Now he is insisting on retaining the power of the finance minister to appoint and remove the secretary-general of the Securities and Exchange Commission and its board members.

Is Chalongphob turning the clock backwards?

Pridiyathorn Devakula, Chalongphob's predecessor and before that the central bank governor, wanted to make his mark as a reformist. Before leaving office, he introduced legislation to free both the Bank of Thailand and the SEC from political intervention. Several laws in that package of legislation modernise the central bank, including the appointment and removal of its governor.

Pridiyathorn wanted to keep politicians on the sidelines when it came to appointing or dismissing the governor for fear that they might try to meddle in the governor's running of the central bank. He also introduced another legal package to reform the SEC by trying to rid it of domination by politicians. The finance minister should play no role at all in the appointment or dismissal of the SEC's secretary-general and its directors, in his view.

Chalongphob had a brilliant academic record before he joined the Surayud government as finance minister earlier this year. Chalongphob and the Thailand Development Research Institute that he headed had suggested that the central bank should have full independence in running monetary policy. Now that he is finance minister, why does he appear to reverse his earlier philosophy on public policy management?

In most countries, the power to appoint the central bank governor lies with the leadership of the country. "I think it's crazy to think that politicians, who are voted in by the people, should have no say at all in the appointment of the central bank governor. Yes, the central bank governor must have independence in running monetary policy, but that does not mean that he can come from anywhere," said a former official of the central bank.

"I wonder what people mean when they talk about independence. I would ask independence from what? Even in the US, the Securities and Exchange Commission is not totally independent. It all depends on the personality of the people who assume the high office. Everywhere politics gets involved in these institutions. This is a fact of life."

The Thai SEC might have exercised poor judgement when it failed to pursue any irregularities in the trading of Shin Corp stock during the Temasek takeover. However, the SEC is not involved in prosecution matters alone. It has a broader capital market development role to pursue. In this context, it has to follow the capital market development policy of the government in office.

"If we ask for complete independence of the SEC, then should the police be independent too? And how about public prosecutors? Should they be independent too?" the former central bank official asked. "I think it would be sufficient to specify the term of the people running the office.

Phatreeya Benjapholchai, president of the Stock Exchange of Thailand, said investors should have no cause to panic from the news that the finance minister might be trying to revise the clauses on the appointment and dismissal of the SEC's secretary-general and board members.

"Foreign investors have realised all along that the existing regulation gives the finance minister the power to appoint and dismiss the SEC. This should not affect their confidence. And this also has nothing to do with the plan to privatise the Stock Exchange of Thailand," she said.

SET chairman Vijit Supinit also said the bourse would not be affected by any attempt to retract the legislation on the appointment and dismissal of the SEC.

A brokerage source said in general it is still necessary to keep the finance minister as chairman of the SEC in order to maintain coordination on capital and financial market development with the government.

It might only be necessary to separate their roles with the finance minister focusing more on planning and development, he said.

If the central bank and the SEC are allowed to run their own course, it might be difficult in practice to see coordination in the country's financial policy, he added.