Capital Control : Details Still Hazy

[cclub75]

A very interesting paper in BKK Post today.

2 weeks after the BOT move, well... details from an "operational point of view" are still unclear...

And only now, they start to aknowledge potential BIG loopholes... Like foreign investors who have more than one account in Thailand : Easy to send the money to account 1 asking for exemption of the 30 % reserve (for instance buying stocks on SET), and then... change your mind... and transfert the money from account 1 to account 2. And then do whatever you want.

More headache for Doctor Tarisa....

Details on reserve rules still hazy

Custodians want BoT to clear the air

DARANA CHUDASRI

Two weeks after the central bank shocked the market with its new 30% reserve requirement on capital inflows, local and foreign banks continue to field questions about what transactions are subject to the rule. Bordin Unakul, the chairman of the Custodian Club, said that local custodians would meet with Bank of Thailand officials shortly to discuss ''fine tuning'' of the reserve rule.

The Dec 18 rule requires financial institutions to transfer 30% of foreign exchange inflows against the baht to a non-interest-paying account at the central bank.

The deposit will be returned after one year, with shorter transactions subject to a 10% penalty.

Mr Bordin said while the principle of the reserve rule was understood, details on its implementation remained unclear.

''We understand the rule's spirit, but some issues remain uncertain, particularly from an operational point of view,'' he said.

Another complication is the fact that many overseas clients maintain multiple accounts with different financial institutions.

http://www.bangkokpost.com/Business/04Jan2007_biz34.php