Baht's strength 'will assure capital inflow' in the second half
Capital inflows into Thailand will continue in the second half of this year, on the back of a reallocation of dollar-denominated asset holdings, according to a local financial expert.
"Foreign capital will still flow into the Thai stock market as foreign investors have lowered their holdings in dollar-denominated assets," said Kongkiat Opaswongkarn, chief executive of Asset Plus Securities and chairman of the Federal Thai Capital Markets Organisation.
Many pundits have blamed the sharp appreciation of the baht against the greenback on the capital influx from overseas. The baht has strengthened from about Bt40 to the dollar early this year to Bt37.55.
Yesterday baht closed at 37.51-Bt37.53.
Foreign investors poured $11.5 billion into the country during the first fourth months of the year, according to the Bank of Thailand (BOT).
Kongkiat said the baht's appreciation would continue for at least another three months and that the global oil price would range between $55 and $80 per barrel.
However, Kongkiat said the high oil price did not mean the economy would slow down. It will depend on how flexible the Thai economy is, he said. The global economy is growing at a rate of 5 per cent, the Thai economy at 4.5 per cent.
He said a number of global research houses had expressed concerns that Thailand could fall behind Vietnam within five years in many sectors if the Thai economy did not improve.
"It's not only one research house predicting it: many foresee the same thing if within five years we don't improve our economy. Then Vietnam is going to beat us for sure. Take a look at the rice-export figures: we're already losing out to Vietnam," Kongkiat said.
He pointed out that what Thailand needed to develop the most was a solid logistics system. That should be its main strategy to decrease operating costs for all industries, especially now that oil prices are so high, he said.
Separately, Finance Minister Thanong Bidaya said per-capita energy consumption in Thailand was 50 per cent higher than in developed countries. He too blamed the poor logistics system.
"The government's energy-saving plan is a temporary measure that helps people in the short term. People will need to learn to save and adjust to the situation themselves. I've asked the Fiscal Policy Office to study a financial plan to rectify the situation," Thanong said.