BOI downplays stronger baht’s impact, FTI warns of struggle
Board of Investment doubts strengthening baht will deter foreign investment, but Federation of Thai Industries warns of severe impact on exports
While the Board of Investment chief does not believe the rising baht would affect foreign investments, a Federation of Thai Industries’ vice president disagrees, saying it would severely affect investments in exports.
Narit Therdsteerasukdi, BOI secretary-general, said the strengthening baht had little impact on foreign investors’ decision to use Thailand as their manufacturing hub.
Instead, he said, a strong baht would provide a window of opportunity for foreign investors to import machines and tools for expanding their manufacturing capacity.
Instead of focusing on a stronger baht, Narit said foreign investors would make their decisions based on the country’s infrastructure, human resources, domestic market potential, source of clean energy, investment privileges and support from the state as well as ease in doing business. He said foreign investors focused more on these factors because they make long-term investments.
Narit was responding to a report published by Bloomberg News that said the Thai currency was appreciating at its fastest rate in 26 years, since before the Asian financial crisis in 1997. This, the report said, was directly impacting Thailand’s slowly recovering tourism and export sectors.
Though the baht’s strength is partially due to the weakening of the US dollar ahead of the Federal Reserve’s interest rate cut, the currency’s unexpected appreciation compared to key trading currencies has reduced the competitiveness of Thai goods, Bloomberg added.
Apichart Prasoprat, FTI’s vice president, said the baht has been appreciating too fast over the past month, adding that it has risen by more than 3 baht against the US dollar over the past month.
He said this has put exporters in a difficult situation, noting that exports account for 30% of the country’s revenue. Apichart explained that the rising baht had depleted the value of exports by 10% compared to last year.
He added that though a stronger baht allows businesses to import materials cheaply, they need to insure against currency fluctuation and the cost of insurance premiums would outdo the savings from a stronger currency.
Apichart added that if the situation continues like this, it would severely affect Thai industries.
