Exporters, overseas investors to be biggest beneficiaries

"Exporters will be among the first beneficiaries. Later on, these measures will benefit Thais planning to invest overseas," said Katiya Greigarn, chairman of the Electrical, Electronics and Allied Industrial Club under the Federation of Thai Industries (FTI).

Companies could expand abroad more easily with the relaxed forex rules, while exporters could hedge their currency risks more effectively, he said.

The new measures would help relieve the pressure that has been pushing the baht up, as capital flows would be better balanced, he said.

The electric and electronics industry expects its exports this quarter to improve by 15 per cent from about Bt300 billion a year earlier.

For the whole year, overseas shipments are forecast to grow 7-9 per cent from about Bt1.2 trillion last year.

Aat Pisanwanich, director of the University of the Thai Chamber of Commerce's International Trade Studies Centre, said the baht should be trading at 32.5-33 per dollar this year due to the new forex measures.

Earlier forecasts showed that the baht could appreciate to 31-32 per dollar by year-end due to the weakening dollar. Aat also called on the central bank to facilitate SMEs venturing into Asean markets.

Liberalised forex procedures should also attract more multinational firms to set up regional headquarters here instead of Singapore, he added.

Vallop Vitanakorn, secretary-general of the Thai Garment Manufacturers Association, said the baht should be less volatile, allowing garment exports to rise 14-15 per cent this year.

More garment-makers would be encouraged by the more flexible forex rules to locate overseas, particularly in Asean countries, because Thailand now has a shortage of labour, he said.

Kriengkrai Thiennukul, chairman of the FTI's Printing and Paper Packaging Industry Club, said a more stable baht will allow the industry to achieve its export target this year of 10-15 per cent over last year's US$1.5 billion (Bt50.4 billion).

The central bank's move will encourage the printing industry to seek new markets abroad.

The only problem was the fragile economic recovery in many export markets such as the US and Europe, so the brightest export prospects might be limited to only Asian countries, he said.

ML Thongmakut Thongyai, CEO of SCB Securities, agreed that smoother capital outflows would help deflate the baht while allowing Thai firms to invest abroad more conveniently.

Adisak Kammool, a vice president of KGI Securities, said it's a good policy in support of free trade but cautioned that some exporters might turn into currency speculators.

Vorapol Socatiyanurak, economists at the Graduate School of Business Administration National Institute of Development Administration (NIDA), welcomed the central bank's move, but warned private firms and investors that overseas investment is also associated with risks.

"There are risks out there such as credit and currency risks. I'm not sure whether Thai investors are well prepared. Therefore, money may not flow out as much as BOT expects " he said.

Sompop Manarugnsan, an economist at Chulalongkorn University, suggested Thai manufacturers invest more in neighbouring countries. Meanwhile, the government should improve diplomatic ties with those countries in order to facilitate investment, he suggested. He also warned that investment overseas may not be successful and pointed out bitter experience of Thai investors who expanded investment abroad before the 1997 financial crisis.