Capital Controls - Did they affect you?

[STUDMEYER]

Hey All,

Wondering for those who were here during the asian financial crises and the years that followed if you were at all affected by capital controls.

The small amount I understand on the subject is this:

-Thailand wanted to stop capital inflows, and promote capital outflows and thus put in place capital controls.

So for those here that are getting their income stream out of country transferred in - Were you affected at all?

Thanks

SM

In Thailand, capital inflows started to gather momentum in 2003, reversing massive outflows experienced during the Asian financial crisis (Figure 1b.1). This was interrupted by the global financial crisis, which led to a slowdown in cross-border capital inflows in 2008. Nevertheless, the rapid economic recovery in Thailand has encouraged the resumption of large capital inflows since the second quarter of 2009, approximating that of 2007 levels. Alongside the increase in capital inflows from 2003 to 2007, net capital outflows also increased substantially in Thailand, reaching $17 billion in 2007 (Figure 1b.2). The Bank of Thailand (BOT) worried about the appreciation of the baht from the influx of short-term capital inflows. The nominal exchange rate (baht per US dollar) began to appreciate beginning in 2001 with the influx of short-term capital into debt securities (Figure 2b). In 2003, the BOT announced a number of policy measures to relax restrictions on capital outflows, aiming to offer alternative investment opportunities abroad and promote Thai residents’ investment in foreign countries. Nevertheless, there was a sudden increase in total outstanding nonresident baht accounts, from the normal level of B18 billion in 2000–2002 to B63 billion in October 2003. The BOT imposed capital restrictions for capital inflows and relaxed regulations for capital outflows originated by Thai residents. The continuing appreciation of the baht led the BOT to impose additional measures to guard against possible economic instability in 2006. Nevertheless, the pressures did not abate, and in December 2006, Chilean-style capital restrictions were introduced. Financial institutions were asked to withhold from their customers 30% of foreign currencies purchased or exchanged against the baht as URR to be deposited with the BOT.2 The URR was eventually lifted in March 2008. Meanwhile, restrictions were imposed by the BOT to guard against speculative capital flows and a rapid appreciation of the baht. Other measures for relaxing capital outflows imposed since 2006 were also maintained in 2008–2010.

Edited August 30, 2015 by STUDMEYER

[hhgz]

Not in any manner, whatsoever.

[Pib]

No impact....the capital controls dealt more with large corporations, BIG, BIG money; not money like someone sending over a few thousands or even several hundred thousand dollars (or equivlent) like to buy a residence...no tax/money withheld. The capital controls affected some of the big boys (companies, stock market, etc), not the average farang on the street.

[Time Traveller]

No impact....the capital controls dealt more with large corporations, BIG, BIG money; not money like someone sending over a few thousands or even several hundred thousand dollars (or equivlent) like to buy a residence...no tax/money withheld. The capital controls affected some of the big boys (companies, stock market, etc), not the average farang on the street.

BS.....take a look at any stock market chart and you will see exactly the effect. The 2006 capital controls only caused the largest one day crash ever in the Thai Stock market. A record that stands to this day.... The person responsible for that is the current Deputy Prime Minister - Pridiyathorn Devakula (en.wikipedia.org/wiki/Pridiyathorn_Devakula)

So if by "average farang on the street" you really mean dirt poor chimp with nothing of value, then yes Pib the average farang was not affected

[STUDMEYER]

Thanks for the replies.

Is anyone at all worried that Thailand would enact some form of capital controls in the future?

Its a total speculation, i know, but given the current financial climate, and put in a hard place its not much of a stretch to consider the possibility.

Thanks

SM

Edited September 1, 2015 by STUDMEYER

[WorkingTourist]

Is anyone at all worried that Thailand would enact some form of capital controls in the future?

Thai citizens need to state the purpose for funds transferred abroad and foreigners need to show source of the income, perhaps this just falls under the anti money laundering regulations, but it does seem to be a form of capital control.

Its a total speculation, i know, but given the current financial climate, and put in a hard place its not much of a stretch to consider the possibility.

The capital controls for money flowing into Thailand were to weaken the Thai baht, though it caused the stock market crash that Time Traveller mentioned (which made them make equity investments exempt for the required 30% deposit) and the baht did go up in value while the capital controls where in place, so it didn’t seem effective.

Right now the Thai baht is getting weaker and the stock market is fragile, so I really don’t see why Thailand would repeat this experiment.

But then, I don’t always get the reason behind Thai policies, just take their VISA system. As someone who have bought real estate in Thailand, I’m more worried about changes here and the increasing inefficacy of the CM immigration office.

[Pib]

No impact....the capital controls dealt more with large corporations, BIG, BIG money; not money like someone sending over a few thousands or even several hundred thousand dollars (or equivlent) like to buy a residence...no tax/money withheld. The capital controls affected some of the big boys (companies, stock market, etc), not the average farang on the street.

BS.....take a look at any stock market chart and you will see exactly the effect. The 2006 capital controls only caused the largest one day crash ever in the Thai Stock market. A record that stands to this day.... The person responsible for that is the current Deputy Prime Minister - Pridiyathorn Devakula (en.wikipedia.org/wiki/Pridiyathorn_Devakula)

So if by "average farang on the street" you really mean dirt poor chimp with nothing of value, then yes Pib the average farang was not affected

I meant no impact for the average farang transferring money...such as that periodic transfer of funds for living expenses, buying a condo, etc. No impact...well yes there was an impact in that they got a higher exchange rate as the baht dived during that time frame.