Confidence in the Thai Economy?

[elef]

Their theory is that because of the low valuation on the stock market of thai companies a lot of money moved to Thailand and made the baht too strong. IMO it's just the USD which is weak so they don't even can identify the real problem.

 

Now the 30 % restriction on payments over 7 million baht (200,000 USD) is away from stock market investments, but not for buying condos. Buying houses is also OK but you can't form a company, so either elite card, BoI or thai wifes must be involved.

 

On the other I know there're discussions in the thai government to allow foreign ownership of 100 % in thai companies also, but just through BoI.

 

The thai baht is now weak but probably as a result of market operations. The thai government has lost credibility and either the finance minister or BoT governor must resign - or both. It's rumoured that the finance minister is the one to be sacrificed.

[Gadfly]

The title of this thread is "confidence in the Thai economy". I think the following from the lead article in Bloomberg sums it up well:

 

`Incompetent' Decision

 

``I simply don't believe a central bank in the region would make a decision like this independently,'' said Julian Jessop, an economist at Capital Economics Ltd. in London. ``This is about as incompetent as it gets.''

 

The central bank underestimated the impact of restrictions on equities because ``they did it without talking to us,'' Thirachai Phuvanatnaranubala, the head of Thailand's Securities and Exchange Commission said yesterday. Thirachai is a former deputy governor of the central bank.

 

Meanwhile, the person who made this decision:

Bank of Thailand Governor Tarisa Watanagase defended measures to control the appreciation of the baht that wiped $23 billion from the value of Thai stocks, and said the rules will be removed once ``volatility'' eases.

 

``As soon as the volatility reduces, we will lift the requirement,'' Tarisa said in an interview in Bangkok today.

Lead Article on Bloomberg Site Today

 

One article today (either the Bangkok Post or The Nation) reports that she was on holiday the day after issuing the edict and the market crashed. No one could reach her. Amazing Thailand.

[dddave]

Foreign investor and nominee regulations are stuck in limbo because the interpretations of these rules by the judiciary are at the heart of the current governments attempts to force Thaksin's kids to pay taxes on the Shin sale.

The government is really stuck in the mud on this issue not only because Thaksin still has a lot of backroom pull, but also because if they call back the Shin deal, the government of Singapore is going to be mightly pissed-off and that could cost the Thais big time.

[Gadfly]

Thailand's Board of Trade is supposed to issue proposed changes to the Alien Business Law on 27 December. The proposed changes will be submitted to the legislative assembly for adoption.

 

The foreign chambers have heard that they intend to change the definition of an alien so that it now includes voting control. Because the currrent definition of an alien pointedly does not include or even mention voting control and the because the Council of State and Ministry of Commerce previously said that alien status is not based on voting control, the Board of Trade must propose a change of the law. Further, the changed law will be applied retroactively to exisiting businesses.

 

The government sent up a trial ballon by saying it is not really retroactive because businesses will have 6-12 months to change their structure. The foreign chambers and embassies and the EU are not buying this spin.

 

If the proposal the Board of Trade is currently considering is adopted, it will be a compulsory divesture. This is essentially the same as government expropriation, which triggers all sorts of problems under bilateral investment treaties and WTO. And this is why they are trying to say this is not retroactive.

 

No one is buying this. And if they do this on the heels of the BOT fiasco, it will attract serious and very negative attention in the business press. This will seriously chill investment in Thailand and the Thai economy will suffer.

 

I don't know how seriously the Thai economy will suffer. And I don't know if they will adopt the proposed changes (or hesitate because of all of the attention Thailand is now getting because of the BOT's blunder) or if calmer heads - who are genuinely concerned about Thailand's future - will prevail. But it will be interesting show.

[jitagawn]

Gadfly-

 

Thanks for your imput ..really. Its classic they clearly make a riculous choice of directions yet take zero responsibility and put the blame elsewhere(on people looking out for themselves.)

Looking brooadly I think what may be going on here is the coup gov does not have enough control over this arena or its just avarice-plain and simple avarice...

[chuckwoww]

Foreign investor and nominee regulations are stuck in limbo because the interpretations of these rules by the judiciary are at the heart of the current governments attempts to force Thaksin's kids to pay taxes on the Shin sale.

The government is really stuck in the mud on this issue not only because Thaksin still has a lot of backroom pull, but also because if they call back the Shin deal, the government of Singapore is going to be mightly pissed-off and that could cost the Thais big time.

 

Good thinking dddave. It all comes back to Thaksin and the Shin deal. He sold a Thai company to Singapore and fiddled his taxes. Naughty, naughty. Business is done that way in the West every day. Now the people who run Thailand have a headache trying to come to terms with it.

[vegasdave49]

Well once again LOS comes through. Money will go where it can make money. I am sure there where some insiders (read that Thai hi-so's) that were well aware of the pending regulation, and I am sure they made a tidy sum shorting the market. Then they turned it around and made money on the way up.

Again it is just this kind of "Thai way" of doing things that will assure that LOS remains a comfortable but still developing country for years to come. On a personal note as one who likes to go there and not spend a lot of money this is all nothing but good news.

[Gadfly]

There is an article in the Bangkok Post where the Japanese community describe the capital controls - the revised more 'investor friendly version - as more concerning than the coup. The Japanese are the biggest investors in Thailand, and they say these new regulations are deterring new investments.

 

More bad news on the Alien Business Law. The latest unofficial report is that retroactive changes to the law will be enacted. These changes will make companies that are now absolutely legal absolutely illegal. It is a change in the law, and it is a retroactive change. This is essentially an expropriation of foreign assets.

 

A Europeon diplomat estimates about 14,000+ companies will be affected. There is a lot of spin on the government's side about how they present the new laws - they are trying to say it is really a liberalization - and they are being coy. But once the official announcement is available, that won't work.

 

Following on the heels of the BOT blunder - which the BOT still has not completely backed-off or even clarified - this is going to make Thailand look starkly anti-foreign investment.

[AF16]

So in other words, If I were to transfer some money this comming summer and want to buy a house I'm basically out of luck?

[shygye]

I don't think the USA, EU, Japan, Australia, etc. are going to take this. Just like when Thaksin tried to change the foreign ownership in cell phone companies, a quiet word from the USA got that squashed.