OLD FACES IN NEW LINE-UP: A swap
to better suit their talents

Published on August 04, 2005 - I’ve worked with Somkid for 30 years: Thanong. Commerce Minister Somkid Jatusripitak swapped portfo-lios with Finance Minister Thanong Bidaya to better suit their talents. And Industry Minister Suriya Jungrung-reangkit still wields enormous political clout, because, in his additional role as deputy prime minister, he also oversees the Transport Ministry.

Prime Minister Thaksin Shinawatra has rejigged his Cabinet to relieve political pressure in the wake of major corruption scandals, economic problems and strife in the South. Little has changed in substance as the economic team is still made up of old faces. However, Thaksin has tried to put the right man in the right job by placing Somkid at the helm of Commerce and sending Thanong, a former banker, to Finance.

Since Somkid, whose heart and mind lies in marketing more than in finance, also holds the dual post of deputy premier, he is in charge of all major economic policies and committees.

“We have been working as a team, with the prime minister as head,” Somkid said. “Dr Thanong used to serve the finance portfolio and I believe that he should be able to continue to tackle the problems. There are no serious issues, except inflation, which might flare up now, but we have to look at it for the whole year.”

Somkid will show up for work at the Commerce Ministry office in Nonthaburi tomorrow. Over the past four years and a half, he has been the key figure behind the Thaksin government’s marketing drive, although he spent most of his time as finance minister. He is expected to focus on expanding exports, attracting more foreign direct investment and tourists.

Marco A Sucharitkul, president of JP Securities (Thailand), said the Cabinet reshuffle was merely a rotation with no fresh blood coming aboard.

“The direction of the economy is not going to change because the government has already laid down the economic framework,” he said.

“Although Dr Thanong is well accepted by investors, there should not be any surprise because the fiscal position of the country is not going to improve.”

JP Morgan maintains its forecast for this year’s economic growth at 3.5 per cent.

Somkid, accompanied by Kittiratt Na Ranong, president of the Stock Exchange of Thailand, held talks with key officials of the Finance Ministry in the morning and asked them to carry on with their work in implementing the government’s policy.

After bidding farewell to some 400 officials at the Commerce Ministry, Thanong, who is taking up his finance duties today, said he had confidence in Somkid’s ability to direct the country’s trade and commerce efforts.

Thanong said he and Somkid have been working closely together for some 30 years, back to when they were academics at the National Institute of Development Administration (NIDA).

“I believe Dr Somkid will be in good control of his assignments at the Commerce Ministry. He has been my colleague for some 30 years. I admire the way he has been managing the country’s economic policies,” Thanong said.

The new finance minister said his priorities are to look at credit in support of investment and at tariff reform. However, he faces the critical task of restoring confidence in the economy, which has been hurt by the higher oil prices. Headline inflation is also accelerating beyond 4 per cent this year, while the current-account deficit hit US$6.5 billion (Bt270 billion) and the trade deficit US$8.1 billion in the first half.

Thanong said the economy should improve in the second half, with the current account turning back to surplus and the trade deficit coming under control.

Medhi Krongkaew, a NIDA economics professor, said Thanong could not do much about economic policy because the economy is facing adverse impacts from the higher oil prices and unrest in the deep South. These factors were beyond the control of the finance minister, he said.

It was not clear what Thanong’s agenda is going to be, Medhi said. Tax reform may be one of the most important issues but Thanong does not seem to be keen on it. But tax reform would help improve social equity by reducing the burden on low-income earners, he said.

Thanong’s record was not outstanding. When he served as finance minister in 1997 and announced the float of the baht, it triggered the Thai and Asian economic crisis, Medhi said. But it was Thanong who also negotiated the $17.2-billion urgent credit line from the International Monetary Fund, and he was not likely to implement policies that would harm the economy, Medhi added.

Suriya put on a brave face because in the new line-up he, as deputy prime minister, still supervises the Transport Ministry, which he has had to leave. He said that while Pongsak Ruktapongpisal, his replacement, would zero in on developing the country’s mega-infrastructure projects, Phumtham Wechayachai, the deputy transport minister, would be in charge of logistics system development.

“I have known Pongsak for a long time,” said Suriya, who was badly bruised by the scandal surrounding baggage-scanner machines for the new airport.

“We can talk things out. He used to serve at the Industry Ministry and is also an engineer like me. As for me, I will be trying to improve the country’s industrial competitiveness and trying to link it with all the transport systems.”

Phumtham said another major Cabinet reshuffle was definitely on the cards by next April, after the government completes reorganising the bureaucracy by scrapping some ministries and merging others.

“The Transport Ministry will become bigger as it will incorporate all the civil works into its sphere of responsibility,” he said.

“The Transport Ministry will then concentrate on developing the country’s infrastructure projects and all the mass-transit systems as well as the logistics system.”

The Commerce Ministry will disappear after bureaucratic reform. Oversight of agricultural crops would be transferred to the Agriculture Ministry, and the insurance industry would be overseen by the Finance Ministry.

“I give this Cabinet reshuffle a score of 8.5 out of 10,” said Visit Tantisunthorn, president of the Government Pension Fund.

“It should help improve the management of economic policymaking. The economy should improve. If the economy does not improve, at least it shouldn’t get worse.”

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