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Published on August 2, 2007

Boonchai Chokwatana, president of major export conglomerate Sahapathanapibul, criticised the measures launched recently by the Bank of Thailand (BOT) for not effectively solving the currency problems.

"The measures announced recently by the BOT are not effective so far. They are like aspirin. They are not a medicine able to treat the disease directly," he said.

Sahapathanapibul is a major trading arm of the Saha Group, one of Thailand's largest manufacturers. Almost 30 per cent of its revenue comes from exports.

"In my view, the [people at the] BOT need to open their minds to the comments and solution ideas expressed by the private sector, as well as by academics, who are dealing with and have direct experiences from the currency problem," he said.

Boonchai said the BOT should accept there had been a strong attack on the baht, causing the currency to appreciate over a short period.

"We should have a strong message for attackers who hit our currency, that we will not allow our currency to be appreciated further and any measures [necessary] will be launched to serve this clear message," Boonchai said.

He added that the BOT should increase the supply of baht in the market by collecting US dollars into national reserve funds as well as investing dollars in investment projects.

"For major exporters, a baht depreciation to about Bt38 against the US dollar would be more favourable. However, if the government mismanages the problem, the baht may further appreciate to Bt30 against the dollar and that will cause the country to face a very tough crisis in the near future," Boonchai said.

Sahapathanapibul's sales fell 5 per cent short of their target in the first six months of this year.

"We have set a target to grow our sales by 12 per cent this year, which is lower than the 15-per-cent growth targeted last year," Boonchai said.

The company achieved sales of Bt16.4 billion last year and the figure is expected to rise by another Bt1 billion this year.

Boonyarit Mahamontri, managing director of Lion Corporation (Thailand), which manufactures personal-care and household products, said the government should listen to the private sector, which is able to see the problem realistically.

"The private sector is a primary indicator of the economic situation and its related problems. The [need for a] quick response from the government against the problem is quite significant," he said.

"I personally don't mind if the baht is Bt30 or Bt38 against the US dollar. But they must not [let it be] stronger than other currencies in the region, so that we [local manufacturers] are able to maintain our competitiveness."

Lion Corporation is expected to achieve sales of Bt8 billion this year, up from Bt7 billion last year. About Bt700 million, or 10 per cent, of its sales come from exports.

"We [local producers] should not be setting up benchmarks among ourselves, but against multinational players so that we can compete in the international arena," Boonyarit said, adding that local firms should move from vertical or professional-oriented companies to cross-functional organisations, allowing them to make quicker responses to change.

Chairman of the Federation of Thai Industries' (FTI) Gem and Jewellery Club, Doonkij Jitngamplang, said this would be the first year that the gem and jewellery industry would not record positive growth, largely because of the strength of the baht.

"The government should have acted faster than they did, because the baht is affecting exporters already. The authorities should have reacted when the baht was 37 to the dollar, but the measures were introduced when the baht reached 33 to the dollar."

Chairman of the FTI's Food Industry Club, Paiboon Ponsuwanna, said the increasing strength of the baht had adversely affected food exports.

He likened the situation to the government's undertaking to double tax allowances for companies that invest in research and development.

"The government should instead be acting as a leader to promote research and development in the industry," he said.

Chairman of the FTI's Automotive Industry Club, Phaibool Poocharoen, said exporters were now barely making any profit because of the rising cost of raw materials and the baht's appreciation. Some have been forced to increase domestic prices to spread the risk of higher production costs.

Kwanchai Rungfapaisarn

Chalida Ekvitthayavechnukul

The Nation