sector ’ s loans and assessing ability of debt repayment of the private sectors, especially the middle and the low income groups. second, on exchange rate policy, the main challenge is that the thai baht has been on an appreciating trend due to various factors, including capital inflows surge into the region, structural change in the world economy, growth differential between advanced and emerging economies as well as accommodative monetary policy in advanced economies. generally, allowing the exchange rate to be determined by the market can serve as an automatic stabilizer in the short - term and as an important price signal and catalyst for structural change in the long term. so, as the first line of defense, the exchange rate should be determined by market mechanism and from both the market and our own assessment, the thai baht still remains broadly in line with economic fundamentals. however, the bot stands ready to use policy instruments at our disposal to prevent and manage dysfunctional market conditions, excessive speculation or exchange rate overshooting. it should be noted also that, the baht appreciation at this juncture provides an opportunity for businesses to upgrade their technology and productivity. given scarce labor and increasing wages, productions in thailand need to shift from labor intensive to a more capital intensive industries and thus more import of capital goods and machinery are made cheaper during this investment up - cycle. third, on capital flows management. in october 2012, the bank of thailand launched the capital account liberalisation master plan. this master plan aims to facilitate thai companies to diversify their investments abroad, especially in neighboring countries. this would encourage private companies to operate their businesses more efficiently by expanding their markets and production bases, which in turn will help strengthen their competitiveness. facilitating outflows also helps capital flows to be more balanced. the bank of thailand, for instance, has removed the limit for thai individuals ’ outward direct investment, raised the limit per investor, and eased regulations for transfers of foreign currencies to facilitate investment in foreign securities. recent surge of capital inflows to the region is likely to continue as long as advanced countries continue their extra - loose monetary policies and as long as the prospect of this region remains much more positive than advanced economies. there is no one - size - fits - all measure to deal with impact of short term capital inflows on the economy. the bank of thailand thus utilizes policy combinations, namely : allowing exchange rate adjustment as a first buffer ; liberalising outward investments by residents ; exercising

exchange rate intervention to deal with excessive movements ; and should circumstances deem necessary, the bank of thailand is prepared to consider appropriate measures in order to prevent serious impact on the economy. last but not least, other than the monetary policy, there is still a concern over the structural problem of the thai economy in the medium and the long term. given the tight labor market and increasing wage costs, we need to improve the country ’ s infrastructure and productivity. this involves the upgrading of technology and innovation to move thailand up the value chain. the well - being of workforce, as well as quality of education and training are also crucial to increase competitiveness ahead of the aec integration. this cannot be done by only one party. long - term coherent vision and concerted efforts among all agencies, both public and private, are needed. ladies and gentlemen, to close my remark this evening, i believe that the jcc will have a big role in shaping thailand ’ s future and i hope that with the long history of partnership between japan and thailand, we will continue our close cooperations in all aspects in the years to come. thank you. bis central bankers ’ speeches