Ex-finance minister backs central bank’s monetary measures
By English News

BANGKOK, May 16 – Former finance minister Thirachai Phuvanatnaranubala today threw his support for the central bank’s measures to tackle foreign capital inflows into the Thai bond market.

He strongly agreed with the proposed Bank of Thailand (BoT) measures to levy fees on foreign investors profiting from bond investments, and a requirement for foreign investors to do foreign exchange hedging for their investments in Thailand.

The two measures are on target and will help prevent the development of an economic bubble though it will slow down capital inflows into the bond market in the long run, and compel the government to pay higher interest for its bonds, he said.

He insisted that a proposed measure to reduce the policy interest rate, currently at 2.75 per cent, would not stem the inflow of foreign capital to buy bonds.

Foreign ownership of bonds with a more than one-year maturity is currently as high as 71 per cent of total foreign purchases at Bt884 billion as of last month.

Mr Thirachai said the BoT has been on the right path in handling its monetary policy and that the Finance Ministry should give greater emphasis to its finance policy to prevent bubble which could escalate in light of Japan’s implementation of quantitative easing (QE).

“Japan’s QE is in addition to the United States’ QE. The situation is so dynamic that some say the train from Tokyo is approaching Bangkok very soon,” he said good-naturedly.

Former deputy finance minister Pichai Nariptapan said the Monetary Policy Committee should reduce the interest rate simultaneously with enforcing other measures to rein in the baht.

The central bank must avoid successive losses, or it will put the country in jeopardy like the crisis in 1997 when Thailand lost Bt1.14 trillion, with devastating impact that has continued until today, he said. (MCOT online news)

-- TNA 2013-05-16

Seems, in future Thailand will also think about quantitative easing due to corruption and bureaucracy.

Indeed limited natural resources and disasters like flooding will blow Thai economy and thus within 8-10 years Thailand will be on the stage of quantitative easing.

(This is just my opinion)