Yingluck Names Stock Regulator Thirachai to Be Thailand’s Finance Minister
Thai Finance Minister Thirachai Phuvanatnaranubala
Dario Pignatelli/Bloomberg
Thai finance minister Thirachai Phuvanatnaranubala.
Thai finance minister Thirachai Phuvanatnaranubala. Photographer: Dario Pignatelli/Bloomberg
Thai Prime Minister Yingluck Shinawatra named Thirachai Phuvanatnaranubala as finance minister, tapping a veteran central bank policy maker and securities regulator in a move that may reassure investors.
Thirachai, 59, was named as part of Yingluck’s 36-member Cabinet that was endorsed yesterday by King Bhumibol Adulyadej, according to a copy of the royal command. Surapong Tovichakchaikul was appointed foreign minister and former stock exchange head Kittiratt Na Ranong was named commerce minister.
Thirachai’s challenge will be to find ways to pay for Yingluck’s election pledges to increase wages and rice prices even as he inherits inflation near a 32-month high. The central bank last month signaled it may add to eight interest rate increases over the past year and called for “harmony” between fiscal and monetary policy to contain price pressures.
“His background at the central bank may help ease potential policy tensions between the finance ministry and the central bank,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG. “A fresh face with an understanding of capital markets and banks is probably what the market will like, too.”
The benchmark SET Index jumped 1.8 percent to 1,061.02 as of 12:17 p.m. local time, poised for its biggest gain in more than a month. The baht advanced 0.3 percent to 29.82 per dollar, and has climbed 3.3 percent since the election, the biggest gain among 10 most-traded currencies in Asia excluding the yen.
Election Pledges
The campaign promises by Yingluck’s Pheu Thai party would cost 2.3 trillion baht ($77 billion), about half involving agriculture and transport infrastructure projects, Phatra Securities Pcl said in a July 19 note.
The government will “talk to many parties” to ensure the spending plan won’t threaten economic stability, Yingluck told reporters in Bangkok today.
“I will focus on fiscal discipline,” Thirachai wrote on his Facebook page today, confirming the comments in a mobile- phone text message. “I will be the coordinator between government officials and the party’s policies to ensure they are in harmony.”
Yingluck, who put together a 300-seat coalition in the 500- member parliament after winning a majority in the July 3 election, also pledged to cut corporate taxes, build high-speed train lines and give tablet computers to students. The planned spending makes inflation a greater concern than threats to growth, the central bank said July 27.
Yingluck’s Cabinet must present its policies for a confidence vote 15 days after taking office.
Central Bank Experience
Thirachai replaces Korn Chatikavanij, the Oxford-trained former chairman of JPMorgan Chase & Co.’s Thai unit who presided over the economy’s fastest expansion in 15 years in 2010.
Thirachai received a bachelor’s degree in economics from the London School of Economics before beginning a 25-year career with the Bank of Thailand, where he oversaw financial institutions and was deputy governor in 2002.
He was among the top four candidates for the position of governor last year. Korn instead chose Prasarn Trairatvorakul, the former head of Kasikornbank Pcl.
Thirachai resigned as secretary-general of the Securities & Exchange Commission on Aug. 5, after Yingluck’s initial choice for finance minister, Siam Commercial Bank Pcl (SCB) Chairman Vichit Suraphongchai, withdrew his candidacy.
“Though Thirachai has experience at the Bank of Thailand and the SEC, he has less experience in implementing policy than Vichit,” said Andrew Stotz, a Bangkok-based strategist at Kim Eng Securities (Thailand) Pcl, the nation’s largest stock brokerage.
Shin Corp. Probe
As head of the regulator, Thirachai oversaw a probe into the 2006 sale of holding company Shin Corp. to Temasek Holdings Pte by Yingluck’s brother and former Prime Minister Thaksin Shinawatra, who was deposed in a 2006 coup. Thaksin’s family didn’t pay tax on the proceeds of the deal, which fueled street protests against his administration that culminated in the coup.
A court last year seized about 60 percent of the 76.6 billion baht that Thaksin’s family earned from the sale. Yingluck made about 985 million baht in the deal, according to stock exchange filings.
The SEC fined Thaksin’s son, Panthongtae, 6 million baht in 2006 for violating disclosure rules over the sale. In June, the SEC cleared Yingluck of a similar charge, ruling that she wasn’t required to disclose her stake in Shin Corp. because she held less than 5 percent of the shares.
Cabinet Appointments
Yingluck named Kittiratt and Yongyuth Wichaidit as deputy prime ministers, while Yongyuth will also serve as interior minister.
Other Cabinet members include Defense Minister Yuthasak Sasiprapha, Energy Minister Pichai Naripthaphan, Transport Minister Sukumpol Suwannatat, Agriculture Minister Theera Wongsamut, Information Minister Anudit Nakornthap and Industry Minister Wannarat Channukul.
As finance minister, Thirachai may also butt up against opposition from exporters such as Hana Microelectronics Pcl (HANA), the nation’s largest packager of semiconductors, as an appreciation in the baht, an economic slowdown in key export markets in Europe and the U.S., increased borrowing costs and the specter of higher wages threaten to erode their competitiveness.
A group of 12 associations from labor-intensive industries that employ about one million people said last week that higher wages may reduce orders and force them to cut their workforce by as much as 30 percent.
Pheu Thai pledged to raise the minimum wage to 300 baht per day during the election campaign. The daily minimum wage in Thailand ranges from 159 baht in northern Phayao province to 221 baht on the resort island of Phuket, according to the Labour Protection and Welfare Department’s website.
“The wage rise will increase our costs and hurt our export competitiveness,” said Verachai Kunavichayanont, chairman of the Thai Furniture Industry Club. “The government may see only a positive impact, but there is also a negative side-effect to small- and medium-sized companies and their workers.”
To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at Suttinee1@bloomberg.net
To contact the editors responsible for this story: Tony Jordan at tjordan3@bloomberg.net; Stephanie Phang at sphang@bloomberg.net
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