Thai Prime Minister Prayuth Chan-Ocha has revamped his cabinet less than a year after it was formed, naming a new deputy and finance minister days after a blast in Bangkok piled more risks onto the struggling economy.
by Suttinee Yuvejwattana and Chris Blake
August 19, 2015 — 5:16 PM WIB
Thai Prime Minister Prayuth Chan-Ocha has revamped his cabinet less than a year after it was formed, naming a new deputy and finance minister days after a blast in Bangkok piled more risks onto the struggling economy.
Somkid Jatusripitak, a former finance minister, will become the deputy prime minister overseeing the economy, Prayuth told reporters Wednesday. Apisak Tantivorawong replaces Sommai Phasee as finance minister, local media have reported, citing a list of changes awaiting the king’s approval.
Prayuth, who took charge after a military coup in May 2014, is struggling to revive an economy that is forecast to have among the slowest expansions in Southeast Asia this year. While government spending is improving, local demand and exports remain weak and tourism is expected to take a hit after the blast that killed at least 20 people, including foreigners.
“Somkid is a well-known veteran, so having him leading the economic team should help boost sentiment,” said Pornthep Jubandhu, a strategist at SCB Securities Co. in Bangkok. “The urgent task is boosting confidence. They should also come up with additional short-term economic stimulus, if possible.”
Investors have dumped Thai stocks and bonds in recent months as the economic outlook worsened. It has had the most equity outflows in Asia this year, and the baht is among the worst performers in the region.
Political Divide
The junta seized power last year with a pledge to bridge a decade of political schism, end corruption and bring happiness. While Prayuth has said he’ll return the nation to civilian rule once there is no dissent and the constitution is in place, there is no firm date yet for an election, and the risk of unrest rises the longer he stays on and as the economy stutters.
The junta hasn’t yet finalized a new constitution that it says is needed before an election is held, with critics saying the draft risks deepening a political divide. The draft is up for a vote at the National Reform Council in early September.
Prayuth has also been faulted for populating the cabinet with military personnel with little experience in their portfolios. The reshuffle may address some of those concerns.
Somkid, 62, was a deputy prime minister and finance minister in the government of former premier Thaksin Shinawatra, and has been a member of the junta’s advisory board since the coup. He has a Bachelor’s degree from Thammasat University and a Ph.D. from the Kellogg School of Management at Northwestern University.
Thaksin Links
He was a co-founder of Thaksin’s Thai Rak Thai party, the political machine that has won every national election since 2001 and twice been ousted in military coups. He is credited with developing “Thaksinomics,” the populist economic platform that endeared Thaksin to the nation’s rural poor, but derided by his opponents, including Prayuth.
Somkid was one of 111 members of Thaksin’s party banned from politics for five years in a controversial 2007 court ruling regarding violations of election law. His appointment could rankle some coup supporters who are wary of his links to Thaksin and believe that political bans should be for life.
“While Somkid is likely to bring new drive, obvious energy, and far better coordination to the dictatorship’s economic team, he is no magician,” said Michael Montesano, co-coordinator of the Thailand Studies Programme at the ISEAS Yusof Ishak Institute in Singapore. “The failure of the economy to turn around right away means that he may soon become a target for criticism.”
Economic Team
Apisak, 61, a former president of Krung Thai Bank Pcl, has a master’s in business administration from the University of Tennessee. Apisak in recent days resigned from board positions at Thai Oil Pcl, Indorama Pcl and Quality Houses Pcl, according to statements from the companies.
Sommai, the outgoing finance minister, said Wednesday that he hoped the new economic team would continue his efforts to reform Thailand’s tax system.
The newly minted officials have their tasks cut out. The economy grew 2.8 percent in the second quarter from a year earlier, slowing from 3 percent in the previous period. The finance ministry and the National Economic and Social Development Board have cut their forecasts for GDP growth and exports. Overseas sales may contract for a record third year.
Tourism, which accounts for about 10 percent of the economy, was one bright spark. Fewer visitors after the attack will be acutely felt in an economy already suffering from drought and the yuan devaluation that may further dent exports.
While the government has pledged higher investment spending in the fiscal year starting Oct. 1, it has failed to make much headway on a planned investment program in transport infrastructure. The Bank of Thailand has cut the benchmark rate twice this year.
“The change should help sentiment, but we don’t expect to see a major shift in policies,” Amonthep Chawla, head of research at CIMB Thai Bank Pcl in Bangkok, said before the announcement. “The key task for the new cabinet is to bring back confidence among tourists. The government also needs to push for economic reforms, as the economy faces structural problems.”