Industries in favour of devaluing baht to push exports

Federation of Thai Industries (FTI) chairman Santi Vilassakdanont has expressed support for Finance Minister Suchart Thadathamrongvech's idea of keeping the baht undervalued by 5 per cent to give exporters a competitive advantage amid next year's expected global economic slowdown.

"Our exports are predicted to fall in the coming year, as future orders in many industries are giving signals that are not so good. The lower demand the market has, the tougher the competition will be," he said.

However, Bank of Thailand (BOT) Governor Tarisa Watanagase has rejected the idea. She said it was difficult to fix the value of a currency in the present environment. As well, the central bank's main policy target was controlling inflation rather than the baht's exchange rate.

Santi took issue with the central bank governor.

"The central bank may think this policy is not necessary, but if we are to consider our members' performance, it should undervalue the baht by 5-10 per cent, in order to maintain exporters' confidence," he said.

An FTI survey of most Thai industries, including steel, electronics and electrical appliances and ceramics, have slashed their expected export growth from 15-20 per cent to less than 5 per cent.

Moreover, many industrial sectors, such as cement, metal, machinery and furniture, are downbeat about their performance in the present quarter.

Meanwhile, the FTI's monthly survey has found that manufacturers' confidence was 81.1 points last month, from 83 in August.

Vice chairman Adisak Rohitasune said confidence was hit by the government's announcement of a state of emergency on September 2 and then by the crash of financial institutes in the US.

"Confidence normally increases in September, because of future orders for year-end festivals. However, most manufacturers remain optimistic the situation will improve over the next three months," he said.

Most manufacturers reported positive effects on their production and transportation costs last month following reductions in the oil price.

They said the country's political turmoil should be ended as soon as possible and that the BOT should curb the baht's value at 33-35 to the US dollar.