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Fri, Oct 06, 2006 - Page 10 News List

Thailand's new chief sends mixed signals on economy

AFP , BANGKOK

Thailand's post-coup leaders have sent mixed signals on economic policy by both embracing and rejecting deposed prime minister Thaksin Shinawatra's drive for robust growth and globalization.

General Surayud Chulanont, who was sworn in as the new prime minister following a bloodless coup on Sept. 19, started his term by say-ing he would focus on people's hap-piness more than growth in GDP.

Thailand would opt for the "self-sufficiency" economic model advocated by the revered king, he said, which stresses moderation and stands in sharp contrast to the gung-ho capitalist "Thaksinomics" of the former CEO-prime minister.

The happiness comment was welcomed by three quarters of people in Bangkok, according one survey. But abroad it raised fears that Thailand, after decades of export-led growth, may be turning its back on the global economy.

Bank of Thailand Governor Pri-diyathorn Devakula, the chief economic adviser to the new military rulers, has sought to reassure foreign trade partners and investors about the junta's approach.

He said the royally inspired model aimed at sustainable growth, based on domestic savings, to shield the economy from the hot money inflows that led up to Thailand's 1997 economic meltdown and the Asian financial crisis.

The Thai economy should not expand beyond its own resources and savings, and growth should "not affect the environmental balance and the quality of people's lives," said Pridiyathorn, according to the state-run Thai News Agency.

But Pridiyathron, who is set to become deputy prime minister or finance minister, also said the post-coup government would stick with many of Thaksin's economic policies.

He said this would include three Bangkok railway projects worth US$3.8 billion that are to be financed by foreign investors.

Thailand's revered King Bhumibol Adulyadej famously advocated the self-sufficiency philosophy after the 1997 crisis, telling his subjects to be frugal rather than materialistic, in line with Buddhist concepts.

"It is not important to be an economic tiger," the king said at the time. "What matters is that we have enough to eat and to live ... It helps us to stand on our own and produce enough for our consumption."

Bhumibol, 78, advocated Thailand scale back its reliance on exports and emphasize a system where local production makes up one quarter of the economy.

By contrast, Thaksin sought to turn Thailand into an economic tiger, promoted free-spending stimulus policies and oversaw a shift to sharply higher consumer spending and debt.

During Thaksin's time in office, GDP grew 45 percent to 7.1 trillion baht (US$188 billion) at the end of last year from 4.9 trillion baht in 2001. Exports now account for 60 percent of GDP.

Thailand's economy is now expected to grow at around 4.0 percent this year, down from an earlier estimate of 5.0 percent, due to the months-long political crisis.

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