New cabinet to face economic challenges ahead

Left to right: Suvit Maesincee, Sontirat Sontijirawong, Uttama Savanayana, Kobsak Pootrakool. (Source: Thai News Agency)

Following our previous report about the signals of change, it seems the cabinet reshuffle process has begun. The "Four Children" have announced their resignations from the cabinet, effective immediately. The seats at the ministries of Finance, of Energy, and of Higher Education, Science, Research and Innovation, and the post of Deputy Prime Minister responsible for the economy, will soon be available for other factions within Phalang Pracharat to take. Many anticipate that technocrat outsiders will also be brought in to help Thailand out of hard times.

We still have to wait and see who will take on the weight of the declining economy that the outgoing ministers left behind. For now, the cabinet has appointed Deputy Prime Minister Wissanu Krea-ngam as the acting deputy prime minister for economic affairs in place of Somkid Jatusripitak. When asked by the press to comment on Somkid’s statement that one of the reasons he resigned is because he wanted to take care of his health, Wissanu said it is everybody’s duty to take care of their health. The press asked him whether he was sad that Somkid had gone after working together for years. He said “No answer now, or I will cry.”

Wissanu has also been appointed acting Minister of Energy after Sontirat Sontijirawong resigned. That means he now holds 3 cabinet seats. Other ministers have also taken on the work of those who resigned.

  • Deputy Prime Minister Gen Prawit Wongsuwan the has been appointed acting Minister of the Office of the Prime Minister in place of Tewan Liptapallop.
  • Deputy Minister of Finance Santi Promphat  has been appointed acting Minister of Finance after Uttama Savanayana resigned.
  • Education Minister Nataphol Teepsuwan has been appointed acting Minister of Higher Education, Science, Research and Innovation to replace Suvit Maesincee.
  • Minister of Social Development and Human Security Juti Krairiksh has been appointed acting Minister of Labour as Chatumongol Sonakul resigned.

Who will be in the new cabinet? At the end of June, a rumour hinted that Narumon Pinyosinwat, spokesperson of the Office of the Prime Minister, may be the next head of the economic team. Even though she has a PhD in finance from the University of Pennsylvania, many said that she lacks experience and her record as spokesperson was merely average. At the end of June, she held a press conference stating that her role was only to help Phalang Pracharat formulate its economic policy, not to become the deputy prime minister for economic affairs. Prachachat reported that she may become Minister of the Office of the Prime Minister while other outlets speculated that the head of the new economic team may be a technocrat outsider.

The final list for the new cabinet remains uncertain. Gen Prawit Wongsuwan, the Deputy Prime Minister for security affairs, 74, has rejected a rumour that he would swap positions with Gen Anupong Paojinda, the Minister of Interior. “It doesn’t have to be myself. Others can do it,” Prawit said. On Tuesday, many outlets also published an unconfirmed report of him saying jokingly it was difficult enough for him to walk.

Suthep Thaugsuban, the co-founder of the Action Coalition of Thailand (ACT) Party, revealed yesterday (23 July) that the Prime Minister made a phone call to him discussing a possibility for Phalang Pracharat to take back the Ministry of Labour while ACT gets the Ministry of Higher Education, Science, Research and Innovation in return. Suthep said the party was founded to help the Prime Minister move the country forward so it is up to Gen Prayut to decide.

After Chatumongol resigned, both from his Ministership and the party, ACT proposed Anek Laothamatas to be the next Minister of Labour. This means that upon approval of Gen Prayut Chan-o-cha, Anek will be “fit” to work as the Minister of Higher Education, Science, Research, and Innovation. What “fit” means depends on which side you are on. Now part of the establishment, the former medical student and progressive activist of the 1970s who became a political science lecturer in the 1980s has experience in administrative positions in several universities and has become increasingly radical in his anti-democratic ideas.

