Representatives from the chamber pointed out yesterday that the government's hesitation and unclear policies had affected the Kingdom's economic growth.

Although currently maintaining its prediction of 4-4.5 per cent growth in Thailand's gross domestic product this year, the chamber will revise its forecast next month.

Chamber members called for the government to clarify its economic policies, in order to increase understanding among the business sector.

Other plans that the chamber have suggested are decreasing the policy interest rate immediately by 0.5-1 per cent, imposing baht-stabilisation measures and speeding up budget disbursement, in order to restore consumer confidence and promote investment growth.

Deputy secretary-general Dusit Nontanakorn said the government would find some SMEs going bankrupt in three to five months, due to the strengthening baht and unclear measures for remedying the export sector.

"Since SMEs have lower capital investment, they will be the first to die, because of many negative factors destroying their business," he said, adding that the impact would create a domino affect on other related businesses, including suppliers, manufacturers and farmers.

Negative factors include the baht's strengthening against competitors, a slow-down in domestic and foreign consumption, lower consumer confidence, drought and political uncertainty.

Vice chairman Pongsak Assakul said the government must clarify whether it will maintain the 30-per-cent currency-control measure. Government uncertainty only decreases the confidence of US dollar holders and leads to further appreciation of the baht.

He said that most exporters were facing a high fiscal burden, because they had to sell products at a lower price to keep their customers.

"Although January's exports grew significantly by 17.7 per cent, aggressive baht appreciation will soon lead to a drop in the total exports of the country," he said.

Pongsak added that the currency was too strong compared with that of Thailand's competitors.

The baht began strengthening more than other Asian currencies last year.

The baht appreciated 12.29 per cent against the dollar from January 2006 to last month. Over the same period, China's yuan gained 4 per cent against the dollar, Malaysia's ringgit 7.6 per cent and Vietnam's dong 4.6 per cent.

The baht appreciated against the dollar 14.5 per cent during the first half of this month.

Vice chairman Chatchai Bunyarat also expressed concern that many negative factors in the Kingdom would dampen Thailand's competitiveness. He said manufacturers and exporters relying on local content, such as farm goods, food and processed food, would suffer the most.

Weak economic polices will lead to more serious problems, including labour layoffs, a decrease in domestic consumption, high manufacturing costs and an overall economic slow-down, said Chatchai.

Petchanet Pratruangkrai

The Nation