Potential Layoffs If Thai Baht Touches Bt27/ U S Dollar: Survey

[Mudcrab]

It'll certainly hit westerners that are on a pension. With nothing getting cheaper, only more expensive, and the baht getting stronger I know of 6 retirees that have already left for Phil.

With most walking out the door, exports being hit etc I wonder how much longer the Government will hold out before taking action - if they are capable of such a thing.

Yeah -don't forget if you live here your U.K. pension is in a time warp until you return, I have a mate down country that get 88 pound a week, and had this ammount for 10 years, now you can understand many are struggling--when my friend returns to U.K. expected to get 110-120 pound PLUS all the benefits that go with it in U,K,... people here are SAVING the U.k. government money.---all to return it would cost the government a bomb to pay out.--

Yes..and no. When they are in the UK the pension they get is recycled into the local economy. When they are in Thailand it does not.

[hellodolly]

The Baht isn't appreciating it is still about the same against currencies that are not dropping like the OZ and NZ dollar.

It is only the drop in US, Jap and Euro currencies that make it look like it is going up..

That of course doesn't help those who are exporting to countries whose currencies have dropped or tourists and expats on fixed incomes from those countries.

Nonsense, go to oanda.com and have a look at how the Oz dollar has dropped against the baht since January

Jeez and I thought my Canadian $ was doing bad.

There is no getting around it the Baht is definatly stronger.

Suffinator

Where is Phil.

Edited April 24, 2013 by hellodolly

[NeverSure]

It would appear intervention was started this afternoon: http://www.xe.com/currencycharts/?from=USD&to=THB&view=1D

Thailand can't win this currency war at the moment. Next we're going to see the ECB once again lower interest rates to keep the value of the Euro down. Link

This declining of Western currencies is deliberate. It isn't the baht rising, it's Western countries and China deliberately lowering the value of their currencies.

It's about stimulating the economies. Expensive currencies make exports more expensive in any country. Thailand has just now seen that, but they are too late to the party. They no longer have any real control over the baht that wouldn't crash the economy.

Thailand is going to lose this one. They can't win this race to the bottom being conducted by the major powers' currencies. Thailand has been proud of its strong baht, being blind as usual (see rice scheme which destroyed Thailand's rice exports) and thinking it is somehow "entitled" to be a major growth center while all the time setting itself up for a fall. (Again, see rice scheme scam for a sense of entitlement which failed.)

Thailand's mentality of the rice scam, the new minimum wage, and the strong baht are all based on a false sense of entitlement. No one else thinks that Thailand is somehow entitled to growth and prosperity. Just the opposite, the sharks in the water want to take the business away from Thailand. It's a competitive world but Thailand is operating on this sense of entitlement instead of having policies which will make its exports and manufacturing competitive. Again, the new minimum wage and strong baht will combine to kill Thailand's growth.

Vietnam, Cambodia and Laos will be happy to be the new manufacturing centers, without the costs to manufacturers of Thailand's new minimum wage, or the unrealistic strong currencies.

Thailand has peaked.

Edited April 24, 2013 by NeverSure

[metisdead]

Off topic posts and replies have been removed, this isn't about ATM fees.

Another post using overly large fonts within a quoted post has been removed. Use normal font when posting, thanks.

[hellodolly]

It would appear intervention was started this afternoon: http://www.xe.com/currencycharts/?from=USD&to=THB&view=1D

Thailand can't win this currency war at the moment. Next we're going to see the ECB once again lower interest rates to keep the value of the Euro down. Link

This declining of Western currencies is deliberate. It isn't the baht rising, it's Western countries and China deliberately lowering the value of their currencies.

It's about stimulating the economies. Expensive currencies make exports more expensive in any country. Thailand has just now seen that, but they are too late to the party. They no longer have any real control over the baht that wouldn't crash the economy.

Thailand is going to lose this one. They can't win this race to the bottom being conducted by the major powers' currencies. Thailand has been proud of its strong baht, being blind as usual (see rice scheme which destroyed Thailand's rice exports) and thinking it is somehow "entitled" to be a major growth center while all the time setting itself up for a fall. (Again, see rice scheme scam for a sense of entitlement which failed.)

