Thailand seeks new economic chiefs in worst crisis

The upheaval comes at a time of heightened uncertainty in the global economy and a slump in export- and tourism- reliant Thailand

BANGKOK • Thailand is replacing the top two officials steering the economy through its worst crisis ever, injecting more uncertainty into the policy outlook.

Finance Minister Uttama Savanayana resigned on July 16 ahead of a Cabinet reshuffle, with Prime Minister (PM) Prayuth Chan-o-cha saying he’ll announce a likely replacement by next month. At the Bank of Thailand, the search for a successor to governor Veerathai Santiprabhob is entering the final stages, although the Cabinet changes may delay that process. Veerathai, 50, has declined to seek a new term when his current one ends in September.

Prayuth (right) says he’s waiting to hear from potential successors he has approached — some of whom are ‘outsiders’ without political backgrounds (pic: Bloomberg)

In the latest news, Minister to the Prime Minister’s Office Tewan Liptapanlop resigned yesterday followed by Labour Minister Chatumongol Sonakul, making him the sixth minister to quit.

The upheaval comes at a time of heightened uncertainty in the global economy and a slump in export- and tourism-reliant Thai- land that’s among the worst in Asia. The finance minister and central bank governor helped shape a 1.9 trillion-baht (RM254.67 billion) stimulus package that’s meant to curb the economic fallout from the pandemic, and investors want to see those funds put to work.

“We are in a crucial time of transition from lockdown to resumption of business, so the continuation of key policies are very important to help the economy hit by the outbreak,” said Vasin

Vanichvoranun, chairman of Kasikorn Asset Management Co Ltd in Bangkok. The sooner the replacements are found “the better,” he said.

Somkid Jatusripitak, who was deputy PM in charge of the economy, also resigned alongside Uttama last week, another blow to the government’s management team.

Prayuth is set to make his first Cabinet changes since his victory in last year’s disputed election. A former army chief, he led a military coup in 2014 and ruled as the head of a junta for five years before returning at the head of a multi-party coalition after the vote. Uttama was recently replaced as leader of the largest political party in the coalition.

The political shake-up couldn’t have come at a worse time for the economy. The central bank expects GDP to shrink 8.1% this year, the biggest decline on record and more dire than official forecasts for any other Asian nation. The central bank also is dealing with currency turmoil that’s undermining exports, and is examining new ways of supporting the economy as it runs out of conventional policy space.

Veerathai said at a seminar yesterday that it will take about two years for the economy to return to its pre-Covid levels, based on the assumption that the outbreak can be kept under control. Rather than a V-shaped recovery, he sees the trajectory more like a “checkmark with a long tail”.

“I am concerned the most about employment as tourism and related businesses employ lots of people,” the governor said. “When the outbreak hit, so many people lost their jobs” and many probably won’t get them back, he said.

After sharp gains since April, the baht has slid steadily this month amid weaker global sentiment. It fell 0.4% to 31.786 against the dollar as of 11:44am in Bangkok yesterday, taking its decline since the beginning of July to 2.8%, the worst performer in Asia after Indonesia’s rupiah.

Baht weakness illustrates market worries about the pandemic and the political upheaval, with the uncertainty weighing on financial market, consumer and business sentiment, said Tim Leelahaphan, an economist at Standard Chartered plc in Bangkok.

The finance minister post is a key one market participants are watching. Prayuth said last week he’s waiting to hear from potential successors he has approached — some of whom are “outsiders” without political backgrounds.

The new finance minister will pick the next central bank governor from a shortlist of candidates. A selection committee received six applications for the position, including from two current deputy governors.

“What the newcomers need to deal with are real tough jobs,” said Win Phromphaet, CIO of Principal Asset Management Co Ltd in Bangkok. “The central bank has limited policy space and they will need to handle rising bad debts going forward, while the task of the finance minister, who will need to boost the economy after Covid-19, is also very difficult.” — Bloomberg