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Economy

Bank of Thailand seeks outside picks for chief as deadline nears

Successor to Harvard grad Veerathai will have little room to cut interest rates

Thailand has cast a wider net in its search for a new central bank governor, with incumbent Veerathai Santiprabhob's term is set to expire at the end of September. (Nikkei montage/Reuters)

BANGKOK -- Thailand has cast a wider net in its search for a new central bank governor who can lead Southeast Asia's second-largest economy out of the COVID-19 crisis, with incumbent Veerathai Santiprabhob's term is set to expire at the end of September.

Friday marks the deadline for applications, which are open to the public. The process has already been extended once after an initial list was closed on June 16.

"The ability and quality of the internal candidates is sufficient, and they are qualified, but we want more external applicants," said Rangsan Sriworasart, chairman of the selection committee.

Four candidates filed their applications for the job prior to the extension, local media reported. They include two of the three incumbent deputy governors: Mathee Supapongse and Ronadol Numnonda. The external candidates are Suchart Techaposai, former chief investment officer of Ayudhya JF Asset Management, and the firm's former head of institutional business, Tongjai Thanachanan.

Only a few days are left until the deadline, but no new names have been reported as contenders.

Applicants must be Thai nationals no older than 60 years when they apply. They must have knowledge and professional skill in the field of economics or banking and finance.

The search for a top central banker comes as Thailand struggles to revive economic activity amid the coronavirus pandemic -- a challenge that has exposed divisions within the government over trade and investment policy.

Some economists fear that candidates who emerge after the extension could be applying for the position under strong influence of the government. They assume the extension was made because the selection committee had not received an application from someone willing to run monetary policy aligned with government policy.

Emerging-market economies in Asia seek central bank governors who can balance support for the economy and confidence in monetary policy as they enter the uncharted territory of easing.

Coronavirus-impacted emerging economies must be equipped with capable central bank governors who can balance support for the economy and confidence in monetary policy as they enter the uncharted territory of easing.

The Bank of Thailand's policy rate stands at 0.5%, a historical low, after three rate cuts of 0.25 percentage point this year. With the one-day repurchase rate rapidly approaching zero, the monetary policy committee said it "would stand ready to use additional appropriate monetary policy tools if necessary," signaling that it may have to venture into using unconventional monetary policies such as quantitative easing.

The search for a new governor began in May, when Veerathai declined to seek a second five-year term, citing family reasons. The selection committee of seven members led by Rangsan, a former permanent secretary of the Ministry of Finance, started accepting applications on May 26.

Veerathai, a former International Monetary Fund economist who also worked in the private sector, was chosen as the 23rd governor in 2015 from five applicants. Only six of the past governors were from the central bank.

Lack of applications may be a reflection of difficult tasks the next governor will be left to deal with. "I would think it is quite a stressful job even under the best of times, and this is not the best of times," said Supavud Saicheua, advisor at Kiatnakin Phatra Financial Group.

Supavud was shortlisted for the job in 2015 with Veerathai. The age restriction did not allow the 63-year-old to apply a second time.

Veerathai "is a highly qualified person and a very nimble person as well," Supavud said. "But even he had a lot of things he had to go through."

Veerathai holds a doctorate in economics from Harvard and has more than 25 years of experience in economic policy design, commercial banking and capital markets. He is recognized among global central bankers for his ability to steer Thai monetary policy, maintaining a fine balance between economic support and macro-prudence.

The COVID-19 pandemic has torn the Thai economy apart. On June 24, the Bank of Thailand lowered the kingdom's economic growth projection to a contraction of 8.1%. This is larger than the 7.6% contraction the kingdom reported in 1998 when it was the epicenter of the Asian financial crisis.

"Any person who would want become the governor has to think outside the box," Supavud insisted, as the next central bank chief must combat the slumping economy with limited conventional arms left in the central bank's arsenal.

"The committee won't open application envelopes until the new deadline ends," Rangsan said. The panel will not extend the application period further. On July 17, it will gather to check applicants' qualifications. Applicants will be given an opportunity to present their thoughts on economic and monetary policy on July 21.

The committee will shortlist two candidates from the applicants and submit their names to Finance Minister Uttama Savanayana. The finance minister will pick one from the shortlist to present as the final candidate to the cabinet for approval. Finally, the approved candidate will be named the next governor by King Maha Vajiralongkorn.

Open recruitment for the position is relatively new, starting after the latest Bank of Thailand Act was enacted in 2008. Outside Thailand, the Bank of England has used open recruitment for its governor position since 2012, when it headhunted for former Bank of Canada governor Mark Carney.

A potential snag in the selection process is a cabinet reshuffle reportedly under consideration by Prime Minister Prayuth Chan-ocha. A new finance minister, who plays an important role in choosing a central bank governor, could signify a change in Prayuth's economic policy, in turn affecting the qualifications of the next governor.

In the U.K., the governor succession from Mark Carney to Andrew Bailey was delayed due to the resignation of Prime Minister Theresa May in July 2019, and a snap election in December 2019.

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