Chalongbhop, who is set to replace MR Pridiyathorn Devakula after his abrupt resignation as deputy prime minister and finance minister last week, has clearly expressed his thoughts on some key economic issues.

For instance, Chalongbhop did not agree with the 30-per-cent capital-reserve measure on short-term capital inflows. The Bank of Thailand (BOT) imposed the measure last December 19, to halt the rise of the baht after the currency surged 17 per cent against the US dollar last year. He suggested the central bank should instead have controlled the stock and bond markets both without setting a time frame of how long the funds were to be invested in Thailand.

And if the common views among TDRI economists are any indicator, Chalongbhop preferred the liberal approach on the matter. He also disagreed with Prime Minister Surayud Chulanont's plan to amend the Foreign Business Act to be more restrictive.

Besides, TDRI had earlier recommended that Surayud sign the bilateral trade agreement between Thailand and Japan, signalling its preference for a liberal trade policy.

The extent of Chalongbhop's responsibility was not clear at the time of going to press. Deputy Prime Minister and Industry Minister Kosit Panpiemras yesterday confirmed Chalongbhop's appointment was imminent but also said that he himself would assume responsibility from Pridiyathorn for the overall economic scenario.

If that is the case, Chalongbhop's responsibilities will focus only on the Ministry of Finance.

In fact, Chalongbhop was named an economic adviser to the Surayud government but hardly had any influence on decisions when Pridiyathorn remained at the helm of the economic team.

Besides, the TDRI's views often ran counter to government policies. For instance, TDRI honorary adviser Ammar Siamwalla suggested the BOT should have cut the interest rate to ease the level of the baht instead of

introducing the Draconian

capital-control measure.

Chalongbhop was considered a dark-horse candidate. Earlier, it was speculated that former deputy finance minister Virabongsa Ramangkura, among others, would replace Pridiyathorn. However, Chalongbhop's name was floated last weekend after Surayud reportedly approached him.

Unlike the other candidates whose names were earlier floated as favourites for the job, Chalongbhop was not in the inner circle of the Surayud government. But his appointment is not surprising, considering his earlier critical comments against ousted prime minister Thaksin Shinawatra.

For instance, Chalongbhop urged opposition politicians to formulate economic policies as an alternative to Thaksin's populist policies, of which he disapproved. Chalongbhop criticised the Bt1-million Village Fund programme initiated by Thaksin to score points among rural voters, saying the money was spent unwisely.

And he disagreed with Thaksin's easy-credit programme, saying it not only was a waste of the fiscal budget, but also created a morale hazard among the borrowers.

Upon appointment, Chalongbhop will soon find himself in the hot seat. First of all, he will have a mission to restore confidence among investors, especially foreigners. The capital-control measure and planned amendments to the Foreign Business Act have created a perception among some that the military-installed government is not friendly to foreign investors.

In addition, he will have to stimulate the economy by accelerating the process of fiscal-budget disbursement. The Finance Ministry will more or less be financially responsible for the government's much-needed mega-projects to stimulate economic growth amid declining consumer and investor confidence.

While the BOT's capital-control measure has been relaxed to the point where it barely exists any more, Chalongbhop will have to work closely with the central bank to stabilise the economy, as well as the currency, amid the upward trend of regional currencies. He issued a stern warning last December that the Thai government should have withheld reserves on foreign inflows at a lower rate, starting at 2 per cent and then gradually increasing it. Harsh measures will not be accepted by the market, he said at the time.

Tax reform, which Pridiyathorn avoided touching, may be on his agenda amid growing calls from the industrial sector, a different agenda politically from one under a normal elected government.

Now it remains to be seen how this 56-year-old economist will turn his economic ideas into practice and whether his performance will be able to spice up the Old Ginger Cabinet, which is facing a slump in popularity among the public.

Wichit Chaitrong

The Nation