December 16, 2008

Abhisit 'faces tougher job than Chuan in 1997'
By Thanong Khanthong

Prime minister-elect Abhisit Vejjajiva will have a tougher job than Chuan Leekpai, who led Thailand back to a growth path after the 1997 financial crisis, given the bitter political divide and broader dimension of economic problems.

Abhisit, who won a vote for the premiership in Parliament yesterday against Pracha Promnok of the Puea Pandin Party, has already announced he will serve as head of an economic team and focus on restoring confidence in Thailand and bridging the political and social divide.

A high-level Democrat Party MP yesterday said the present problems were more complex than in 1997, when Thailand faced a foreign-exchange crisis and a collapse of the corporate and banking sectors and the Bank of Thailand having blown its entire foreign reserves.

"Now we cannot just tackle the economic problems alone without curing the social and political ills in parallel," the MP said.

After painful financial restructuring, the export sector led the Thai economic recovery on the back of devaluation of the baht. The sound global economic environment also helped boost exports, which spurred a timely Thai recovery.

But now the world is threatened with recession, with financial crises in the US and Europe, which are important trading partners. Thai economic growth is set to decline, probably to 1-2 per cent at most next year. If exports were to rise 5 per cent next year, after 20-per-cent growth this year, it would be a blessing.

"It will be more difficult for the Democrats to achieve fast results in tackling the economic problems now than in 1997," said Ekamol Khiriwat, a former secretary-general of the Securities and Exchange Commission and former Democrat member.

"Then, our financial institutions were collapsing. Now, everything is kind of slowing down. Consumption is bad. Exports are bad. Unemployment is also going to be bad. It will be tough to achieve fast results in tackling these economic problems."

Ekamol suggested several remedies to boost the economy:

First, the government must make sure interest rates are kept low in real terms.

Second, bank credit must flow to the needy corporate sector in the broader economy. Banks are now fearful about the weaker economic environment, which could make repayment of loans difficult. So state-owned banks must take the lead in pushing out credit to keep the economy humming.

Third, the government must help the private sector push for exports. Measures to assist exporters to boost exports and find new markets must be implemented quickly.

Fourth, investment, both public and private, must be stimulated in order to lift domestic consumption.

Fifth, allow the exchange rate to stay down if the baht becomes weaker. In the present environment, Thai exports need to be competitive against products from other countries.

Kiat Sitthi-amorn, a Democrat candidate for the commerce portfolio, said a priority of the new government would be employment, as the Federation of Thai Industries expected up to a million out of work next year.

He said the new administration must come up with innovative measures to create jobs, both permanent and temporary, in order to help reduce socio-economic impacts from rising unemployment, especially among the low skilled.

The new government will also have to revive tourism and other sectors hit hard by the recent closure of Bangkok's two airports by anti-government protesters, as well as boost the farm sector.

##################

December 15, 2008

Abhisit Vejjajiva of the Democrat Party has become Thailand's 27th prime minister. He has won over Pracha Phromnok, the leader of the Puea Pandin Party, by a margin of 233 to 197 votes in Parliament.

That's the easy part. To become a prime minister is difficult. But to serve as prime minister is even more difficult. Just ask Samak Sundaravej and Somchai Wongsawat how it is so tough to hang on the high office.

It's my turn.

Abhisit brings a youthful image and hope to the political theatre, which has been in turmoil over the past three years. The challenge facing Abhisit is enormous, politically, economically and socially. With the bitter political and social divide, Abhisit will have to adopt a more reconciliatory tone in bringing the Thais together again.

He has uttered his goal. First, he would like to defend the Monarchy from any slanting or misunderstanding. Second, he would lead to bring about an economic recovery. Third, he would try to work on national reconciliation. And finally, he would restore confidence back to Thailnd among the international community of nations.

The first task is important because there has been a systematic campaign to undermine confidence in the Monarchy in order to divert the attention from the political malaise. More than 400 web sites involving in indecent and anti-Monarchy materials were closed down by the ICT Ministry in September alone. 

