Sunday, August 10, 2008

Thailand's Narongchai urges infrastructure work

CHATRUDEE THEPARAT

The government needs to speed up investments in infrastructure and public utilities and promote policies to facilitate private investment to help the economy, says Narongchai Akrasanee, a member of the cabinet's economic advisory team.

The financier and former commerce minister said the government should maintain its investment in infrastructure at about 25% of the fiscal budget to increase national competitiveness.

Another top priority, he said, would be to tackle rising consumer goods prices, which have hit people hard.

Dr Narongchai, who is also the Exim Bank chairman, said the government was on the right track in handling economic policies as well as anti-inflation measures, but he warned it should ensure that policies do not run counter to market mechanisms.

He expected Thailand's economy this year would grow by at least 5% because the agricultural sector had been thriving on high prices and exports remained strong, with inflation averaging 6-7%.

However, growth could reach 6% this year if for the remaining months politics stabilised with no more anti-government demonstrations, and the government was able to start its megaproject investments.

Mr Narongchai said the current Bank of Thailand interest rate was appropriate enough, and urged policymakers not to use interest rate policy as a key instrument to rein in high inflation.

''Thailand's existing economic problems are mainly caused by high oil consumption. We consume one million barrels per day. That means that based on oil price of $120 per barrel Thailand is spending US$120 million per day for domestic oil consumption,'' he said. '' Other problems are rising food prices which play a part in pushing up inflation.''

According to Dr Narongchai, inflationary pressure in Thailand was not as strong as in many economies, partly because over the past three years investments to build up the competitiveness had been put on hold.

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