Security act invocation to affect confidence in short run: Thai central bank

BANGKOK, March 10 (TNA) – The Cabinet decision to Implement Thailand’s Internal Security Act (ISA) in the capital and its environs to prevent any eruption of violence during the Red Shirt protests later this week may negatively affect investor confidence and domestic spending, according to the Bank of Thailand (BoT), but it will last only for the short run.

“It is normal that people must react carefully when there are [disturbing] news reports. So do businesspersons,” said Suchart Sakkankosone, senior director of the BoT Domestic Economy Department.

“Whenever making investment decisions,” the central bank expert said, “they will consider the political climate first.

“Whether the security law is invoked or not, they pay no attention,” he explained, “but they will give greater importance to the overall picture of the country’s economy in the long run. The money market is sensitive to good and bad news in the short term, but in the long term the market will be influenced by the overall picture.”

He said surveys conducted to indicate the opinions of the public and business players show that political uncertainties are the main reason for a lack of confidence among the business community and the public.

However, it was found the entrepreneur confidence began to improve as a result of an increase in incomes earned by farmers and operators in the tourism and service sectors.

Mr Suchart said the central bank would monitor the overall picture of the economy and assess possible impacts from the political uncertainties and the rallies by Red Shirt demonstrators on both the confidence and economic expansion at the Monetary Policy Committee’s meeting on March 10 before making a decision on the policy interest rate. (TNA)