BOT Clarifies Foreign Direct Investment Exemptions

[Jai Dee]

BOT clarifies FDI exempted

The Bank of Thailand clarifies Friday that foreign direct investment that are exempted from the 30 per cent reserve requirement include property, tourism, travellers' checks.

The others are education, medical, donations, diplomatic, roll-over of FX swaps, expenses for transportation of goods.

The clarifications are announced following confusion which inflows are subject to the requirement which has been in place since Tuesday.

Source: The Nation - 22 December 2006

[Jai Dee]

Market in jitters over confusion

Lenders, borrowers pause to see effects

Business operators have already felt the effects of the Bank of Thailand's draconian 30-per-cent reserve requirement on capital inflows, with Kasikornbank's corporate customers delaying plans to raise funds.

Piti Tantakasem, head of Kasikornbank's capital market department, said yesterday that the bank's wholesale customers who were scheduled to offer baht bonds early next year have postponed their plan until the situation becomes clearer. They intend to wait and see the consequences, if any, of the anti-speculation move by the BOT.

"After the central bank announced its aggressive measure, bond yields have increased significantly. Issuers are uncertain about the success of bond issues, as investors may be reluctant to buy them. Both sides are unable to assess bond yield benchmarks properly," he said.

Kasikornbank forecast that new bond issues next year would be worth between Bt150 billion to Bt160 billion assuming that new bond offering is around Bt37.5 billion to Bt40 billion per quarter. If Thailand's bond market remains volatile, new bond offers could fall in the first quarter next year.

Overseas companies, meanwhile, are likely to delay borrowing from their parent firms due to the BOT's measure, which requires financial institutions to withhold 30 per cent of all foreign investors' capital inflows, this increases their funding costs.

For example, if a foreign business operator borrows Bt100 from their parent firms, they can use only Bt70. But they still have to pay interest on a full loan amount of Bt100, Piti said.

If the two channels of funding mobilisation, bond issues and borrowing from parent firms, are restricted, bank lendingwould rise. In this case, banks might need more funding to cope with higher loan requirements.

"However, banks have to wait and see how the situation turns out. They also have to see the effects of the BOT's measure. As a result, creditors, debtors and business operators cannot do much at the moment," he said.

"All parties have to wait for clearer policy direction from the central bank."

Source: The Nation - 23 December 2006

[animatic]

Of course those banks don't lend to farangs,

unless the company is 3 years old and

shows better profits than a Thai company,

and they get your first born child as collateral....

[Jai Dee]

BoT may exempt property funds from capital control

The Bank of Thailand said Monday it may exempt foreign investment in property funds from the recently introduced 30 per cent reserve requirement rule on capital inflows.

According to Pongpen Ruengvirayudh, Bank of Thailand's senior director for financial markets and the reserve management department, the central bank needs some time to study if the easing of the rule (on property fund investment) would affect the effectiveness of such measure in curbing the baht's appreciation.

The Bank of Thailand last week said it requires 30 per cent of most foreign capital inflows unrelated to trade and services to be deposited in a non-interest account with the central bank for a year as it sought to tackle speculative capital inflows which pushed the baht to a 9-year high.

Capital inflows related to foreign direct investments in equities, properties, tourism, education, health, transportation and diplomacy are exempted from the requirement.

Source: The Nation - 25 December 2006

[brazil]

what a mess!

heres to a hopefull brighter 2007 for thailand

merry christmas and happy new year to thailand

[marquess]

what a mess!

heres to a hopefull brighter 2007 for thailand

merry christmas and happy new year to thailand

Merry Xmas and Happy New and more common sense!