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Finance minister from Thai elite faces raft of economic woes
Sun, Dec 21, 2008
AFP

BANGKOK, THAILAND - 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.

Mr Korn brings more practical experience in finance to bear than Mr Abhisit, but the long-standing colleagues are otherwise from the same mould - both 44-year-old Oxford graduates raised in English boarding schools.

'They're from the same background, high level elite families, very much establishment,' said political analyst Michael Nelson.

Mr Abhisit, the leader of the Democrat Party, went to expensive Eton while Korn attended the elite Winchester College, before both went on to study politics, philosophy and economics at Oxford.

While Mr Abhisit has focused on academia, Mr Korn began a finance career in Britain before returning to Thailand in 1988 to set up investment house Jardine Fleming Thanakom, aged just 24.

He went on to work at global investment bank JP Morgan before leaving to run for political office in 2004 - although the experience can only be of limited help in his new post, said Nelson, from Bangkok's Chulalongkorn University.

'(He's) experienced in the finance sector, but he has to head a ministry of bureaucrats which is an altogether different thing to do,' said Mr Nelson.

Mr Korn told AFP he knew the role would be a difficult one.

'Currently the issue of the economy is very challenging, unlike in 1997 when the financial crisis resulted from one set of problems,' said Mr Korn, referring to the Asian financial crisis that crippled the region on a mountain of foreign debt.

'Now it's a global problem. Our trading partners are in recession,' he said.

Thailand's main export markets of the US, Europe and Japan, are struggling economically, and analysts have advised stimulating domestic growth.

But a power vacuum in the kingdom has made that difficult, caused by months of anti-government protests that culminated in a devastating eight-day blockade of Bangkok's airports.

The protesters were demanding the previous government step down, accusing it of acting as a proxy for populist former premier Thaksin Shinawatra who they accuse of corruption.

Mr Korn himself played a key role in the investigation into Thaksin's alleged tax fraud in the sale of his company's shares.

This year's protests only ended after a court ruling on Dec 2 that ordered the dissolution of the previous government, and after a week of horsetrading among lawmakers the Democrats secured a weak coalition on Monday, after eight years in opposition.

But Mr Korn on Wednesday dismissed the idea that the new government could spend its way out of crisis.

Referring to a 100 billion baht (S$4.23 billion) spending package introduced by the last government he said: 'It's difficult for the government to use fiscal policy by using the budget deficit because the government has already revised down its revenue forecast.'

But with analysts predicting that economic growth will fall from about four percent in 2008 to two percent next year, the new finance minister will be expected to do something to change the tide of economic fortunes.

Besides exports, tourism is suffering after the protesters' airport seizure left 350,000 travellers stranded.

Since then the Tourism Authority of Thailand has warned it is expecting only half as many tourists next year as the 14.5 million visitors who came in 2007, despite the sector accounting for six percent of Thailand's gross domestic product. -- AFP

 

 
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