In a recent announcement, Thai former energy executive Pichai Chunhavajira has been appointed as the country’s new finance minister at the age of 75. Pichai, who previously served as the chair of the board of Bangchak Corp, now takes the helm as the deputy prime minister, tasked with the challenging job of rejuvenating Southeast Asia’s second-largest economy.
As Pichai steps into his new role, he faces a multitude of economic challenges plaguing Thailand. The country’s economy has been lagging behind its regional peers, with high levels of household debt, soaring borrowing costs, and the looming impact of China’s economic slowdown. The most recent data shows a concerning trend, with Thailand’s GDP unexpectedly contracting in the final quarter of 2023 and overall growth slowing to a mere 1.9% in the previous year.
One of the key policies that Pichai will be overseeing is Prime Minister Srettha Thavisin’s ambitious 500 billion baht ($14 billion) handout scheme. This scheme aims to provide financial support to 50 million Thais by transferring 10,000 baht ($270) to each individual to spend within their communities. However, this initiative has faced criticism for its delayed implementation, lack of funding, and concerns regarding its impact on public debt. Despite the skepticism from economists and former central bank governors, the government is determined to proceed with the scheme, albeit with recommendations from the central bank to target it towards vulnerable groups.
Srettha, the previous finance minister and a real estate mogul, had been at odds with the Bank of Thailand regarding the direction of monetary policy. Srettha repeatedly urged the central bank to lower interest rates to stimulate the economy, which he described as being at a “critical” stage. However, the central bank has maintained its key interest rate at 2.5%, the highest in over a decade, resisting pressure for rate cuts. Analysts believe that Pichai’s experience and knowledge in both politics and economics will facilitate better coordination with the central bank on key policy decisions.
With a master’s degree in business administration from Indiana University of Pennsylvania and a strong background in the energy sector, Pichai brings a wealth of experience to his new role as finance minister. His tenure will be marked by the need to navigate through complex economic challenges, stimulate growth, and steer the country towards a more stable and prosperous future. The eyes of both investors and citizens will be on Pichai as he takes on the formidable task of reviving Thailand’s economy amidst a backdrop of uncertainty and volatility.