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