Capital controls removal delayed

The decision on whether the disputable 30% capital controls should be scrapped will have to wait until April. The above was agreed at a meeting between Finance Minister Surapong Suebwonglee and Bank of Thailand executives 12 February.
''We must have a clear position on what to do about the capital measures before we go overseas to meet with investors,'' Mr. Surapong said.
Speculation has been roaring in the financial markets that the new government would soon move to scrap the controls that have been in place since December 2006.
''The central bank has independence to decide. But this does not mean that they are independent from government policy. At the end of the day, it is the government that must be responsible to the people,'' Mr Surapong added.
The capital controls were imposed by the central bank to help stem the estimation of the baht and to help support Thai exports.
Foreign investors were originally required to set aside 30% of capital inflows with the central bank, and were subject to a 10% surcharge for transactions of less than one year.
The controls, imposed on Dec 18, 2006, led to the worst one-day decline on the Stock Exchange of Thailand the following day. The Surayud Chulanont government quickly reversed its position and exempted inflows into the stock market, and the central bank has since relaxed the rules for other types of transactions.
But analysts predict the controls, while having little impact in practice, continue to raise questions about how open Thailand is to foreign investment..