A Talk With Thailand's Finance Minister
Amnuay Viravan, Thailand's new Finance Minister, has a difficult job ahead of him: restoring rapid growth to an economy suffering from slowing exports, a battered banking sector, an overvalued currency, and a slumping stock market. To make matters worse, Amnuay's political position is unclear.
A former ousted Prime Minister, Chatichai Choonhavan, has been named economics adviser, and Chatichai reports directly to the Prime Minister, not to Amnuay. In an interview with BUSINESS WEEK correspondent Bruce Einhorn, Amnuay insisted that he is firmly in control of the country's economic portfolio, and he stressed the need for a patient approach to solving Thailand's economic woes.
Q: The press is reporting that you won't be able
to work with General Chatichai.
A: I don't see why there should be such a concern. I have the authority, I have the responsibility, I have to deliver. Economic advisers give advice. They are not involved in making decisions. General Chatichai and I are good friends. There is no conflict of priorities. We know exactly what we have to do.
Q: How will you restore confidence in the Thai economy?
A: It's all relative. Our growth, at 6.5% or 7%, is not something that you might say is an economic collapse or disaster. Of course, one of the major problems that affects us is the slowdown
in exports. We probably have [had] zero growth in exports, while the economy [has] expanded. This in a way implies the strength of the domestic market. When you have this type of growth on the strength of the domestic economy, it means that we have come of age.
Q: Still, the collapse of the real estate market in Bangkok has left many
of the banks and developers there struggling.
A: When you have a real estate problem, there is a sort of age-old solution that every country has [implemented]. You restructure the loan. People always have ambition to buy houses. Then you provide access to liquidity. During the next six months, the government will [also] set up about a $3 billion pension fund. And also, [companies will be setting up] provident funds. So there could be hundreds of billions [from these retirement funds], which will become major sources of money for both liquidity and equity [to invest in real
Q: What is your policy on the currency?
A: [First] we want to liberalize the existing financial institutions so that they can also handle foreign exchange transactions. Now, only 15 banks in Thailand can do so. That's why we don't have a foreign exchange market. We have
to go to Singapore to buy and sell.
One of the reasons we want to have a foreign exchange market in Thailand is so that speculative pressure outside the country will not be so significant. We need the market to keep things stable.
Q: Then should the baht be allowed to fluctuate more?
A: Perhaps after the money market, equity market, and foreign exchange markets are strengthened. Having a wider band doesn't mean that we want to see [the baht] become more volatile. We don't want people to speculate on our currency, and we will intervene if there is any attempt to do so.
Q: The government has been getting a rough ride from critics.
A: I have yet to see any person in the world who can write a policy and be accepted by the opposition members or by the academics or by the media. They all think they know better.