The public has also been paying attention to Suriya Juangroongruangkit, the current Minister of Industry. As a member of the Sam Mit (Three Friends) faction, many thought that his rivalry with the Si Kuman (Four Children) faction over the Ministry of Energy was the major cause of internal tension within the Phalang Pracharat Party. Just before his victory, a video clip of his speech during the 2019 election campaign resurfaced and went viral on social media. He said he would not accept any position in the cabinet.

As netizens criticized him as a liar, his dream faded. On 21 July, Prachachat reported that at one of Phalang Pracharat’s board meetings, he was shortlisted as a candidate for the Minister of Energy, but the matter could not be concluded. The party leadership looked stressed and declined to talk to the press as they were walking out of the room.

While the government’s side is negotiating cabinet seats, the challenges ahead for the new cabinet are enormous. Not only will they face rage of proliferating student protests fuelled by accumulated injustice and incompetence in dealing with the Covid-19 outbreak, they will also need to improve the Thai economy, an impossible task given the structural problems Thailand is facing.

Supant Mongkolsuthree, President of the Federation of Thai Industries, said that the private sector is concerned that there may be changes to the policies in which they have cooperated. If possible, the new economic team should start after the Covid-19 crisis. With pressure from the private sector, the new cabinet will be constrained to continue the same policies. Somchai Phagaphasvivat, an economist and independent analyst, also told Manager Online that large-sized businesses liked Somkid’s economic policies because they provided them with stability.

There is also another reason, however. After the military coup in 2014, Prayut’s unelected government altered Thailand’s economic structure. Despite a 2019 UNCTAD report that they do not “benefit the broader economy,” Special Economic Zones have been imposed against the will of local people in ten border provinces in the Eastern and Southern regions of Thailand. In 2018, Prayut’s government also launched its 20-year National Strategy. They even drafted the 2017 Constitution to enable the unelected Senate to vote together with the House of Representatives on matters related to implementation of the National Strategy. 

Unlike the National Economic and Social Development Plans which expire in 5 years and allow Thailand to adjust, the 20-year National Strategy will freeze the Thai economy for decades. Given the current political structure and leadership, it is questionable if the new cabinet will be able to change anything. If the Thai economy is likened to a car, it is as if the steering wheel is locked and it is going to crash into the trees. The four ministers who resigned have jumped out of the car. But who will hold the steering wheel?

The car crash analogy may not be perfectly apt, but it is also not very far-fetched. If anything, the new cabinet will face many great challenges. Thailand is increasingly unequal. TDRI’s Somchai Jitsuchon wrote that Thailand is “among the 10 most unequal countries on this planet for wealth distribution” and estimated that “as much as 10% may have fallen into chronic poverty”.

At the end of June, World Bank said that Thai economy will shrink at least 5% this year due to the impact of Covid-19. Because of the shrinking global economy, exports are estimated to shrink by 6.3 percent in 2020. Control of the pandemic, albeit necessary, “will likely lead to severe job losses, particularly in tourism,” the sector which “makes up close to 15% of GDP.” Household consumption is also expected to decline by 3.2% because of the government’s restrictions on movement and declining incomes. As a result, it is estimated that “8.3 million workers will lose employment or income”. Thailand’s GDP will take more than two years to recover to pre-Covid output levels.

The World Bank has proposed policy recommendations with an emphasis on supporting households and firms. The Thai government’s “combined Covid-19 response packages amount to 12.9% of GDP, focused on providing relief to vulnerable households and affected firms,” and these are “unprecedented for Thailand in terms of size, coverage and variety of instrument.” But the Thai government still needs to work on “connectivity to register for beneficiaries.” Firm interventions should concentrate more on sectors which have been severely impacted. Also, “training and employment services programmes need to be reformed to reflect shifting demand in the labour market.”

To respond to these challenges, Somchai told Manager Online that the new economic team must have knowledge and experience in fiscal policy, economic policy, geopolitics, administration and the ability to bring ministries together while maintaining their different ideas, so that they go in the same direction. With on-going negotiations among government parties and Gen Prayut’s final say over the new cabinet, Thais will be very anxious to see if the new economic team is fit to restore the Thai economy.