Horror what shall we do now

[Guest ear wig]

Foreign house buyer affected by baht measure

 

 

 

Impacts of the Bank of Thailand's austere capital control measure spreads beyond the stock market, as an expatriate sees a problem in settling a house purchase deal scheduled Wednesday.

 

The expat who contacted The Nation but asked not to be named transferred 150,000 euro from a bank in Hong Kong to Kasikornbank Tuesday, without knowing of the measure.

 

He was shocked to know that 30 per cent of his money would be parked with Kasikornbank once he converted the foreign currency into Thai baht.

 

"Only if the central bank averts the policy, would I have enough money to sign the contract. If this policy remains, I would need 30 per cent more for the house that I have reserved," he said.

 

The Nation

 

 

[Guest wowpow]

One wonders about the 800,000 baht deposit for retirement visas now to be lodged 3 months prior to application.

 

It is supposed to demonstrate adequate funds to live in Thailand for a year but if 30% is frozen they would logically have to ask for 1,040,000.

 

Another fine mess they have gotten us into.

 

What about pension payments? The list of queries is very long.

 

 

Market for condominiums badly hit

 

The financial authorities' miscue on currency control will hurt the local condominium market, as foreigners would balk at paying the 30-per-cent deposit and that could delay transactions, CB Richard Ellis, an international property consulting firm, said yesterday.

 

Foreign investors and exporters also urged the government to gauge investor sentiment before implementing any new measures to slow down the baht's rise and to restore foreign investor confidence after the capital-control measure routed the stock market and left investors in shock.

 

Aliwassa Pathnadabutr, managing director of CB Richard Ellis Thailand, said that if foreigners were required to deposit 30 per cent of their purchase price with the Bank of Thailand for one year without interest, this would be very damaging to the condo market and present a significant barrier to demand for units from foreigner investors.

 

"Property is a reasonably illiquid asset that takes longer to purchase and to sell than shares, bonds and other financial instruments. Property is not a short-term investment and therefore should not be targeted in an effort to control short-term capital inflow. Any additional paperwork or approval to purchase a condominium will restrict demand and may be impractical to implement because of the timing issue," she said.

 

A foreigner has complained to The Nation that he had to delay the purchase of a Bt7 million residence due to the measure. His money was transferred into Thailand on Tuesday and subjected to the deposit. That means he has to bring in Bt2 million more to acquire the reserved property or he has to win a central bank exemption from the deposit requirement.

 

Full article

http://www.nationmultimedia.com/2006/12/21...ss_30022112.php

[Gaybutton]

BANGKOK, Dec 21 (TNA)

 

Thai Prime Minister Surayud Chulanont on Thursday welcomed the drastic moves launched earlier this week by the Bank of Thailand (BoT) and Finance Minister Pridiyathorn Devakula to protect Thailand's currency from foreign speculation.

 

Speaking to journalists before leaving for Chiang Mai province, Gen. Surayud dismissed criticism that M.R. Pridiyathorn, also deputy prime minister, inappropriately intervened in operations of the central bank.

 

On the contrary, the prime minister defended both the BoT and the finance minister, saying that speculation on the Thai baht was in fact a threat to the Thai economy as this could be clearly seen that the Thai stock market rebounded Wednesday after the BoT ruling on currency controls on foreign investors was relaxed.

 

The market value of the Stock Exchange of Thailand (SET) lost over Bt800 billion in value on Tuesday, one day after the central bank imposed its stringent measure to control currency transactions, regained Bt550 billion in value yesterday as the SET composite index rebounded 69.41 points to close at 691.55 points.

 

Wednesday's sharp rebound of the stock market came after M.R. Pridiyathorn on Tuesday night reversed his position and waived stock investments as well as foreign direct investment from the new reserve rules on foreign inflows.

 

"They're both positive," the prime minister said, "and (there are) negative consequences in every action. Both senior officials of BoT and M.R. Pridiyathorn moved in the right direction to correct the mistake."

 

When asked whether the overnight change in the rule could erode foreign investor confidence, he said the government's policy was straightforward and that was to prevent the baht from being too strong, as it could impact the country's exports.

 

(TNA)-E111

 

 

[Guest Boxer]

Wow pow is right over the retirement amount as if you have to live off the money it will be 25/30% more when you deposit it 3 mths before renewal. The amount has to be 800000 AT TIME OF RENEWAL AS WELL AS WHEN DEPOSITED.

 

[Guest wowpow]

Remember that TIT and as the ramifications of the panic rules become clear these anomalies will get sorted. They are obviously not involved inn speculation.

 

Of course, it's all America's fault for running a massive deficit balance of payments. It is such a short time since Clinton got it in balance and it vitually started to go wrong as he walked out of the White for the last time as President.

 

Countries holding dollar reserves are searching for somehwere safe to put their money other than the UK and EU which have strong controls - learned by

experience of the speculators.

 

Remember when America catches a cold the rest of the World gets flu.

 

[Gaybutton]

Property purchases have been declared exempt from the new rules.

 

The following appears in THE NATION:

_____

 

FOREIGN INVESTMENT

 

BOT Steps Could Lead to Pull-Out

 

Upside is a Badly Needed Weakening of the Baht: S&P

 

While controls on short-term capital inflows in Thailand have succeeded in stemming further speculative inflows, they could also trigger a pull-out of foreign funds already invested in the Kingdom, says a report published today by Standard and Poor's Ratings Services.

 

Entitled "Capital Controls Come at a Cost to Thailand", the report also reveals that the country's new capital controls have spawned tighter domestic financing conditions, harmed the Bank of Thailand's reputation, and made investors cautious.

