Virabongsa Says Thailand an ‘Attractive Place for Hot Money’

Virabongsa Ramangkura, chairman of the Bank of Thailand, comments on efforts to stem capital inflows. He spoke at a seminar in Bangkok late yesterday.

The Bank of Thailand will keep its benchmark interest rate at 2.75 percent today, according to 17 of 20 economists surveyed by Bloomberg. Three predict a quarter of a percentage point reduction. The decision is due at 2:30 p.m. local time.

Thailand is an “attractive place for hot money because our regulations are not that tight like China,” Virabongsa said.

“I am concerned, but not panic-stricken yet. There have been huge amounts of inflows to stocks, bonds and property. The situation may be similar to 1994-1995. Land prices in some areas, like by the sea, have risen more than 10-fold.”

“Our economic growth at 4 percent to 5 percent is not enough to cope with such an increase. When money flows in, many people, especially investors in stocks and properties, are happy. I just hope that we have learned our lesson during the crisis and that laws and bank rules have been improved.”

“Money is like water. It will flow from low- to high-yield places. No matter what regulations or barriers you have, it will always find a way. I can’t think what measures we should use to slow it down. Using a Tobin tax is not easy. Any direct controls like reserve requirements or non-market measures have strong side-effects. If prices of property and financial assets increase enough, investors will suffer a lot when they fall. So no government will be willing to use such drastic measures.”

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at

To contact the editor responsible for this story: Stephanie Phang at

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