Capital Inflow Tax

[SeanBangkok]

So if someone bought low, they will make 15% in a day after the gov. retracts their policy? thats a nice score!

[Martin]

"''I think they are trying to kill foreign investment,'' said a fund manager based in Singapore. ''The move is not helping bring in new capital into the country.""

And so they should be doing (i.e. trying to kill foreign investment).

At this stage of the development of the Thai economy, there are no longer any "investments in assets that sweat", that is income-producing organisations, available.

So foreign investment would just pump up another property bubble, or add to the easy-credit bubble.

I strongly suspect that the BOT have done what they have done for that reason, and applaud their action. The references to pressure from exporters of rice etc could be seen as a convenient smokescreen behind which to strengthen the country's monetary defences.

When I see all the kicking and squealing from the international-funds wheelers and dealers, I am immensely cheered.

Maybe the light is dawning that markets that are too free encourage harmful speculation---harmful to those speculated against and, ultimately, harmful to the speculators who would better serve themselves by putting their time and effort into productive work, or relaxing in their gardens.

There is an ominous feeling in the air that the present is akin to late 1928 (i.e. one hheell of a crash about to happen). The more Thailand can stand aside from its effects the better.

Incidentally, the comments that the baht has strengthened are way overdone. It would be much truer to say that there have been months of the trend for the American dollar to weaken against oil and the baht and the pound and the euro and the Canadian dollar and gold.

[leedstony]

This entire thread is riddled with over-reaction, crass generalisations and ill-informed panic.

Hmmm. How would you describe the biggest crash of the Stock Exchange of Thailand in its entire history?

A buying opportunity, the same as every other stockmarket crash in history.

OH GOODIE even cheaper!

[Virgil]

so what implications is there to me sending 10000 baht for my girlfriend to pay for her room and living.

1. The withholding tax only applies to deposits of over US$20,000

2. Your gf is giving 5000 per month of your money to her bf or her family

3. Tell your gf to get a job. Do you think she'd be paying you if the roles were reversed?

Virgil, Out!

[Virgil]

I love to see how Thais screw themselves by trying to screw Farangs. But the super joke is Farangs letting themselves be screwed.

exactly Falux.

Virgil, Out!

[Virgil]

Some of us were smart enough to be BUYING on the market yesterday...

Really? What did you buy? Why did you buy it? How do you expect it to perform over short term and long term? What market indicators induced you to buy yesterday? What performance indicators affected your choice of stocks?

Hmmm .... the SMART farangs that I know don't invest in the Thai economy. Why would you? Euro/American markets are more stable as are businesses and property values.

My wife is a dentist here. The money we save goes off shore where it is safer.

Good luck with your investments.

Virgil, Out!

[Virgil]

Please help me. I do send every month 10 000 to my beloved girlfriend and her extended family. Do I have to send $ 14286 that she gets 10 000 in January 07?

Thank you for your support. I'm very worry.

No. The rule applies to much larger sums of money... Read post #124. It explains your situation clearly.

Virgil, Out!

[Virgil]

``The stock market has fallen too much today,'' Pridiyathorn told reporters at a press conference. ``This is the side effect of the central bank's measure, but we have fixed it already.''

unbelievable .... the idiot is actually taking credit for solving the problem !

he'll be offering his resignation next.

Pridiyathorn Pridiyathorn Pridiyathorn ... whatever you do, don't press the little red button ....

Virgil, Out!

[kangeroo]

ok how is everybody ,

Just a coment if you are a invester buy buy buy everyone that does will find investing in thai stock echange will be free of any tax .

but normal fees still apply. leave it in there for 6 months and you will make 20%.

but i really wonder about some investers because the only way they know how to make money is to move to Thailand where they get a cheaper way to live.

[Bruce1]

I see the finance minister is saying it was "not a mistake". Therefore I can only conclude one of the following might be true:

1. The finance minister is an idiot.

2. The finance minister is a very clever man who has effectively cut the value of the baht to help exporters, while agreeing to personally look like an idiot and be the "fall guy".

Personally, I have now reached the following conclusions about Thailand, a place I love, incidentally:

1. They don't want us to marry their women.

2. They don't want us to buy their property.

3. They certainly don't want us to feel secure here, or to get visas for more than a year, or - heaven forbid - to become Thai citizens (they already have plenty of people).

4. They don't want us to encourage independent thinking - much better to use religious teaching to keep the population docile.

5. They like us to spend our money and then leave, to make room for others to do the same.

You gotta laugh!

[bendix]

I see the finance minister is saying it was "not a mistake". Therefore I can only conclude one of the following might be true:

1. The finance minister is an idiot.

2. The finance minister is a very clever man who has effectively cut the value of the baht to help exporters, while agreeing to personally look like an idiot and be the "fall guy".