 

"Foreign investors will now be far more wary of investing in Thai financial markets," said Standard and Poor's credit analyst Kim Eng Tan. "This will lead to higher funding costs in the Kingdom, with negative implications for the prices of debt and equity assets.

 

"Although this should not harm Thai economic prospects in the near term, it could adversely affect domestic investment if planned government capital spending leads to the reappearance of current account deficits. This is because such deficits would increase Thailand's reliance on foreign financing."

 

The Bank of Thailand's latest controls initially triggered a wave of volatility across Asian financial markets, accentuated by the seasonally low liquidity in most financial markets as traders closed their books for the year. The disruption came at a time of significant concern regarding near-term market conditions, with an expected slowdown in global economic growth in 2007

 

Nevertheless, although the losses in Thailand outpaced those of elsewhere, most markets have since recovered. Moreover, the implementation of capital controls in Thailand is unlikely to heighten perceptions of risk in Asian markets, as financial market volatility is likely to dissipate in the short-term unless the region suffers another significant negative shock or abrupt policy adjustments, said S&P.

 

"Barring a further significant negative shock, the volatility in Asian financial markets should subside in the near term," said Kim Eng Tan. "The healthier external balance sheets of both Asian central banks and corporations also make the recurrence of a 1997-type financial crisis unlikely.

 

Asked to comment on the S&P report, Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula dismissed the notion that the S&P might have lowered the rating of Thailand.

 

"Normally, the credit-rating agencies would assess an incident in a country. It would not affect the credit rating of Thailand. The measure had a short-term impact.

 

S&P also urged Asian governments to balance their instincts against exchange rate volatility and appreciation, as well as the need to focus on the fundamental determinants of competitiveness.

 

However, Deputy Prime Minister and Industry Minister Kosit Panpiamras said the coordination of policy might be difficult to be realised because each country has to take care of itself. He added a decision to adjust credit rating would certainly affect the cost of businesses in raising funds.

 

S&P gave Thailand's foreign

 

currency a rating of BBB+ (long-term) and A-2 (short-term), while the local currency rating is rated A (long-term) and A-1 (short-term). The long-term rating outlook is rated stable.

 

Some foreign investors yesterday pulled their money out of the country after Black Tuesday. The baht fell against the dollar, closing at 36.42-44 from Wednesday's 35.80-90.

 

Demand for dollars yesterday increased as foreigners reduced portfolios in the Thai equity bourse and Thai importers bought dollars as they were afraid of the weaker baht. But, on the other hand, some exporters are satisfied by an appropriate rate of exchange and have sold out their foreign-currency incomes.

 

BOT governor Tarisa Watanagase said the weakening baht was caused by foreigners selling out Thai stocks. This was in line with the central bank's purpose to halt the rapid appreciation of the baht.

 

Earlier, the baht had rapidly headed north no matter which direction the dollar moved, while other Asian currencies have shifted in a reverse path of the dollar.

 

"The measure helped to break the one-way direction of the baht and the momentum has already ceased. The baht is not weakening too rapidly now. We continue to closely monitor it," said the governor.

 

Aside the action of foreign investors, the weak baht was also a result of importers' purchases of the dollar for goods and service payments. But the demand for the dollar was not too high, said Pongpen Ruengvirayudh, the BOT's senior director of the Financial Markets Operations Group.

 

Tarisa believes some foreign investors, who have already sold out Thai stocks, continue to park their money domestically and wait for the proper time of the bourse to recover. She had a talk with a long-term foreign fund operator, which was satisfied with the drawback policy and decided to maintain its money in the Kingdom

 

The governor said that the efficiency of the reserve requirement measure would be apparently seen at the beginning of next year because the market turnover was currently too thin to reflect the actual transactions due to the holiday season.

 

Meanwhile, the Bank of Thailand also issued an announcement on their website on December 21 stating that property including land and condominiums is exempt from the reserve requirement on short-term capital inflows.

 

Foreign purchasers of condominiums can bring funds into Thailand to purchase condominium property. According to a major local bank, foreign condominium purchasers should clearly state the project name and unit number when remitting funds.

 

Aliwassa Pathnadabutr, managing director of CB Richard Ellis Thailand, said that the company welcomes this clarification, which means that foreign property purchasers are not affected by the new regulations.

 

"We believe that this will reassure existing and potential property purchasers," she added

 

There are still many foreigners who want to purchase condominiums in Thailand both to live in and as long-term investment. The rental market remains strong and the prospects for capital appreciation are good for projects in locations with limited supply and a scarcity of development sites.

 

The negative impact on the real estate sector following currency controls recently introduced by the BOT has become evident. A number of foreign investors planning to conclude major acquisitions in the Thai property market before Christmas have immediately put their plans on hold, says Longlom Bunnag, chairman of Jones Lang LaSalle.

 

Foreign investors' sentiment and confidence were negatively affected by the BOT's action on currency controls. Though BOT announced that the currency control measure would not apply to foreign investment in the property sector, this has apparently failed to restore the confidence of foreign investors in the Thai property sector.

 

"All overseas investors who we are dealing with in the process of acquiring property in Thailand have immediately ceased their plans and applied a 'wait and see' approach. Though we believe that these investors remain keen to invest in the Thai property market, it will likely take some time before foreign investment activity in the market resumes, at least until the Thai government finds out how to reinstate foreign investors' confidence," said Longlom.

 

Some foreign investors who are less concerned by the BOT's action have also held on their investment decision, waiting to see where the Thai currency is going.

 

"If the baht currency is weakened by the BOT's measure, this means foreign investors will pay less for the assets they plan to acquire in the Thai property market," Longlom added.