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Published on February 8, 2008

Newly appointed Finance Minister Surapong Suebwonglee yesterday said he would focus on economic growth by boosting domestic consumption among low-income groups and jump-start large-scale infrastructure projects.

However, he refused to say whether he would revoke current capital controls.

He said he would discuss this with Bank of Thailand Governor Tarisa Watanagase next week, even though he earlier told members of the foreign press that his first priority would be cancelling the 30-per-cent reserve requirement.

"We must discuss the issue thoroughly before making a decision," he said, while adding that capital controls had distorted the financial market and "spooked" investors.

Speaking on his first day in office, Surapong pledged to place a higher priority on growth than on stability, in order to overcome the present sluggish economy.

He said he would resurrect the populist policies championed by the now-defunct Thai Rak Thai Party, including a renewed debt moratorium for farmers, increasing the size of village funds and allocating budgets directly to every village under the Small Medium and Large village scheme.

"The government needs to boost consumption," he said.

Following the slump in consumer confidence during the previous government, Surapong said the new government planned to increase economic growth beyond 5.5 per cent this year despite an earlier forecast of 5 per cent.

It will accelerate nine electric-train projects and finance them by issuing government bonds.

"We still have liquidity in the market," he said. "But we must consider interest rates, as well."

The government will also consider giving tax breaks to low-income groups and, in the long term, may also consider cutting corporate income tax to boost investment, Surapong said, adding that injecting more public funds into low-income groups was aimed at increasing their spending.

Surapong met senior Finance Ministry officials yesterday to discuss the economic situation and the new government's broad economic policies.

He said the new government would spend more to boost economic growth. When asked whether it would increase the mid-year budget while inflation was still threatening the economy, he said the budget deficit should be larger.

"I will place priority on growth, while stability - which is still important - will come later," he said.

The new finance minister said he would consult with the governor of the central bank about managing the baht exchange rate, because the Thai currency was a little stronger than other currencies in the region.

He gave assurances that the new government's economic policies would be friendly to investors. Referring to proposed amendments to the Foreign Business Act, he said alien business laws should not place more restrictions on foreign investment.

He also expressed reservations about reviving plans to privatise state-owned enterprises.

"There are several options on how to raise funds for state enterprises, and listing them on the stock market is one of those choices," he said.

 Wichit Chaitrong

 The Nation