Award for Tarrin marks his recent achievements
July 24, 1999 -- THE small crowd who on Thursday evening attended the ceremony to present Tarrin Nimmanahaeminda with Asiamoney's Finance Minister of the Year 1999 award witnessed another triumph over tragedy for the man who has borne the burden of the crisis-hit economy in the face of great adversity.
If there is appreciation or acknowledgement of Tarrin's economic stabilisation programme over the past nearly two years to bring Thailand to where it is today, it ironically comes from abroad rather than from at home.
In the citation of the award, George Ball, managing director and publisher of Asiamoney, admitted that Tarrin was not without his critics but the task he had accomplished was clear to see. The baht has stabilisied, foreign exchange reserves have been rebuilt, inflation has fallen to below the pre-crisis level, and depositors' confidence in the banking system has been restored.
Tarrin's record is not perfect, of course. The banking system remains deeply troubled and corporate debt restructuring is still not making progress at a satisfactory pace. Still, it has been quite an accomplishment, given a sense of almost hopelessness in 1998 when nobody could really fathom the depth of the financial crisis.
Moreover, Asiamoney voted Tarrin ahead of his Australian counterpart, Peter Costello, because of his success in March this year in engineering a legislative drive to pass the bankruptcy and other economic laws at a critical juncture. Without that legal framework in place, confidence built through the stabilisation programme would all have been in vain.
Tarrin gladly accepted the award, but he also showed his modesty. He said that the challenge for Thailand was to return to a sustainable and quality growth path now that the stabilisation efforts have been completed and there are some signs of economic pick-up.
The longer-term question that all Thais will have to address, Tarrin said, is how the country as an open economy can participate in a new global financial architecture. First, joining the global community will mean that Thailand will have to improve its governance and other practices to international standards.
Second, the country will have to improve its competitiveness to ensure sustainable growth. It is easy to talk about how a company may improve its competitiveness, but when it comes to the competitiveness of the whole nation, it is far more complicated and difficult to achieve.
Third, for economic growth to be sustainable, it must be accompanied by equitable social distribution and political development. Some 60 per cent of Thais are still dependent for their livelihood on the farm sector, which has clearly been left behind.
Tarrin has recently sought to overhaul the Bank for Agriculture and Agricultural Cooperatives (BAAC) on the legislative front, so that the banking institution can become more commercially oriented. With the growing consolidation in the banking industry and with bigger banks reluctant to do business with rural people, Tarrin sees in the BAAC an institution for bridging this gap, helping upcountry citizens to start up their own small-scale businesses or industries.
Fourth, Tarrin admitted that there would be greater pressure on the government to manage its debts in the coming years, as it will have to pay off the cost of financial restructuring and deficit spending incurred during the present administration.
The financial restructuring cost flows from the government's guarantee of all deposits and senior bank debts. Another big bill comes from its opting for deficit spending to stimulate domestic demand at a time when the private sector is crippled by the credit crunch and consumers are experiencing falling incomes.
Tarrin said an office to specifically manage government debts had been set up, with the aim of monitoring the situation so that the debts do not get out of control.
With these four points, Tarrin left the crowd to ponder the future before he hurried off to catch a 10 o'clock plane to attend an Asia-Pacific Economic Cooperation seminar in Japan.
BY THANONG KHANTHONG