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Economy

Return to Thaksinomics

BANGKOK -- Following a cabinet reshuffle, Somkid Jatusripitak, a deputy prime minister, minister of finance, minister of commerce and chief economic theoretician in the governments of former Prime Minister Thaksin Shinawatra, has returned as deputy prime minister in the military government of Prime Minister Prayuth Chan-ocha, the embattled former army chief who took power in a coup on May 22 last year.

Somkid Jatusripitak, Thailand's economic czar under Prime Minister Thaksin Shinawatra, has returned as deputy prime minister following a recent reshuffle by the floundering military government.

     As he assumed overall responsibility for economic affairs, Somkid told a business forum in Bangkok on Aug. 27 that the government's policies will focus on the poor, farmers, and small and medium enterprises (SMEs).

     In his first public address back in office, Somkid said time is short and "ministers have to be proactive" if the economy is to struggle back on track.

     "We need to help those with difficulties sustaining themselves in this difficult time," said Somkid. His new team includes Finance Minister Apisak Tantivorawong, a former banker.

     Apisak's first day in the hot seat was a baptism of fire on Black Monday with stock markets and currencies in turmoil. The new finance minister is working on stimulus measures that include a scheme for state banks to extend cheap loans to low-income earners and SMEs.

     Addressing a packed ballroom, Somkid drew applause when he announced a program in the next fortnight of "small measures focused on SMEs that will not require a high budget".

     The new deputy prime minister said Thailand is locked in a "vicious cycle". Farmers have lost purchasing power with falling crop prices; this damages SMEs, which in turn cannot secure bank loans to tide them over.

     In a population of 67 million, Somkid estimates 18 million Thais belong to farming families. Others suggest more than half the population is dependent on agriculture in one way or another.

     "We need to bring back the confidence of the people," said Somkid. He noted that middle income people are also spending less, exerting a deflationary effect.

     Longer term, Somkid wants to see Thailand reduce its export dependency. Exports currently account for around 60% of gross domestic product. "A country that depends solely on the outside factor for its growth, will one day collapse," said Somkid, echoing an unfulfilled aspiration from the Thaksin years.

     The global slowdown, particularly in China, has hit Thailand hard. Exports fell for a seventh consecutive month in July according to government figures released this week. "When the outside world falls, the impact is all on us," said Somkid. "Now, it's a good opportunity to build strength from within."

     Somkid sees room for economic development upcountry. He wants to bring back Thaksin's populist One Tambon, One Product (OTOP) program to promote locally made products from more than 7,000 tambon, or districts.

     Somkid said raising competitiveness is another key to recovering growth, admitting that Thailand had been too dependent on cheap labor in the past. He plans to seek advice from local and international academics and the private sector on ways to add value to what Thailand currently offers in agriculture and manufacturing.

     Samsung Electronics and LG Electronics have both closed TV manufacturing operations in Thailand and moved to Vietnam with its more productive labor. "If we had the advanced human resource that they wanted, they wouldn't have left," Somkid said, adding that developing competitive skilled labor must be a top priority.

     "Never let such history be repeated again," said Somkid, with no hint of irony.

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