Further liberalization of financial services, progressing as planned in Financial Sector Master Plan II, will provide Thailand opportunity for firms to have better access to funds at a more competitive price, especially small businesses which comprise a large part of the workforce. This adds another dimension to Thailand’s competitiveness and will help strengthen economic growth. Now, let me turn towards the Bank of Thailand’s other major responsibility – to balance between financial stability and economic growth. The role of monetary policy is to manage the financial environment to ensure macroeconomic and financial stability. The Monetary Policy Committee, or MPC, has maintained an accommodative monetary policy stance throughout the adverse shocks in the last couple of years. In the current episode, we are conducting monetary policy to maintain a right balance between economic growth and financial stability, including inflation. The current policy rate which is negative in real term has already helped alleviate small businesses and households’ interest burden and can help the private sector survive the short term slump. Turnaround is coming! Weak sentiment due to the uncertainty about the political situation is the root cause of the faltering domestic demand. Political resolution is beyond our scope, so it may be appropriate to focus more on the medium and long term strategy necessary to support the economic rebound once the political status improves. The collaboration between private businesses and financial sectors to deal with the mentioned structural challenges is required to lay a solid foundation of the future economy.
But this advantage diminished since the global financial crisis. Firms may consider moving up the value chain to differentiate products and enhance value. There are two possibilities that exist in Thailand depending on the industry. The industries that are behind need to catch up with the ongoing trend, and industries that have the opportunity, can leap ahead of the trend. In either case, Research and development investment is needed. To address the issues just mentioned, Thailand’s financial sector, which includes my esteemed guests for today and the Bank of Thailand, must set clear directions for our roles. To deal with the structural challenges, the private sectors need support from the financial sectors. They will require long term and low cost funding, from both domestic and international sources. Ladies and gentlemen, your operation of financial institutions with both caution and long term vision has so far contributed to financial stability in Thailand. We would like you to continue placing value in the long term, and providing liquidity for established customers who will definitely return to growth after Thailand’s rebound. Such support creates long term value for your international investors and helps both your future returns, and to usher the economy through the slump. For the Bank of Thailand’s part, we continue improving financial system strength and efficiency.