. Now laws and regulations have been manipulated and modified to justify self-serving actions such as the non-taxable capital gains from Shin’s selling of assets to Temasek. It takes a courageous person like Sondhi Limthongkul to make transparent to the world the treacherous actions of crooked politicians in power. I wish him the best on February 4. Patrick Xu Washington ------------------------------------------------- Eliminating SET exemptions would devastate exchange Re: “The PM has a moral duty not to duck taxes in Temasek and other business transactions”, Letters, January 27. I have two points on Korn Chatikavanij’s reasoning: First, we can agree that the moral standard of a prime minister in discharging his individual obligations to the state should be higher than that of an ordinary person. The PM’s previous share transfers to his children and brother-in-law were definitely substandard by any measurement and the Revenue Department’s exemption on those transfers deserves public scorn. But, sir, the sale to Temasek, a respectable third party and not a family member, is above board since Temasek agreed to buy Shin instead of AIS, ie purchasing all of the PM’s interests in the Stock Exchange of Thailand (SET) (except for a small property company, SC). In so doing, the sale through the SET is exempt from tax under the statues of the Revenue Code. This exemption was codified 20 years ago and does not require the Revenue Department’s interpretation to help the PM. Surely, Korn would not tell the PM to sell AIS instead of Shin in order to make sure that he pays some sort of tax. How does he know that Temasek wants only the cell-phone business, when the satellite and other interests under Shin’s umbrella are also attractive? This is what I call hitting a lot of birds with one stone for Temasek. Second, it’s odd to read Korn’s suggested amending of the law regarding tax exemptions as they relate to the proprietors of business. Per Korn’s proposal, proprietors once they list their companies with the exchange by giving up their 30-per cent interest must then forego tax exemption rights. Why doesn’t Korn put this idea in the Democrat manifesto and see whether the Bangkokians will favour his party in the next election? To persuade a proprietor to sell partially his profitable business to the public is hard enough already. This would be the quickest way to kill the SET. Songdej Praditsmanont Bangkok ------------------------------------------------- In the real world, people dodge taxes any way they can What is all the fuss over? We have to live in the real world. All businessmen the world over employ tax advisers to limit their exposure to payment of tax. If anyone is to blame it’s the lawmakers who wrote the legislation enabling stock-market gains to be exempt from tax. If the avoidance is legal then there can be no arguments. Do we really expect the rich to serve the poor? Dennis Harvey Bangkok ------------------------------------------------- Chirac’s dangerous nuclear comments deserve attention A few days ago France’s president, Jacques Chirac, threatened the use of nuclear weapons. His statements did not receive the media attention they truly deserve. Chirac warned leaders of “regional powers” that they could be targets of French nuclear missiles if they used “terrorist means against us” or if they were “to utilise, in one way or another, weapons of mass destruction”. These words are not only disturbing, they are terrifying, since they come from one of the five permanent members of the UN Security Council, all of which are in possession of nuclear weapons. This “exclusive club” – the United States of America, Great Britain, France, Russia and China – claim that only they are entitled to possess nuclear weapons. However, there is not a single document of international law that supports this presumed monopoly. On the contrary, the principle of equality of all UN member states is enshrined in the UN Charter, the basis of all international law. France deserves a strong condemnation from the international community. It should be forthcoming from the UN Security Council, but it is very unlikely that this will happen. The Big Five, including France, have the veto right. But there are alternatives, such as letting regional associations do it on their own. First and foremost the European Union and the European Parliament, of which France is a member. The voices of other regional associations could join this forum. The world cannot remain silent. Chirac’s statements undermine any effort to prevent the proliferation of nuclear weapons. He only encourages others, including terrorist organisations, to obtain the same weapons the Big Five already possess. France certainly can “wipe off the map” another country. Al-Qaeda cannot; not yet. Manfred Liebig Freiburg, Germany ------------------------------------------------- Restrictions on alcohol sales another knock to tourism It was with shock and amazement that I found myself standing in Tops in Hat Yai at 3pm on a Friday afternoon being refused to be allowed to purchase a bottle of wine. The clerk gestured towards a faint photocopy indicating some “new” hours for the sale of alcohol (as I understand, 11am to 2pm, 5pm to midnight, so no alcohol sales from 2pm to 5pm). I took this in my stride, thinking I would just have a few beers with lunch. No luck, as the restaurant was now following these new, archaic rules, too! As anyone living in or travelling through Hat Yai will tell you, tourist numbers are off due to the blundering of the Thaksin government’s handling of the unrest in the South. The number of visitors from Malaysia and Singapore is way down, and now the government’s efforts are [apparently intended] to dissuade visitors altogether. How will this affect foreigners in tourist areas like Phuket, Koh Samui, Phang Nga, Krabi and Pattaya? No alcohol from 2pm to 5pm? Bars closing at 1am? How will people travelling from countries with enlightened liquor laws react? Even countries with Victorian liquor laws like England have been relaxing them in this regard, realising that the more restrictive laws were encouraging binge drinking, and the exodus of people from the bars into the streets at the same time encouraged lawlessness and rowdy behaviour. Tourism has been suffering in Thailand for years from the ill effects of 9/11, Sars, the Balinese bombings, avian flu, the tsunami and the unrest in the South, and this is the government’s way of encouraging people to return? As other countries move to a more progressive approach to problem solving, we have Thaksin and his Big Brother attitude to help us. Small, regressive steps like these are the first backward steps towards dictatorship. John Morrisey Krabi ------------------------------------------------- A major beef with Thai-US free-trade negotiations I’ve just escaped from the US to Thailand to get away from things like beef tainted with bovine spongiform encelopathy (mad-cow disease), and now it’s to be imported to Thailand if the FTA passes. Yikes! Please, government of Thailand, say no to the FTA and America’s greed-fuelled corporatisation of food. It’s the only way to be sure Thailand’s supplies remain nutritious, plentiful, and cheap. And watch out for another US menace to public welfare, genetically modified seeds, or Thai farmers may find themselves paying for the privilege of fertilising their crops. America and the FTA: Good for big business – bad for people. Christy K Sweet Phuket Send us your views in an instant E-mail your opinion, with ‘Letters to the Editor’ in the subject box, to: letters@nationgroup.com
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