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DaffyDuck
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The Reserve Requirement on Short-Term Capital Inflows
Dr. Tarisa Watanagase, Governor of the Bank of Thailand (BOT), announced that despite recent measures aiming at discouraging short-term capital inflows and limiting Thai baht speculation, short-term speculative inflows of various forms continue to persist, as evidenced by the volatility of the Thai baht and its rapid pace of appreciation.
The BOT, therefore, decided to implement an unremunerated reserve requirement on short-term capital inflows. Financial institutions are required to withhold 30 percent of foreign currencies bought or exchanged against the Thai baht, except those related to trades in goods and services, or repatriation of investments abroad by residents. The details of the measure and related operational procedures are summarized as follows:
1. After one year, customers whose foreign currencies have been withheld can request for refunds by submitting related evidence to prove that the funds have been in Thailand for at least one year.
2. Once financial institutions have examined and certified the one-year minimum stay period, they shall inform the BOT to return the funds, through them, to their customers.
3. Should any customers wish to repatriate their funds earlier than one year, they would be refunded only two-thirds of the amount.
4. Foreign exchange transactions which have been traded prior to 19 December 2006 are exempt from this reserve requirement.
5. Foreign direct investments or unrequited transfers would initially be subject to the reserve requirement but shall be refunded upon submission of supporting evidence through financial institutions. Once financial institutions have examined and certified the legitimacy of such claims and the BOT deems it appropriate, the BOT shall promptly return the full amount.
6. Financial institutions shall remit the required reserves, in the form of foreign currencies, to the BOT on the 7th of the subsequent month.
7. The earnings received from this measure would be earmarked for public benefits.
In order to regulate foreign short-term capital inflows, several countries have imposed reserve requirements on such inflows during critical times. The BOT views that the present situation warrants the introduction of such measure to prevent speculative pressure on the Thai baht. The BOT will closely monitor and assess the impact of this measure.
Bank of Thailand
18 December 2006
For more details : Kleddao Sungnet E-mail : KleddaoS@bot.or.th Tel : +66 (0) 2356 7345
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Thai Girls : Meet Sexy Thai Girls
Posted on: 1:24 am on Dec. 19, 2006
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localguy
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Judging by international reaction and the drop in the stockmarket, the Bank of Thailand just shot themselves in the foot big time. Sure, 35 Baht to the dollar hurts the export industry here, but this policy will be disastrous for the capital markets.
Look for a face saving modification soon.
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Bangkok Women : Meet Sensual Bangkok Women
Posted on: 2:10 am on Dec. 19, 2006
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latenight
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Ouch... talk about beeing misinformed... faxed a TT order to my bank at 46,05 bht to the euro... 30 hours later it's already 47,33... the measure seems to have worked when it came to holding down the THB...
Wonder how people will need to justify the funds they import are for trading, so much money is moving in this country without proper invoices...
Yet I very much appreciate every percent the THB loses... 46 to the Euro and 35 to the $ is not good for business...
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Thai Girls : Meet Sexy Thai Girls
Posted on: 5:32 am on Dec. 19, 2006
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Abrak
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These capital controls are pretty severe. In theory if you are buying a condo for Bt10m you need to transfer Bt13m to Thailand. Bt3m will be kept by the Bot for up to one year interest free until it deems your purchase a 'direct investment' when it will fully refunded. When there were capital controls during the 1990s refunds from the Bot took up to three years.
There is a very convenient loop hole though - the Bot has announced that stock investment is exempt from the reserve requirement. A condo buyer could therefore buy Bt10m of stocks sell them the next day and use the proceeds to purchase his condo. The stock purchase certificates can be used to show the Bot that you have spent Bt10m investing in the stockmarket.
For smaller investments - say under US$100k - these capital controls can be circumvented simply by transfering multiple amounts amounts under US$20k.
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Bangkok Girls : Meet Sexy Bangkok Girls
Posted on: 8:43 am on Dec. 19, 2006
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silentbob1234
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It would be nice if the dollar to baht rate went higher than the current 35 to 1 rate. Although I remember years ago when the rate was 25 to 1.
It'd be sweet if it went as high as 50 to 1.
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Thai Women : Meet Matured Thai Women
Posted on: 8:55 am on Dec. 19, 2006
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DaffyDuck
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Quote: from Abrak on 11:07 pm on Dec. 19, 2006
There is a very convenient loop hole though - the Bot has announced that stock investment is exempt from the reserve requirement. A condo buyer could therefore buy Bt10m of stocks sell them the next day and use the proceeds to purchase his condo. The stock purchase certificates can be used to show the Bot that you have spent Bt10m investing in the stockmarket.
I take it these would have to be investments in the Thai stock market, and not just any US or international stock, right?
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Bangkok Women : Meet Beautiful Thai Girls
Posted on: 9:07 am on Dec. 19, 2006
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Baskoy
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Hmmm I'm in the process of buying a 9m Condo just now and have paid about 30% and have to pay the residual in March on completion.
I wonder if I will be affected as I am already in the contract ? Or will I have to transfer the residual payment in in lots of 20K or less?
Any of you barrackroom lawyers have any advice before I run panicking to the developers?
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Bangkok Girls : Meet Attractive Thai Girls
Posted on: 9:18 am on Dec. 19, 2006
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Abrak
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Quote: from Baskoy on 11:42 pm on Dec. 19, 2006
Hmmm I'm in the process of buying a 9m Condo just now and have paid about 30% and have to pay the residual in March on completion.
I wonder if I will be affected as I am already in the contract ? Or will I have to transfer the residual payment in in lots of 20K or less?
Any of you barrackroom lawyers have any advice before I run panicking to the developers?
You will certainly be affected if you try and transfer the balance of your condo purchase over to Thailand in one go. My guess is that your developer will have found a solution for you by the time you need to transfer the money.
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Thai Girls : Meet Active Thai Girls
Posted on: 9:59 am on Dec. 19, 2006
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localguy
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From the Financial Times:
Thailand revokes capital controls on equities
BOT, thanks for listening!
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Thai Women : Meet Matured Thai Women
Posted on: 10:54 am on Dec. 19, 2006
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latenight
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Quote: from Abrak on 11:07 pm on Dec. 19, 2006
There is a very convenient loop hole though - the Bot has announced that stock investment is exempt from the reserve requirement. A condo buyer could therefore buy Bt10m of stocks sell them the next day and use the proceeds to purchase his condo. The stock purchase certificates can be used to show the Bot that you have spent Bt10m investing in the stockmarket
Is that the tuesday evening government announcement ? Situation is far from clear...it seems they've only lifted part of the restrictions...wonder if thai will have much more problems using sums over 20000US$ wired from overseas to their thai accounts.
On a side note wire orders I faxed monday morning to main french bank have not been honoured yet and it seems international TTs to Thailand are largely suspended at the moment... confusing...
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Bangkok Girls : Meet Attractive Thai Girls
Posted on: 11:12 am on Dec. 19, 2006
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