Chalongphob's policy direction (28-03-07)
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Bangkok Post Article: March 27, 2007
Chalongphob sets priorities
New minister aims to improve transparency POST REPORTERSImproving the transparency of public policy, speeding up the passage of legal reforms for the financial sector and streamlining the review process for public-private programmes are among the key priorities for new Finance Minister Chalongphob Sussangkarn. "The next government will probably follow populist policies, regardless of the party," he said.
What I can do is to make state spending more transparent, to develop an early warning mechanism and make public information about what is spent and how."
Dr Chalongphob, an economist by training, took over the finance portfolio earlier this month following the snap resignation of M.R. Pridiyathorn Devakula.
The 57-year-old Cambridge graduate is well-known in academic circles, having served as president of the Thailand Development Research Institute since 1996. But he remains an unknown to many investors and is a newcomer to politics.
He said that with only several months remaining for the interim government, his priority was to push forward with structural reforms to improve the mechanisms of fiscal policy. Financial reforms to the Bank of Thailand Act, the Securities and Exchange Act and the Currency Act would also be pushed forward to modernise the financial markets.
But Dr Chalongphob disagreed with moves to make the central bank governor accountable to the Senate, saying the concept could be flawed in practice. Under current law, the finance minister is responsible for the appointment and dismissal of the governor.
"This is an idea that looks good in principle, but could be quite problematic in practice. For decades, the central bank has operated quite well under the current system, and I'm not sure it is one that should be changed," he said.
The screening of public-private infrastructure investments also needs change, Dr Chalongphob said. Under current laws, investment programmes of over one billion baht must pass through a lengthy screening process by various government agencies. "The current system doesn't work. It's overly cumbersome in some areas, insufficient in others,'" he said.
Policies for state enterprises providing basic services to the public should also be overhauled, Dr Chalongphob said - specifically agencies such as the State Railway of Thailand (SRT) or the Bangkok Mass Transit Authority.
"The state should define its responsibilities clearly, assess the costs of public services and make the necessary subsidies clear," he said.
Agencies such as the SRT are reeling from massive debts as fares are maintained below cost due to political policy.
Dr Chalongphob said it would be better to define the amount of annual subsidies to be paid for such public services, with the remainder carried as the responsibility of the operator on commercial terms.
He said the Finance Ministry would also look to assist low-income residents through state support to ease the impact of the slowing economy.
"I don't want to concentrate on the overall economic growth figures. It's more important to think about who has been affected [by the downturn]," Dr Chalongphob said, adding that state-owned banks would be encouraged to accelerate their lending programmes while maintaining overall credit quality.
"During the Thaksin Shinawatra governments, the state gave too much [to the grassroots]. Now we have pulled back, but perhaps too quickly," he said
