Finance Minister Pichai Chunhavachira recently confirmed that he had received the name of the proposed candidate to serve as chairman of the Bank of Thailand (BOT).
The proposal came from the selection committee chaired by former Finance Ministry permanent secretary Sathit Limpongpan.
Somchai Sajjapongse, also a former permanent secretary at the ministry, has emerged as the front runner.
The proposal is undergoing a review before being presented to the Cabinet for approval as soon as possible so that the new chairman of the Bank of Thailand (BOT) can immediately assume duties, Pichai said.
When asked whether Somchai would face the same obstacles as Kittiratt Na-Ranong, Pichai, who is also a deputy prime minister, said he believed that this time utmost care was taken in the selection process.
“Somchai possesses excellent qualifications and I believe he would work well with the Bank of Thailand. Somchai understands the public sector very well and has a strong financial background, which should help in formulating policies and ensuring smooth operations,” said Pichai.
It is highly likely that Somchai’s nomination as chairman of the central bank’s board will be approved by the Cabinet. This follows Pichai's failure to forward Kittiratt’s nomination due to concerns regarding his qualifications, particularly his close political connections with the ruling Pheu Thai Party.
The BOT nominated Prof Surapol Nitikraipot, a public law professor at Thammasat University’s Faculty of Law, as a candidate, but he failed to make the cut. The academic community had strongly opposed Kittiratt’s nomination, fearing it could compromise the independence of the central bank through political interference.
A solid track record
Somchai, 63, has an impressive record in civil service and has held several director positions on the boards of various state-owned enterprises and private companies.
He holds a bachelor’s degree in economics from Chulalongkorn University, and won a government scholarship to study abroad. He obtained his master’s and doctorate degrees in economics from Ohio State University.
After returning to Thailand, Somchai taught economics at several universities for many years. In 1996, the year before the Asian Financial Crisis in 1997, triggered by Thailand’s baht debacle, he joined the Finance Ministry as a senior economist at the Fiscal Policy Office, the ministry’s research arm.
This role provided him with the opportunity to work under the leadership of then finance minister Tarrin Nimmanahaeminda, consulting with the International Monetary Fund on the rescue package and Thailand’s economic reforms.
Somchai was later promoted to serve as the director-general of the Fiscal Policy Office, the director-general of the Customs Department, and the chief of the State Enterprise Policy Office. In 2015, he was appointed by General Prayut Chan-o-cha’s Cabinet to a top civil service position as permanent secretary at the Finance Ministry.
However, he resigned abruptly in apparent protest after the Prayut Cabinet transferred him as secretary-general of the National Economic and Social Development Council, a state-owned think tank, in 2018.
Rich in experience
At the Finance Ministry, Somchai played a key role in advocating tax reforms, which often faced opposition from politicians concerned about their impact on political popularity.
He was part of the team that initiated the reform of the land and building tax law, but the final version was toned down by the government, resulting in lower tax collections than originally anticipated.
Although he occasionally commented on monetary policy, he maintained a positive relationship with central bank officials, who are typically proud of the BOT's independence, despite it being under the Finance Ministry's supervision.
Somchai also collaborated with other Finance Ministry and BOT officials to promote the establishment of the Government Pension Fund, the National Savings Fund, and the Student Loan Fund.
As permanent secretary of Finance, Somchai collaborated with the National Anti-Corruption Commission and other agencies to seize the assets of former prime minister Yingluck Shinawatra, over alleged corruption in the rice-pledging scheme.
The nomination of Somchai comes at a time when there is friction over monetary policy between the government and the BOT. The previous coalition government led by Srettha Thavisin and the current government under Paetongtarn Shinawatra have pushed hard for policy rate cuts, citing slower economic growth and high interest rates as obstacles to economic recovery.
The BOT has strongly opposed rate cuts, arguing that the current policy rate was not high and that it must safeguard financial stability.
The BOT’s Monetary Policy Committee in October made its first rate cut in four years, reducing the policy rate by 25 basis points, followed by another 25 basis points cut at the February meeting this year, bringing the interest rate down to 2 per cent.
During the first rate cut, the BOT cited progress in debt deleveraging, saying the cut could provide some relief to households burdened by debt. In February, the BOT noted that the slower-than-anticipated economic growth was the reason for the rate cut.
No resistance to Somchai
Unlike the strong opposition Kittiratt faced from former central bank governors and staff, there does not appear to be resistance to Somchai’s nomination. Academics have remained calm about his nomination.
“Appointing Somchai as chairman of the central bank’s board is acceptable, as he does not come from any political camp,” said Praipol Koomsup, former dean of Thammasat University’s Economics Faculty.
Once approved, the new chairperson of the BOT’s 12-member board would replace Porametee Vimolsiri, whose term ended last year, but who continued in the role temporarily.
