The Bank of Thailand is accelerating its master plan on capital movement, and expects the first phase of the plan to be completed by the third quarter of the year.
Completion of the first phase had previously been expected by early this year. Pongpen Ruengvirayudh, BOT deputy governor, cited more discussion with relevant agencies and the requirement for the Ministry of Finance’s announcements on some issues for the delay.
“The caretaker finance minister cannot sign the announcements. However, the first phase will likely be complete and all announcements will likely be declared by the third quarter of this year,” she said.
The first phase will include additional relaxation for listed companies’ direct overseas investment without intermediaries. Since 2012, the central bank has allowed eight types of investors, including the Government Pension Fund, the Social Security Office, insurance companies and provident funds, to make such investments.
Investment in foreign current deposit accounts is also being adjusted. Pongpen said the changes would allow investors to manage foreign-currency liquidity more efficiently and add alternatives for foreign-currency hedges.
The BOT has also been assessing aspects of the first phase of the master plan that have already been implemented. These include relaxation on direct overseas investment of juristic persons through abolition of the US$100-million investment ceiling, and permission for Thai investors to unwind hedging.
Extension of the limit was also made for local financial institutions to lend or borrow baht with foreign investors or non-residents. The new limit is Bt500 million per non-resident per financial institution.
Pongpen explained that it was relatively difficult to make the assessments as they involved situations that were now unusual in the country and abroad. The fact that overseas investment has declined did not mean there was no benefit from central bank’s relaxed restrictions, but due to global financial and economic situations.
“The [local] political problem is also a significant factor for decision-making on overseas investment. Previously, the BOT expected businesses’ direct overseas investment to rise consistently. However, the figure is down, mainly because of the local situation. Many issues are related to the government. The central bank has to work with several units to drive measures.”
The second phase of the master plan has been made in parallel with the first phase, she explained, noting, however, the second phase was expected late this year after the first phase had been clearly assessed.