Thai finance minister quits, cites differences with PM

The Straits Times, February 28, 2007


Mr Pridiyathorn's shock departure renewed market uncertainty about the direction of economic policy in Thailand. -- AFP





BANGKOK - Thai Finance Minister Pridiyathorn Devakula resigned abruptly on Wednesday, blaming Cabinet infighting and media criticism of his performance since he took the job after a military coup in September.

Mr Pridiyathorn, a highly regarded central bank governor before he moved to the ministry in October, had been blamed for a series of decisions, including an embarrassing U-turn on capital controls that spooked foreign investors and triggered a huge stock market sell-off in December.

'I am resigning from all positions. I have talked to the prime minister. He approved my resignation and understands,' he told reporters.

Mr Pridiyathorn said his resignation would take effect on March 1.

'I do not want to work in an atmosphere of hidden motives,' Mr Pridiyathorn told reporters after walking into the press room at Government House to announce he was quitting.

'The expressions of some Cabinet ministers can be construed as actions that put the government under the influence of some members of the media,' he said without elaborating.

A government spokesman said Prime Minister Surayud Chulanont was looking for a successor to Mr Pridiyathorn, whose shock departure renewed market uncertainty about the direction of economic policy in Thailand.

Former central bank governor Chatu Mongol Sonakul, once fired by ousted Prime Minister Thaksin Shinawatra, was among the favourites, analysts said.

Mr Pridiyathorn also cited his refusal to work alongside former ministers ousted in the bloodless coup that removed Mr Thaksin.

He had not been consulted on PM Surayud's appointment of former Finance Minister Somkid Jatusripitak, the architect of Mr Thaksin's free-market, pro-business policies who often clashed with Pridiyathorn, as an economic adviser earlier this month.

Mr Somkid's appointment triggered a storm of protest by Thaksin critics and he resigned after only six days on the job.

But media reports said the incident still rankled with the aristocratic, bow-tie-wearing Pridiyathorn, who earned an MBA in the United States and was a top executive at a major Thai bank.

Markets unfazed
Thai stocks , which had been down around 2 per cent, extended their fall to 2.7 per cent after Mr Pridiyathorn announced he was quitting.

The Thai baht , which has evolved into a two-tier onshore and offshore market after capital controls were imposed in December, was little moved at 35.47 per dollar onshore.

Mr Pridiyathorn's departure was a major setback for a government that has seen its popularity decline due to a series of policy flip-flops, analysts said.

'The resignation of a key minister is bound to throw into question the credibility of the existing government, as well as the desirability of Thailand as a destination for investment and business,' economist Vishnu Varathan of Forecast Pte said.

But others said it may bring some stability to a fractured Cabinet criticised for its lack of action.

'There has been infighting within the government and that has resulted in a bit of a power struggle behind the scenes,' said Frederic Neumann, a regional economist for HSBC in Hong Kong.

'By removing one of the protagonists, you might actually get more coherence in government policy,' he said.

'The crucial question is: who are they going to replace him with? There have been some rumours that Somkid might replace him, which could potentially be received positively by the markets, given his previous market-friendly policies.'

Mr Pridiyathorn, 59, was seen as a steady hand on the economic tiller when he was named finance minister and deputy to General Surayud, a retired general with scant economic experience, after the coup.

But his reputation was soon tarnished by the botched imposition of the capital controls in December, which led to the sharpest one-day fall in the history of the Thai stock market.

A move to tighten foreign business ownership laws in January outraged foreign investors and triggered fears of rising economic nationalism in the country.

One of his sharpest critics was media firebrand Sondhi Limthongkul, who blamed Mr Pridiyathorn for mishandling the capital controls. His broadcasts last year had stoked street protests against Mr Thaksin, which eventually led to his downfall.

'The last straw was allowing the Sondhi show to air on Channel 11,' a source close to Pridiyathorn told Reuters, referring to a state television channel. -- REUTERS