Personally, I have now reached the following conclusions about Thailand, a place I love, incidentally:

1. They don't want us to marry their women.

2. They don't want us to buy their property.

3. They certainly don't want us to feel secure here, or to get visas for more than a year, or - heaven forbid - to become Thai citizens (they already have plenty of people).

4. They don't want us to encourage independent thinking - much better to use religious teaching to keep the population docile.

5. They like us to spend our money and then leave, to make room for others to do the same.

You gotta laugh!

Yes, Bruce. You're quite right. Every action or decision the Thai authorities make is done solely with foreigners in mind.

<deleted>, do you really think we are that important? Get over yourself.

[Crushdepth]

3. Should any customers wish to repatriate their funds earlier than one year, they would be refunded only two-thirds of the amount.

And the winner of the Most Stupid Investment Decision of 2006...Thailand...

Was it really so hard to predict the market reaction to such a ridiculous announcement? Does Dr. Tarisa Watanagase not have advisers? Or is he deaf as well as stupid?

[BigSnake]

Hmmm!! U.S. 20,000

[Bruce1]

Yes, Bruce. You're quite right. Every action or decision the Thai authorities make is done solely with foreigners in mind.

<deleted>, do you really think we are that important? Get over yourself.

No actually. That was my point. They obviously don't think we're that important, otherwise they wouldn't do these things. Get over yourself.

[Martin]

The whole fiat money situation is now getting very shaky.

Neither countries' central banks, nor private banks, have any clear view of how to hold their foreign reserves. (In fact, the Chinese Government is hiding its transactions by doing them via the private system.)

And both the forex market and the stock exchanges are full of gamblers trying to do trades to make capital gains.

Thailand was taught a lesson (and appears to have learned it) in 1996/7/8.

If an economy is going to grow sustainably, it must grow through trade (i.e. through making things and selling them). It can't do it through money games and building concrete fantasies.

So the BOT was right to say: "Go play your money games elsewhere---or pay us through the nose."

Look at the fundamental economic conditions in various countries.

The USA and Britain are facing a property market crisis, enormous personal indebtedness levels, and a lot of people about to retire and start drawing their pensions (for what they'll be worth). That combination will induce recession that will turn into Depression. So the US$ and the pound haven't much future.

Nor has the yen, since Japan has to import all its oil. Similarly for France and Germany.

Thailand is one of the few countries whose fundamentals look good in the long term (provided it isn't carved up in the short and medium term). That is, it is a country that can foresee being able to feed, and house, and keep warm in winter, its populace for decades to come.

After consumerism implodes, there will be one trade that outweighs all. It will be food for oil/gas, and oil/gas for food.

In the meantime, expect volatility.

[cutter007]

I can make this real simple, if you are not an private currency trader, or your salary is lower than 100,000 USD per year,

you do not have to be concerned with this law.

This is a law that applies to commercial banking and currency trading.

I don't even think there is a market that will let you trade Thai baht in less than 10,000 USD transactions, anyone know of one?

if this regulation applied to what you were doing, you would know it instantly, and would know exactly how it

applies to you, so all you people asking about your little export companies or sending your girlfriend money,

don't trouble yourself another minutes though about this.

[Japhrodisiac]

I can make this real simple, if you are not an private currency trader, or your salary is lower than 100,000 USD per year,

you do not have to be concerned with this law.

This is a law that applies to commercial banking and currency trading.

I don't even think there is a market that will let you trade Thai baht in less than 10,000 USD transactions, anyone know of one?

if this regulation applied to what you were doing, you would know it instantly, and would know exactly how it

applies to you, so all you people asking about your little export companies or sending your girlfriend money,

don't trouble yourself another minutes though about this.

Far from true. As with many regulations in Thailand, the grey area outweighs the clarity. People are on forums like these for the specific purpose of gaining clarity, they would not be posting for help and advice if they had any solid idea of how this measure affects them. This measure will affect my business, to what extent depends on the answers to a whole host of questions - answers that no one seems able to provide at the moment. What I do know is that many foriegn banks have stopped trading in Baht, my bank WILL hold 30% of transfers (the manager told me this morning) and what constitutes a "good or service" and what is on the list of "equities" is unclear. If you are clear with things, fine. You are one of the few.

[bendix]

I can make this real simple, if you are not an private currency trader, or your salary is lower than 100,000 USD per year,

Huh? What does a salary of US$100,000 have to do with this?

[cutter007]

I can make this real simple, if you are not an private currency trader, or your salary is lower than 100,000 USD per year,

you do not have to be concerned with this law.

