Thai Interest Rates, Foreign Reserves Too High, Thaksin Says

Thaksin Shinawatra, who was deposed as Thailand’s prime minister in 2006, comments on the country’s economic outlook, interest rates and foreign reserves. He spoke in an interview with Bloomberg Television in Seoul yesterday.

On interest rates:

“The central bank has the committee to consider whether they are going to raise or bring down the interest rate. They worry about inflation too much. During this economic slowdown you should not push the interest rate. That is my opinion. We have nothing to do with it because it’s their autonomy.”

“I don’t think now we need domestic consumption to drive growth and drive jobs. The interest rate should be low to help, yes.”

On the economic outlook:

“In the third quarter of this year the economy in Thailand will pick up due to money we put in for reconstruction and then by the end of the year they will do a lot more construction, not just the flood but infrastructure. We will stimulate the economy through government investment and then we will promote domestic consumption as well, so that will be helping the economy.”

On the minimum wage:

“The minimum wage is too low in Thailand. It’s long overdue.

‘‘Otherwise it’s the labor that subsidizes the production cost of industry.

‘‘Let’s don’t sacrifice the human being. Let them have enough to eat so they can produce in better quality.”

On the call by PTT Plc, Thailand’s biggest energy company, for a strategic oil reserve:

“It’s under study. The prime minister keeps asking them what is the business model that we will benefit from having a strategic stockpile. Should we want to be the energy hub of that area? Should we want to refine oil to sell to other countries in the region? We have to have the proper answer before we decide. The structure is not clear yet because it’s under study. It might be a private sector investment or foreign reserves from the central bank if the central bank agrees.”

On creating a sovereign wealth fund:

“The central bank is not interested in this. Sometimes government officials don’t want to take any risks or responsibilities. It’s a matter we have to discuss with the central bank. The government cannot force them to do so.

‘‘The foreign reserves that are unnecessarily high should be invested. We prefer in Thailand. We still have room to invest, room to grow. There might be some like infrastructure or restructuring of agricultural production, restructuring of some industries, that money should go into the big projects that change the direction of how we produce.”

To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Rishaad Salamat in London at rishaad@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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