US financial woes could impact Thai liquidity in future

[Mid]

US financial woes could impact Thai liquidity in future



BANGKOK, Sept 29 (TNA) - Global liquidity has started to tighten following the financial troubles in the US, causing Thai investors to switch to borrowing money domestically due to the higher costs of international funding mobilisation and this may eventually cause a tightening in local liquidity, a senior Bank of Thailand (BoT) official said Monday.

BoT deputy governor Bandid Nijathaworn said during a seminar that the central bank is closely monitoring the financial crisis in the US in order to prevent it from affecting Thailand and it has found that liquidity worldwide has started to tighten.

However, domestic liquidity tightening has not yet appeared, thanks to the high demand for spending while Thai financial institutions are also competing finding deposit customers, which automatically boosts liquidity in the system, according to Mr. Bandid.

Local financial institutions are now providing lending which grows about 10 per cent, he said.

In order to prevent the problem, the Thai government must accelerate local spending and investment on mega-projects, said Mr. Bandid. The government must also create confidence among the public regarding spending.

He said measures by the Bush administration to bail out troubled financial markets are considered positive but they would take time before results are shown and while positive results are not displayed, it is necessary to guard the Thai economy.

CEO Kongkiat Opaswongkarn of Asia Plus Securities, who is also president of the Securities Analysts' Association, said he estimated that damages inflicted on the US financial market are likely to be as high as US$1.5 trillion, of which about one-third has been suffered already.

Even if the Congress and the Senate approve the US$700 billion to bail out troubled securities and other bad debts, the impact would last for years just like the Asian financial crisis in 1997, Mr. Kongkiat said.

He said the US financial crisis did not effect investment banking in Thailand because local firms are using their own capital rather than borrowing, unlike American companies which depend on borrowings.

In another development, Apisak Tantivorawong, managing director of Krung Thai Bank and also president of the Thai Bankers Association, said he had proposed five measures to the finance ministry to consider and help the private sector.

The proposals, presented at a meeting between senior bankers and newly-appointed Finance Minister Suchart Thadadamrongwej, include strict control of foreign investors mobilising funds in baht and taking the US dollar out of Thailand.

Also included would be extending tax exemptions for private enterprises undertaking debt restructuring process to long-term instead of short-term as it is now, and the finance ministry providing low-interest loans for small- and medium enterprises and to entrepreneurs in the three troubled southern provinces. (TNA)

enews.mcot.net

[bkkandrew]

^Good, oh. The Thais have noticed there is a crisis on. Only about 12 months too late. No change there then!

[mediamanbkk]

Wonder what the reaction will be now the bale-out plan was voted down?

[Rattanaburi]

We'll probably hear about runs on banks etc today or tomorrow. I bet the Singaporeans will go into the fear factor again as they have already once. In Thailand there are endless car loans ect and once orders stop coming in and companies lay off staff all hell is going to hit the fan. Just consider all the companies that supply labor for overseas work. just yesterday a US airline laid off alot if nopt all Thai and Singapore staff. Was that United? Things are going to get bad bad bad for all of us here in LOS and there in the US if things continue down. For those who actually have cash and secure jobs maybe things won't be so bad.

[keda]

bail out?

[mediamanbkk]

^Correct spelling sir, my mistake!

[keda]

mm, didn't notis the spelink till yu brung it up...i was just echoing the BoT's delayed reaction...