This is a law that applies to commercial banking and currency trading.

I don't even think there is a market that will let you trade Thai baht in less than 10,000 USD transactions, anyone know of one?

if this regulation applied to what you were doing, you would know it instantly, and would know exactly how it

applies to you, so all you people asking about your little export companies or sending your girlfriend money,

don't trouble yourself another minutes though about this.

Far from true. As with many regulations in Thailand, the grey area outweighs the clarity. People are on forums like these for the specific purpose of gaining clarity, they would not be posting for help and advice if they had any solid idea of how this measure affects them. This measure will affect my business, to what extent depends on the answers to a whole host of questions - answers that no one seems able to provide at the moment. What I do know is that many foriegn banks have stopped trading in Baht, my bank WILL hold 30% of transfers (the manager told me this morning) and what constitutes a "good or service" and what is on the list of "equities" is unclear. If you are clear with things, fine. You are one of the few.

Sorry if there was a misunderstand what I was trying to do, rather than answer multiple peoples specific questions for clarification, was to

let everyone know that this regulation was targeted at currency speculators. But unfortunatly the BofT made the regulation to broad and its effects spilled over into the investment markets such as the SET.

But it will have little to do with people transfering money to individuals for personal reasons, or small export businesses as they rarely use currency hedging mechanisms.

If you are using currency hedging mechanisms in your export business then yes you will be effected by this new regulation, but I just assumed that

if your export business was that large in size, you would understand how this regulation will apply to you, and seeking advise on a board like this would

have little to no value.

Anyways, the Bank of Thailand has already repealed many of the restrictions due to the SET fallout from yesterday.

The foreign banks have not stopped trading in baht, they suspended trading in Baht, because this regulation was effective immediately and

so of course the foreign banks will enact immediate blanket stop measures on all exchange transactions in this sector, until clarification on the regulation has been made.

With the 100,000 USD salary, what I am saying is that this rule mainly effects inflows of foreign capital that are signed off by, executives

managing institutional investments.

It was an exaggeration though, I should have wrote if you aren't a foreigner making 100K salary. There are plenty of Thais working in the financial sector that don't make that kind of money that this will effect.

[yeti]

For those who still have questions, BoT has setup a hotline for this:

+66 2356 7345-46

+66 2356 8630-33

Of course u'll have to wait to go through given the high number of callers.

My question was about a condo I am planning to buy, an exasperated guy answered me: not concerned.

[cclub75]

Difficult time for the poor guy : monday he closed the window and the door, tuesday he reopened the window and said "oops I've made a big mistake".

And now he understands that... well... the window is open. Again. Oops.

http://www.nationmultimedia.com/breakingne...newsid=30022084

Yes, the uggly farang speculator are back ! Via the stock market this time...

Ah... nothing is simple in our world.

[Jai Dee]

Private sector is pleased with the measure to restrict short-term investment

Mr. Dej Pathanasethpong, the Thai Garment Manufacturers Association under the Federation of Thai Industries, said private clothing companies are satisfied with the measure to control the short-term capital inflows. They expect the measure to show a clear result on December 25th. The measure has helped the baht currency from strengthening, and it is an important turning point that may affect short-term investment psychologically. However, it should be beneficial in the long-run, starting December 25th.

Meanwhile, Thai Textile Merchants Association chairman Thavon Tantisirivit suggested the state sector to impose other measures besides the flexible measure to cut off the short-term capital inflows, to prevent constant speculation of Thai bath.

He said the stability of the Thai currency is based on low fluctuation, or be idle for four months, since local exporters favor to export their products when the baht currency has a low fluctuation.

Source: Thai National News Bureau Public Relations Department - 20 December 2006

[obsession]

Its a catch 22 for condo buyers. If you transfer less then 800,000 baht you wont get the necessary FET certificate. If you transfer more ,they might withold 30% of it. Ive got my swift form filled out and ready to post today, but wont do it until this matter is cleared. Between that and the anticipated empty rental condos vacated by the visa runners whose 90 days run out, it might be a good idea to hold off on condo purchases. IMHO

[bkkandrew]

Its a catch 22 for condo buyers. If you transfer less then 800,000 baht you wont get the necessary FET certificate. If you transfer more ,they might withold 30% of it. Ive got my swift form filled out and ready to post today, but wont do it until this matter is cleared. Between that and the anticipated empty rental condos vacated by the visa runners whose 90 days run out, it might be a good idea to hold off on condo purchases. IMHO

You could have also mentioned the insane increase in supply with new-build projects... A perfect prick to burst an over-inflated bubble! Actually sums up K. Tarisa Watanagase rather well...

