May 2, 2013, at 0950hrs, Mr. Payungsak Chartsutipol, President of the Federation of Thai Industries (FTI) led the FTI delegation to pay a courtesy call on PM Yingluck Shinawatra at the Purple Room, Thai Khu Fah Building, Government House, to propose measures to tackle Baht value problem.
According to the FTI President, at present there was a sign suggesting domestic Baht speculation since Baht value had quickly been stronger than other currencies within the region which had affected domestic supply chain. This resulted in the exporters turning to foreign supply chain which in turn affected domestic industries. Thus, FTI proposed the following solutions to Baht value problem:
1. An exchange rate management for crisis is to be arranged 2. Change of policy from inflating targeting to exchange rate’s integrated care policy to tackle the country’s economic problem 3. Immediately decrease policy interest rate by 1% 4. Use Capital control policy to forbid investment capital from flowing out of the country for at least 3-month term. If baht value uncertainty is still not solved, duration should be further expanded to 6-month term, and 5. Improve the Bank of Thailand’s policy on the issuance of government bonds.
PM Yingluck, then, thanked the private sector for their concern and proposal of the measures to curb Baht value problem. She stated that economic problem solution must be done in the big picture together with the financial and fiscal policies. The Government had attempted to decrease production cost particularly for SMEs entrepreneurs in order to motivate the competition. Fiscal policy was to be designed in various formats to emphasize domestic Baht spending in investments, for example, the investment in the 2 trillion projects and other Government-invested projects.
PM Yingluck also mentioned that Baht appreciation, as well as currency fluctuation, had resulted in higher production cost for entrepreneurs. The Government now concerned with the domestic capital investment from foreign investors as it would like to encourage fluidity through domestic investment in new industrial sectors rather than investment in bonds. Nevertheless, this issue had already been discussed between the Government and concerned agencies. The Government would take into consideration the proposal from FTI, and assigned related agencies, such as the Bank of Thailand, and the Ministry of Finance to further collaborate on the matter.