The political task will always be tough. Abhisit is not going to enjoy a comfortable margin in Parliament. Stability cannot be taken for granted. Some have predicted his government might last six months because a political accident can happen any time. Abhisit will only have to perform his best.

The Red Shirt army is preparing to undermine his government in the same way that the People's Alliance for Democracy had protested against the People Power-led government. But it is not likely to match the PAD.

Abhisit will not have the home-field advantage of a strong economy. The Thai economy is weakening going into 2009. The world economy is in bad shape, aggravated by the financial crisis in the US and Europe. The Thai exports will be hard pressed. Unemployment will be rising. Tourism has taken a bad hit. Agricultural prices have already collapse.

Abhisit will have no time waste. His government will delivery policy address to Parliament on December 26. He will have to assemble a good economic team to tackle the economic weakness as quickly as possible. The most effective way to stimulate the economy is to spend government money directly into the economy to create jobs and rejuvenate the economic activities.

Working toward national reconciliation will not be easy. The wounds are so deep. The rural and urban divide has been chronic. Abhisit will need to have a dialogue with the rural voters in the North and Northeast, the traditional base of the defunct People Power Party. Communicating with the Thai people will be one of his most important jobs so that the country achieves reconciliation.

Newin Chidchob, who has led a defection from the defunct People Power Party and has been instrumental in Abhisit's premiership, has already given the advice to Abhisit that he should dish out at least Bt100 billion into the rural programme to stimulate jobs and consumption. This would help the rural people have something to bank on during the economic hardship ahead. Soon they would forget Thaksin Shinawatra, Newin suggested.

Restoring confidence among the international community is equally important. Foreigners and foreign governments do not understand the complex political situation of Thailand. They need to be informed about what has gone wrong with Thailand and how Thailand will be on a course of self-correction.

Abhisit will have a chance to shine at the Asean Summit, which has been resheduled to February next year. That will be a good platform for him to meet with other regional leaders and explain to them about Thailand's status.

Can Abhisit do the job?

Unlike most politicians, he does not have business connections or vested interests that he needs to protect. He was born from an elite family and went to Eton and Oxford. He served as a teacher at the Chulachom Klao Military Academy before leaving to teach at Thammasat University's Faculty of Economics. Then he went into politics, joined the Democrat Party and got elected as a Bangkok MP at the age of 27. He served a number of Cabinet portfolios in the past. His weakness is his lack of management experience outside the politics.

If he surrounds himself with capable people, who give him the best advices, all he needs to do is to make decisions. He will make some errors and some good decisions. But if he serves his premiership honestly, the Thai people will give him a chance.

Abhisit has nothing before him except to serve the Thai public. This call is noble as he has been raised to do so.

Korn Chatikavanij has also been raised along this tradition. Once he made it in the financial world, he retired and entered politics. Korn said his family has taught him that once he had enjoyed success in the society that nourished him, he should return the favour back to society.

This sense of noble obligations in public policy is so lacking among the Thai politicians, who mostly enter politics in order to seek power, money, fame,  and business networks and connections. Few Thai politicians engage in political discourse over the virtue and soundness of public policy.

We still have this sense of public policy consciousness among the technocrats at the National Economic and Social Development Board, the Finance Ministry and the Bank of Thailand for instance. But among the politicians, there are very few of them out there.

Abhisit's rise to power is another accident in Thai politics, coming after two of his predecessor losing power in a hurry, in a period of less than one year. The judiciary review is up to its task. The message is clear. If the politicians believe that they can continue to buy votes, they will see the axe falling on their parties. Thailand's rule of law system is up and running after years of rusty negligence.

Abhisit should use this rare opportunity to set high standard of political governance for his administration. Looking at the coalition partners and the politics as we know it, there is not much hope on this front. But it is a challenge. It is time to make history.