Economy needs Political impasse to be resolved

The selection committee is to be established under the new Bank of Thailand Act and is designed to make monetarypolicy-making more efficient. It has been reported that the Finance Ministry recently put forward names for the crucial committee. Although no official announcement has been made, there is speculation that most of the selection committee members would be people close to Deputy Prime Minister Surapong Suebwonglee and the People Power Party's camp.

The press earlier reported that Finance Minister Surapong recently decided on seven members of the selection committee, who will pick six of the 12 members of the BOT board. The press reported that the selection committee would consist of Nipat Pukkanasut, Viroj Nualkhair, Chaiyawat Wibulsawat, Vijit Supinit, Manu Liewpairoj, Wisut Srisupan and Somchainuk Engtrakul.

Nipat, a former senior Finance Ministry official, has been known to have the ear of Surapong. Viroj, former president of state-run Krung Thai Bank, is close to Vijit, a former central bank governor. Chaiyawat,  a former BOT governor of the Bank of Thailand, once worked with Vijit. Manu was permanent secretary to the Industry Ministry. Somchainuk was permanent secretary to the Finance Ministry and was close to now defunct Thai Rak Thai Party. Wisut is currently director-general of the Customs Department.

The members of the BOT board are crucial because they are authorised under the new BOT Act to name the members of three key economic committees - Monetary Policy Committee (MPC), Financial Institutions Policy Committee (FIPC) and Payment Systems Committee (PSC).

As such, the selection committee is very important because it will be influential in naming the persons involved in the decision-making process.

The MPC was set up to make decisions on monetary policy in order to maintain economic stability. In short, the MPC decides whether interest rates should be raised or lowered. At times, the MPC's mission to maintain currency stability runs against the government's desire to boost economic growth.

The FIPC was formed to set the direction of the Kingdom's banking system development and to introduce guidelines of supervision. And the PSC was established to improve the efficiency and development of the country's payments system.

Aside from the importance of these committees, the BOT board itself is authorised to set criteria for the BOT's asset management, which includes the country's international reserves. Currently, the board just plays the role of housekeeper.

According to the BOT Act, the finance minister would appoint seven out of the nine members of the selection committee. There are only two conditions for committee members. They shall not hold any political position nor have any conflicts of interest.

The seven names reportedly appointed by Surapong have met all the requirements. There have been criticisms that they have acquaintances who may share the same interests, though.

The selection committee will choose six out of the 12 BOT board members from 18 candidates nominated by the Finance Ministry's permanent secretary and the BOT governor. One of the six will be chairman of the board. The others will be the BOT governor, three deputy governors, and directors of the FPO, the National Economic and Social Development Board. The BOT board is also to choose members of the MPC, FIPC and PSC.

After the selection committee names the BOT board, it can be re-appointed for other occasions, such as to find a new governor if the current central bank governor had to be removed from office due to misconduct or incompetence.

Although the new BOT Act is designed to boost efficiency at the central bank, it also empowers the selection committee to have a say in major BOT decisions.

The seven persons named by Surapong thus will have the challenge to prove that they can transcend personal interests and that they are up to the task.