Exporters are uncomfortable with the prospect of a strengthening baht, as they want a stable exchange rate to help them keep pace amid tough global competition.
Sukij Kongpiyacharn, president of the Thai Garment Manufacturers Association, said a stronger baht would certainly hurt his industry, which has drawn large amounts of foreign currency into the country over several decades.
”The private sector believes the new government will apply a policy of market manipulation. This will be like taking money out of our pockets. It’s not right, as other measures are available to solve problems related to inflation and the cost of living,” he said.
”We see that several of the policies planned by the new government will be at the expense of operators. The private sector may have not cried ‘Foul!’ very loudly yet, but we are uncomfortable.”
Mr Sukij’s comments reflected the widespread confusion among businesses regarding the imminent Pheu Thai-led government’s currency policy.
Some party strategists have floated the idea of a managed peg for the baht, similar to that used by Singapore or China.
However, would-be prime ministerial candidate Yingluck Shinawatra this week affirmed that her administration did not intend to make any changes to the current managed float and said the baht would move in line with the market.
Mr Sukij said the baht has fluctuated more in the past two weeks, but the current exchange rate of about 30.50 to the US dollar is still acceptable.
The association remains confident that garment exports will grow by at least 10% this year based on orders already taken, but it is worried about competitiveness next year.
Malee Choklumlerd, deputy director-general of the Department of Export Promotion (DEP), said the strengthening baht may hurt Thai exporters’ competitiveness, but it would also reduce the cost of imports, especially raw materials and machinery.
”Our exporters need a stable exchange rate policy more than a weaker or stronger baht,” she said.
The DEP plans to meet with exporters to discuss what they need in the way of government support, especially those using more local than imported content.
Korbsook Iamsuri, president of the Thai Rice Exporters Association, said he was not surprised by the new government’s strong-baht policy, as there are pros and cons to both a weak and a strong currency.
How this policy will affect Thai exports must be considered for each product, but for rice it will all come down to the mortgage policy and not the currency, she said.
Meanwhile, the DEP is trying to increase the competitiveness of small and medium-sized enterprises (SMEs) by helping them to develop quality products that meet international standards.
To this end, it has set up an Office of SME Support Solutions and an SME Export Service Center to help these businesses gain access to information and privileges in export markets such as China, Asean, China, Africa and India.
Source: Bangkok Post