Democrat, TRT coalition 'is best option'

December 18, 2000

A COALITION government uniting the Democrat and Thai Rak Thai parties would be the best option to ensure stability and smooth implementation of economic policies as the country recovers from the crisis.

That was the conclusion of capital market observers who met for a roundtable discussion at the Nation Multimedia Group last week.

Supavud Saicheua of Merrill Lynch Phatra Securities said it would be ideal if the two rival parties could work as a team and complement each other's strengths and weaknesses.

But he added that the possibility was remote.

"The Democrats have a very sound principle of economic policy, but they have failed to implement it in a timely fashion. If they come to power again, they might go too slowly again, and then fail. But in the case of the Thai Rak Thai, if they can do it well, they would be able to tackle the problems quickly. But if they fail, the whole thing will crash," Supavud said.

Suvabha Charoenying, chief executive officer of Nakornthon Schroder, agreed that the two parties should bury the hatchet, fine-tune their economic policies and work together to tackle the country's economic problems. "In this way, we hope the next government might fulfil its four-year [goal] to ensure political stability," she said.

The roundtable participants agreed that there is growing concern that the task of managing the debt-plagued economy will become even tougher if political stability is not achieved.

There's little doubt that the Democrats and the Thai Rak Thai will muster the largest number of MPs. But their political rivalry has been so intense that they might not be able to transcend partisan differences in the event they are required to work together to form the next government, the participants said.

The Democrats have a tendency to rely on market mechanisms, with little regard for target dates or timeframes, to tackle financial problems. On the other hand, the Thai Rak Thai has promised a more decisive leadership in which government activism and more public money will be used to tackle the country's structural and financial problems.

The market observers agreed that the challenge of bringing down corporate debt while strengthening the balance sheets of the banks should be the next administration's top priority.

More than Bt2 trillion in bad debts in the banking system have yet to go through the market clearings that would truly signal a bottoming out, they agreed.

Suvit Maphaisansilp of Merrill Lynch Phatra said political stability will be crucial if the new government hopes to lead the country to a full economic recovery. "I think we would like a more decisive style of leadership, one that runs the country like a CEO," Suvit said.

Thai Rak Thai leader Thaksin Shinawatra is the candidate that best fits that description, having literally pledged to run the country like a CEO if he becomes prime minister.

Chuan Leekpai of the Democrats still prefers to work in the collegial style, portraying himself as the head of a good team rather than a lonely chief executive.

Vichate Tantivwanich, president and chief executive of Krung Thai Asset Management Co, agreed that more decisive leadership is needed from the next government.

"We really want the new leader to bang the table with his fist and make the hard decisions without fearing any vested interests," he said.

He said the new government must have a clear target and a specific timeframe of what it would like to achieve in its economic programme.

"The government recently has not so much led the country down the wrong path - it's more that there has been no target. There has been no sense of managing the public's expectations, or the government can even anticipate what the people might face once certain measures have been introduced and implemented," Vichate said.

Machima Kunjara Na Ayudhya, executive director and chief financial officer of Electricity Generating Plc, said the new government would have the advantage of assuming the reins after the biggest part of the financial mess has been cleaned up by the Democrats.

"International reserves have been rebuilt, so the new government can settle in more comfortably. They should tackle the problems in a wise way. There is nothing wrong with debts as long as they are quality debts," he said.

BY SIRIPORN CHANJINDAMANEE and

THANONG KHANTHONG