Thailand's mentality of the rice scam, the new minimum wage, and the strong baht are all based on a false sense of entitlement. No one else thinks that Thailand is somehow entitled to growth and prosperity. Just the opposite, the sharks in the water want to take the business away from Thailand. It's a competitive world but Thailand is operating on this sense of entitlement instead of having policies which will make its exports and manufacturing competitive. Again, the new minimum wage and strong baht will combine to kill Thailand's growth.

Vietnam, Cambodia and Laos will be happy to be the new manufacturing centers, without the costs to manufacturers of Thailand's new minimum wage, or the unrealistic strong currencies.

Thailand has peaked.

I don't think Cambodia and Laos have a chance against Thailand. Lao is land locked and neither one of them has any thing near the infrastructure it would take for big time manufacturing.

[somtampet]

If this trend continues there will be a mass rethink from westerners about staying on here. I know of a multitude that have gone for much cheaper accomodation, to keep the same living standards on spending.

Western holiday makers will stay for less days here, many now instead of a month have now dropped down to 14 days.

I am aware that there are many ways of bringing orgetting money changed, why not help others by dropping the charges down for ATM visa transactions.

There are thousands who cannot just go home-- because of money tied up in house- business-car-condo. and some are getting desperate.

Easy to say people should have made better plans, but if you have been here a long time plans are not always easliy to deal with.

Brits dont come here in great numbers compared to russians,arabs etc etc.I dont know of 1000,s who want to go home,i dont know even 10.All my friends who come for between 1 month and 5 months still come,but pick their places better

[Publicus]

How did Thailand become successful in the first place not inc tourists?


Unrestrained and shameless lying, stealing, cheating, scamming. That's how.
Did'nt work for me, there must be another reason?

I was making a joke that your reason's above did'nt make me successfull.
I was wondering way back say since the Vietnam war how Thailand has become the place it is now who or what helped and for what reason.
Compared to Cambodia and Vietnam and surrounding countries.

Thailand began to industrialize in 1980, simultaneous to an election in 1979 that brought a period of political stability which enabled industrialization to surpass agriculture as the main component of GDP. By 1990 Thailand had followed the lead of models such as Singapore, Taiwan, S Korea to become an exporting economy. A service economy accompanied the developing of the Thai export predicated economy.

Since industrializing and establishing an export economy, Thais proudly separated themselves from neighboring countries by assigning themselves a distinct sense of superiority. Thais however are lousy business operators so they turned the parliament into a market place - literally - to support themselves and promote a massive network of interdependent crony capitalism.

The 1997 East Asian financial collapse began in Thailand, precipitating the downfall of the established crony capitalist elite. The subsequent rise of Thai Rak Thai and Thaksin, gave a new focus to the rural poor, in the North especially. As we know, however, Thaksin was massively corrupt and dictatorial, which led to a coup that further destabilized Thailand.

One cannot separate tourism from the Thai sense of superiority, what with all the successful and monied Western visitors and migrants arriving in the Land of Smiles, as it was known. Thaksin's particular democratic populism, which relied strongly on the electoral appeal of exploitative populism, precipitated a reactionary response from the already discredited crony capitalist elites who had begun industrialization and the successful export economy. T

he conflict between the old elites and Thaksin's populism alongside his corporate capitalism for his cronies caused the old crony capitalist consensus and its inherent contempt of democracy to divide the Thai population. Thailand now is seldom referenced as the Land of Smiles as the fundamental division of the old crony capitalists and the new populist, corporate crony capitalists has caused the population and elites to battle for control of Thailand's uncertain future.

Throughout, the divisions and the loss of a unified focus, and a loss of the sense of a unified identity and direction, has shaken the Thai self-appointed sense of superiority. Whether this sense of being special is called a sense of superiority or a sense of entitlement, there is little difference between the two characteristics as each is a negative factor to both the Thai present and to the Thai future.

