Amid a clamour of support for the government's attempts to limit further appreciation of the baht, businessmen from the Thai Chamber of Commerce yesterday warned that the country's export growth next year may drop to single-digit figures if the currency continued to strengthen.

While supporting the Bank of Thailand's moves to control the baht's appreciation, as well as the subsequent move to roll back the stringent measures to improve the situation in the capital market, the chamber urged the government to go further, or the export sector - the engine behind the country's economic growth - may lose its price competitiveness.

It said that if the baht grows stronger than 35 to the US dollar, the country's export growth will range between 7 per cent and 9 per cent. However, if the baht is stabilised at an exchange rate weaker than 36 to the dollar, exports growth could be between 9 per cent and 11.5 per cent.

The chamber predicted economic growth next year of 4 per cent to 5 per cent, but based the forecast on a baht value of 36.30 to the US dollar.

The cries for stronger currency controls came as the Commerce Ministry reported that Thailand recorded a trade surplus of US$2.18 billion in the first 11 months of this year. At yesterday's exchange rate, the surplus amounts to Bt79.59 billion. This follows trade surpluses of $1.74 billion last month and $810.4 million in October, which was the highest monthly surplus in six years.

The figures prompted the ministry to give a reassurance that this year's target of 17.5 per cent export growth, to reach a value of $130 billion, should be achieved. It said the country may enjoy a trade surplus of as much as $3 billion for the whole year.

Export Promotion Department director-general Rachane Potjanasuntorn said the country recorded 17.2-per-cent export growth to $118.9 billion in the first 11 months of this year, while imports grew by 7.5 per cent to $116.8 billion.

The Thai Chamber of Commerce held a press conference yesterday to lend support to the government's measures to curb the soaring baht. Chamber members said the government was on the right track and should adopt "any measure" to help the country's export sector.

The heads of various industry groups within the chamber urged more restrictions to control currency speculation. Secretary-general Dusit Nontanakorn pointed out that the strengthening baht was not a reflection of a healthy economy, as some investors believed.

Deputy secretary-general Pornsilp Patcharintanakul said Thailand's currency should be controlled to a point where it holds a similar level to others in Asia.

While the baht has jumped by 13.3 per cent, China's Yuan value has increased by only 3.1 per cent, Vietnam's dong by 0.9 per cent, Malaysia's ringgit by 5.4 per cent and Indonesia's rupiah by 7 per cent.

Had the baht stayed with the rest and strengthened by only 7 per cent, it would now be ranging between 37 and 38 to the dollar.

The chamber's vice chairman and president of the Textile Industry Association, Pongsak Assakul, said textile exporters will face flat growth next year, or a value of only $7 billion.

Chairman of the chamber's Gems and Jewellery Business Club, Vichai Assarasakorn, said jewellery exports grew 30.27 per cent to $1.5 billion in the first five months this year, but growth fell to 15.57 per over the first 10 months to $3.02 billion as the baht grew stronger.

Thai Shrimp Association president Somsak Paneetatyasai said farmers and agricultural exporters will be hurt most by the baht's appreciation because they export only local content. The stronger baht means a drop in income as well as faltering competitiveness. However, despite the currency situation, the association predicts that shrimp exports will grow by 20 per cent to Bt100 billion next year.

Rice Exporters' Association representative Sumeth Laomoraphorn said the government's measures to control speculation and weaken the value of the baht are not enough to stop the currency's rising value. He urged new measures to prevent problems with speculation and short-term investment.

Tapioca Exporters' Association president Sukit Wanglee said tapioca farmers may shift to grow other kinds of crops if the baht remains stronger than other currencies because their income is dropping despite world demand.

Despite the strength of the baht, the Commerce Ministry will attempt to drive exports to achieve growth of 10 per cent to 12.5 per cent to $145 billion next year.

Petchanet Pratruangkrai

The Nation