An accommodative monetary policy and a strong and well capitalized banking system provided a favorable environment whereby firms and household could continue to finance the consumption and expansion to support domestic demand. The Thai economy was able to navigate through short term sell offs and the sharp reversal of capital flows. The  BIS central bankers’ speeches  1  recent turbulence in fact provided a reality check on the importance of policy consistency and the fundamentals of the economy. Monetary and financial policies in Thailand have strongly relied on prudence and pragmatism. A credible monetary policy framework helped anchor inflation expectation, thereby fostering continued growth and stability. A flexible exchange rate regime also supported the efficient allocation of resources and competitiveness of the economy. A strong external position helped cushion against sharp reversals of capital flows. One can never put a price on the comfort with which a strong international reserves position brings. Imagine if we had to raise domestic interest rates to defend the currency that is weakening because of capital outflows. All of this at a time when the global economy is weak and the domestic economy needs the support of accommodative macroeconomic policies! Financial liberalization and regulatory reform efforts under the Financial Sector Master Plan provided opportunity for Thais, particularly small-scale firms, to have better access to finance. A competitive banking system and a vibrant capital market also helped strengthen investors’ confidence through efficient resource allocation and appropriate pricing of risks.

Recognizing this, the Bank of Thailand has gradually relaxed capital flows regulations, initially on outward direct investment and more recently on portfolio investments for Accredited Investors. We plan to continue to broaden the scopes of investment with freer mobility for Thai residents in investing overseas. The BOT is also working closely with the Ministry of Finance and other agencies on appropriate tax incentives to facilitate the setting up of treasury center to enable large corporate to conduct in house financial transactions more efficiently and with lower transaction costs. With the opening up of the New Investment Frontier, this is probably the most exciting times for Thai corporates to invest abroad to secure resources both raw material and know how, expanding customer base, acquiring distribution channels, and broadening markets. 3. The last area of “Move in”, aims to create a more attractive business environment for foreigners to turn to Thailand as an important spring board for investment in the new frontier markets. Thailand has a geographical location advantage to become an investment hub for the ASEAN Economic Community, particularly the new frontier markets. To become a magnet for the region, Thailand needs to maintain its ranking in the ease of doing businesses in such areas of rules of law, governance and strong regulatory frameworks. The Thai capital market has also worked hard to promote its role as the funding centre for new frontier markets. Recently the Government of the Lao PDR successfully issued Thai baht-denominated bonds amounting to THB 1,500 million to finance its investment projects.