Edited April 24, 2013 by Publicus

[Eesat]

It would appear intervention was started this afternoon: http://www.xe.com/currencycharts/?from=USD&to=THB&view=1D

Thailand can't win this currency war at the moment. Next we're going to see the ECB once again lower interest rates to keep the value of the Euro down. Link

This declining of Western currencies is deliberate. It isn't the baht rising, it's Western countries and China deliberately lowering the value of their currencies.

It's about stimulating the economies. Expensive currencies make exports more expensive in any country. Thailand has just now seen that, but they are too late to the party. They no longer have any real control over the baht that wouldn't crash the economy.

Thailand is going to lose this one. They can't win this race to the bottom being conducted by the major powers' currencies. Thailand has been proud of its strong baht, being blind as usual (see rice scheme which destroyed Thailand's rice exports) and thinking it is somehow "entitled" to be a major growth center while all the time setting itself up for a fall. (Again, see rice scheme scam for a sense of entitlement which failed.)

Thailand's mentality of the rice scam, the new minimum wage, and the strong baht are all based on a false sense of entitlement. No one else thinks that Thailand is somehow entitled to growth and prosperity. Just the opposite, the sharks in the water want to take the business away from Thailand. It's a competitive world but Thailand is operating on this sense of entitlement instead of having policies which will make its exports and manufacturing competitive. Again, the new minimum wage and strong baht will combine to kill Thailand's growth.

Vietnam, Cambodia and Laos will be happy to be the new manufacturing centers, without the costs to manufacturers of Thailand's new minimum wage, or the unrealistic strong currencies.

Thailand has peaked.

The ECB cutting 25 basis points for the overnight rates from 0.75% to 0.50% won't make a huge difference in the long run but it will ensure that the Euro at least stays as weak as the US Dollar,helping European exports remain competitive.

As for the Thai policy makers and Central Bank,it's just laughable to think that they imagine they stand a chance against the central bankers of the G7 nations.Unfortunately the Thais seem to judge all farangs by the beer-swilling Westerner in his wife-beater and thongs staggering around Soi 4,they are in for a big shock!

Thailand is like the Titanic right now with their export-driven economy heading straight for a huge iceberg.The parallels go even deeper as you can bet all the policy makers believe Thailand to be unsinkable as the builders of theTitanic did!

The final ironic one will be watching the band play on as the good ship Thailand sinks beneath the waves!I do believe they acknowledge their problems more than they are letting on but what can they do to stop them,very little really?

Strong Baht deterring foreign visitors,no matter how much they massage the figures.Rice exports must be dropping like a stone for the same reason,the strong Baht.They seem to be in the perfect storm right now with no-one at the wheel,it's like watching a train wreck!

[NeverSure]

I don't think Cambodia and Laos have a chance against Thailand. Lao is land locked and neither one of them has any thing near the infrastructure it would take for big time manufacturing.

The infrastructure is improving, and like Thailand, improves as business comes. Some companies put in their own infrastructure.

If they can take substantial business away from China, they can sure do it to Thailand, and they will due to the new Thai minimum wage and strong baht, and frankly, a lack of productivity and a sense of entitlement of the Thai people.

Published: April 8, 2013

PHNOM PENH, Cambodia — Tiffany & Company is quietly building a diamond-polishing factory in Cambodia, a country popularly associated more with killing fields and land mines than baubles.

Some of Japan’s biggest manufacturers are also rushing to set up operations in Phnom Penh to make wiring harnesses for cars and touch screens and vibration motors for cellphones. European companies are not far behind, making dance shoes and microfiber sleeves for sunglasses.

Foreign companies are flocking to Cambodia for a simple reason. They want to limit their overwhelming reliance on factories in China.

Problems are multiplying fast for foreign investors in China. Blue-collar wages have surged, quadrupling in the last decade as a factory construction boom has coincided with waning numbers of young people interested in factory jobs. Starting last year, the labor force has actually begun shrinking because of the “one child” policy and an aging population.

“Every couple days, I’m getting calls from manufacturers who want to move their businesses here from China,” said Bradley Gordon, an American lawyer in Phnom Penh.

More - NY Times

"U.S. Manufacturers Look to Fast-Growing Laos."

'Laos is a new frontier for U.S. companies.'

