Government Continues Attacks On Independent Agencies: Thai Opinion

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OVERDRIVE
Government continues attacks on independent agencies
Thanong Khanthong


Kittiratt Na Ranong

BANGKOK: -- Kittiratt Na Ranong, the deputy prime minister and finance minister, is picking up his knife. He has invited members of the Bank of Thailand's (BOT) Monetary Policy Committee (MPC) to attend a meeting next Monday with him and representatives of the private sector. By doing so, Kittiratt is trying to win over all the members of the MPC to his side.

The move is unprecedented. For Kittiratt has failed to convince Dr Prasarn Trairatvorakul, the BOT governor, to cut the interest rate deeply - or by one full percentage point to be more precise - to stem the capital inflow. Hot money from abroad has driven up the value of the baht against the US dollar by 5-6 per cent since the beginning of this year. Kittiratt believes that narrowing the Thai rate with the US rate will slow down the capital inflow, which is pushing up the baht's value. Prasarn believes that cutting the rate will not stem the capital inflow, but will further fuel the financial bubbles and even worsen the level of household debt.

But Prasarn and the majority of MPC members have so far stood their ground. At 2.75 per cent, the BOT's policy rate is already one of the lowest in the region, compared with 5.75 per cent for Indonesia, 3.0 per cent for Malaysia, 3.50 per cent for the Philippines, 8.0 per cent for Vietnam, 6.0 per cent for China, and 7.25 per cent for India. South Korea yesterday cut its rate from 2.75 per cent, equal to Thailand's, to 2.50 per cent.

It is as clear as daylight that Kittiratt is attempting to take control of the BOT. By inviting the members of the MPC to attend the meeting with him at the Government House, Kittiratt is going to do the unthinkable - bypass the central bank's governor and deal with the MPC directly.

He has made known his desire to remove Dr Prasarn. But the dilemma is that removing Prasarn will not automatically lead to a drastic cut in the interest rate, even though Kittiratt might field in his own candidate for the BOT governorship. For determining the monetary policy lies with the independent MPC. Dr Prasarn has only one vote on the MPC. The last time the MPC cut its rate from 3.0 to 2.75 per cent, Prasarn was in the minority.

So if Kittiratt wants to see a one-full-percentage-point rate cut, he has to cast his influence over the MPC. If all of the MPC members accept Kittiratt's invitation to attend the meeting at the Government House next Monday, that would signal the end of the BOT's independence.

It is unthinkable for other independent bodies or agencies such as the Constitutional Court, the National Counter Corruption Commission, or the National Broadcasting and Telecom Commission to have their members attend a meeting at the Government House to follow the directives of the executive branch. This would ruin the check-and-balance mechanism. Independent bodies such as the BOT are designed to be independent of the executive branch or the legislature, otherwise they have no reason to exist.

Yesterday, Prasarn backtracked. He admitted that Thailand's relatively high interest rate is one of the reasons for the inflow of capital and the rise of the baht. With the interest rate cuts of the European Central Bank from 0.75 to 0.50 per cent, the Reserve Bank of Australia from 3.0 to 2.75 per cent, the Bank of Korea from 2.75 to 2.50 per cent, the Bank of Thailand is now under similar pressure to cut its rate at its next meeting on May 29. It is highly likely that the policy rate will be trimmed to 2.50 per cent.

That would mark a victory for Kittiratt. And if the MPC members were to attend the meeting with him, the finance minister would stand tall. On the other hand, Prasarn would find it untenable for him to continue his governorship if the MPC were to betray him. For this would create a loss of trust and respect between the governor and the MPC.

Kittiratt has found a perfect way to drive a wedge between the governor and the MPC. Let's wait and see what happens next.


-- The Nation 2013-05-10

RELATED TOPIC
Measures to curb the strong Baht: Kittiratt woos BOT's committee
http://www.thaivisa.com/forum/topic/638429-measures-to-curb-the-strong-baht-kittiratt-woos-b-o-ts-committee/

[MaxLee]

Pig face, money hungry piece of motherF*******ng piece of pig face will be doing anything to get his 110% paycut by all means,

Not only is he the master of white lying, but the government dog if the man in Dubai...

[gerry1011]

Pig face, money hungry piece of motherF*******ng piece of pig face will be doing anything to get his 110% paycut by all means,

Not only is he the master of white lying, but the government dog if the man in Dubai...

Cool down. Take a deep breath. Go out and enjoy the day... Your vulgarity spoiled my breakfast.

[theajarn]

Pig face, money hungry piece of motherF*******ng piece of pig face will be doing anything to get his 110% paycut by all means,

Not only is he the master of white lying, but the government dog if the man in Dubai...

Cool down. Take a deep breath. Go out and enjoy the day... Your vulgarity spoiled my breakfast.

Yeah, after all it's just Chinese-Thai ruining the lives of Thais. Let the sheep be harvested.

[MaxLee]

Pig face, money hungry piece of motherF*******ng piece of pig face will be doing anything to get his 110% paycut by all means,

Not only is he the master of white lying, but the government dog if the man in Dubai...

Cool down. Take a deep breath. Go out and enjoy the day... Your vulgarity spoiled my breakfast.

Yeah, after all it's just Chinese-Thai ruining the lives of Thais. Let the sheep be harvested.

I'm ashamed to call myself from Thai Chinese ancestries, if people like him take control of Thailand finances.... I gotta puke, really hard!!!!

[Locationthailand]

A repetitive article from a similar post. Nation duplicating when there is nothing else to report?

[chainarong]

A further incursion into the independence of the monetary system, as with the courts, these people are all about circumventing , appointing persons of dubious calibre of their choice, the circumvention of normal channels for the 2.2Tn loan, enables them to detour around the conditions the IMF laid down, after 1997, however the IMF has a strong bow up their sleeve, to advise all major institutions to avoid this like the plague.

[samran]

The BOT governor can only be dismissed for gross incompetence and the reasons for dismissal have to be made public. As such, the BOT is effectively independent of the MOF and government, as it should be. As an economic body, it is proper that the MOF has a say at the MPC, but it is one amongst many. No doubt the government, via loyal Thaksinista's are doing their best to force the BOT into line, the fact is they can't.

[indyuk]

Pig face, money hungry piece of motherF*******ng piece of pig face will be doing anything to get his 110% paycut by all means,

Not only is he the master of white lying, but the government dog if the man in Dubai...

Cool down. Take a deep breath. Go out and enjoy the day... Your vulgarity spoiled my breakfast.

Yeah, after all it's just Chinese-Thai ruining the lives of Thais. Let the sheep be h

Racist remarks are not helpful when debating Thailand's monetary policy. Shame on you.

[NeverSure]

These guys couldn't pour piss out of a boot if the instructions were written on the heel.

Yes they can lower interest rates paid by Thai banks without lowering consumer rates and driving up household debt.

Where I grew up we called this closing the gate after all the cattle had escaped. Thai household consumer debt has been driven by no down payment car loans and no down payment house loans added to a "need" for a cell phone and a flat screen TV. Thais aren't smart enough to know what interest rate they are paying, much less would they rush to the bank to borrow money if the rate went down a point.

They'd rush to the bank to borrow money for a new car or house if they didn't have to make a down payment, so they have been. It would be easy to curtail this burgeoning debt, unless it's too late.

Thai exports are way down, and coupled with the stupid idea of massively raising the minimum wage, the manufacturers are feeling it.

I can't wait to see what they do next. A cassava scheme?