Thai companies should set up manufacturing bases overseas because the period when they sold goods cheaply on the back of a weak currency is over, Finance Minister Korn Chatikavanij said.
The baht’s 82 percent drop in 1997 during the financial crisis prompted Thailand’s exports as a percentage of gross domestic product to increase to a peak of 70 percent last year from 35 percent, he said. The currency gained beyond 30 against the dollar for the first time since 1997 earlier this month.
“We became manufacturers of goods to the rest of the world using our relatively cheap currency,” Korn said in a speech in Bangkok last night. “That era is over and it’s over rather quickly, so very quick restructuring and rethinking needs to take place.”
Developing nations have been selling their own currencies and taxing global investors to curb appreciation. The Bank of Thailand may refrain from a third straight increase in rates tomorrow, as Asian central banks widen efforts to stem currency gains that threaten exporters.
If Thai companies “don’t become aggressive in making overseas investment within our near neighboring countries, we will be losing out on a major opportunity that is given to us,” Korn said. “It is almost inevitable that the U.S. dollar will continue to weaken.”
The baht was little changed at 29.91 per dollar as of 10:18 a.m. local time. It has gained 11.3 percent this year, the best performer among Asia’s 10 most traded currencies outside Japan. The SET Index had advanced 34 percent this year, the third-best performer among Asia’s 15 biggest markets.
Italian-Thai Development Pcl, Thailand’s biggest contractor, is close to signing an almost $12 billion deal to build a deep- sea port in Myanmar, Nijaporn Charanachitta, a senior executive vice president, said Oct. 7.
“The ministry of finance has already been tasked to look at more measures needed to help incentivize and subsidize Thai companies into making these industry investments,” Korn said.
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