Thailand Seeks New Central Bank Head With Economy in Trouble

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Prasarn Trairatvorakul
Outgoing Bank of Thailand Governor Prasarn Trairatvorakul. Photographer: Dario Pignatelli/Bloomberg

A former International Monetary Fund economist, a woman and a central banker who defended the baht before it was floated 18 years ago are among the likely candidates to be the new governor of the Bank of Thailand.

Five applicants have met the criteria of the central bank’s selection committee, which will propose at least two names to the finance minister by July 2 after interviews on Tuesday, according to Krisda Chinavicharana, head of the finance ministry’s Fiscal Policy Office. Once he makes his choice, he will seek the Cabinet’s approval, after which the prime minister gets the King’s endorsement.

Governor Prasarn Trairatvorakul, who will end his five-year tenure on September 30, has held office through a military coup, the worst floods in seven decades and three governments. The new chief faces falling exports, deflation, an economy that grew at the slowest pace in four years in 2014, the prospect of higher U.S. interest rates and diminished firepower after two unexpected rate cuts this year.

“It’s a tough job to become governor at this juncture because of limited monetary-policy effectiveness,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG. “The new governor must have strong credibility and respect to set powerful policy guidance, which will help boost policy efficiency.”

The five candidates are Deputy Governors Paiboon Kittisrikangwan and Tongurai Limpiti, the only woman; Veerathai Santiprabhob, a former executive at Siam Commercial Bank Pcl and the Stock Exchange of Thailand; Supavud Saicheua, managing director of Phatra Securities; and Kiatchai Sophastienphong, a former BoT director, according to local media reports.

Policy View

“We can’t comment on this matter as the central bank doesn’t get involved in the selection process,” said Bank of Thailand spokesman Chirathep Senivongs Na Ayudhya.

A seven-member selection committee, led by a former permanent-secretary for commerce, has met twice to screen applicants. All five shortlisted candidates are required to write a paper detailing their views on the Thai and global economy, as well as their plan for managing the central bank, from monetary policy to the payments system.

Each candidate had a 30-minute closed-door interview today, with Paiboon going first after drawing lots, said Krisda, who is secretary of the selection committee.

The selection wasn’t always this rigorous; before 2008, when the process was put in place, the finance minister named the governor in consultation with the government. The system differs from countries like Indonesia and the Philippines, where the president makes the appointment.

Youngest Candidate

In Thailand, Veerathai, 45, would be the youngest governor in four decades if chosen. He is seen as a frontrunner along with Paiboon, with both also on the rate-setting monetary policy committee.

A former economist at the IMF, Veerathai has a doctorate in economics from Harvard University and was an Eisenhower Fellow in 2013. He returned to Thailand to lead the Policy Research Institute of the Ministry of Finance during the Asian financial crisis, and is credited with driving the country’s capital market development and Asean capital market integration during his tenure as chief strategy officer at the Stock Exchange of Thailand.

Paiboon, 54, was a recipient of a central bank scholarship, with which he earned his bachelor’s degree from the London School of Economics and a master’s from the University of Chicago. He has held several positions at the monetary authority and was part of the team that defended the baht before the decision to float the currency in 1997.

Thai monetary policy is “highly accommodative” and more rate cuts would do little to boost growth, Paiboon said in an interview last month before the June 10 meeting where it was unanimously decided to hold borrowing costs.

New Normals

Tongurai, at 59, would be the first female governor after Tarisa Watanagase, and among the few in Asia besides Malaysia’s Zeti Akhtar Aziz. She has an MBA from the University of Wisconsin, Madison and began her career as a lecturer at Thailand’s Chulalongkorn University.

Also in the running are Supavud, 58, a former adviser to Thaksin Shinawatra when he was deputy prime minister, and Kiatchai, who has written books on finance and the bond markets.

As in countries including India and Indonesia, the central bank governor in Thailand has had to contend with pressure from the government. The new chief also has to confront challenges that were unknown to the predecessors.

“We live in a world of new normals such as aging population, low interest rates and low inflation,” said Somprawin Manprasert, deputy dean at the faculty of economics at Chulalongkorn University. “So the new governor must be able to handle unconventional conditions and may need to come up with unconventional policies.”

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