The Bank of Thailand is preparing to allow listed companies the ability
to freely invest abroad, says Suthasinee Nimitkul, director of the central
bank's Foreign Exchange Administration and Policy Department.
Previously, only companies with
assets of at least 5 billion baht were given leeway to invest abroad.
The central bank is also
considering lifting restrictions on foreign portfolio investment by
institutional and individual investors. Institutional investors are restricted
to foreign portfolio investment of US$50 million, with individual investors
limited to $20 million.
The deregulation policy is
expected to be finalised next year for review by the Finance Ministry and
incorporated into changes in the country's Exchange Control Act.
"Easing overseas investment
regulations will give greater opportunities to local businesses and is in line
with the move to deregulate with the creation of the Asean Economic Community
[in 2015]," said Mrs Suthasinee.
The central bank has maintained
overseas investment rules over the past several years in a bid to control
capital flows that could affect the baht.
But sluggish economic growth in
the US and Europe has led major central banks to ease monetary policies
sharply, prompting concerns among Asian regulators of new capital inflows that
could result in currency volatility or appreciation, in turn affecting the
region's export-dependent economies.
Mrs Suthasinee said the central
bank plans to allow Thai companies to maintain deposits of Asean currencies to
assist trade and investment activity within the region. Firms would still have
to comply with reporting requirements to allow the central bank to track
capital flows.
In any case, the central bank
said capital flows into Thailand remain at normal levels and are on par with
those seen by other countries in the region.
Narongchai Akrasanee, chairman of
MFC Asset Management, said allowing freer investment abroad should ease
pressure on the baht to appreciate against the US dollar.
"If the baht breaks 30 to
the dollar, it will certainly pose problems for Thai exporters," he said.
The baht yesterday traded at 30.94/96 to the dollar compared with 30.78/82 last
Friday.
Tachapol Kanjanakul, a first
executive vice-president of the Government Savings Bank, said excess liquidity
in the Thai market stands at 2.1 trillion baht, with a clear increase in inflow
after the US Federal Reserve's latest quantitative easing.
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