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Turbulent Thailand

Thailand's economic ministers quit amid coronavirus crisis

Move paves way for Prayuth to appoint favorites to cabinet as economy turns cold

Thailand's Deputy Prime Minister Somkid Jatusripitak became Prime Minister Prayuth Chan-ocha's adviser on foreign economic relations shortly after the leader took power in a 2014 coup. Somkid's resignation letter was submitted together with those of three fellow ministers on Thursday.   © Reuters

BANGKOK -- Thailand's long-standing economic policy team celebrated the first anniversary of Prime Minister Prayuth Chan-ocha's cabinet with resignation letters instead of a birthday card, heralding a looming shake-up in the former army chief's governance of the Southeast Asian country.

Finance Minister Uttama Savanayana, Energy Minister Sonthirat Sontijirawong and Suvit Maesincee, the higher education and science minister, announced their resignations at Government House on Thursday, ending their role in the country's recovery from the coronavirus pandemic. Deputy Prime Minister Somkid Jatusripitak did not appear, but his resignation letter was submitted together with those of his fellow ministers.

"We've made a decision ourselves," Uttama said of the move to step down. "We were not forced to resign. Our resignation is intended to reduce political pressure on the prime minister and to clear the way for a cabinet reshuffle."

On the surface, the ministers quit to take responsibility for economic underperformance. But the resignations are also seen as a result of the machinations of party politics. They are likely to be replaced by people from, or close to, Palang Pracharat, the leading party in the ruling coalition.

Prime Minister Prayuth Chan-ocha's cabinet was sworn in a year ago Thursday after general elections in March 2019. But the country's sudden loss of economic momentum has exposed the military junta roots of the elected government.

Thailand's emergency coronavirus decree has been extended three times since the beginning of the outbreak. The state of emergency minimizes the political roles of Thailand's cabinet and parliament while giving overwhelming power to the prime minister, including the ability to curtail individual rights.

The prime minister warned on July 9 that the reshuffle could come sooner than people think.

"A cabinet reshuffle can take place any time from now on. I did not say I would definitely reshuffle in September," Prayuth said. "Changes will be made where necessary. Those who already work well will carry on."

The resignation on Thursday will force Prayuth to kick off the reshuffle.

Prayuth appointed Somkid in August 2015 as deputy prime minister to steer economic policy. Since then, his faction has been at the center of Thailand's economic policymaking, surviving the transition from the junta to an elected cabinet.

Thai Prime Minister Prayuth Chan-ocha takes questions from journalists after the photo session with his new cabinet in Bangkok on July 16, 2019.    © Reuters

Somkid, who served as deputy prime minister and finance minister for ousted Prime Minister Thaksin Shinawatra's government from 2001 to 2006, became Prayuth's adviser on foreign economic relations shortly after the leader took power in a 2014 coup.

Thailand outperformed the world in 2017 and 2018, but the kingdom's economic growth has since deteriorated. Thailand recorded 2.4% growth for 2019, lower than the 2.9% growth globally.

The Bank of Thailand projected June 24 that Southeast Asia's second-largest economy would contract by 8.1% due to the pandemic. The International Monetary Fund forecast the world economy to shrink by 4.9%.

The strong coronavirus impact on Thailand reflects its reliance on foreign demand including tourism and exports. One economic objective set by Prayuth's administration was to transform the country from an export-oriented economy to one led by domestic demand. But the transformation did not come fast enough to beat the pandemic.

At first, Somkid resorted to bravado over speculation of being replaced.

"If the new team has no ideas about how to do it, or cannot do it, then don't come," he said in a public speech June 24, the same day the central bank downgraded its economic projection. "What's the point of change?"

The prime minister defended the economic team June 30 after a weekly cabinet meeting, saying, "They have worked well with me all this time." But political developments in the past few months suggest Prayuth was moving steadily toward the team's replacement.

Thailand is considering carefully whether to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the trade pact comprising Japan, Australia, Canada, Mexico and seven other countries.

Despite Somkid's push to join the CPTPP soon, the kingdom is unlikely to decide this year. A parliamentary committee said it will need to study costs and benefits until September after meeting fierce opposition from civil groups, which argue that the deal will harm food security and access to medicines. The study will not end in time for this year's meeting of the CPTPP commission, set for Aug. 5 in Mexico.

Meanwhile, economic team members Uttama, Sonthirat and Suvit resigned from Palang Pracharat, the leading party of the ruling coalition, on July 9. Prawit Wongsuwan, a deputy prime minister and former army chief, replaced Uttama as party leader, while Sonthirat had held the secretary-general position.

Uttama and Sonthirat helped pave the way for Prayuth to become the elected prime minister when they left their ministerial roles in the junta in 2018 to lead the party.

Their faction had accepted its fate by last week. Somkid said Friday that political problems impact the stability of the economy, and so politics must go smoothly.

"I have been prepared for a long time," he said. "I am old now. I already lost heart years ago."

Local media reports said that Predee Daochai, president of Kasikornbank, and Pailin Chuchottaworn, former CEO of state-owned oil and gas company PTT, will take part in the new economic policy team that will replace Somkid's.

"The government cannot afford any delays in replacing the economic team as the private sector is worried about the future of economic stimulus projects initiated by the Somkid team," Kalin Sarasin, chairman of the Thai Chamber of Commerce, told a local newspaper.

Several business executives voiced concerns on potential changes to the country's economic policy, including monetary policy. The Bank of Thailand chief will be replaced, as Gov. Veerathai Santiprabhob decided not to seek for another term after his first expires in September.

Finance Minister Uttama Savanayana, left, and Sonthirat Sontijirawong arrive at the Government House in Bangkok on Thursday to submit their resignation letters. (Photo by Masayuki Yuda)

Since 2015, the country has worked on a long-term economic renovation called Thailand 4.0, aiming to realign away from heavy industry toward a value-based economy driven by innovation, technology and creativity. Somkid was instrumental in devising the initiative. Domestic and foreign companies in Thailand have invested based on the plan.

"We expect Thailand 4.0 and human resource development for the initiative to go on, regardless of a cabinet reshuffle," said Naoki Sakamoto, secretary-general of the Japanese Chamber of Commerce, Bangkok. "JCC would also hope that the central bank will continue working on taming baht appreciation under a new leadership."

A selection committee for the Bank of Thailand governor post ended open recruitment on Friday, after extending the application deadline from June 16. Two candidates applied during the extended period. Setthaput Suthiwart-Narueput, a member of the Monetary Policy Committee and the prime minister's advisory team, joined the race at the last minute. Anusorn Tamajai, director of business reform at Rangsit University and a former member of the committee, also filed his application.

The field already includes two central deputy governors -- Mathee Supapongse and Ronadol Numnonda -- and outside applicants Tongjai Thanachanan and Suchart Techaposai, who were the former head of institutional business and the former chief investment officer, respectively, at Ayudhya JF Asset Management, currently known as Krungsri Asset Management.

The governor will navigate Thailand's monetary policy in an uncharted territory of easing in order to support the coronavirus-hit economy, while working in tandem with the government's economic policies. The selection committee will send two finalists to the finance minister.

The minister will choose one finalist to present the cabinet for approval. But the likely removal of the current economic team from the cabinet may interfere with the selection process.

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