[LaoPo]

Bangkok Post

Wednesday December 20, 2006

Foreign fund managers blast curbs on capital inflows

UMESH PANDEY

Foreign fund managers expressed shock yesterday at central bank capital controls intended to help stem the speculative nature of funds flowing into the country. ''This is a kind of thing that is not good for investor sentiment, and you have sent the whole market out of whack,'' said Mark Mobius, the president of Templeton Emerging Markets Fund Inc, who is considered a guru of emerging markets.

''The move by the central bank has sent Thailand to never, never land.''

Although his firm had divested its Thai portfolio, he said, it was looking at further selling if opportunities came up.When asked if Templeton would want to take the market slide as an opportunity to buy cheap, he said: ''No way.''

''Who in their right mind will want to put themselves in prison?'' he asked rhetorically. ''You take the money in and it will be locked in for one year. How can an open-ended fund operation like ours participate in this kind of market?''

Other investors echoed his comments, saying that the reaction of the central bank was too strong for curbing speculation.

''I think they are trying to kill foreign investment,'' said a fund manager based in Singapore. ''The move is not helping bring in new capital into the country.

''It may be good for the long term, which we don't know about, but for the short term, it's a disaster.''

The move, which prompted the stock market to use its circuit-breaker mechanism for the first time since its establishment in 1975, has been widely criticised as too strong for the market.

''They have totally screwed the system up,'' said Mark Greenwood, a former broker in Thailand and an investor in the Thai equity markets. ''There were other ways of managing the speculative element, but they went for the harshest one.

''What they have done is to try to kill an ant with a sledgehammer.''

Reaction to the central bank move was so strong that investors panicked and sold heavily. Foreign investors took the lead in getting out of the market yesterday.

''There are still a lot of clarifications that are needed, and in our view the Thai baht has been undervalued for some time, especially when considered on a purchasing power parity basis,'' Mr Mobius said.

''Even now it is undervalued by about 10%,'' he added.

To add salt to the wounds, it is expected that global index compliers such as MSCI Barra and FTSE will look at the possibility of removing Thailand from their weighting lists, which could trigger further selling by fund managers who follow the indices.

''I would not be surprised if Thailand is removed and if it does happen, that would mean more selling pressure as those that follow would need to shed their investment in the country,'' said a foreign broker.

Most fund managers and analysts believed better measures existed to curb speculative inflows rather than such harsh ones that tax everything, with nothing to differentiate speculation from genuine investment.

''They could have reduced the interest rate, or could have sold baht or other measures to help stop speculation. But this was too strong a move and it is evident by the reaction of the market,'' Mr Mobius said.

If Thailand is removed from gobal indexes the results would even be more dramatic than anticipated.

It's unbelievable Thailand has such imcompetent financial 'leaders'. The same 'leaders' who are now saying "no harm has been done......all is well". (trying to save face)

Truly unbelievable.

LaoPo

[yeti]

Its a catch 22 for condo buyers. If you transfer less then 800,000 baht you wont get the necessary FET certificate. If you transfer more ,they might withold 30% of it. Ive got my swift form filled out and ready to post today, but wont do it until this matter is cleared. Between that and the anticipated empty rental condos vacated by the visa runners whose 90 days run out, it might be a good idea to hold off on condo purchases. IMHO

BoT has been rather clear on this: money transferred to buy a property is not concerned by the new rule. Of course u could always call them yourself.

[Naam]

i wonder what problem is discussed here. all restrictions (except for foreign sources buying short term domestic bonds denominated in THB) were lifted yesterday evening.

[jumnien]

i wonder what problem is discussed here. all restrictions (except for foreign sources buying short term domestic bonds denominated in THB) were lifted yesterday evening.

On TV forum, news seems to travel very, very slowly when it is positive in our favor!

[LaoPo]

i wonder what problem is discussed here. all restrictions (except for foreign sources buying short term domestic bonds denominated in THB) were lifted yesterday evening.

The problem that Thailand has lost big face in the financial world because of its incompetence and drastic unneccesary steps.

They wanted to protect their exporters but protective measurements always bounce back and they've probably done more harm to those exporters (in the future) than they realize.

Buyers will be more careful where to buy and will start looking for other sources (countries) and thus the exporters will be harmed....and the country/people.

The 'fear' with global investors/institutions for eventual future 'new' Thai steps will remain for a long time.

LaoPo

[yeti]

Something had to be done to decrease the speculative pressure on the baht, or thailand was heading directly toward a crisis like 97. Seems they managed to spook everybody except their target (baht stoped its growth, but did not really go down).

Well, they may have slow down the real estate bubble..