Thai analysis: BOT governor race nears finish line

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ANALYSIS
BOT governor race nears finish line
Achara Deboonme
The Nation


Veerathai

BANGKOK: -- AHEAD of the Finance Ministry's nomination of the Bank of Thailand governor, the odds are strongly in favour of Veerathai Santiprabhob being the next person to run the country's most prestigious economic institution.

Sources say the selection committee has given him the highest score than the four other applicants: Paiboon Kittisrikangwan, a deputy central bank governor; Tongurai Limpiti, also a deputy central bank governor; Supavud Saicheua of Phatra Securities; and Kiatchai Sophastienphong, a former central bank official.

Veerathai brings with him an excellent academic record and work experience. Having worked for the International Monetary Fund and with master's and doctoral degrees from Harvard University, he was a former executive of Siam Commercial Bank and executive vice president of the Stock Exchange of Thailand. He is now a member of the BOT's Court of Directors and a member of the "superboard" established by the junta to revamp state enterprises.

It is said that his economic views have won him a large number of supporters. In an article published by Thaipublica.org, he repeated the message that the Thai economy is plagued with structural problems and that the previous government, rather than curing the problems at their roots, came up with policies that relieved short-term pains but worsened the long-term conditions.

If appointed the 23rd governor, at 45, he would be the youngest governor in the Bank of Thailand's 73-year history.

In this battle, officials at the central bank are throwing their support behind the "insiders", Tongurai and Paiboon. Of the two, it seems that Tongurai, a deputy governor in charge of corporate support services and banknote management, has secured more support. To the insiders, she is more easy-going than Paiboon, which could have something to do with the latter's responsibilities. Formerly dealing with foreign-exchange policy, he is now a member of the Monetary Policy Committee, the most powerful of the three central bank committees.

To outsiders, Tongurai is well known for her role in the Financial Institutions Development Fund, which played a key role in reshaping the financial sector after the 1997 crisis. To these outsiders, Paiboon's knowledge and experience in the macro-economy are more impressive than Tongurai's.

Since his name appeared on the list of applicants, he and Veerathai have seemed to outsiders to be the most likely candidates to take the post. Paiboon's weakest point seems to lie with his past: he was the former chief currency trader and one of six central bank executives held responsible for the 1997 crisis.

It is unlikely that he will win the race, but Supavud is reputed for his professional record. The economic views of the managing director of Phatra Securities have never failed to woo public attention.

In the past few years, exporters supported his push for a weaker baht, when Thai exports plunged for the first time in history.

But to people at the BOT, Supavud's most outrageous proposal was to abolish inflation targeting. The central bank adopted the framework in 2000, on the belief that setting targets in line with core inflation would cushion temporary economic shocks, reduce short-term interest-rate volatility and promote financial stability. Supavud favoured exchange-rate targeting - to control inflation through exchange rates not through policy rates. He said inflation targeting was suitable for a closed economy, while Thailand was more exposed to the global economy, as import-export accounts exceeded gross domestic product. In his view, local prices were subject to global movements.

Clearly, his idea won him no support from the central bank and those who had full confidence in the institution's operations. Fears are that if he were appointed the central bank's governor, its operations would be entirely revamped. His chances of winning are slim because of this, coupled with his brief association with the Thaksin Shinawatra government. In 2001, he served as an adviser to the government. He also served as an adviser to Somkid Jatusripitak, then finance minister.

Now chairing the advisory team to Prime Minister General Prayut Chan-o-cha, Somkid is believed to back Veerathai's candidacy.

Kiatchai's chances of becoming the next governor seem to be slimmest of all.

While at the central bank, he was in charge of the financial institutions stability unit. Despite work experience with the Asian Development Bank and the World Bank, he has apparently won low recognition in his homeland.

On Tuesday, all five candidates presented their visions to the governor selection committee, consisting of seven members chosen by the Finance Ministry. The committee is to submit two names to Finance Minister Sommai Phasee, who will then nominate only one for the title. That person will start the new job on October 1.

Sommai on Wednesday signalled that all five applicants, including Veerathai and Paiboon, stood an equal chance of winning the race. But his comments focused on only Veerathai and Paiboon. In the case of Veerathai, he said, age should not be an issue as long as the governor is knowledgeable, responsive to situations and independent.

Concerning Paiboon, the minister said: "Everybody has bruises."

The chance is also equal that the new governor will be an insider or an outsider, as Sommai indicated that an insider would bring pride to the institution but history tells that not all insiders have won praise.

According to the minister, the selection will be concluded in three weeks.

Source: http://www.nationmultimedia.com/business/BOT-governor-race-nears-finish-line-30262613.html


-- The Nation 2015-06-19

[Srikcir]

"Now chairing the advisory team to Prime Minister General Prayut Chan-o-cha, Somkid is believed to back Veerathai's candidacy."

Now that is a black mark against Veerathai.

Prayut's economic advisors have failed the nation to provide a path to economic sustainability. And being an advisor in a government with an unelected but absolute ruler does not hold promise for any independent advisor.

But Veerathai might have the necessary skills to manipulate Thailand's currency a la yuan-style to help prop up the Junta as the economy continues to collapse. Political policy will prevail over monetary policy.

[Senechal]

Veerachai's ties to commercial banking and the SET should immediately disqualify him. Those are dangerous associations for a central banker.

If Veerachai gets the job: Buy stocks and property. Short the baht. And remember the fuse will officially be lit on a banking meltdown. He'll go full throttle on day one.

Edited June 29, 2015 by Senechal