FTI: Private sector wants baht reined in
Published: 25 Apr 2013 at 00.00Newspaper section: Business
The private sector is urging the Bank of Thailand to address the baht appreciation with strong remedies including capital controls and an immediate one-percentage-point cut in the overnight rate.
But what good is that going to do, because the rate is not the cause of the speculative escalation of the baht value. The currency investors are not seeking the interest, they are seeking short-term foreign exchange gains. The interest rates of Thailand are no different from other countries’, but their currencies are not rising.
The baht shortage is due to the government over- spending that is non-productive and keeping the baht in non-accessible domains such as
Corruption, foreign bank accounts waiting to be laundered
Foreign companies that provide the services for the government’s mega-projects
In idle funds, such as in projects that will not be materialized to be financially productive for a long time to come if it ever becomes successful.
So fighting the world market is futile. The market is reacting to the opportunity to make profit which is the rule of successful business. The opportunity is provided by us. So fix us, fix what are wrong with us, not the world!
And the key word of solving this problem is the capital control by preservation not destruction.
Destruction is to pass the measures that block the influx of the capital which will increase more capital deficit and will result in more valuation of the baht.
Preservation is the answer and it is to
Utilize the influx in productive ways such as offering IPOs on Privatized government runnel businesses and industries
Stop bickering, and both BoT and government start working together co-operatively
Stop government‘s over-spending, it drains the baht off the markets for the reasons mentioned above. Government is not an investment firm. The word investment sounds good but investment itself is very risky.No good government should risk the public fund in any shape or form. In US new investments fail 55% in 5 years and 71% in 10 years.
Unbalanced Experience or Lack of Managerial Experience
Lack of Experiences in line of goods or services
Neglect, fraud, disaster
And our government possesses all those poor qualities
This is the first time I agree with the Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong not to cut the policy rate to curb the baht's rapid strength. He said, "Haven't we learned anything from trying to block fund inflows by using the baht [to buy US dollars]?" He was referring to 1997, when the central bank fought a losing battle defending the currency. But I like to add that
Not cut the policy’s rate but cut the policy on mega-projects!
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