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Virabongsa throws his hat into BOT ring

Vatchara Charoonsantikul

Wichit Chaitrong

The Nation

PM's adviser to join race for central bank chairman; announces plans for mega-projects using forex reserves

BANGKOK: -- Virabongsa Ramangkura officially announced his nomination for the post of Bank of Thailand chairman, with forceful spending plans that fuel fears among conservationists about long-term economic stability.

Virabongsa, chairman of Prime Minister Yingluck Shinawatra's advisory team, said yesterday that he had agreed to the government plan to nominate him for the central bank post. He told reporters that if appointed BOT chairman, he would retain his title as chairman of the Strategic Committee for Reconstruction and Future Development.

A source from BOT said that though the central bank is entitled to nominate two candidates for the position, the governor had decided on a single nomination - MR Chatu Mongol Sonakul, whose three-year term ends this month. Earlier, it was anticipated that Narongchai Akrasanee would be another contender.

Yesterday was the last day for nominations. The selection committee, chaired by Panus Simasathien - former chairman of National Economic and Social Development Board - is expected to name the new chairman and two new directors in early May. The Finance Ministry will then submit the name for Cabinet approval, and then for royal endorsement. The process should be completed before July.

Virabongsa, a former deputy prime minister, yesterday surprised economic circles with his plans to finance infrastructure mega-investment from the current account surplus. He did not specify details, but gurus envisioned a policy rate cut that would encourage savers to take away their money from banks.

In his keynote speech to mark MCOT's 35th anniversary yesterday, he said the government needs to invest more in high-speed trains, international airports, deep sea ports, and new industrial parks.

"Policy-makers must abandon old ideas. Thailand could lag behind others if we keep worrying about the reoccurrence of the 1997 financial crisis," he said. "The situation is different. Now, we're sitting on huge amounts of cash, with the US$100 billion of current account surplus."

The Yingluck government has favoured lower interest rates, while inflation remains a concern as oil prices escalate.

A source in the financial market warned that if inflation spikes due to lower interest rates, the baht will weaken against other currencies and this will eventually bring down the foreign reserves - which as of April 13 stood at $178 billion. "Higher inflation would also reduce the eventual value of the investment," the source said. "Virabongsa is more focused on growth, not inflation. As chairman, he will need to come up with convincing data if they want the BOT to lower the policy rate. It's a big risk to the economy if inflation spirals."

Virabongsa said in his speech that the prime minister had agreed to most of his financing proposals. "She told me to follow my dreams," he said.

He also suggested that Don Mueang Airport be reopened to ease traffic at Suvarnabhumi Airport.

"AirAsia has agreed to move but the airline wants an assurance from the government that it will not reverse its policy later."

Gas pipelines that currently reach only Saraburi province must be extended to Chiang Mai, Nong Khai and Hat Yai.

The deep sea port on the Eastern Seaboard will be also expanded as it is facing congestion.

New industrial parks will be set up on the Eastern coast as investors will not expand their production in the flood-hit areas of the Central region.

Virabongsa insisted that the government had the financial resources for the mega-project investments. He dismissed criticism of using international reserves, saying the economic landscape had changed since the previous crisis. The government will keep public debt under 60 per cent of GDP, he said.

Mega-project investment over the next five years is estimated to be about Bt2.3 trillion, according to the National Economic and Social Development Board.

The Transport Ministry announced yesterday that a committee will be set up to regulate and develop the high-speed train projects, following Yingluck's recent visits to Japan and China.

-- The Nation 2012-04-26

[waza]

hmmm more jobs for the boys to cosolidate control and increase Thaksins power.

Edited April 26, 2012 by waza

[billd766]

More snouts in more troughs.