VZCZCXRO6318
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #4943/01 2560953
ZNR UUUUU ZZH
P 130953Z SEP 07
FM AMEMBASSY BANGKOK
TO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 9622
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 4093

UNCLAS SECTION 01 OF 03 BANGKOK 004943 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EB 
STATE PASS TO USTR 
TREASURY FOR OASIA 
COMMERCE FOR EAP/MAC/OKSA 
FEDERAL RESERVE SAN FRANCISCO FOR DAN FINEMAN 
SINGAPORE FOR SUSAN BAKER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD EINV TH
SUBJECT: DEMOCRATS AND PPP OUTLINE ECONOMIC PLATFORMS 
 
 
BANGKOK 00004943  001.2 OF 003 
 
 
¶1.  Summary:  Leaders of Thailand's likely top two political 
parties in the coming elections, the Democrat Party and the 
People's Power Party (PPP), outlined notional economic 
platforms at an investment conference on September 12-13. 
The Democrat leader, Abhisit Vejjajiva, said he would scrap 
the 30 percent capital reserve requirement as well as 
proposed changes to the Foreign Business Act.  He called for 
confidence-building and productivity enhancement measures, 
leavened with populist rural programs similar to those of the 
former Thai Rak Thai (TRT) administration.  The PPP's 
Secretary General, Surapong Suebwonglee, without mentioning 
 
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TRT by name, said his party would largely implement the same 
policies of the previous Thaksin-led government.  "We did it 
before; we'll do it again," he said, later adding that it 
would be done "without retribution."  End Summary. 
 
¶2.  Leaders of the Democrat Party (DP) and the People's Power 
Party (PPP) outlined their prospective economic platforms 
before an investment conference audience on September 13 in 
Bangkok.  The two parties are currently seen as the largest 
potential vote-getters in the planned December 23 elections, 
with the winner possibly able to form the core of a new 
coalition government.  The conference, organized by Phatra 
Securities, Merrill Lynch and the Stock Exchange of Thailand, 
featured a panel comprised of Democrat Party Leader Abhisit 
Vejjajiva, Secretary General of the PPP Surapong Suebwonglee, 
and current Minister of Energy Piyasvasti Amranand.  Prime 
Minister Surayud addressed the conference's opening session 
September 12. 
 
 
"Investor-Friendly" Program with Populist Flavor 
--------------------------------------------- --- 
 
¶3.  Abhisit gave the more polished of the presentations, 
laying out a three-pillar agenda aimed at restoring investor 
confidence in Thailand after the "economic mismanagement" of 
the Thai Rak Thai (TRT) administration, led by former PM 
Thaskin, and the subsequent "year of inaction" following last 
September's military coup.  Abhisit blamed the TRT government 
for causing political instability and resultant economic 
stagnation through ill-considered policies and a climate of 
corruption and cronyism.  The first two pillars of Abhisit's 
platform laid out plans to "Restore Confidence" and "Invest 
to Increase Competitiveness" in the Thai economy.  The third 
pillar, "Invest in People", contained a series of populist 
policies that bore similarities to previous TRT programs 
targeted to rural constituencies. 
 
¶4.  Starting with the first two pillars, Abhisit said the 
Democrats, if elected, would abolish the 30 percent 
unremunerated reserve requirement on capital inflows imposed 
last December by former Finance Minister Pridiyathorn.  He 
said the Democrats would shelve proposed amendments to the 
Foreign Business Act that were recently debated in the 
National Legislative Assembly (NLA).  He called for greater 
market liberalization measures, particularly in the services 
sector and including telecommunications.  He further said the 
Democrats would protect the public interest through enhanced 
competition laws and commitments to international standards 
of governance. 
 
¶5.  Abhisit said a Democrat-led government would spur 
domestic demand and increase productivity by funding mass 
irrigation projects for the agricultural sector (amounting to 
USD 2.9 billion from the government budget), completion of 
subway and skytrain mass transit projects (USD 7.4 billion), 
and renovation and extension of Thailand's railway system 
(USD 5.9 billion).  Abhisit said the Democrats' policy 
package was aimed at improving crop yields in the 
agricultural sector, reducing logistics and transportation 
costs for manufacturing, and spurring innovation in service 
sector industries such as film entertainment, health care and 
tourism.  He said he believed the government had enough 
fiscal space to carry out these programs, citing the current 
public debt-to-GDP ratio figure of less than 50 percent. 
 
