'Temporary charter should further boost confidence'
July 24, 2014 00:00
By ERICH PARPART
THE FEDERATION of Thai Industries believes the temporary charter will further increase the confidence of domestic and foreign investors along with business operators, while the recent strengthening of the baht is still tolerable for the export industry as
The FTI also said yesterday that its Industries Sentiment Index (TISI) had increased by 4.4 points since April.
“The introduction of the provisional charter is in line with the political road map of the NCPO [National Council for Peace and Order] and I believe that in general, investors and operators will feel more relaxed and gain more confidence that things are going in accord with the NCPO’s plans for a new charter, the setting up of an interim government, and the possibility of an election in the future,” said Supant Mongkolsuthree, chairman of the FTI.
In his view, the country over the past two months has been “running on a smooth surface” since the NCPO took power, a move which has led to an increase in foreign investor confidence, certainty over public investment policy, and rising domestic consumption.
These factors will support the recovery and allow gross domestic product to expand by 2.5 per cent this year, he said.
The FTI had been projecting an economic recession before the arrival of the NCPO.
As for exports, Supant said: “The strengthening of the baht is related to the increased confidence of foreign investors, which has led to an inflow of foreign funds. This will have some effect on the export industry, but it is still acceptable for exporters since the currency’s strengthening pace is not too fast and the Bank of Thailand is still monitoring the situation.”
The export sector will be able to cope with a stronger baht if the rate does not fall below 30.50 per US dollar, he said.
Moreover, since the global economy is continuing to recover, the FTI is sticking with its export growth projection of 3.5-5 per cent for the year.
According to Bloomberg, the baht was valued at 31.76 per dollar yesterday.
The FTI chief pointed out that if the Kingdom’s export value were calculated in baht, it would already show 10-per-cent growth, year on year.
According to the central bank, export value in May came in at US$19.27 billion (Bt612.4 billion), which is 1.2 per cent lower than the same period last year in dollar terms.
Meanwhile, the TISI has increased for two months in a row. The index rose from 84.0 in April to 85.1 in May, and to 88.4 in June amidst calmer political waters, the economic recovery, the lifting of the curfew – and even Fifa World Cup fever, which led to an increase in overall production, orders and sale figures.
The overall TISI for orders, sales and production in all industries rose from 80.2, 79.6, 82.1 points in May to 84.3, 84.4, 87.9 points respectively in June.