ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter

Thai junta taps former Thaksin aide to rejuvenate ailing economy

BANGKOK -- Thai Prime Minister Prayuth Chan-ocha has picked government adviser Somkid Jatusripitak, who was a close aide to deposed Prime Minister Thaksin Shinawatra, as the new chief of economic policy in charge of re-energizing the country's feeble economy.

     The appointment of Somkid as deputy prime minister responsible for guiding Thailand out of its doldrums is the most significant decision coming out of Prayuth's cabinet reshuffle on Sunday.     

     Somkid is an economic policy maven who served as deputy prime minister and finance minister for the Thaksin government in power from 2001 to 2006, whose policy agenda bitterly divided the nation. Somkid was known as Thaksin's right-hand man and the architect of the toppled government's populist economic policy, known as "Thaksinomics."

     Now, the 62-year-old former marketing expert has the challenge of engineering an economic turnaround of a country that has been hit by the terror attack on Aug. 17. Perhaps just as difficult, Somkid faces the test as a member of the ruling military junta, which has been rather hostile to his former boss' policy.

Into the fire

Somkid wasted no time in getting right to work. On Monday, the day after the cabinet reorganization, he announced a plan to cobble together a package of emergency policy measures to rescue the country's sinking economic ship.

     "We planned measures to help farmers, the grassroots and low income earners, aiming at moving the economy," he was quoted by Reuters as saying.

     Somkid also indicated his intention to promote government investment, including spending for infrastructure development, to stimulate growth.

     The once vibrant Thai economy has screeched to a halt as consumer spending and export growth have weakened sharply. The heavy burden of household debt, which is now equivalent to 80% of the nation's gross domestic product, is forcing Thai consumers to tighten their purse strings. China's increasingly pronounced economic slowdown is cramping Thailand's exports despite a significant depreciation of its currency.

     The Office of the National Economic and Social Development Board has revised down its forecast for economic growth in 2015, from 3-4% to 2.7-3.2%.

Marketing man

Somkid certainly has his work cut out for him. But who is he?

     Born as one of the 10 children of a Chinese-Thai family in Bangkok, Somkid studied abroad, following the path of his elder brother, Som Jatusripitak, who served as commerce minister for the administration of Chavalit Yongchaiyudh, in power from 1996 to 1997.

     Somkid obtained a doctorate in business administration from Kellogg Graduate School of Management at Northwestern University in Illinois.

     A marketing expert, Somkid co-authored a book entitled "The Marketing of Nations" with Philip Kotler, a Kellogg professor and internationally reputed management guru. The book discusses government strategies for enhancing the competitiveness of nations through marketing.

     Shortly before the book was completed, Somkid had his fateful first encounter with a person who was to have strong influence over the course of his life: Thaksin Shinawatra, a telecommunications business tycoon who later became a new political star in the politically unstable country.

     A magazine article about leadership written by Somkid caught Thaksin's attention, launching a political alliance between the two, according to a book authored by Akira Suehiro, a Thailand expert at the University of Tokyo.

     In his autobiography, published in 2013 as a series in The Nikkei, Kotler cited Somkid as one of his outstanding students. When Somkid asked for Kotler's advice over whether he should pursue an academic career or enter politics, Kotler encouraged his Thai protege to carve out a political future for himself, according to the autobiography. 

"A political redefinition"

Following his academic mentor's advice, Somkid became involved in the formation of the Thai Rak Thai Party with Thaksin in 1998 and contributed to the party's landslide victory in the 2001 general elections as a key economic policy adviser.

     Thaksinomics is based on the idea that a nation should be governed like a company, with the prime minister serving as chief executive.

     A year before Thaksin's electoral win, a famous Thai journalist said the economic policy program proposed by Somkid represented a challenge to the control of the Thai economy by 40-50 powerful Chinese-Thai families.

     "This agenda, if pursued sincerely, amounts to a political redefinition, a complete antithesis to letting the elite class collapse - the class that had ruled over the Thai economy over the past three decades until 1997," the journalist wrote.

Public and private positions

Thaksin's premier-as-chief-executive approach to economic management of a nation resonated with Somkid's belief that a country's competitive power can be enhanced by effective marketing efforts.

     Somkid's ideas about the power of marketing to boost a country's position in the world appear to reflect his experiences in the business world.

     After returning from the U.S., Somkid was recruited as a senior executive for Saha Group, a business conglomerate involved in consumer goods businesses as well as logistics and distribution services. He developed a close personal relationship with the group's founder, Thiam Chokwatana.

     As finance minister for the newly elected Thaksin government, Somkid led a marketing campaign targeting mainly farmers to promote the administration's economic policy.

     The administration's program featured such goodies for farmers as a three-year debt moratorium, a development fund to provide 1 million baht ($28,000) in lending to every farming village and a universal health care system that allowed people to receive all medical services for 30 baht per treatment.

     These populist policies contributed greatly to bolstering Thaksin's power base and election machine.

     But the administration's policies were not a simple scheme to pamper farmers. The Thaksin government also rolled out a "One Tambon, One Product" campaign to help develop local economies. It was modeled on Japan's "One Village, One Product" movement, designed to support the production and marketing of local specialty goods.

Unraveled and re-raveled

In 2006, however, the Thaksin administration started unraveling as its popularity and reputation were damaged by endemic corruption and allegations of tax evasion by members of the Thaksin family. The Thaksin government was eventually ousted by a military coup in September that year.    

     Thaksin announced his resignation and named Somkid as one of potential successors prior to the coup, and the country's business community also endorsed Somkid as the nation's new leader. Somkid might have become Thailand's prime minister if the government had not been toppled. If that were the case, though, it was possible that Thaksin would have been pulling the strings behind the scenes.

     The Thai public was surprised by Somkid's appointment as economic envoy by the military government that came to power through the coup. This inevitably enraged the anti-Thaksin camp, forcing Somkid to resign after only one week in office.

     In an ironical quirk of fate, eight years later Somkid was handpicked by Prayuth, the army chief who led a coup in May 2014 to oust the government of former Prime Minister Yingluck Shinawatra, Thaksin's younger sister.

     Has Somkid not been able to shed his image as Thaksin's right-hand man? It seems so far that his appointment as the new economic policy chief has not provoked any strong criticism among the anti-Thaksin conservatives.

     The new cabinet includes two other members who studied at Northwestern University -- Uttama Savanayana, minister of information and communication technology, and Suvit Maesincee, deputy commerce minister. They will support Somkid in his efforts to revive the sagging economy. Suvit worked under Somkid in the Thaksin administration.

     The question being asked in the Thai political community is whether Somkid will be able to overcome his reputation as a populist policymaker. Local media are awash with comments from business leaders lauding Somkid. But the tough economic conditions in Thailand are too serious for him to have a long honeymoon with the media.

     Somkid now faces a series of difficult tests of his policy acumen as he grapples with the challenge of pulling the economy out of its current stagnation.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more