VZCZCXRO2330
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHBK #0163/01 0221008
ZNR UUUUU ZZH
O 221008Z JAN 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5745
INFO RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RUEHBJ/AMEMBASSY BEIJING IMMEDIATE 6705
RUEHBY/AMEMBASSY CANBERRA IMMEDIATE 9369
RUEHUL/AMEMBASSY SEOUL IMMEDIATE 5218
RUEHKO/AMEMBASSY TOKYO IMMEDIATE 1329
RUEHCHI/AMCONSUL CHIANG MAI IMMEDIATE 6093
RUEAIIA/CIA WASHINGTON DC IMMEDIATE

UNCLAS SECTION 01 OF 02 BANGKOK 000163 
 
STATE FOR EAP/MLS, EEB 
STATE PASS TO USTR FOR WEISEL AND BISBEE 
TREASURY FOR SCHUN AND MNUGENT 
COMMERCE FOR EAP/MAC/OKSA 
COMMERCE PASS TO USPTO 
SINGAPORE FOR FINATT BAKER 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:N/A 
TAGS: ECON EFIN EINV ELAB ETRD KIPR PGOV TH
SUBJECT: NEW PM TACKLES THAILAND'S ECONOMIC CHALLENGES 
 
REF: A. 08 BANGKOK 3774 (NEW COMMERCE MINISTER) 
¶B. 08 BANGKOK 3747 (NEW FINANCE MINISTER) 
¶C. 08 BANGKOK 3746 (NEW ECONOMIC TEAM) 
¶D. 08 STATE 134459 (FINANCIAL CRISIS REPORTING) 
 
BANGKOK 00000163  001.2 OF 002 
 
 
¶1. (SBU) SUMMARY: Thailand's fourth quarter economic figures show an 
"economy in crisis," Prime Minister Abhisit Vejajjiva told numerous 
local and foreign audiences over the last several weeks during a 
non-stop schedule of speeches to woo the country with his cabinet's 
economic stimulus plans. "Manufacturing is down; productivity is 
down; exports are down; tourism is down." But Abhisit and his 
finance minister, Korn Chatikavanij, believe they have a good mix of 
programs and incentive packages to help Thailand weather, at least 
in the short run, the global economic crisis. In comments to foreign 
audiences, Abhisit has pledged to liberalize the ability of foreign 
business to operate in the Thai economy and has said he will curtail 
the use of compulsory licenses for pharmaceuticals. END SUMMARY. 
 
¶2. (SBU) COMMENT: The analysis behind Abhisit's economic proposals 
appears well thought out and is impressively presented, a welcome 
change from the economic policy-making of preceding governments over 
the last year. Abhisit's pitch is also attuned to play well 
politically to an audience that demands the continuation of the 
ever-popular populist programs begun under former Prime Minister 
Thaksin Shinawatra, incurring some criticism from the Bangkok 
business sector that the program has too little in it for them. 
Abhisit and Korn are also aware that there may be little they can do 
to rescue Thailand's economy absent improvement in the global 
economy, and are developing longer-term investment plans that can be 
rolled out later. Even if the economy does not turn around soon, 
they want to build confidence that their government is Thailand's 
best bet to deal with the challenges. END COMMENT. 
 
-------------------------------------- 
Abhisit Sprints from the Starting Line 
-------------------------------------- 
 
¶3. (SBU) Prime Minister Abhisit Vejajjiva has spent much of his 
first few weeks in office explaining how his administration hopes to 
tackle the current economic challenges facing Thailand -- and he has 
done so in a large-scale public relations effort. Abhisit headlined 
numerous big-ticket events, including extravagant affairs sponsored 
by the Bangkok Post, the Thailand Board of Investment, and the 
Foreign Correspondents Club of Thailand. He presented pro-business 
plans to influential audiences amidst his populist proposals to 
rescue the Thai economy from what appears to be a worsening 
situation. 
 
¶4. (U) Thailand's fourth quarter economic figures show an "economy 
in crisis," Abhisit told a group of more than 1,000 press and 
business leaders at the January 15 Bangkok Post event. He added that 
nearly every economic and financial indicator is in the red: 
"Manufacturing is down; productivity is down; exports are down; 
tourism is down." The Ministry of Finance announced on January 21 
that the Thai economy is likely to contract further in the first 
quarter of 2009 because of weaker exports and fewer tourist 
arrivals. Abhisit's outreach efforts will continue over the next 
several weeks; he addresses the American Chamber of Commerce at a 
dinner on February 3, which will also include a conference call with 
the U.S. Chamber of Commerce in Washington. 
 
