BANGKOK - THAILAND'S new Finance Minister Korn Chatikavanij is a political novice but his career as an investment banker made him the investors' choice even before his appointment was confirmed.
Taking a key cabinet job after only four years in politics, Mr Korn faces a major challenge in trying to prevent the economy sliding into recession amid the global economic slowdown.
Finance minister from Thai elite faces raft of economic woes
BANGKOK - AS A graduate from the same Oxford class as Thailand's premier, new finance minister Korn Chatikavanij reinforces the traditional elite's return to power in the kingdom.
But Mr Korn and Prime Minister Abhisit Vejjajiva will need to build on that solidarity to face a dual onslaught of global recession and sluggish domestic demand following months of political protests.
'He takes this job as we are entering a severe storm,' politics and economics professor Somjai Phagaphasvivat at Bangkok's Thammasat University said.
The economy may contract in the fourth quarter this year and the first quarter of 2009, the first shrinkage since early 2005, analysts and government economists say.
A Reuters poll on Dec 11 showed analysts expecting gross domestic product to grow 2.8 per cent in 2009, down from an estimated 4.5 per cent this year, as exports are hit hard by recessions in the United States, Japan and the European Union.
'My first priority is to try to mitigate the impact of the global economic downturn by reviving investment and boosting consumption, partly through fiscal stimulus and increased liquidity in the banking system,' Mr Korn told Reuters on Saturday.
Some analysts compare the timing of Mr Korn's Democrat Party taking office as leader of a multi-party coalition government to a decade ago when it assumed power to clean up the mess left by the 1997/98 Asian economic crisis that started in Thailand.
Oxford economists In many respects, Korn's personal background reads like Prime Minister Abhisit Vejjajiva's. Both are 44, schooled in economics at Oxford University, and have been elected members of parliament representing Bangkok.
'We have known each other since our school days at Oxford where I studied economics one year ahead of him,' Mr Korn said, referring to Mr Abhisit, who became Thailand's 27th prime minister on Wednesday.
His career in finance started in 1987 when, at 23, he founded JF Thanakom Securities to become the youngest chief executive of a major Thai investment bank after working three years for SG Warburg in London.
He spent almost all of the following 16 years in banking, ending up as chairman of JP Morgan (Thailand).
At 1.93 metres in height, the former investment banker always stands out in crowds at Thai social functions.
Apart from his previous banking experience, he is likely to get a helping hand from Mr Abhisit, who says he will play an active role in supervising an economic team made up of politicians from various coalition partners.
'With nearly two decades in the finance business, I think he can make decisive decisions when necessary, especially on the fiscal side,' Professor Somjai of Thammasat University said.
Mr Abhisit became Thailand's third prime minister since September after a protracted period of political unrest that has damaged the economy.
Anti-government protesters had seized the previous prime minister's office and shut down Bangkok's two major airports.
In an interview with Reuters earlier this week, Mr Korn said the political divisions had to be fixed quickly to restore investor confidence and attract foreign money back to an economy driven by exports and tourism.
He told Reuters on Saturday he intended to go beyond tentative stimulus plans left by the previous government of Prime Minister Somchai Wongsawat.
'We will definitely raise the mid-year supplementary fiscal budget of 100 billion baht (S$4.2 billion) announced by the former government without sacrificing fiscal discipline,' he said.
The finance minister confirmed that, among other things, he would consider cutting corporate tax to 25 per cent from 30 per cent for unlisted companies.
The last government's increased spending plans are likely to push the annual budget deficit up to 3.5 per cent of GDP from 2.4 per cent in the original budget for the fiscal year from Oct 1.
'There is still room for the state to spend more. Our fiscal and public debt deficits are still quite low compared with many other countries,' Prof Somjai said.
To nudge cautious Thai banks to raise money supply in the market by lending more to businesses, Mr Korn said he would consult with the Bank of Thailand about deferring a requirement for banks to adopt more stringent Basle-2 capital adequacy standards. -- REUTERS
