Divided on the economy
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Divided on the economy

ABOUT POLITICS: Bank of Thailand, Pheu Thai standoff over digital wallet and interest rates could put coalition's unity to the test | Observers believe the Pichit Chuenban cabinet row could be a conservative backlash against the perceived influence of Thaksin

Sethaput: Conveyed fears to cabinet
Sethaput: Conveyed fears to cabinet

From the showdown between the ruling Pheu Thai Party and the Bank of Thailand (BoT) came a call for coalition parties to ponder parting ways with the government.

Seven months into this government’s term and despite Prime Minister Srettha Thavisin’s insistence on having a united coalition bloc, the central bank’s relentless caution against the lurking danger of the controversial digital wallet handout scheme has rallied a chorus of supporters to its cause.

Critics have grown in number as the government edges closer to laying the groundwork for launching the half-a-trillion-baht populist programme it says will spur exponential economic stimulation designed to wake the country from its deep slumber.

All were pointing to the government’s adamant stand to get the scheme rolling, and fast.

It was announced the handout policy could materialise by the final quarter of the year after a delay of more than a year. Pheu Thai made its pledge clear during the election campaign that digital money would be in the offering immediately upon it taking office.

A political source, however, said a scheme of such magnitude was bound to have technical and legal glitches.

Pheu Thai insisted earlier this year the scheme must be implemented right away to deliver the crisis-hit economy a shot in the arm, which should have needed the enactment of an executive decree for a loan to finance the handout. But the party decided to take the slow path and opted for a bill instead, which typically takes months to pass.

Enacting a decree is done by the cabinet while a bill requires approval from parliament. Pheu Thai, as the ruling party, would not have been able to escape the legal consequences if the scheme was adopted via a decree only to be rejected later by parliament.

But by opting for the slow-path bill, Pheu Thai has found its own argument that the scheme is urgently needed to kick-start the economy untenable.

The technical hurdles halted the scheme for months before the first cabinet reshuffle on April 28, in which Mr Srettha relinquished his concurrent post of finance minister and handed it to Pichai Chunhavajira, his adviser.

However, what raised eyebrows was the fact that Mr Pichai was to have not one, not two, but three deputies, two of whom are from Pheu Thai.

The three are Krisada Chinavicharana, Julapun Amornvivat and Paopoom Rojanasakul. Before the reshuffle, Mr Srettha entrusted Mr Julapun with the unenviable job of announcing developments, or a lack thereof, in the handout scheme. The task saw Mr Julapun land in hot water as deadline after deadline lapsed in implementing the handout.

The ruling party now exerts almost absolute control over the ministry, a clear indication that the coast is clear for Pheu Thai to exploit full leverage and dispense the regulatory means needed to finally make the digital wallet scheme a reality.

With the scheme tantalisingly close to starting, Pheu Thai has heaped blame on the BoT for being counterproductive to economic recovery by standing firm on not cutting interest rates.

The confrontation between Pheu Thai and the central bank reached a point where the BoT governor Sethaput Suthiwartnarueput wrote a five-page paper conveying his concerns about the digital handout programme to the cabinet.

The document dated April 22 was addressed to the cabinet secretariat office.

It outlines the governor’s suggestion that the scheme should be reviewed to better target individuals who need assistance the most, such as low-income earners and other financially vulnerable groups.

The document also said the scheme should proceed in phases to prevent overstretching the budget and preserve fiscal stability.

It also said there was no pressing need to spur public consumption on a bigger scale at this time, which would warrant heavy spending through various stimulus campaigns.

The growing animosity between the government and the central bank has given way to reports that Pheu Thai was contemplating a push to amend the law to curb the BoT’s independence and give the prime minister the power to sack the bank governor.

The reports irked experts who spoke in defence of the central bank staying free from political meddling.

Jade Donavanik, a legal scholar and ex-adviser to a charter drafting panel, told a recent news talk show that firing the head of the central bank needs extraordinarily strong justification.

“One must spell out what despicable act or defilement or gross underperformance the central bank governor has supposedly done to warrant his dismissal,” the academic said.

One way to keep at bay a change in the law that would jeopardise the central bank’s independence, according to Mr Jade, is to ask the coalition partners, such as Palang Pracharath and United Thai Nation, if they want to remain in the coalition and be complicit in undermining the country’s pillar of financial stability by voting for a bill to weaken the central bank.