IndustryWeek

"U.S. companies, whose investments trail far behind those of China, Vietnam and Thailand in communist Laos, are turning their attention to the poor but fast-growing nation, an official said Thursday.

The US-ASEAN Business Council this week took its first formal delegation to Laos, as part of a regional tour that included Cambodia and Vietnam, said Frances Zwenig, who led the tour by five corporations.

"As the economic activity in Laos has picked up, our companies obviously have noticed," Zwenig told AFP in an interview.

"Laos is a new frontier for U.S. companies," Coca-Cola general manager for Laos and Thailand, Jorge Garduno, said in a statement from the Business Council, which represents more than 100 major American firms.

In May, the World Bank projected growth of 8.6% for Laos this year, with an average of 8% in years to come."

More

It doesn't even have to be Asia. Thailand can lose manufacturing to Brazil or Mexico or other Central/South American emerging countries, or, as Japan and Korea and many others have done, to the US which hasn't forgotten how to manufacture at a price point.

Toyota, Honda, Kia, Hyundia, Mitsubishi, Subaru, Mazda, Nissan, Mercedes-Benz, Acura, BMW, Volkswagen, Suzuki, Fiat, Lexus, and others have all built huge manufacturing plants which are humming away in the US!!! Their own employee policies and other laws made the US cheaper for manufacturing. Link

That's getting pretty bad.

And, the US doesn't charge import duties, so this wasn't any advantage. The advantage is clear productivity.

When a country like the US or Canada (I won't list those but Canada is similar to the US in manufacturing foreign cars) can kick butt on the major Asian and European countries for cost, Thailand had better get its head out of the clouds.

Productivity? In Thailand?

Edited April 24, 2013 by NeverSure

[Publicus]

The baht is getting whipped around by the monetary and economic policies of the G-7 countries. Expand that to the race to the bottom also occurring among the G-20 countries and we see the baht is a victim, not a player in global currency markets. Thailand remains a long way from joining the G-20, which must befuddle the prideful Thai self assigned sense of superiority.

Thailand is obliviously stuck in the middle income trap, having no clue that its dreamworld aspirations are vacuous. As the baht continues to appreciate, Thais still will wonder why they are unable to control their own destiny. Thailand is not S Korea, Singapore, Taiwan which a decade ago surpassed the middle income trap.

Thais love to believe the can make their own rules, apply them to themselves, and compete in the global market. The economy of the PRChina has turned down a dead end street for this very reason. Thailand is headed for the same fate.

[jucel]

Also, once a currency turns it can collapse really quickly. Look at the yen. It was at approx 70 to the dollar at one point. It has fallen to almost 100! If that were to happen to the baht then we would see 60ish again to the pound. One can but dream!!

[rametindallas]

How did Thailand become successful in the first place not inc tourists?

Rich in natural resources, good and cheap labor force, good weather, few natural disasters or wars.

[rametindallas]

Look, I can understand in the short run, everyone jumping around panicking about 27 to the USD if it effects your business personally.

The reality is, that the rest of the world's major currencies are absolutely in the poop, and they aren't going to get any stronger anytime soon, and Thailand and everyone here is going to have to get used to it. There is an avalanche of currency being pumped into the markets from everywhere, and what is little Thailand supposed to do? Be completely immune? Fight it with what? Thailand is but a spec in comparison with the USA, EU and Japanese printing money left right and centre.

How can Thailand continue to pay such (relatively) high interest rates to the wealthy of the world? The money that is currently flowing into Thailand (and distorting the economy) can just as easily flow out. If they wait too long, the consequences of the money suddenly flowing out will be intolerable. The government needs to act now, as anything they do will takes months to have an effect. My suggestion is to make all foreign investment long-term and capital gains difficult to take out of he country quickly. That would at least slow the process. Edited April 25, 2013 by rametindallas

[rametindallas]

It would appear intervention was started this afternoon: http://www.xe.com/currencycharts/?from=USD&to=THB&view=1D

Thailand can't win this currency war at the moment. Next we're going to see the ECB once again lower interest rates to keep the value of the Euro down. Link

This declining of Western currencies is deliberate. It isn't the baht rising, it's Western countries and China deliberately lowering the value of their currencies.

