BANGKOK - THAILAND'S new Cabinet, due to be sworn in before King Bhumibol Adulyadej today, will focus on the grassroots for the bulk of an upcoming economic stimulus programme, Finance Minister Korn Chatikavanij said yesterday.

Mr Korn, a British public school-educated former investment banker, said there remained some discussion on whether to cut taxes. But while the party was philosophically in favour of such cuts, he pointed out that previous ones had made no difference.

Noting that Thailand's tax base was narrow, he said: 'Savings from cuts went to those already well off and haven't helped the lower income groups, nor have they stimulated consumption.

'It's a tough one, but it will be more effective to inject money rather than cut taxes,' he told The Straits Times during a phone interview.

Much of the economic stimulus would also address the needs of the north-east - the stronghold of the opposition Puea Thai, where voters have long been cynical about the Democrat Party's priorities.

Mr Korn acknowledged that there were limits however to stimulating the economy which is expected to limp along next year, with growth as low as 2 per cent, on the back of recent domestic political turmoil and the worldwide slowdown.

'There will be an impactful stimulus programme but on its own it will not be enough, there has to be an easing of monetary policy,' he said.

He added that political management was also essential in order to ensure that recent political problems do not undermine efforts to boost the economy.

'We need to buy time for the economies of our trading partners to recover,' he said.

Mr Korn and Prime Minister Abhisit Vejjajiva are both the same age - 44 - and have known each other since they were schooled in England where both also studied economics.

Over a year ago, even as the Democrats sat in opposition, Mr Korn led an effort to research economic conditions in the north-east in order to tailor the party's economic policy towards the populous but relatively poor region - a political imperative if it is to make any inroads in the region in the next election.

Members of Thailand's new Cabinet held a meeting among themselves yesterday and also with their top bureaucrats.

Of the 36 ministers, 24 will be in the Cabinet for the first time.

They include some figures who have not inspired confidence - such as Commerce Minister Pornthiva Nakasai, whose experience appears limited to running a family-owned business: the upscale massage parlour in Bangkok called Poseidon.

Another is Information and Communication Minister Ranongruk Suwanchawee, who is a qualified nurse and was shifted from the proposed post of Industry Minister in response to objections from the business community.

Many other choices reflect the necessity of accommodating the demands of coalition partners as well as those who wield significant influence and funding.

'The economics team is not impressive,' cautioned Thammasat University Professor Pavida Pananond.

'It reflects the power play that took place to form the coalition and it will be difficult for them to work together as a team.

'The challenge is a lot more than just stimulating domestic demand. We need a strong team to boost exports, in which Thailand's competitiveness is already slipping.'

Mr Abhisit's ability to balance and in some cases rise above the divisive issues holds the key to his success or failure - and his own credibility.

Particularly controversial is the appointment of Foreign Minister Kasit Piromya, who was an outspoken supporter of the royalist People's Alliance for Democracy (PAD) whose protests all but paralysed the previous government.

Mr Kasit supported the occupation of Suvarnabhumi International Airport by the PAD on Nov 25 - an eight-day protest that dealt a severe blow to the economy and the credibility of Thailand as a travel hub and destination.

But Mr Kasit - a seasoned diplomat - has insisted that the PAD and its methods are part of the dynamics of Thailand's evolving democracy, and has asked that he be judged on his work as a minister.

nirmal@sph.com.sg

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