• 
• 

Published on January 31, 2008

The new government's economic team should not focus on short-term populist policies which will lead to negative effects in the long-term, the outgoing finance minister Chalongphob Sussangkarn said yesterday.

The business sector has also urged the new government to follow economic guidelines written in the Constitution, as they had been endorsed by the majority of voters.

The comments came in light of the fact most of the new Cabinet members are seen to be nominees of deposed Prime Minister Thaksin Shinawatra, who championed populist policies. Although some policies are welcome, other populist policies left a long-term negative impact such as huge debts from the Oil Fund, rising household debts and a rise in non-performing loans at the government's specialised banks.

Chalongphob urged bureaucrats to offer straightforward opinions when asked to give ideas to the ministers for the benefit of the country.

Politicians usually look for short-term gains in order to win popularity from voters, such as unproductive spending, that often weaken the country's strength in the long run, he said.

Chalongphob will return to work at the Thailand Development Research Institute (TDRI), an independent think-tank after his terms ends tomorrow.

He said he did not regret what he could not achieve and had succeeded in passing several financial bills, although he failed to get the Currency Act through the National Legislative Assembly.

Energy Minister Piyasvasti Amranand said his successor would need to pay close attention to the development of nuclear power, for the country's energy security.

On his last day in office, Piyasvasti said the new regime would need to decide whether Thailand would go ahead with the development, as it would require at least 10 years of preparation. Without the government's support, Thailand would face energy insecurity, price instability, and pressure from effects of global warming.

Kongkiat Opaswongkarn, chairman of the Federation of Thai Capital Market Organisations, suggested the new government speed up new investment projects, end capital control requirements and form a capable team to solve economic issues.

It should also introduce an economic package to rebuild the confidence of foreign investors and take the lead to invest in projects to stimulate consumption. The government should also find ways to increase the public's purchasing power, he said.

Pornsilp Patcharintanakul, secretary general of the Board of Trade, said the new government should take into account policies, such as the sufficiency economy, outlined in the new Constitution.

"The new government can't avoid it because it is a part of the Constitution, which was passed by the national referendum."

Supavud Saicheua, managing director of Phatra Securities, urged the new administration to let the currency float to ease inflation pressure, which should pave the way for the Bank of Thailand to cut interest rates following the US Federal Reserve decision to deal with the sub-prime crisis and stimulate domestic consumption.

"I want to give some homework to the new government in laying down economic policies by promoting private investment which is currently lower than what it should be. Last year, private investment rose by only 3 to 4 per cent, from the supposed rate of no more than 10 per cent."

The government should accelerate measures to strengthen the baht according to market forces to ease the pressure of inflation, he said. If the baht rises by 10 per cent, inflation should stay at no more than 4 per cent. The Bank of Thailand could then reduce interest rates in line with the US trend to stimulate the economy.

Ammar Siamwalla, an economic expert and honorary adviser to the Thailand Development Research Institute, said the new economic minister's team should be able to do their job effectively thanks to the number of experts in their advisory team.

Ammar said although Surapong Suebwonglee, who is tipped to be Finance minister, may have no economic background, he looked compromising enough to handle financial issues.

"The priority for the government is to urgently promote export growth as it is the key economic driving engine of the country, as well as encourage investment rather than pump money to the grassroots," he said.

Ammar said the government's endeavour to pump money into the grassroots as part of economic stimulation was appropriate, however worried that too much spending to increase the government's popularity would have negative effects.

He foresaw the government having a maximum term of two years in office.

Apichart Sankary, president of Association of Thai Travel Agents (ATTA), said the new economic ministers should be careful in implementing their policies. Although these individuals were closely linked to the Thaksin government, his government was successful at implementing populist policies, but also created various problems.

"The ministers should be cautious that they do not create new problems," he said, urging the new finance minister to restore confidence in the stock exchange as soon as possible, as recent plunges had discouraged tourist travel. The new energy minister should also keep oil prices in control, because if the grassroots people are negatively affected, it will kill the entire local tourism industry."

Poj Aramwattananont, president of the Thai Frozen Foods Association, said the government's priority should be to stabilise the baht. Although the People Power Party favoured abolishing the 30-per-cent capital reserve measure, the new government should maintain the measure, he said.

It should boost exports and promote the use of local content as well as ensure cooperation between the Finance, Commerce and Agriculture ministries which will play important roles in driving the economy.

The new administration should also focus on resolving the violence in the South and economic problems rather than focus on the particular benefits of each party.

Nattakit Tangpoonsinthana, executive vice president for marketing of Central Pattana, said he could not judge whether new government's economic team was good or not, as he was waiting to see the policies and their performance in the first and second quarters.

Nattakit said if each minister had a good team to support them, the government's economic team would be strong.

Piti Kittithirapornchai, managing director of TC Union Global, said he had high hopes for the government's new economic ministers and wanted them to boost investor confidence first, particularly overseas investors.

"Those investors will then invest in Thailand if the government has a policy to support their businesses," he said.

Business Reporters

The Nation