Thai economy focal point ahead of elections

Thai economy focal point ahead of elections

By Philip McClellan

BANGKOK (AFP): Thailand's stalled economy, a key factor in the collapse of the previous government, has become the focal point of political parties jockeying for position in the upcoming general elections.

In a campaign seemingly devoid of other issues, the two main parties have been falling over themselves to prove their economic credentials, competing to assemble the best team of gurus to cure the ailing economy.

At the heart of the campaign are fears that Thailand's economic boom of the past 10 years -- during which gross domestic product growth averaged more than nine percent a year, according to Bangkok Bank -- may finally be over.

The Thai financial community was dealt a blow in September when Thailand's short-term sovereign debt was downgraded by Moody's Investor Services and data was released showing a significant drop in export growth.

All this disheartening news came against the backdrop of a growing current account deficit, fears of inflation and a bourse which plummeted more than 30 percent during the watch of outgoing premier Banharn Silpa-archa.

Accordingly, the frontrunning Democrat and New Aspiration parties have been keen to avoid the same charges of economic incompetence which helped shatter Banharn's fractious coalition ahead of a no-confidence motion in September.

The Democrat Party of former premier Chuan Leekpai has been boosting its formidable line-up of Tarrin Nimmanhaeminda, a former finance minister, and respected economist and former deputy premier Supachai Panitchpakdi.

The Democrats' main rival -- the New Aspiration Party of Chaowalit Yonchaiyudh -- has, for its part, assembled a "dream team" led by Amnuay Virawan, a deputy premier in the last government with strong economic credentials.

Meanwhile, nipping at the heels of the frontrunners, the Chart Pattana Party is staking its own claim by citing the performance of the Thai economy under former premier and party leader Chatichai Choonhavan in the late 1980s.

"We are campaigning hard on economic issues, which is probably the leading issue of our campaign strategy," the Democrats' Tarrin told journalists last week as he outlined his plans for restoring confidence in the Thai economy through fiscal discipline and boosting export growth.

Amnuay, who is likely to head the finance ministry in the event of an NAP victory, has also been appearing on television to outline his plans to boost liquidity in the financial system and possibly cut government spending.

All this concern for the economy has been cautiously welcomed by many analysts who say the next government will have to make good on its pledges.

"It is quite positive that they have made such a big deal out of putting together these economic teams," said Sriyan Pieterz, an economic strategist with Capital Nomura Securities.

"This should ensure that there is a fairly competent team of economic managers in the next government whether it is NAP or Democrat," he added.

However, other analysts point to the country's deeply- entrenched system of patronage politics, where election-day support from provincial politicians often means handing them key ministries over the heads of the technocrats.

"If you buy all those votes, you have to pay them back somehow, and that could mean interference in the Bank of Thailand and the finance ministry," said Lan Pajasalmi, a senior vice- president at First Asia Securities.

Charges of such cronyism was one of many leveled against Banharn's government after he handed finance to an inexperienced advisor and key deputy minister spots to influential provincial politicians in his Chart Thai Party.

Despite efforts by Chaowalit, a former army chief, to brush up on his economic homework and tout his dream team, many analysts are looking to the Democrats as the champions of fiscal prudence for the overheated economy. Pieterz said the Democrat line-up was probably more committed to long-term stability through austerity -- pointing to proposals to cut unneccesary infrastructure projects and military spending.

On the other hand, he said, the NAP -- with its powerbase in the rural northeast, where pork barrel politics is the norm -- had "more pressure on the fiscal expenditure side."

Lan said the short-lived nature of Thai governments meant politicians often went in for short-term policies rather than working to build the economy.

"No-one is willing to make long-term plans because they know they will not be there for long," she said. "This way, it's tough to build confidence."