It's about stimulating the economies. Expensive currencies make exports more expensive in any country. Thailand has just now seen that, but they are too late to the party. They no longer have any real control over the baht that wouldn't crash the economy.

Thailand is going to lose this one. They can't win this race to the bottom being conducted by the major powers' currencies. Thailand has been proud of its strong baht, being blind as usual (see rice scheme which destroyed Thailand's rice exports) and thinking it is somehow "entitled" to be a major growth center while all the time setting itself up for a fall. (Again, see rice scheme scam for a sense of entitlement which failed.)

Thailand's mentality of the rice scam, the new minimum wage, and the strong baht are all based on a false sense of entitlement. No one else thinks that Thailand is somehow entitled to growth and prosperity. Just the opposite, the sharks in the water want to take the business away from Thailand. It's a competitive world but Thailand is operating on this sense of entitlement instead of having policies which will make its exports and manufacturing competitive. Again, the new minimum wage and strong baht will combine to kill Thailand's growth.

Vietnam, Cambodia and Laos will be happy to be the new manufacturing centers, without the costs to manufacturers of Thailand's new minimum wage, or the unrealistic strong currencies.

Thailand has peaked.

I don't think Cambodia and Laos have a chance against Thailand. Lao is land locked and neither one of them has any thing near the infrastructure it would take for big time manufacturing.

Not to quarrel but Laos, like Burma, will be feeding the nearly insatiable market that is China. China is investing heavily in Burma, Laos, and Cambodia and that is their path to prosperity, Of course, if they become too dependent on China, they will become, in essence, vassal states to China.

[Thai at Heart]

Look, I can understand in the short run, everyone jumping around panicking about 27 to the USD if it effects your business personally.

The reality is, that the rest of the world's major currencies are absolutely in the poop, and they aren't going to get any stronger anytime soon, and Thailand and everyone here is going to have to get used to it. There is an avalanche of currency being pumped into the markets from everywhere, and what is little Thailand supposed to do? Be completely immune? Fight it with what? Thailand is but a spec in comparison with the USA, EU and Japanese printing money left right and centre.

How can Thailand continue to pay such (relatively) high interest rates to the wealthy of the world? The money that is currently flowing into Thailand (and distorting the economy) can just as easily flow out. If they wait too long, the consequences of the money suddenly flowing out will be intolerable. The government needs to act now, as anything they do will takes months to have an effect. My suggestion is to make all foreign investment long-term and capital gains difficult to take out of he country quickly. That would at least slow the process.

The last part of your paragraph is a possibility. They are very worried about inflation and also the state of the property market.

But your idea would make a lot of money flow out and drop the baht. Would it achieve anything really a one or two point change in the baht?

Edited April 25, 2013 by Thai at Heart

[jocko]

How did Thailand become successful in the first place not inc tourists?

Unrestrained and shameless lying, stealing, cheating, scamming. That's how.

Did'nt work for me, there must be another reason?

I was making a joke that your reason's above did'nt make me successfull.

I was wondering way back say since the Vietnam war how Thailand has become the place it is now who or what helped and for what reason.

Compared to Cambodia and Vietnam and surrounding countries.

Thailand began to industrialize in 1980, simultaneous to an election in 1979 that brought a period of political stability which enabled industrialization to surpass agriculture as the main component of GDP. By 1990 Thailand had followed the lead of models such as Singapore, Taiwan, S Korea to become an exporting economy. A service economy accompanied the developing of the Thai export predicated economy.

Since industrializing and establishing an export economy, Thais proudly separated themselves from neighboring countries by assigning themselves a distinct sense of superiority. Thais however are lousy business operators so they turned the parliament into a market place - literally - to support themselves and promote a massive network of interdependent crony capitalism.

The 1997 East Asian financial collapse began in Thailand, precipitating the downfall of the established crony capitalist elite. The subsequent rise of Thai Rak Thai and Thaksin, gave a new focus to the rural poor, in the North especially. As we know, however, Thaksin was massively corrupt and dictatorial, which led to a coup that further destabilized Thailand.

