Former IMF economist Veerathai nominated to head BoT

Bangkok Post, 7 July 2015 – Veerathai Santiprabhob, a former economist at the International Monetary Fund, has been nominated as the next governor of the Bank of Thailand.

Mr Veerathai, 45, takes charge Oct 1 after Prasarn Trairatvorakul steps down following a five-year term that ends Sept 30. Finance Minister Sommai Phasee’s selection received cabinet approval Tuesday and still needs a formal endorsement from the King, Justice Minister Paiboon Koomchaya said.

If royally appointed, the new chief will grapple with falling exports and deflation in an economy that grew at the slowest pace in four years in 2014, with policy space limited by the prospect of higher US interest rates and diminished firepower after two unexpected rate cuts this year. Elections have been delayed until next year by Prime Minister Prayut Chan-o-cha, adding to the uncertainty.

The decision to nominate the central bank’s youngest leader in four decades will be welcomed by investors, said Pakorn Peetathawatchai, executive vice president at the Stock Exchange of Thailand, who worked with Mr Veerathai at the SET.

“His younger age means he’s a very good listener,” Mr Pakorn said. “He is willing to learn from other people, but whenever it was a time for decisions and leadership, he was always quick and decisive in making those decisions if they were right and appropriate.”

Mr Veerathai was chosen from a shortlist that included Supavud Saicheua, an adviser to former Prime Minister Thaksin Shinawatra, and Bank of Thailand deputy governors Paiboon Kittisrikangwan and Tongurai Limpiti.

Capital markets

Mr Veerathai has a doctorate in economics from Harvard University and was an Eisenhower Fellow in 2013. He returned to Thailand to lead the Policy Research Institute of the Ministry of Finance during the Asian financial crisis, and is credited with driving the development of the country’s capital markets and the integration of Southeast Asian capital markets during his tenure as chief strategy officer at the Stock Exchange of Thailand.

The incoming governor is familiar with some of the challenges of the role, through his position on the central bank’s seven-member Monetary Policy Committee, which sets the Bank of Thailand’s benchmark interest rate. The committee voted unanimously last month to keep the key rate at 1.5% after two consecutive cuts, and said borrowing costs were already supporting a gradual economic recovery.

Bank independence

Mr Veerathai is also a member of the junta’s so-called “super board,” which Gen Prayut tasked with supervising Thailand’s state enterprises last year. Gen Prayut heads the 17-member board, which also includes present Governor Prasarn.

“I just approved the appointment in line with what was proposed,” Gen Prayut told reporters after Mr Veerathai was endorsed. “I don’t dare mess with them. The Bank of Thailand is an independent agency. It isn’t a government agency.”

“Just let him work,” the premier said. “If he fails to do the job, you let me know and I will remove him.”

The incoming governor’s experience outside the central bank will be an asset, said Kongkiat Opaswongkarn, chief executive officer of Bangkok-based brokerage Asia Plus Group Holdings.

“I think people from inside don’t actually understand what the real business world is,” Mr Kongkiat said. “I think people from outside, at least they can bring in the expertise and knowledge that they gained from working in different organisations outside the Bank of Thailand and try to blend that with the culture and philosophy within.”