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Democrats vow to scrap reserve rule
FBA changes also would be abandoned
Bangkok Post – 14 September 2007
YUTHANA PRAIWAN & PARISTA YUTHAMANOP
The Democrat Party will scrap the Bank of Thailand's 30% reserve requirement on capital inflows and shelve efforts to amend the Foreign Business Act if it forms the next government, according to party leader Abhisit Vejjajiva. Mr Abhisit reassured local and foreign investors at the Thailand Focus 2007 conference that his party was intent on rebuilding market confidence if elected.
Surapong Suebwonglee, the secretary-general of the People Power Party, offered similar statements, adding that key reforms were still needed to help restore political and economic stability.
But Mr Abhisit and the Democrats offered an economic policy platform that was considerably more detailed than that of the PPP, one of two main groups that have emerged from the remnants of the Thai Rak Thai Party.
Mr Abhisit said his ''People's Agenda'' rested on three pillars _ restoring investor confidence, new investments to improve national competitiveness, and investments in people.
The 30% reserve rule on foreign inflows, imposed by the Bank of Thailand last December to help curb appreciation of the baht, had sent the wrong signal to the market, he said.
''I will review the reserve requirement measure, once I am in charge. The measure has proved ineffective,'' Mr Abhisit said, adding that ultimate responsibility for the central bank rested with the government. ''Government intervention in the central bank should not be to distort financial supervision to favour those associated to politicians or force the bank to print money. If the central bank implements any policy that will affect the overall economy, the government will have to take responsibility.''
The Democrats would similarly reverse the widely criticised policy of the military-installed government regarding the Foreign Business Act.
The National Legislative Assembly last month approved a new FBA draft that would significantly tighten the definition of foreign companies to include voting rights and management control.
Mr Abhisit said a Democrat-led government would shelve efforts to amend the FBA, and would focus on improving enforcement of existing rules against nominee shareholdings.
''If the current draft does not go through, we will not push it further. ... We will maintain the existing definition [of foreign companies],'' he said.
''But if nominees for foreign investors are set up, that is illegal.''
To improve competitiveness and productivity, the Democrats would push for new programmes to increase farm yields, reduce logistics costs and support the service sector.
Mr Abhisit said the party supported new infrastructure investments of 550 billion baht over the next five years, including 200 billion for rail systems, 100 billion for irrigation and water management and 250 billion for new mass-transit systems.
State enterprises also needed to be reformed and made competitive, he said, but ruled out wholesale privatisation.
''We will not privatise state enterprises that represent national assets, but we will step up competition and promote good governance such as personnel management and accounting systems,'' he said.
Education and health care would be strengthened and improved, with the government's universal health care programme extended and new pension systems established for the elderly.
''Education has long been our policy priority. We want to improve the quality of secondary and university degrees and reduce the mismatch between labour skills and market demand,'' Mr Abhisit said.
Dr Surapong offered fewer details of PPP policies, but agreed that the December elections would be critical to restoring political and economic stability.
He said the PPP had already recruited candidates for its economic team, and would name them next month.
He added that Thai Rak Thai's ''dual-track'' philosophy, emphasising boosting domestic demand along with the export sector, had proved successful over the past five years and would be maintained, albeit with unspecified adjustments.
''We will work to help the country return to normal, with sustainable economic growth and a restoration of global confidence in the country,'' he said.
''If PPP is elected to the new government, I promise that there will be no efforts to take political revenge.''
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