Business News
Thailand to rein in baht with tax on foreign investment in bonds
Oct 12, 2010, 12:13 GMT
Bangkok - Thailand's cabinet on Tuesday approved measures to curb the appreciation of the country's currency including the removal of a 15-per-cent tax exemption on foreign investments in Thai bonds.
Finance Minister Korn Chatikavanij said the withholding tax will not be imposed retroactively, but only on new foreign investments.
'The tax collection measures will take effect tomorrow,' he said.
Thailand has for years waived the withholding tax on foreign investments in bonds in an effort to boost the local capital market.
This year, the Stock Exchange of Thailand has been one of the fastest growing in the region thanks to the kingdom's strong economic performance and an 11-per-cent appreciation of the baht against the dollar.
But the strong baht is hurting Thailand's export competitiveness. Exports account for 60 to 70 per cent of the country's gross domestic product.
The cabinet also approved a measure to urge state enterprises to speed up spending of investment funds in foreign currencies and to buy foreign currencies in advance.
The third measure was to provide foreign exchange risk insurance to small- and medium-sized exporters.
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