Wednesday, March 12, 2008

Thaksin Tells Thailand to Cut Rates, Boost Spending

By Nipa Piboontanasawat and Haslinda Amin

March 12 (Bloomberg) -- Thaksin Shinawatra, Thailand's former premier, insists that he's done with politics; he isn't done advising politicians on what to do.

Thaksin, who returned from exile last month after having been ousted from office and banned from politics in a 2006 military coup, said Thailand's newly elected government must repair economic damage to the country caused by the leaders who unseated him.

In an interview yesterday with Bloomberg News, Thaksin called for lower interest rates, a weaker currency and more business investment. ``We have to bring back confidence to Thailand after the coup,'' he said. ``It's quite difficult, but the government has to try harder.''

Thaksin's advice to the ruling People Power Party, which was founded by his loyalists and won the first post-coup election in December, suggests he wants to continue exercising political clout, said Suriyasai Katasila of the Campaign for Popular Democracy, an activist group that opposed Thaksin when in office.

``He is running the government behind the stage now, and will come back for sure once he proves his innocence in front of the justice system,'' Suriyasai said. ``His words on the economy have much influence because the team running Thailand's economic policy at the moment is basically his.''

Thaksin, who remains a popular figure for his policy of grants to poor villages, presided over Thailand's fastest economic growth in a decade. In the interview, he said the Southeast Asian nation's interest rates need to be lower to boost confidence among consumers and investors.

`Not Easy'

Finance Minister Surapong Suebwonglee last week said economic growth may be 6 percent this year, the best pace since 2004, when he unveiled tax cuts aimed at spurring spending. Southeast Asia's second-largest economy expanded 4.8 percent in 2007, slowing from 5.1 percent a year earlier.

``It's not easy for any government to step in now right after the coup,'' Thaksin said. ``It's been almost two years that the country has not moved forward.''

Consumer and business confidence in Thailand languished under the junta-backed government amid economic policy bungles and political squabbles.

Thaksin said the Thai currency is ``too strong compared to other currencies in the region.'' The baht is at the highest level in more than a decade after adding 6.9 percent this year, the most among Asia's 10 most-traded currencies outside Japan.

``Because of the strong baht, Thailand should take this opportunity to upgrade the production quality of exporters by bringing in new machines, equipment and technology,'' he said.

Banned From Politics

Thaksin, whose Thai Rak Thai party won a record 377 of 500 parliamentary seats in 2005, was ousted in September 2006 after months of demonstrations in Bangkok by protesters who accused him of corruption. He was also criticized over the 2006 tax-free sale of the mobile-phone company he founded to Singapore's sovereign wealth fund Temasek Holdings Pte.

In May last year, a nine-judge tribunal appointed by the junta that ousted Thaksin said his party broke laws in a 2006 election. The judges dissolved the party and imposed five-year political bans on 111 executives of Thai Rak Thai, or Thais Love Thais, including Thaksin.

The army justified its coup by saying Thaksin was corrupt. The former premier and his wife Pojamarn, who returned to Thailand in January, face charges over their involvement in purchasing land from the central bank. A separate lawsuit filed this week by a junta-installed committee alleges Thaksin bypassed laws in setting up a lottery.

The Asset Examination Committee froze more than 60 billion baht ($1.9 billion) of assets belonging to Thaksin and his family.

``I can prove my innocence easily, I have done nothing wrong,'' Thaksin said, describing the charges he faces as politically motivated. He pleaded not guilty today during the first hearing in Thailand's Supreme Court.

Thaksin returned to Thailand on Feb. 28 and said he will devote himself to charitable activities and managing the Manchester City soccer team, which he bought last year.

To contact the reporters on this story: Nipa Piboontanasawat in Bangkok at npiboontanas@bloomberg.net; Haslinda Amin in Bangkok at hamin1@bloomberg.net

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