Exporters seek to have baht's rise capped at up to 2% of rivals' units

Ten leading exporters of food, farm goods and garments called for monetary measures and assistance from state agencies to ease the baht's rapid appreciation, which they say has threatened their competitiveness. The exporters want the government to cap the baht's appreciation at 1% to 2% above the currencies of trading competitors, rather than the current levels of 3% to 6%. The baht has appreciated by 11.4% from 41.17 baht per US dollar at the end of 2005, to 36.48 yesterday.

''How can we compete with our rivals such as China, Indonesia, Vietnam when the values of their currencies increase only between 2% and 7%?'' asked Poj Aramwattananont, president of the Thai Frozen Foods Association.

The currency exchange rate of 37.50 baht per US dollar was the extreme tolerable rate for local exporters, he added. So when the baht jumped to 36.40 on Tuesday, he said, Thai exporters lost their ability to compete with foreign counterparts.

''Local exporters have been improving their businesses by creating innovations, upgrading their skills, and reducing costs for years to make local competitive capacity top foreign rivals by 1% or 2%,'' Mr Poj said. ''But controlling the baht's value is something that is beyond our capability to manage.''

Tarisa Watanagase, the central bank governor, insisted yesterday that the Bank of Thailand had no policy to weaken the baht. The central bank will try to keep volatility at a minimum and introduce new rules to facilitate overseas investment by local firms.

''We will stick to policies we have announced,'' she told reporters. ''We will look after the baht's stability and gradually issue rules for overseas investment.''

Mr Poj said the Bank of Thailand should review its regulations on the acquisition of currencies to make it more difficult to buy US dollars.

In addition, the central bank and the government should not allow people who are not authorised to talk about national financial policies to deliver opinions on the baht through the media, otherwise it would shake the confidence of exporters who trade under forward contracts, said Mr Poj. He cited an example of a financial executive who recently said the baht would reach 35 per US dollar.

If the government can't stop the baht's rise, he added, then it better provide other non-monetary measures to help local manufacturers cut down utility costs and other expenses.

The export groups yesterday were led by the Thai Frozen Foods Association, Thai Broiler Processing Exporters Association, Thai Fruit and Vegetable Traders Association and the Thai Food Processors' Association.

Export revenue from the food, farm and garment industries this year has been adjusted down to 680 billion baht from an earlier projection of 750 billion baht when the exchange rate was 41.17 baht per US dollar, said Mr Poj.

Somsak Paneetatyasai, president of the Thai Shrimp Association, said revenue from shrimp exports would drop from an earlier forecast of 10 billion baht this year.

In addition, the strong baht would keep the processed food industry from reaching its target of 12% to 15% growth this year, said Vilai Kiatsrichart, president of the Thai Food Processors' Association.
Some canned tuna producers had lost clients to Ecuador, the Philippines and Vietnam already since they could offer cheaper prices, she added.
source: Bangkok Post : Business news