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'Too soon to assess ISA impact on Thai economy'
Publication Date : 01-08-2013
Thai authorities insist that it is too soon to assess any impact on the economy from the decision to invoke the Internal Security Act (ISA), which takes effect today amid signs of heightening political tension.The Stock Exchange of Thailand Index yesterday lost 12.30 points or 0.86 per cent on turnover of 42.5 billion baht (US$1.35 billion). At one time, it had fallen nearly 40 points.
Local institutional investors and brokerage houses were net-sellers, apparently on fears that political instability would return as a number of anti-government groups plan to stage rallies in Bangkok.
Mathee Supapongse, the Bank of Thailand's senior director, said the central bank was closely monitoring any impact on the economy from yesterday's announcement of the ISA's invocation, and that now was too soon for any assessment to be made.
The authorities have made use of the Act in the past several years, and the law this time will only be enforced in three Bangkok districts.
"We are waiting to see [how] the situation [develops], and how it will affect the economy depends on the situation," Mathee said.
He conceded that the announcement could affect the way people feel, and that Thailand's tourism sector, although highly flexible, had experienced a consistent run of growth without any negative impacts.
In June, Thailand welcomed more than 2 million foreign visitors. It was the only leg to show improvement, as the overall economy braced for weaker export growth as well as lower investment in light of growing economic uncertainties.
Somchai Sujjapongse, director-general of the Finance Ministry's Fiscal Policy Office, said he expected the imposition of the ISA to have only a small impact on investor confidence, as it had been declared in advance, and it was not the first time it had been invoked.
Such advance announcement was intended to cope with any violence that may occur, and to provide information to facilitate investors' decision-making, he said.
Kasikornbank president Predee Daochai, meanwhile, said he believed the ISA would not significantly affect investors' confidence, given their demand for stability and the ability to forecast.
The announcement merely meant the government was using a tool in its pocket, besides which there was no violence after the previous occasion it had been invoked, he said.
SidivachrCheewarattanaporn, president of the Association of Thai Travel Agents, expressed concern that the use of the ISA could affect inbound tourism, as foreign travel agencies could interpret it as a signal of impending political violence.
While the law might not prompt tourists to cancel their plans immediately, as the political rallies have yet to take place, it could cause agencies to delay promoting visits to Thailand.