One cannot separate tourism from the Thai sense of superiority, what with all the successful and monied Western visitors and migrants arriving in the Land of Smiles, as it was known. Thaksin's particular democratic populism, which relied strongly on the electoral appeal of exploitative populism, precipitated a reactionary response from the already discredited crony capitalist elites who had begun industrialization and the successful export economy. T

he conflict between the old elites and Thaksin's populism alongside his corporate capitalism for his cronies caused the old crony capitalist consensus and its inherent contempt of democracy to divide the Thai population. Thailand now is seldom referenced as the Land of Smiles as the fundamental division of the old crony capitalists and the new populist, corporate crony capitalists has caused the population and elites to battle for control of Thailand's uncertain future.

Throughout, the divisions and the loss of a unified focus, and a loss of the sense of a unified identity and direction, has shaken the Thai self-appointed sense of superiority. Whether this sense of being special is called a sense of superiority or a sense of entitlement, there is little difference between the two characteristics as each is a negative factor to both the Thai present and to the Thai future.

Now your talking some of that industrial punch no doubt came from multinational companies and you mention Taiwan as a country that did this before Thailand i remember in the UK when consumer goods started to get cheaper they where manufactured in Taiwan now you see very little cheap goods from there as they have moved on and making good stuff themselves that the world wants and of course China makes the cheap goods now and even there they have started building there own cars for worldwide sale.

As we well know multinational companies can just pick up sticks and move to somewhere cheaper and as Thailand is surround by them they are going to have to get there heads out of the sand, as a previous post mentioned some Thai companies are doing it now, good for the rich but not so good for the poor more lay off's methinks

[Tarric]

In my opinion the Thai government have well and truly shot themselves in the foot.

They can't lower interest rates to weaken the baht because of the threat of inflation.

They can't raise interest rates to combat inflation because of the continued appreciation of the baht.

The 300 baht a day wage increase has severely damaged the BOT's (Bank of Thailand) to keep the economy balanced. The wage increase has set off systemic increases in wage demands across all industries that continues to ripple through the economy until finally a balance will be found. The workers now earning 300 baht will likely find themselves little better off once this rebalancing is complete and the increased cost of living is factored in.

The BOT could of potentially lowered rates to combat the appreciate of the baht at this point if not for the inflationary effects of the 300 baht a day wage increase. But instead are finding themsleves in an increasing goldilocks sitution where the possibility of the economy remaining "just right" is shrinking daily. If they lower rates inflation will be off to the races yet again.

In my opinion Thailand needs to face the brave new world of a high currency, what's done is done. Thailand needs to become more competitive, more productive and more innovative to continue to grow so strongly. Even something as simple as allowing foreign business's to own a 100% of a stake of their own business would encourage investors to Thailand creating perhaps millions of jobs in the long run.

In addition to this the government needs to send clear messages to business's about policy, not the flip flopping that has become normal in the last 10 years. This would encourage confidence, which in turn would encourage further investment in the future of the kingdom.

Edit: Also Thailand is not a net exporter in fact it had a record trade defecit (imported more goods than it exported) in January this year

Edited April 25, 2013 by Tarric

[ricku]

Why not just devalue the baht? Should be quite easy to do, right?

A weaker baht would great for tourists, expats, and thais. It's a win win for everyone.

Thais don't travel abroad anyway. (Well, some do, but they are too few to care about).

[rametindallas]

Look, I can understand in the short run, everyone jumping around panicking about 27 to the USD if it effects your business personally.

The reality is, that the rest of the world's major currencies are absolutely in the poop, and they aren't going to get any stronger anytime soon, and Thailand and everyone here is going to have to get used to it. There is an avalanche of currency being pumped into the markets from everywhere, and what is little Thailand supposed to do? Be completely immune? Fight it with what? Thailand is but a spec in comparison with the USA, EU and Japanese printing money left right and centre.

How can Thailand continue to pay such (relatively) high interest rates to the wealthy of the world? The money that is currently flowing into Thailand (and distorting the economy) can just as easily flow out. If they wait too long, the consequences of the money suddenly flowing out will be intolerable. The government needs to act now, as anything they do will takes months to have an effect. My suggestion is to make all foreign investment long-term and capital gains difficult to take out of he country quickly. That would at least slow the process.

