Uphill task for Thailand’s deputy prime minister
Can Thailand’s Deputy Prime Minister Somkid Jatusripitak deliver amid slower economic growth and the aftermath of last week’s Bangkok bomb blast, which has shaken confidence?
It is obvious from Prime Minister Prayuth Chan-ocha’s Cabinet reshuffle that the ruling junta wants to enhance the nation’s international image and boost economic partnerships with other countries.
The junta seems to be intent on capitalizing on Somkid’s marketing expertise, as he had proved his worth in the administration of former PM Thaksin Shinwatra.
Somkid, who holds a doctorate from Kellogg School of Management at Northwestern University in the U.S., served as finance minister and commerce minister under Thaksin.
During his time in office, he won support from local and international businesses, probably because he spoke the same language of free trade with them, and his lively speech was able to get the audience’s attention.
Somkid also seemed confident when he took to the public stage in making speeches to win support from foreign counterparts.
In its reshuffle, the junta has also removed Gen. Tanasak Patimapragorn as foreign minister and replaced him with Don Pramudwinai, a veteran former diplomat, which suggests that it wants to make friends with democratic governments who are uncomfortable about talking to generals.
The government’s relations with the West have been strained since the coup last year, while the United States has also maintained Thailand on Tier 3 in Washington’s latest “Trafficking in Persons” report, a decision many have criticized as being motivated by politics, arguing that the military government has recently made progress in solving human-trafficking issues.
The European Union, meanwhile, has cut off official contact with Thailand, so Don, as a civil- ian diplomat, might be able to improve the relationship with both the U.S. and Europe.
The junta has also appointed Apiradi Tantraporn to replace Gen. Chatchai Sarikalya as commerce minister, as well as removed Air Chief Marshall Prajin Juntong and replaced him with Arkhom Termpittayapaisith as transport minister.
These moves also strongly indicate that the government wants to improve economic cooperation with the country’s trading partners.
Currently, Thailand is facing the risk of trade sanctions by the U.S. due to its perceived lack of progress in regard to human trafficking.
Moreover, the EU might also impose some trade restrictions on Thailand due to accusations of slave labor and illegal fishing practices among Thai trawler operators, while the Thai airline industry also faces a risk of boycott from other countries due to concerns over aviation safety standards.
As Don, Apiradi and Arkhom will be much more acceptable to their foreign counterparts than the three military top brass they have replaced, Somkid as deputy PM in charge of economic affairs might be able to do something more positive in the eyes of the international community.
Calls for Stimulus Package
Turning to t he domestic economy, Somkid faces an uphill task to make people happy. The prolonged political conflict has resulted in an economic growth rate lower than its potential.
Moreover, the bomb blast at the Erawan Shrine in Bangkok, resulting in 20 dead and more than 100 injured, has put more pressure on the weak economy, as it is expected to hit the tourism industry hard.
Revenue from foreign tourists is currently the life blood of the economy, as exports have not yet returned to positive territory.
Economists have suggested that Somkid should launch a short- term economic stimulus package, aimed at supporting lower- and middle- income groups.
“A stimulus package such as (one including) a tax break is needed, as the bombing might wipe out half of the country’s tourism income,” said Chulalongkorn University economist Somprawin Manprasert, who expects gross domestic product to expand by just 2.5-2.7 percent this year.
Somchai Jitsuchon, research director at the Thailand Development Research Institute, suggested that the government may have to give handouts to the lowincome group.
Newly appointed Finance Minister Apisak Tantivorawong, meanwhile, faces a difficult task when it comes to budget disbursement.
He is part of Somkid’s team, but he may not be able to do much due to the inefficiency of government agencies and state enterprises.
Thailand’s infrastructure investment needs are estimated to be 2.4 trillion baht (US$67 billion) between 2015 and 2022. While the actual financing of public investment is not a serious concern, how to implement the projects efficiently is the hardest part.
The reform of state agencies and state enterprises has not yet made much progress, so implementing the public investment program will take time.
Therefore, it could be said that while Somkid has a dream team at his disposal, he may not be able to do much to boost Thailand’s image as long as the EU and the U.S. remain at odds with the military regime.
On the economic front, Somkid may win back some confidence, but not a great amount due to the persistent domestic political uncertainty that is damaging both consumer and investor confidence.
Moreover, he will also find it hard to win the heart and soul of a low-income group that continues to be badly affected by the country’s economic woes.