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."