I believe that these existing solid fundamentals that I have just outlined will help Thailand emerge strongly from the economic setback we recently experienced. However, in a constantly shifting global landscape, we policymakers cannot be complacent with the status quo. A lot remains to be done to guarantee the continued strength of our economy. The key impetus falls on structural reforms that lift Thailand’s international competitiveness. This will not only enable Thailand to reap the full benefits of the emerging trend of regional integration, but also ensure sustainable growth in the long run. Considerable adjustment and transformation of our economy will be required. Bottlenecks to businesses due to structural rigidities will need to be removed. Factors of production will have to be upgraded and reallocated to activities that offer the most promising way forward. Government policies and laws will have to be updated and changed to best facilitate such structural adjustments, all the while making sure that the burden of adjustment on those who stand to lose is bearable. As should be apparent, these challenges cannot possibly be completely met in the short-term and will require long-term commitment from both the public and private sectors. The BOT’s role in meeting these challenges is, first and foremost, to deliver on our mandate of ensuring macroeconomic stability. A stable macroeconomic environment will not only foster business-friendly climate and make the process of structural adjustment easier, but it is also a key prerequisite for long-term sustainable growth.
We very much recognize the potential risks involved and our utmost priority is to limit harmful second-round effects of this shock. In doing so, this should help to limit the impact on businesses. Apart from serving as an anchor for macroeconomic stability, the BOT can also work to promote Thailand’s competitiveness and adaptability. We will continue to pay particular attention to policies that facilitate businesses in adjusting to a competitive environment. For example, the BOT is formulating a Capital Account Liberalization Master Plan to enable more flexibility in managing cross-border investments and to achieve greater balance of capital flows. Foreign exchange regulations would also be streamlined to help reduce the cost for the private sector in cross-border transactions as well as to deepen and broaden domestic financial markets. More directly, the BOT can strive to enhance the effectiveness of the financial sector in serving as an efficient intermediary that is able to meet private sector demands at reasonable costs. Improvements can be achieved in four dimensions. First, encourage financial innovation and the expansion of available financial instruments. Second, broaden the choice available to firms and households in terms of financial services. Third, reduce the cost of these financial services. And lastly, improve access to them. The second Financial Master Plan is an example of BOT’s efforts aimed at pushing the financial sector in this direction. To conclude, I wish to reiterate that with its solid economic foundations, Thailand is poised for a strong recovery and is well-positioned to benefit from the rise of Asia.