Thai finance chief working to boost economy

The Straits Times, April 23, 2007
By Nirmal Ghosh, THAILAND CORRESPONDENT



BANGKOK - THAILAND'S new finance minister is working to stimulate the country's economy - which took a battering after last year's coup - with a series of measures that includes providing credit for the rural masses.

Finance Minister Chalongphob Sussangkarn also said the Cabinet is now more sensitive to the foreign investment community than in the first six months after last September's coup.

The economy is 'down', said Dr Chalongphob, who was appointed to the post last month, and it is incumbent on him to provide some 'counter signal'.

'Various stimulation measures, whether on the monetary or fiscal side, will now begin to kick in,' he told The Straits Times in an interview on Thursday.

The Thai economy, which is underperforming compared with the rest of Asean, is growing at just over 4 per cent. It grew 5 per cent last year.

The domestic political uncertainty has hit businesses, consumer confidence has slumped and Thais in the rural areas are feeling the pinch. One reason, Dr Chalongphob admitted, was the military-installed government's decision to roll back former premier Thaksin Shinawatra's populist schemes.

One of the government's main priorities is to ensure that rural Thailand recovers, he said. A number of measures are being lined up, including ensuring that the various ministries and government agencies use every baht in their budgets.

His ministry would also encourage lending to small borrowers and look into ways to reduce the debt burden of farmers and small businessmen.

Also on his mind are tax measures to stimulate the housing sector, which could help rev up related activities such as construction.

'You do not want to do it in a way that becomes a... populist policy, and also you have to make sure the way you do it does not create big windows of opportunity for corruption,' he said.

On investor confidence in the context of the controversial Temasek-Shin Corp deal, he said: 'Some of the issues, like the status of some of the companies involved in the Shin sale, are now in the legal process...that will have to take its course. But in terms of nationalising and so on, that is much too extreme.

'It may be that under certain situations, people came out with that kind of statement, but after more careful consideration, they realised that it would not be to the benefit of Thailand...because it has a huge impact on the confidence of the foreign sector.'

The sale in January last year of a controlling stake in telecoms-based conglomerate Shin Corp to Temasek Holdings by Mr Thaksin's family sparked angry protests from civic groups, which said that strategic national assets had been sold to foreigners.

After the army seized power last September, the deal came under intense scrutiny for possible tax and foreign ownership limit violations.