Given the uncertainties of who will lead the new government, the Thai Rak Thai administration should put on hold all new initiatives that will create binding budget obligations and leave such decisions to the new government, they say.

The economists believe the country's dire need for new investment can be properly satisfied once the political conflict ends.

"It would be risky [to commit to new projects now], because the new government may not be led by the Thai Rak Thai Party," said Sompop Manarungsan, an economics lecturer at Chulalongkorn University. "Even if Thai Rak Thai came back, it is not certain the ministers who initiated new investment projects would resume their posts."

One big new project announced recently is the construction of three suburban railway lines in Bangkok, part of the government's transportation mega-project, under the supervision of caretaker Transport Minister Pongsak Ruktapongpisal.

Sompop said that despite concerns from the Finance Ministry over the financing method, Pongsak insisted on going ahead with the mega-project, which will take years to complete and cost more than Bt120 billion. Bidding is expected before the end of this year.

He said that given the uncertainties, few private firms would bid.

Asian Development Bank country director Jean-Pierre Verbiest also doubts whether the caretaker government will be able to implement the mega-project, because it may not have enough money. But he said the interim government could prepare for the bidding - a process that usually takes one and a half years for a project of this kind.

Thai Bankers' Association secretary-general Thawatchai Yongkit-tikul said that although the mass-transit mega-project should be implemented to solve Bangkok's traffic problems, political etiquette would dictate that the interim government not be the one to kick it off.

"It's a shame the interim government cannot do anything with the mega-projects right now," he said.

A Finance Ministry official predicted that the cost of the three railway lines would be higher if funded by private companies through turnkey contracts. Under that arrangement, all of the money would come from investors who would be paid upon completion of the project. The official said the development cost could be reduced if the government invested in the project itself.

Mass-transit development aside, the caretaker government also plans to speed up bilateral trade talks with the US and Japan, even though it realises it has little political mandate to make agreements that would bind Thailand for years to come.

Caretaker Finance Minister Thanong Bidaya has suggested the caretaker government may be able to sign the free-trade agreement (FTA) with Japan, because negotiations were wrapped up before the House dissolution in February.

Sompop is against such a proposal. He said that although the FTA with Japan seemed to benefit Thailand, it could lead to more domestic political conflict.

There have also been reports that the government might launch new economic-stimulation measures. Critics have warned that if the government planned to boost the economy through more spending programmes, it could push up inflation, which has already been made volatile from high oil prices.

Caretaker Prime Minister Thaksin Shinawatra has mentioned a plan to raise civil servants' pay and give them a Bt7-billion bonus. The proposal has attracted criticism, because it is seen to be simply a political tool to garner popularity among civil servants.

Thanong is apparently cautious of the repercussions of new initiatives, saying that he will not initiate new spending programmes. However, he has also expressed concern over a lack of government investment in the year to come, due to delays in the approval of the 2007 budget bill.

Thanong admits that the implementation of the Budget Bill could be delayed by six months, from this October to next April. But chances are high it will be delayed even longer, given the Constitution Court's imminent verdict on the dissolution of five political parties, including Thai Rak Thai and the Democrats. If the two main parties were dissolved, there would be little possibility of forming a parliamentary quorum to approve the Budget Bill.

"If so, we may have to find a consensus in society if we need to make new investments on an emergency basis," said Somchai Jitsuchon, research director at the Thailand Development Research Institute, an independent think-tank.

His suggestion was not to imply that the caretaker government should make such a move unilaterally, but rather that its decisions should be approved by society at large.

Sompop said that at this stage, bureaucrats also appeared incapable of doing anything about the situation. The Thaksin government has over the past five and a half years intervened so regularly in the bureaucratic system that bureaucrats have lost the public's trust.

Chulalongkorn University economist Teerana Bhongmakapat said that under the circumstances, Thailand was lucky to have economic stability, thanks to the independence of the Bank of Thailand in carrying out monetary policies.

"If the caretaker Finance Ministry really wants to boost the economy, its officials should now be studying a tax-cut proposal for presentation to the new government when it is formed. That would effectively boost the economy," he said.

However, by Sompop's reckoning, nothing would boost the economy more effectively than an end to the country's political conflict, which would pave the way for the formation of a new government.

"The political conflict should be settled in the next two months. That is the most important factor for our economic well-being," he said.

Wichit Chaitrong

The Nation