Preparing Measures to Minimize Effects of the Eurozone Crisis on Thailand

(06/07/2012)

The Government is preparing measures to deal with the eurozone debt crisis, so that Thailand will be affected as little as possible by the situation. Among the measures are maintaining the stability of the baht to help exporters and ensuring that inflation and prices of products will not be too high. The measures were discussed by a meeting of economic ministers, chaired by Prime Minister Yingluck Shinawatra at Government House on 4 July 2012. The Deputy Prime Minister and Finance Minister, Mr. Kittiratt Na-Ranong, said that the foreign currency exchange rates remain stable and are not a factor leading to inflationary pressure. Thailand’s capital market also enjoys stability. Although crude oil prices in the world market have increased, he said, the Government believed that it would be able to maintain retail oil prices. If necessary, it might use money from the Oil Fund to maintain domestic retail oil prices. The Oil Fund's red figures have been reduced from more than 30 billion baht to 16 billion baht. Apart from accelerating public sector spending, Mr. Kittiratt said that the Government had instructed relevant agencies to seek new export markets to replace the European Union. The new markets include ASEAN, the Middle East, and East Asia. He said that the unemployment rate in Thailand was still low. However, labor skills needed to be developed in response to the labor market demand. In this connection, the Ministry of Labor, the Ministry of Industry, and the Ministry of Education were told to promote skill development by providing training for workers. In order to enable the tourism sector to earn more income, Mr. Kittiratt said that Don Mueang Airport will be reopened for services on 1 August 2012, instead of 1 October 2012. The reopening of Don Mueang will facilitate the movement of passengers and ease congestion at Suvarnabhumi Airport. According to a recent Cabinet decision, Suvarnabhumi will be a hub airport for full-service and connecting flights, while Don Mueang will serve low-cost carriers and accommodate both domestic and point-to-point international flights. Another measure to help Thailand to cope with the eurozone crisis is that the Government will place emphasis on three groups of products to prevent them from being adversely affected. The three groups, which have been exported mainly to Europe, include textiles and garment, gems and jewelry, and electronics items. Financial institutions under the supervision of the Ministry of Finance will be asked to extend credit, or provide guarantee, for exports to target countries. The Export-Import Bank of Thailand has prepared 100 billion baht in credit for entrepreneurs and another 40 billion baht in credit guarantee for exports. The funds will help in risk management for exports to Europe.