The last part of your paragraph is a possibility. They are very worried about inflation and also the state of the property market.

But your idea would make a lot of money flow out and drop the baht. Would it achieve anything really a one or two point change in the baht?

The value of the baht is a symptom. The root problem is that Thailand is giving greater return on bank bonds than most anywhere in the World. The government needs to Slow the process not Reverse it. It they wait too long and the high interest rates are unsustainable, the reversal will be precipitous and uncontrolled. Don't wait too long or you lose control of the process. Right now they are playing a dangerous balancing game.

[Thai at Heart]

Look, I can understand in the short run, everyone jumping around panicking about 27 to the USD if it effects your business personally.

The reality is, that the rest of the world's major currencies are absolutely in the poop, and they aren't going to get any stronger anytime soon, and Thailand and everyone here is going to have to get used to it. There is an avalanche of currency being pumped into the markets from everywhere, and what is little Thailand supposed to do? Be completely immune? Fight it with what? Thailand is but a spec in comparison with the USA, EU and Japanese printing money left right and centre.

How can Thailand continue to pay such (relatively) high interest rates to the wealthy of the world? The money that is currently flowing into Thailand (and distorting the economy) can just as easily flow out. If they wait too long, the consequences of the money suddenly flowing out will be intolerable. The government needs to act now, as anything they do will takes months to have an effect. My suggestion is to make all foreign investment long-term and capital gains difficult to take out of he country quickly. That would at least slow the process.

The last part of your paragraph is a possibility. They are very worried about inflation and also the state of the property market.

But your idea would make a lot of money flow out and drop the baht. Would it achieve anything really a one or two point change in the baht?

The value of the baht is a symptom. The root problem is that Thailand is giving greater return on bank bonds than most anywhere in the World. The government needs to Slow the process not Reverse it. It they wait too long and the high interest rates are unsustainable, the reversal will be precipitous and uncontrolled. Don't wait too long or you lose control of the process. Right now they are playing a dangerous balancing game.

Yes, it is all a balance. Lest we forget that it was 25 to the USD all those years ago before the crash, and they know what sparked it off was stupid lending to the property sector, so they aren't about to get into that position again. Thailand's GDP growth is strong, and they import huge amounts of products and oil to manufacture the very things that they export. They are not a primary producer of very much, but a secondary manufacturer/assembler.

From a purely economic point of view, it is precisely this type of pressure that forces companies to become more efficient, to rationalise, to invest in training, to implement new technology. I say this purely from an academic perspective, because of course, it isn't a good thing that people lose their jobs, but, the exporters have had a very very easy run of it for 10 years, and have ridden the baht all the way back, and productivity hasn't increased significantly?

Why, because, the owners of these companies were over the moon to take the profit and not invest back into their companies.

[NeverSure]

Why not just devalue the baht? Should be quite easy to do, right?

A weaker baht would great for tourists, expats, and thais. It's a win win for everyone.

Thais don't travel abroad anyway. (Well, some do, but they are too few to care about).

There are two classic ways to devalue a currency. One is to lower interest rates significantly so that fewer people have any reason to hold baht, and the other is to print more fiat baht. Both are inflationary.

The new minimum wage is highly inflationary already. The real estate bubble is highly inflationary, temporarily. If it pops of course it would be deflationary, as any major economic slowdown is. But that's a disastrous type of deflationary as an economy crashes.

Thailand has actually snookered itself. None of the above options would work without damaging the economy. Yet the strong baht is hurting exports and that fact is in the news and covered in other news threads. The new minimum wage is hurting exports and that is also in the news. These aren't just theories, they are happening.

Thailand is pricing itself out of the international trading game, as it did with the rice scheme. It has a sense of entitlement as it did with the failed rice scheme. Now that sense of entitlement is beginning to hurt exports as its strong baht and new minimum wage hurts competitiveness.

Any hiccup in the overall economy will pop the real estate bubble and it's 1997 all over again.