Backing for stay of 30% rule

The issue of whether to lift the 30-per-cent withholding measure has been frequently raised in the past week. Although the Finance Ministry and Bank of Thailand held a meeting to discuss the issue last week, no conclusion was reached.

However, Finance Minister Surapong Suebwonglee said the decision would be made before his international road show in March or April.

Prasarn says it was not proper to revoke the measure now because it could strengthen the local currency.

The baht touched Bt32.50 yesterday before closing between Bt32.53 and Bt32.55.

"If the government revokes the 30-per-cent capital control neasure amid the gloomy US economic outlook, it could bring in foreign inflows and impact the baht. A stronger baht could hurt some exporters. The government should weigh the pros and cons before lifting the curbs," he said.

Prasarn said the money market needs clarity. Authorities should not confuse the market as it may increase speculation.

"On the foreign exchange management policy, the authorities should inform the market on strategy or concept only," he said, adding it does not need to reveal in detail actual figures or amounts to discourage speculation. He criticised the government's use of tax measures instead of currency controls as that would not improve the situation. It just moves the problem from one corner to another, he said.

Recently Pramon Sutivong, chairman of the Thai Chamber of Commerce, said the government should maintain the withholding measure to curb the baht's appreciation.

He said the currency could trade between 30 and 31 to the US dollar this year if the curbs are removed. But many businessmen and investors are strongly in favour of lifting the curbs.

Somruedi Banchongduang

The Nation