Thailand’s industry leaders seek discussions

The unsettled debate on an appropriate policy rate amid baht appreciation has led Thailand’s Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) to request a discussion with the Bank of Thailand, seeking an interest rate reduction.
The JSCCIB also plans to meet with Prime Minister Paetongtarn Shinawatra to discuss measures to deal with the stagnant economy, offering her a list of the group’s proposed solutions.
The dates and times of the two meetings have yet to be announced.
The JSCCIB wants the central bank to consider decreasing the policy rate after the US Federal Reserve last month cut its key interest rate by 0.5 percentage points, said Payong Srivanich, chairman of the Thai Bankers’ Association, a key member of the committee.
In August, the Bank of Thailand’s Monetary Policy Committee (MPC) kept the policy rate steady at 2.5%, described as in line with the local economic recovery.
“We want the policy rate to decrease as this will benefit the real sector, boost people’s purchasing power and stimulate economic growth,” said Mr Payong.
The real sector refers to businesses producing goods and services.
The JSCCIB expects the policy rate to decrease by 0.25 percentage points this year and another 0.25-0.5 percentage points next year, which it predicts will benefit the real sector.
The panel’s projection is similar to that of economists who earlier predicted the time is appropriate to ease monetary policy in an attempt to increase economic activity.
SCB EIC, a research unit under Siam Commercial Bank, believes the MPC will start cutting the policy rate by 0.25 percentage points in December this year.
Central bank governor Sethaput Suthiwartnarueput said the MPC will base its decision on three core domestic factors: economic growth, inflation and financial system stability.
Mr Sethaput said the central bank will focus primarily on domestic factors when considering adjustments to its policy rate, rather than following any Fed adjustments.
The JSCCIB said on Wednesday it would also meet with the Finance Ministry to consider adjusting the inflation target, seeking a suitable framework for the economic environment. The current inflation target is 1-3%.
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the group will discuss with Ms Paetongtarn ways to stimulate the economy and help small and medium-sized enterprises survive the stagnant economy.
The impact of flood damage will also be on the agenda, he said.
“The Thai economy faces many challenges, including slow economic growth, imports of low-cost products from China and flood damage in many provinces,” said Mr Sanan.
He said the impact of baht appreciation on Thai exports is also a concern after its value rose to 32.3 against the US dollar from 36.8 in just three months, an increase of 12%.
Escalating conflicts in the Middle East are also threatening to increase shipping costs, while traders worry about rising global crude oil prices, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries.