Thailand’s foreign reserves of US$142.4 billion at end-2009 represented a 28.61 per cent increase from the previous year, or about $31.68 billion. The Bank of Thailand attributed the increase to foreign assets, 27.53 per cent to $137.6 trillion as of January. Gold value stood at $2.9 billion.
Foreign assets held or controlled by the central bank which are readily available for financing the balance of payments imbalances or to be used as a tool in carrying out exchange rate policy. International reserves consists of monetary gold, special drawing rights (SDRs), reserve positions in the Fund, and foreign exchange assets.
According to the International Monetary Fund, foreign exchange reserves are defined in the Balance of Payments manual (5thedition) as
“Those external assets that are readily available to and controlled by monetary authorities for direct financing of payments imbalances, for indirectly regulating the magnitudes of imbalances through intervention in exchange markets to affect the currency exchange rate, and/or for other purposes”
Purposes for Holding Official Foreign Reserves of Thailand
1. To fulfill the monetary and exchange rate policies
2. To store of nation’s wealth
3. To give credibility to foreign investors
4. To back the banknotes in use
In order to achieve all the aforementioned objectives, The Bank of Thailand manages the official reserves according to the following 3 guiding principles as follows
1. Security –preservation of reserves values
2. Liquidity- able to meet the objectives of exchange rate and monetary policies
3. Returns- to maximize the returns within the given guidelines
Sources of Official Foreign Reserves
1. Balance of payment Surplus: The Balance of Payments consists of the current account and the capital account. Under the managed floating exchange rate, surpluses will lead to increases in foreign exchange holdings when the central bank intervenes by buying the foreign currency.
2. Returns from management of official reserves: Returns from interest payments and the change in principal values of assets
Public investment will expand only slightly next year as the Thai Kem Kaeng Program will just about compensate for the reduction in the government’s on-budget investment in 2010.
Key risks to the outlook are (i) political uncertainty and (ii) the timing of the withdrawal of fiscal and monetary stimulus. Increased political tensions may have a long-lasting impact on investment, and withdrawal of stimulus (in Thailand and the advanced economies) must be precisely timed to avoid macroeconomic imbalances (including new asset bubbles) while also ensuring that the recovery is on a sufficiently solid footing.
Automotive manufacturing in Thailand started 50 years ago after a Japanese company set up operations as an import substitution activity to take advantage of preferential tax and import duty treatment. Laws mandating local content were subsequently introduced, with the limits raised from an initial 30 percent to 40 percent and then 60 percent, to be abolished after the 1997-98 financial crisis. All pickup truck production prior to the 1997/1998 financial crisis was intended for domestic consumption, but companies began exporting after Japanese pickup producers shifted production from Japan to Thailand at the turn of the century. Tax and excise incentives by the Thai authorities encouraged domestic sales of pickups at the expense of cars, and pickups still amount to almost three-fourths of current output.
Stimulus programs were implemented in Thailand throughout 2009, confirming improved expectations, boosting demand and supporting the momentum of the economic recovery.
The export collapse in 2009 has been the most severe in Thailand’s recent history. The magnitude of the decline has been unprecedented. Since 1957, there have been nine episodes where exports contracted for at least six consecutive months. Losses to date are more than double those in the 1997-98 Asian financial crisis and the 2001 “dot.com” bubble turmoil. Thailand’s export performance tracked developments in world merchandise trade, which dropped around four and eight percent in the 1997 and 2001 meltdowns, respectively, but 22 % so far during the current global financial crisis.
The Future of Asia: greener but with a public and private debt hangover
The COVID-19 pandemic has been a perfect storm, destroying jobs, worsening poverty and inequality, and creating a public and private debt problem—especially for countries and firms already in fragile financial health beforehand
50:50 campaign may not get immediate extension
BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.
The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.
Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.
The campaign has already been extended once, with the current end date set for 31st March.
The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.
The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.
Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.
Customs Department Considers Measures to Help SMEs
BANGKOK (NNT) – The Customs Department is seeking ways to reduce the impact of the exemption on import tax and value-added tax (VAT) for imported goods worth up to 1,500 baht, as such measures are hurting small and medium-sized enterprises (SMEs).
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