“ the thai economy : the current state and the way forward ” speech by dr. veerathai santiprabhob governor of the bank of thailand japanese chamber of commerce ( jcc ) thailand dinner talk 13 march 2017 mr. shingo sato, president of the japanese chamber of commerce, members of the jcc board, jcc members, distinguished guests, ladies and gentlemen, a very good evening to you, first of all, i would like to thank the japanese chamber of commerce for inviting me again to share with you my thoughts on the prospect of the thai economy. last year, i truly enjoyed the exchange of views, ideas, and information with all of you and certainly hoped many of you did so too. with more than 5, 000 japanese firms actively operating in thailand across various industries, japan is certainly one of thailand ’ s most important business partners in both the real and the financial sectors. indeed, as thailand is trying to move towards more innovative and high value - added industries, it is encouraging to see japan continuing to be at the top among countries that applied for privileges under the new boi investment promotion scheme in 2016. this would not happen if japanese professionals already on the ground like yourselves did not have strong confidence in the long - term prospect of the thai economy. ladies and gentlemen, my talk this evening will consist of two parts. in the former part, i will briefly discuss the current state of the thai economy, paying special attention to its resilience and growth momentum. in the latter part, i will share with you my thoughts on the way the thai economy is moving forward as well as opportunities for japanese businesses. let me start with the first part, by reviewing what we went through last year. i believe you all agree with me that 2016 was full of unexpected events and turns. on the domestic front, we faced with a severe drought early in the year followed by a historic flood in the south around the end of the year, and of course the passing of his majesty the late king bhumibol, which caused all thai people the greatest sorrow. also, the government ’ s crackdown of illegal tour operators led to temporary yet significant effects on the tourism industry which had been a major growth driver of the economy in the past few years. on the external front, we saw the bank of japan ’ s adopting a negative interest rate policy in january of last year, an unease over the fate of european financial institutions, the brexit vote, and

$ 9. 6 billion over the first eleven months of 2013. having reached the legal limit on the issue of treasury securities for the purposes of open market operations, the central bank sought and received approval from the ministry of finance and the economy to facilitate the issue of two treasury bonds, whose proceeds were sterilized. the first treasury bond was issued in may 2013 at a face value of $ 1 billion and the second in august 2013 with a face value of $ 559. 3 million taken from a $ 1 billion offering. the bank also rolled over for one year, the commercial banks ’ fixed deposits held at the central bank which matured to date in 2013. in addition, the bank indirectly removed just over $ 8. 0 billion from the system via the sales of foreign exchange to the banking system in the first eleven months of 2013. in early december 2013, the central bank ’ s liquidity management framework was enhanced with an increase in the borrowing limits under the treasury bills act ( to $ 30 billion from $ 15 billion ) and the treasury notes act ( to $ 15 billion from $ 5 billion ). i wish to emphasize that these treasury securities are purely for the purposes of monetary policy, not fiscal policy. the proceeds of the securities are locked away in a blocked account at the central bank and only re - enter the financial system upon maturity of the existing securities. these funds are not used to finance the government ’ s budget or any government program. i also wish to emphasize that this practice is not new. in january 2003, parliament approved an increase in limits for both treasury bills ( from $ 2 billion to $ 5 billion ) and treasury notes ( from $ 1 billion to $ 3 billion ). in august 2006, parliament again approved an increase in limits for both treasury bills ( from $ 5 billion to $ 15 billion ) and treasury notes ( from $ 3 billion to $ 5 billion ). by 2008, or within two years, these new limits were already reached and the central bank had to resort to rolling over existing maturities to mop up the excess liquidity. short - term prospects i would now like to turn to the outlook for 2014. it is fairly evident that uncertainty continues to weigh heavily on external conditions. perhaps the most immediate downside risks to emerging markets, including trinidad and tobago, relates to shifting expectations about the future path of us monetary policy. with firmly anchored inflation expectations, the central bank is giving more weight to an accommodative monetary stance until a firm