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Published on July 25, 2007

The measures, which will be supervised by the Bank of Thailand, were introduced by the government to ease the pressure on the baht, which closed yesterday at 33.62 to the dollar, slightly depreciating in response to the announcement of the measures.

Deputy Prime Minister Kosit Panpiemras said the government was working on several options to effectively manage the baht to a proper level and help exporters who have been adversely affected by its rise. For instance, the government will accelerate tax refunds for exporters, encourage state enterprises to service foreign debts ahead of schedule and set up a fund for small and medium-sized industries. "We hope that our measures will be effective in dealing with the baht," he said.

In addition, listed firms on the stock exchange can purchase foreign currencies for foreign direct investment up to an amount of US$100 million (Bt3.37 billion) per year. Resident corporations and individuals in Thailand can deposit foreign currencies.

The requirements for transferring money overseas were relaxed. Thai residents or corporate entities which have revenues in foreign currencies can have more flexibility to give trade credits to clients overseas because the requirement for Thais to bring the proceeds to Thailand has been expanded from within 120 days to 360 days.

 

 

 

The Cabinet has also abolished the condition that Thai residents who receive foreign currency must sell or deposit the proceeds with financial institutions in Thailand within 15 days and has also adjusted the conditions for institutional investors to invest in foreign securities.

Asked whether the government wanted the baht to weaken to 35 or 36 to the dollar, Kosit said the currency had become stable recently but it could change over time.

"We will try to manage the baht's exchange rate by allowing it to move along with other regional currencies and ensure that it would not appreciate faster," said Kosit.

Kosit said the Bank of Thailand and commercial banks would also set up a Bt5-billion fund to assist small and medium-sized firms hit by the stronger baht. The creation of the fund will be completed by the end of this month, he said.

"We have thought through the measures thoroughly and we believe they will be effective," Kosit added.

Finance Minister Chalongphob Sussangkarn said the ministry would accelerate tax refunds for exporters as a way to assist them.

Meanwhile, Pongpanu Svetarundra, director-general of the Public Debt Management Office, said the Finance Ministry had asked government agencies and state enterprises to service their foreign-debt payments ahead of schedule in order to take advantage of the stronger baht and lessen the baht's appreciation against the dollar.

Total outstanding foreign debt is $8.78 billion and could be swapped to baht loans or be paid ahead of the debt-repayment schedule, he said.

He estimated that government and state enterprises could proceed to accelerate the repayment of foreign debts worth $3.18 billion ahead of schedule. These debts include government direct loans from the Japan Bank for International Cooperation of $690 million.

State-enterprise debts include the Mass Rapid Transit Authority of Thailand's debts worth $1.27 billion, Airports of Thailand's debts of $546 million, State Railway of Thailand's loans of $235 million, Thai Airways International's debts of $264 million, TOT's loans of $99 million and the Provincial Electricity Authority's debts of $75 million.

The Office will ask the Cabinet to give MRTA Bt1.2 billion for interest-rate costs, resulting from debt management.

The Finance Ministry also urged state enterprises that have to repay foreign debt within a year to buy dollars now and estimated that one-year term loans amount to about $756 million.

Wichit Chaitrong

The Nation