¶6.  Abhisit's populist programs included a Village 
Sufficiency Fund to provide credit and grants to farmers and 
village entrepreneurs.  He said this fund would differ from 
the TRT's Million Baht Village Fund by ensuring that loans 
would be put to productive use instead of consumption.  He 
 
BANGKOK 00004943  002.2 OF 003 
 
 
pledged to improve educational opportunities for students in 
outlying provinces, expand universal health care, and reform 
the social security, savings and pension programs to provide 
an adequate safety net for all citizens.  Abhisit did not 
provide further details on how these programs would be 
implemented or funded. 
 
¶7.  Referring to electoral prospects, Abhisit said he viewed 
PPP as the Democrats' strongest adversary, and publicly 
conceded the PPP would win the pivotal Northeast provinces, 
considered the heart of TRT's former constituency.  He added, 
however, that "the Democrats will win all the others."  (A 
Democrat staffer told Econoff after the seminar that the 
Party is focusing on promoting its education and irrigation 
plans in its campaign, and that nationwide TV advertisements 
over the past several months had boosted its poll numbers 
around the country.) 
 
 
People's Power Party: "We Did It Before; We'll Do It Again" 
--------------------------------------------- -------------- 
 
¶8.  PPP Secretary General Surapong made no pretense of 
differentiating his party from its progenitor, although he 
avoided mention of TRT by name.  Surapong defended "the 
previous government's" economic policies, crediting them with 
restoring Thailand's growth rates following the 1997 
financial crisis and leading to today's climate of strong 
exports amidst minimal inflation and unemployment.  Citing 
the current account surplus and healthy level of foreign 
exchange reserves as additional benefits accruing from the 
TRT program, Surapong said a return to the "dual-track" 
economic approach (i.e. external economic liberalization 
combined with populist domestic programs) would alleviate 
what he called the two largest challenges faced by the Thai 
economy today:  1) The negative impact of the strong baht on 
labor-intensive and agricultural industries, and 2) The 
decline in domestic demand. 
 
¶9.  Surapong said, however, that drastic measures to control 
the exchange rate were unnecessary, ranking the problem as 
"less than a 5" on a scale of 1 to 10 in importance.  "Many 
countries would like to be in our situation (of having a 
strong currency)," he added.  He said the PPP's top priority 
would be to "re-align the mindset and skillset of financial 
policymakers to match fast-moving developments in global 
capital markets."  He did not elaborate.  Surapong attributed 
his shorter presentation to a "desire to implement the 
policies that people have already approved."  He described at 
length the research conducted by the previous government to 
ascertain the needs of the people, and the subsequent 
implementation of the resulting programs, including the 30 
baht health care program, microfinance for village 
entrepreneurs, and liberalized trade agreements.  Declaring 
that "We did it before, and we'll do it again, with just a 
few adjustments," Surapong stressed that the PPP would do so 
"while seeking no retribution" against those who forced the 
prior government out of power. 
 
¶10.  Surapong also criticized the Foreign Business Act 
amendments, saying "It's time to face facts," and decide 
which business sectors need foreign investment and which 
should be restricted.  In a short question-and-and answer 
session, Surapong declined to name the PPP thinkers behind 
the party's economic program (largely believed to include 
former TRT advisers and Thaksin himself).  He stated that 
"many are afraid to come out into the limelight, but you may 
start seeing braver members appear next month." 
 
¶11.  When asked how his party would work to prevent another 
coup, Surapong said the PPP's leadership accepted that 
"mistakes were made in the past, especially with regard to 
corruption," and that his party had learned lessons to apply 
to the future.  Abhisit, in response, said that democracy is 
more than just having an election, and requires respect for 
the rule of law, freedom of expression and human rights 
(noting past extrajudicial killings).  Minister Piyasvasti 
added that stable democratic governance requires the rule of 
the majority with respect for the rights of the minority, 
"something that the previous government did not abide by." 
 
¶12.  Energy Minister Piyasvasti, the only current government 
 
BANGKOK 00004943  003.2 OF 003 
 
 
member on the panel, limited himself to mostly non-partisan 
comments.  In fact, his sharpest criticism was of the current 
government's 30 percent capital reserve requirement, calling 
for its immediate repeal "hopefully before the end of this 
administration."  He further said that the Bank of Thailand 
needed to be reined in under the supervision of the Ministry 
of Finance, "implementing policy rather than creating it." 
In another observation, he said he hoped the future 
government would focus strongly on developing nuclear energy, 
declaring that "you can't reduce global warming and remain 
self-sufficient without it." 
BOYCE