[Ip-health] TPP poses challenges to Thailand's financial sector: BOT

Jockey jockey.kit at gmail.com
Wed Nov 14 02:07:07 PST 2012

Dear all,

Obama has a plan to visit Thailand and has a meeting with the PM of
Thailand on Nov 18.  The Thai government is willing to get involved in the
TPPA negotiation.  Obama's visit and the TPPA has been published in
Thai-language newspapers.  Below is a news in the English-language press.
This is another challenge to Thailand, in addition to the Thailand-EU FTA.



TPP poses challenges to Thailand's financial sector: BOT

The Nation November 14, 2012 12:38 pmThough not opposing the Trans-Pacific
Partnership (TPP), the Bank of Thailand raised concerns on the influence of
such agreement on Thailand's investment and capital flows. In a research
written by Harit Rodprasert, a senior economist, the author expressec
concerns in two main areas.

First, the policy space to keep capital flows in control. He noted that TPP
tends to limit member countries’ ability in keeping capital flows at the
level accommodating economic and financial stablity. Capital flows offer
new options for investment, saving and fund mobilisation. In the form of
foreign direct investment, the flows could lead to transfer of technology
and greater competitiveness. Yet, they could generate risks to the
financial sector, if this leads to foreign exchange volatility. The influx
could also cause bubble in the property market. Massive outflows, in
contrast, could pose problems in a country’s balance of payments and

"The agreement under the TPP framework would benefit the general public
only when investor protection and policy space is balanced," he said.

The TPP is a key part of US President Barack Obama’s economic strategy and
the government’s move to join the group coincides with next week’s visit by
Obama. Thailand has already signed free-trade agreements with other members
of the bloc, except the US and Canada. Original signatories to the group
are Brunei, Chile, Singapore and New Zealand while negotiating members
include Australia, Vietnam and Malaysia. Other negotiating members are
Canada, Mexico, Peru and the US.

Second, Harit was concerned if Thailand and other member countries would be
pressured to open up their financial sectors up on the US requests.

He noted that liberalisation in developing countries would enhance
efficiency of the financial sector, but policy makers must also take into
account the competitiveness of local players. The timing of the
liberalisation is crucial, to ensure preparation among local players. Plus,
allowing cross-border transactions without the presence of physical
branches could also compromise the supervision and consumer protection.

"The financial liberalisation must be carried out gradually, taking into
account benefits to consumers and readiness of financial institutions.
Local players need time to adjust and increase competitiveness, for
sustainable development," he said.

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