---------------------------------- 
Stimulus Package -- Priority No. 1 
---------------------------------- 
 
¶5. (SBU) Abhisit has pitched his economic stimulus ideas to Bangkok 
elites on nearly a daily basis since he assumed his position in late 
December. He describes the initial proposal, valued at approximately 
120 billion baht (US$3.5 billion), as "quick, targeted spending" to 
"sustain purchasing power and promote economic growth." Consisting 
of largely populist measures, the "quick spending" essentially 
consists of a one-time cash payment of 2000 baht (nearly US$60) to 
low-income earners, supplementary financial support to rural 
communities, and subsidies to lower transportation and utilities 
costs for the poor and elderly. Abhisit told the January 19 Board of 
 
BANGKOK 00000163  002.2 OF 002 
 
 
Investment audience that the package would "make sure our people can 
continue to spend" during this economic downturn. 
 
¶6. (SBU) Abhisit pledged to present the official budget request to 
Parliament by the end of January. Despite the political hurdles and 
various layers of approvals required, Abhisit hopes to quickly 
inject the 120 billion baht into the economy with a "big splash." He 
has said that the funds would leave government coffers by late March 
or early April, but most observers believe these projections are 
overly optimistic. His economic team is reportedly busy at work on 
numerous other options that could be presented throughout the coming 
months. (Note: Details on the economic recovery proposals are 
provided septel.) 
 
------------------------- 
Pro-Foreign Business, Too 
------------------------- 
 
¶7. (U) In his January 19 presentation, Abhisit began with a nod to 
the largely foreign investor audience: "Investors are the real 
drivers of the Thai economy; your continued faith in the Thai 
economy will be rewarded." Abhisit added that government should 
provide certainty and rules to those who conduct business, and avoid 
government efforts to manage the economy. He promised to "work 
closely with business," but noted "I have no right to your 
cooperation; I will have to earn it... Our government will continue 
to be market friendly and open to the world." 
 
¶8. (U) Abhisit emphasized that his administration is committed to 
market access and market liberalization, even amidst the ongoing 
global financial crisis. In a pitch to the largely foreign audience 
on January 19, Abhisit emphasized that he has "no intention" to 
amend the Foreign Business Act in a way that would further restrict 
foreign ownership in certain business sectors. On the contrary, he 
said that he had already asked the government's oversight committee 
for the Foreign Business Act to review what additional sectors can 
be liberalized. 
 
¶9. (U) When asked about the previous government's mega-projects and 
future investment opportunities, such as the southern seaboard, 
Abhisit said, "Most, if not all, will proceed. However, these 
projects require a significant amount of time before we realize the 
fruits of the investments." When asked about rising power costs for 
business, particularly the high costs of natural gas, Abhisit 
answered that he had called on the National Energy Policy Committee 
on January 16 to conduct a "complete review" of the government's 
energy policies, including the pricing structures for energy. 
Abhisit stated that the government should not allow for monopoly 
returns, and the monopolistic elements of the state-controlled 
petroleum conglomerate PTT that have lead to unfair costs should be 
"corrected."  He noted that he expected the 2008 problems of high 
food and fuel prices to return in the near future, and he plans to 
invest significant government funds in alternative energy 
technologies, particularly those that will help boost the 
agricultural sector. 
 
¶10. (SBU) Touching on topics he believes have been of concern to 
foreign investors, Abhisit also said his government is "aware of the 
consequences internationally" for Thailand's compulsory licensing of 
pharmaceutical products. While recognizing that the government needs 
to improve access to medicines, Abhisit said he will seek "other 
acceptable means" to improve healthcare for Thai citizens, rather 
than pursue compulsory licenses. "We will not violate any 
international agreements, and we will comply with all WTO 
standards." (Note: We have never taken the position that Thailand's 
issuance of compulsory licenses violated international agreements, 
but apparently the PM believes that we, or maybe the Europeans, 
think that. End Note.) 
 
JOHN