"These measures might not have been necessary had the Bank of Thailand sharply cut the interest rate," he said.

The baht appreciated 1.9 per cent from January to February, which was worrisome, but the Bank of Thailand had many options apart from imposing the 30-per-cent reserve requirement on capital inflows, he said.

He was speaking at a seminar on "Thailand's Tomorrow" held jointly by the Nation Multimedia Group and 12 top companies in Chiang Mai.

The resignation of finance minister Pridiyathorn Devakula, has "exacerbated political uncertainty", he said.

"It was the turning point, because Pridiyathorn earlier made several proposals to the Cabinet meeting. At the same time, it showed that the government has problems with agencies that have political power. Whoever takes over Pridiyathorn's job will run into political obstacles."

Stock-market expert Somjai Phagaphasvivat said the central bank's capital controls might have halted the baht's rise but had also inflated the cost of doing business.

The central bank should have taken a softer approach, he said, and this year presents an opportunity for it to trim interest rates even more because oil prices have settled down.

Somjai also warned that the country was losing its competitive edge because the baht had gained more than Chinese and Vietnamese currencies. "Have we adjusted our marketing strategy to add value to our products since the financial crisis of 1997?" he asked.

The central bank's operation also came in for criticism.

It does not seem to have sufficient information on the market, he said, and the government has not addressed the needs of the middle and working classes.

"These people need help. This may be the hidden risk in the future," he said. Anusorn Thammajai, an economist, said although he disapproved of the coup, he wanted to tell Thais to support this government because any unexpected political change would be bad for the nation.

Payungsak Chatsuthiphol, vice president of the Federation of Thai Industries, said that for four years the private sector had been used to the previous government's brand of liberal capitalism and while the incumbent interim government had given the private sector a leadership role in steering the economy, "we saw consumption plummet and the economy wobble".

Since December sales of cement, pickup trucks, motorcycles, cars and luxury goods have dropped off, he noted, and only the export sector is still doing fine, chalking up 17 per cent in growth last year.

He believes that private-sector confidence is still steady, but the latest confidence index in January showed a dip from 90 per cent the year before to 86 per cent.

Thailand will fall behind, he said, the economic gloom is here to stay, and the economy could continue slowing down until 2011, which means the baht problem must be dealt with quickly. He suggested Bt37 to Bt38 was the right rate.

Somjai said Vietnam was catching up very fast and had a literacy rate of almost 100 per cent and a workforce with an English-language background.

To keep from lagging behind, the Thai government should invest in infrastructure and human resources, he said.

Anusorn agreed.

"Why didn't the government spend the money on infrastructure? Instead, they spent lots of money on unnecessary items like aircraft," he said.