A questionable appointment

Pichit Chuenban was the third minister to quit the cabinet after Parnpree Bahiddha-Nukara and Krisada Chinavicharana. But his resignation came under starkly different circumstances.

Pichit: Quit cabinet under duress

Mr Parnpree stepped down as foreign minister because he felt slighted about losing his deputy prime minister position he concurrently held before the cabinet shake-up. Mr Krisada vacated his post over a different work ethic and an unfair division of work set by newly appointed Finance Minister Pichai Chunhavajira.

Their departures came as a loss for the Pheu Thai-led government as both men were among a few ministers who had earned praise from government critics.

Pichit, however, quit under duress amid a controversy that could cost Prime Minister Srettha Thavisin, who submitted his appointment for royal endorsement, his job.

In 2008, Pichit — together with two colleagues — was given a six-month jail term for contempt of court when he dropped a bag of “snacks” containing 2 million baht in cash at the Supreme Court in what was seen as an attempted bribe.

At that time, Pichit represented former prime minister Thaksin Shinawatra and his ex-wife, Khunying Potjaman na Pombejra, in the infamous Ratchadaphisek land purchase case. Thaksin was subsequently handed a two-year jail term.

Pichit’s misdeed cost him his lawyer’s licence, and his attempts to reclaim it have been denied. Critics consider him unfit for a cabinet post.

He was tipped to become the PM’s office minister when Pheu Thai was forming the coalition last year. However, he was named prime minister’s adviser instead due to his questionable eligibility.

In the recent cabinet reshuffle, he was finally appointed to the post, which prompted 40 senators to petition the Constitutional Court to rule on his ministerial status and Mr Srettha’s status as prime minister for inking the order to make Pichit a minister.

In the petition, the senators asked the court if Mr Srettha and Pichit should be removed under Section 160 (4) and (5) of the charter, which covers the moral and ethical standards of a cabinet minister.

Pichit had been adamant about his eligibility. Hours before stepping down on Tuesday, he had been dismissive of the calls for him to resign, saying sarcastically that if his resignation could really solve all the political hurdles facing the government, he would consider quitting.

A few hours later, he had a change of heart. His resignation was believed to be a move to shield the prime minister from possible repercussions for appointing him as a cabinet minister.

With Pichit no longer in the cabinet, the Constitutional Court was believed to have no basis on which to rule on his status and would have to throw out the senators’ petition, sparing Mr Srettha any legal hassles.

However, on Thursday, the Constitutional Court accepted the petition, although the judges voted 5-4 not to suspend Mr Srettha as prime minister.

Several observers even thought Pichit’s resignation could have been influenced by the case against Samak Sundaravej, the late prime minister who was ousted over the scandal surrounding his TV cooking show.

He was paid to host what supporters said was a harmless cooking programme. But when Samak refused to stop hosting the show even after he became premier, he was found in violation of a constitutional prohibition on private employment while in office.

“In Mr Pichit’s case, if the Constitutional Court ruled against him, Mr Pichit would lose his post. But that wouldn’t happen because he already quit.

“But the same thing cannot be said about Mr Srettha,” said Jade Donavanik, chairman of the Faculty of Law at the College of Asian Scholars.

In his opinion, Pichit’s resignation did not nullify the pretext for the court to review Mr Srettha’s actions because the petition also called into question the prime minister’s integrity for appointing someone to the cabinet with full knowledge of their dubious qualifications.

However, leaving the court’s decision on Pichit’s case aside, many observers believe there is more to the senators’ petition than meets the eye. It could be a message sent from the conservative camp to Thaksin, who is accused of pulling the strings in Pheu Thai, that they are not happy with his manoeuvrings.

According to observers, the conservative camp was upset over the way Thaksin managed to avoid serving his jail term after having his eight-year prison sentence commuted to one year, not to mention his high-profile public appearances following his parole.

Thaksin’s activities and the appointment of Pichit, one of his inner circle, to the cabinet were interpreted as his attempt to influence the coalition government.

The conservative camp is likely to step up pressure on the Pheu Thai-led government to prevent Thaksin from exerting further clout. And a decision on whether to indict Thaksin for lese majeste this Wednesday will be closely watched for possible political ramifications on the former premier and the country’s politics at large, according to observers.

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