beyondbrics

By Simon Roughneen in Bangkok

Congratulations were the first order of the day after getting through to the Kasikorn Bank HQ this afternoon. President Dr Prasarn Trairatvorakul was earlier named the next governor of the Bank of Thailand during a Thai cabinet meeting, and with a number of key policy decisions looming on interest rates and forex, his thoughts on these matters will be keenly-awaited.

However, for now, he’s likely to keep his views to himself. According to his spokesperson, the new BoT governor cannot discuss his new role with the media until King Bhumibol Adulyadej formally approves the appointment. But some hints may be in the offing when Dr Prasarn speaks at a conference tomorrow morning, at the Queens Park Hotel in downtown Bangkok.

Standard Chartered economist Usara Wiliapich told the FT that despite last-minute reports suggesting Prasarn was always going to be the winner out of the four candidates, the reality was that the field was strong and the final decision difficult. Still, the incoming governor ticks a lot boxes. He has prior central banking experience, knows the capital markets, and has high-level private sector management experience with Kasikorn.

Even more appropriately perhaps, Prasarn headed Thailand’s Securities and Exchange Commission during the turbulent years post 97/8. Thailand’s economy has rode the storm of recent political upheaval well enough, but that has been down to strong export performance. Longer-term growth may require stronger domestic fundamentals – and this will depend greatly on political stability, according to Dr Sompop Manarungsan, an economist at Chulalongkorn University.

Maintaining – or regaining – political stability was the main issue discussed at today’s cabinet meeting, the new BoT appointment notwithstanding. On Monday night, the Orwellian-sounding Centre for the Resolution of the Emergency Situation (CRES) – a joint army-government panel set up to deal with the redshirt protests – advocated retaining the country’s Emergency Decree for another 90 days across 24 provinces. In the end, the government lifted the decree in 5 of the 24. Bangkok is still under emergency rule, two months after the red shirt protests were crushed by the Thai army in the heart of the capital.

Human rights groups have lobbied in recent days for the decree to be lifted, citing dangers to freedom of expression, but also warning that the decree itself is driving the protest movement underground. Thousands of websites remain blocked or closed down under its provisions, including non-partisan news sites. A poll in Bangkok suggests that 62% of people want an end to the State of Emergency, which has been place since April 7.

The government says that it wants to implement a five point reconciliation plan, while ensuring that renewed protests or what it deems ‘terrorist’ activity does not take place. Such an outcome would benefit the Thai economy, and make the new BoT governor’s job easier come October 1.