Credibility a big issue

Financial leaders have called on the new government to appoint a capable finance minister who has expertise in running financial markets and is recognised by local and foreign investors.

Chairman of the Federation of Thai Capital Market Organisation and Asia Plus Securities Plc CEO Kongkiat Opaswongkarn said the next finance minister should be someone who is familiar to both local and foreign investors.

"He must be able to restore investors' confidence. Mostly importantly, the minister must be able to improve economic policies for the sake of the nation," he said.

People Power Party's secretary-general Surapong Suebwonglee yesterday did not admit or deny that he would be appointed finance minister.

"The finance minister holds a very important job, which affects confidence both at home and abroad. He must be decisive and understand economic and financial data used in projects or investments," he said.

"We have approached those who are knowledgeable and capable for this job, some of whom are outsiders, while others are insiders who have been working for the party steadily."

Surapong would not answer directly whether he would eventually become finance minister.

But he insisted economic issues form the core of People Power's platform and that he was ready to assume any position.

Dr Olarn Chaipravat, a well-known economist, has also been cited as another candidate.

He served as an economic adviser in the Thaksin government and is considered the strongest outside contender for the job at present.

One businessman said he feared Surapong may not be able to ensure confidence among investors if he ended up getting the post.

"Obviously Surapong, a medical doctor by profession, has not much of a background in economics. The new government should seek someone else for the job as this post requires a person with a very strong economic background," said the businessman, who did not want to be named.

Kongkiat said the next government should have a clear policy in regard to matters such as the capital market, Foreign Business Act, Currency Act, BOT Act, Financial Business Act, Deposit Insurance Act and Retail Business Act.

"Following the formation of the next government, the overall environment in the local stock market should improve. However, the stock market should also appeal foreigners. So far, of the US$15-billion (Bt495 billion) in capital flows worldwide, only 1 per cent is invested in the Thai stock market."

He was still bullish about local stocks, predicting the SET Index could reach 1,000 points this year.

"At 1,000 points, local stock price to earnings ratio would be 13 times with a dividend yield of 3 per cent."

Kongkiat said investors should keep an eye on external factors such as a looming recession and sub-prime debacle in the US.

Securities Analysts Association secretary-general Sombat Narawutthichai also supported the view the finance minister should have an insight into the workings of the capital markets.

"Expertise in the money market alone is not sufficient to help resolve the country's economy, which is still dependent on capital inflows," he said.

Sombat was unable to say if the SET Index would reach 1,000 points this year, as prices may be affected by how the US sub-prime and credit crisis plays out.

In the first half of the year, stock markets around the world would be affected by US sub-prime and mortgage problems, which had triggered a sell-off in shares while sparking a shift into low-risk bonds, he said.

Government Pension Fund secretary-general Visit Tantisunthorn said the finance minister should be widely recognised as a top economist and someone who can work in tandem with state agencies.

The establishment of the next government would make the country's economic outlook brighter but foreign investors would also be careful about rushing to invest in local stocks, given the US credit crisis, he said.

Separately, Chookiat Ophaswongse, president of the Rice Exporters Association, said businessmen expected the new government would invite outside experts to lead respective economic ministries.

"We are hopeful the new government will improve local and overseas business confidence by appointing a high calibre team, whose members can be recruited from the outside."

He said Mingkwan Saengsuwan could be Commerce Minister, because he was a good marketer. But he was concerned about other positions, as he could not think of anyone in the coalition that really fitted the bill.

Chookiat also said the new government should continue promoting sustainable development in the farm sector, by not setting overly high guarantee prices.

Unrealistic guarantee prices could wreck market mechanisms in the long run, even though they may benefit the government politically, he warned.

Commerce Minister Krirk-krai Jirapaet said his replacement should concentrate on sustainable development in sectors such as agriculture and exports to spur domestic growth.

He said the new minister should set appropriate crop prices to stabilise farm goods rather than high prices to boost its popularity.

It should also set a fair consumer pricing system.

Premchai Karnasuta, the head of Italian-Thai Development, said he believed infrastructure projects would be among the best and quickest ways to jump-start the economy.

"I believe Bt300 billion to Bt400 billion could do the job. The fact that the new government is elected will boost confidence among local and international institutions, such as JBIC of Japan. They should be ready to extend loans again."

Prasert Marittanaporn, a director of infrastructure builder Chor Kanchang, said there were few mega-projects currently, which had forced some contractors to work abroad.

He expects the new government to back more local projects. His firm was mobilising funds and resources to bid for them, he said.

Siriporn Chanjindamanee,

 Petchanet Pratruangkrai,

 Watcharapong Thongrung

 The Nation