These negative factors stemmed from the September 19, 2006 coup that overthrew the corruption-prone Thaksin government but failed to resolve political uncertainty.

Instead of promoting transparency in its decision-making and developing a coherent policy direction, the interim government added to the confusion, which led foreign investors to get the wrong impression of its economic policy being anti-foreigner.

As a result, foreign investors have withheld their investments and adopted a wait and see attitude.

To make matters worse, the disruption caused by the sudden change of government through the military takeover also delayed the disbursement of funds for public sector investment. This could have made up for a shortfall in private investment and contributed to growth at a time when consumer confidence is depressed by persistent political turmoil and the escalating insurgency in the deep South.

The problem is that apart from the prolonged uncertainty and low levels of foreign-direct investment (FDI), Thailand's export sector is beginning to suffer. The only reason why the country's economic growth has not dropped precipitously is because the export and tourism sectors remain strong for the time being.

Exasperatingly, the Surayud government continues to fumble in matters of economic policy, resulting in a sharp decrease in FDI and growing problems in the export sector. The ADB advised the Bank of Thailand to replace the draconian controls on short-term capital inflow with a flat tax rate regime in order to shore up foreign investors' confidence and assure them that they are not discriminated against when they participate in Thailand's economy.

Foreign investors also need to be reassured on the eventual form that the Foreign Business Act will take. The ADB suggests that the selective liberalisation of certain businesses in the services sector, such as banking, should be prioritised. This is a view shared by newly appointed Finance Minister Chalongphob Sussangkarn who called for a more relaxed and market-friendly approach by the Bank of Thailand and the Surayud government.

Let's hope that Chalongphob has got what it takes to persuade the Surayud government to rehash its economic policy platform in order to win back investor confidence so that Thailand can begin to make a recovery, improve its competitiveness and move towards a sustainable growth path.

To come up with a coherent economic policy platform, consensus among policy makers must be reached. So far it appears that there is a serious lack of communication and coordination among ministers responsible for various aspects of the country's economic affairs. Let's not forget that Thailand's slipping level of competitiveness is an issue that has not been seriously dealt with by successive governments. The situation has become so dire that Thailand's export-oriented manufacturing sector is now finding itself stuck with labour intensive products - unable to move up the technological chain toward more value-added products. At the same time, more and more Thai and foreign investors are now moving their production bases to countries with lower labour costs.

The most serious problem that this interim government is facing is a mental block. If it thinks that there isn't much that it can do to solve economic woes, such thoughts will become self-fulfilling.

And that would be a pity because as a government that came to power through extraordinary means, it is in a unique position to push through difficult, potentially unpopular reform programmes that would enable the country to compete successfully in the global economy that a typical elected government would dare not do.