Voice of the Customer

TMCnet - The World's Largest Communications and Technology Community
New Coverage :  Asterisk  |  Call Center Outsourcing  |  Call Recording  |  SIP Trunking  |  Hosted Exchange  |  PBX
Webinars
Channels by Topic
Share
 
| More
RSS-XML alerts
Print this page
E-mail this page to a friend
Voice of the Customer Featured Article Archive

[December 20, 2006]

Thailand finance: Capital-controls reversal - UPDATE

(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY BRIEFING

FROM THE ECONOMIST INTELLIGENCE UNIT

In an abrupt and embarrassing about-face, Thailand's government has partially reversed the capital controls introduced only a day earlier by the Bank of Thailand (BOT, the central bank). The original measures had been intended to stem the rapid appreciation of the baht, but they caused chaos in the equity market as Bangkok's SET index plunged almost 15% on December 19th. The revised measures now exempt investments in stocks, but the fiasco has damaged the credibility of the military-backed government. The episode will add to concerns about the predictability of Thailand's investment environment given the political and policy uncertainty that has emerged as a result of the September 19th coup.

The BOT first announced new anti-speculation measures on December 18th, the same day the baht temporarily reached a nine-year high of Bt35.12:US$1. The Thai currency has appreciated by over 16% against the US dollar since the start of 2006, raising concerns about the ability of the country's export sector to remain competitive, particularly when the currencies of key rival exporting countries in the region (most notably China) have not appreciated by nearly as much.

The original version of the measures required financial institutions to deposit 30% of foreign-currency inflows into Thailand in interest-free accounts with the BOT. Although the government's U-turn now means that the restrictions no longer apply to investments in the stockmarket, investments in bonds will still be affected. Investors bringing foreign currency into the country to buy debt instruments will have to leave 30% of that money with the central bank for one year, or face an early-withdrawal penalty that will mean getting back only two-thirds of the amount withheld. As before, financial inflows related to trade and services are exempt, as are inflows of money by Thai residents repatriating overseas investments.

As was also the case before the Thai authorities' change of heart, FDI inflows are in principle exempt from the reserve requirements. The 30% deposits can be refunded to investors once the inflows are proven to be genuine FDI (rather than, presumably, short-term speculative capital inflows, which the new measures aim to deter).

Even before the market chaos on December 19th, the BOT's new measures would have done little to reassure foreign investors about the wisdom of putting their money in Thailand, particularly given other current issues of concern. This is still the case now. Bond-market investors, in essence, are being asked to trust that the investment climate will remain stable for the entire year in which they are obliged to keep their money in the country--all this at a time when Thailand faces intense political uncertainty as a result of the coup. Although the military has promised to return power to an elected government by late 2007, there is no guarantee that this will happen. Any sign of slippage on the deadline for the restoration of democracy could unnerve foreign investors and prompt capital outflows--with resultant losses for investors who repatriate funds earlier than stipulated in the BOT's measures.

Nor are other signs wholly encouraging. The military-appointed prime minister, Surayud Chulanont, a retired general, has stated that his administration will focus on a "sufficiency" philosophy in managing the economy. This is an effort to distance the new government from what were widely perceived to be the excesses of the gung-ho, pro-growth approach of the ousted previous premier, Thaksin Shinawatra. But the term "sufficiency" will be disconcerting to some just for its echoes of crackpot isolationism--even though economic policy, in truth, looks set to remain fairly sensible under the new regime. Certainly, the interim administration in recent weeks has sought to reassure investors that its "sufficiency" concept does not preclude the upholding of market principles in managing the economy, but instead focuses on good governance as a means of regulating the market economy.

Concerns will nevertheless remain. In particular, foreign companies anxious to protect their investments in Thailand will be keeping a close eye on upcoming changes to the Foreign Business Act. Public outcry over the sale by Thaksin's family of Shin Corp, a telecoms conglomerate, to Singapore's Temasek provided the catalyst for the military coup, and in the aftermath of that the issue of foreign ownership has received great scrutiny. If changes to the act alter the definition of foreign ownership or substantially change foreign shareholding limits, it could spell trouble for the thousands of foreign companies that have invested in Thai firms through nominee Thai shareholders. Overall, in the wake of the Shin Corp episode (and the anti-Thaksin protests it sparked), attitudes to foreign firms have become less welcoming. Foreign retailers in Thailand have also faced a backlash.

Therefore, although the authorities are worrying right now about the amount of foreign money coming into the country, if further policy misjudgements occur they could well have an exodus to contend with.

SOURCE: ViewsWire

Copyright 2006 Economist Intelligence Unit

[ Back To Voice of the Customer Community's Homepage ]
› Return to Voice of the Customer Home

FOLLOW US

FREE Voice of the Customer eNewsletter

Subscribe Now

Featured White Papers

  • Seven Best Practices for Speech Analytics: Speech analytics is valuable for identifying issues in the contact center. However, limiting its use to the contact center only considers a portion of all customer interactions and subsequently only reveals a small part of the voice of the customer. This paper discusses how organizations can optimize their Speech Analytics implementation strategy to realize the promise of this exciting technology.
  • Understanding the Voice of the Customer: Today's contact centers involve a sea of information that must be captured, processed, and distributed on a daily basis. Effective use of this information enables companies to remain competitive in an increasingly aggressive and customer centric marketplace. An overwhelming percentage of the information that circulates in a contact center's audio recordings, documents, web pages, and emails is unstructured in that it resides outside of a normal structured database and cannot be managed efficiently. These unstructured items contain valuable information, yet this information historically has been difficult to organize, categorize, and access.
View All ›

Case Studies

  • Aflac: Aflac, the leading provider of guaranteed-renewable insurance turned to Autonomy to help them automate the process of monitoring their contact center agent for quality and compliance. The company now has a system that can offer continued improvement in agent quality and productivity while enhancing the customer experience. ...
  • Avaya: Avaya, a global leader in business communications, inherited 880 websites as well as numerous intranets and extranets when it was spun off from Lucent Technologies. The sheer volume and diversity of the sites and the over 500 content creators resulted in inefficient content distribution rife with divergent branding, messaging, and product information. ...
View All ›

Video Showcase

    Interview with Autonomy: Rich Tehrani interviews Simon Hayhurst, SVP of Autonomy

Featured Events

  • Multichannel Analytics with Autonomy Explore: In today's world of constant connectivity there are a variety of direct and indirect channels of communication between an enterprise (or a brand) and its customers. 80% of these valuable interactions are generated in a human-friendly, unstructured format across multiple touchpoints and channels. With this ever growing mountain of information how do you extract the emerging trends and topics of interest to the enterprise? ...
  • SES Chicago 2011: Marketers and SEO professionals attend SES Chicago each year to network and learn about topics such as PPC management, keyword research, SEO, social media, local, mobile, link building, duplicate content, multiple site issues, video optimization, site optimization, usability and more. The conference offers 70+ sessions, intensive training workshops, and an expo floor packed with companies that can help you grow your business. While you're at it, network with peers and leading industry vendors. Programmed by the SES advisory board, you can be assured - SES content really is king! ...
View All ›
 
Share
 
| More
RSS-XML alerts
Print this page
E-mail this page to a friend