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Bangkok Post
8 hours ago
- Business
- Bangkok Post
Thailand's next central bank chief champions rate cuts to revive growth
Vitai Ratanakorn, the incoming governor of the Bank of Thailand, by his own admission, will start his new job in October at a difficult time. Growth in Southeast Asia's second-largest economy has stalled, tense negotiations with the United States over trade tariffs continue, industrial sentiment is tepid and critical sectors, including tourism and manufacturing, aren't firing. "We must accept that the Thai economy is not doing so well," Mr Vitai, who has been approved by the cabinet as the next central bank chief but awaits royal endorsement, told reporters last week. "And what is worrying is the sluggishness that may be prolonged." The 54-year-old, who currently serves as president and chief executive of the Government Savings Bank, Thailand's largest state-owned lender, has a prescription: more rate cuts. The central bank late last month left the key interest rate unchanged, underlining the need to save some policy ammunition, after cuts in October, February and April. Those reductions brought the one-day repurchase rate to 1.75%, the lowest in more than two years. "Proactive easing is important," Mr Vitai told Thai financial daily Krungthep Turakij on June 20, when he was locked in the race for the top job with central bank insider Roong Mallikamas. "It's not just another one or two cuts. We may have to reduce them for a long time and more deeply. So, from 1.75%, if you ask me personally, I think it can go down much further." Thailand's ruling Pheu Thai Party, which took power in 2023, has been at loggerheads with current Bank of Thailand chief Sethaput Suthiwartnarueput for not cutting rates enough to support a sluggish economy. In May last year, before she became prime minister, Pheu Thai leader Paetongtarn Shinawatra said the central bank's independence was an "obstacle" in resolving economic problems, underlining the scale of the friction. Mr Vitai's stance will likely tone down some of that conflict, but it has also raised questions about his own ability to lead the central bank without succumbing to pressure from the ruling party - an issue he has publicly addressed. "I am confident that I can make decisions independently, based on principles and prioritising the nation's interests, free from the influence of any groups," Mr Vitai wrote on his Facebook page on July 8. Mr Vitai studied economics and law at Chulalongkorn and Thammasat universities, and finance at Drexel University in the United States, and entered the Thai private sector, where he worked at Charoen Pokphand Group and budget carrier Nok Air. A former colleague, who worked alongside Mr Vitai at a private firm, described him as a team player who preferred to work with consensus. "He is more of a practicalist than a theorist, focusing on getting the job done," he said, asking not to be named because he is not authorised to speak to media. In 2018, Mr Vitai was appointed the Secretary-General of the Government Pension Fund, which manages assets worth about 1.4 trillion baht, and two years later became the head of the Government Savings Bank. Thirachai Phuvanatnaranubala, a former Thai finance minister, said Mr Vitai's long experience as a government banker should help him manage relationships with senior finance ministry leadership.
The Star
9 hours ago
- Business
- The Star
Thailand's next central bank chief champions rate cuts to revive growth
BANGKOK: Vitai Ratanakorn, the incoming governor of the Bank of Thailand, by his own admission, will start his new job in October at a difficult time. Growth in Southeast Asia's second-largest economy has stalled, tense negotiations with the United States over trade tariffs continue, industrial sentiment is tepid and critical sectors, including tourism and manufacturing, aren't firing. "We must accept that the Thai economy is not doing so well," Vitai, who has been approved by the cabinet as the next central bank chief but awaits royal endorsement, told reporters last week. "And what is worrying is the sluggishness that may be prolonged." The 54-year-old, who currently serves as president and chief executive of the Government Savings Bank, Thailand's largest state-owned lender, has a prescription: more rate cuts. The central bank late last month left the key interest rate unchanged, underlining the need to save some policy ammunition, after cuts in October, February and April. Those reductions brought the one-day repurchase rate to 1.75%, the lowest in more than two years. "Proactive easing is important," Vitai told Thai financial daily Krungthep Turakij on June 20, when he was locked in the race for the top job with central bank insider Roong Mallikamas. "It's not just another one or two cuts. We may have to reduce them for a long time and more deeply. So, from 1.75%, if you ask me personally, I think it can go down much further." Thailand's ruling Pheu Thai party, which took power in 2023, has been at loggerheads with current Bank of Thailand chief Sethaput Suthiwartnarueput for not cutting rates enough to support a sluggish economy. In May last year, before she became prime minister, Pheu Thai leader Paetongtarn Shinawatra said the central bank's independence was an "obstacle" in resolving economic problems, underlining the scale of the friction. Vitai's stance will likely tone down some of that conflict, but it has also raised questions about his own ability to lead the central bank without succumbing to pressure from the ruling party - an issue he has publicly addressed. "I am confident that I can make decisions independently, based on principles and prioritising the nation's interests, free from the influence of any groups," Vitai wrote on his Facebook page on July 8. Vitai studied economics and law at Thailand's Chulalongkorn and Thammasat universities, and finance at Drexel University in the United States, and entered the Thai private sector, where he worked at Charoen Pokphand Group and budget carrier Nok Air. A former colleague, who worked alongside Vitai at a private firm, described him as a team player who preferred to work with consensus. "He is more of a practicalist than a theorist, focusing on getting the job done," he said, asking not to be named because he is not authorised to speak to media. In 2018, Vitai was appointed the Secretary-General of the Government Pension Fund, which manages assets worth about 1.4 trillion baht ($43 billion), and two years later became the head of the Government Savings Bank. Thirachai Phuvanatnaranubala, a former Thai finance minister, said Vitai's long experience as a government banker should help him manage relationships with senior finance ministry leadership. "However, his lack of work experience and zero exposure to high level macro public policy is a cause for concern," Thirachai told Reuters. - Reuters
The Star
9 hours ago
- Business
- The Star
Asia markets slip on renewed tariff tensions; Bangkok appoints new cenbank chief
Emerging Asian equities trended lower on Tuesday as investors took stock of regional governments' trade talks with the U.S., with Thai shares falling due to worries over the independence of the domestic central bank following a key appointment. Thailand's benchmark index fell over 1% after news that Vitai Ratanakorn, a perceived rate-cut advocate, would take the helm at the Bank of Thailand. The Thai baht slipped further, down 0.3% on the day. "Given the weakness of Thailand's economy, there is no doubt that the country needs lower interest rates," said Gareth Leather, senior Asia economist at Capital Economics, but added the appointment may fuel concerns about the bank's independence. Thai equities have risen over 8% since reports of Ratanakorn's appointment, anticipating monetary easing, but have also raised concerns about ongoing tensions between the BoT and the government regarding pressure for rate cuts. "While we have some sympathy with the government's argument that interest rates have been kept too high for too long, over the longer term, there is strong evidence that central bank independence tends to deliver better inflation outcomes," added Leather. Across the region, most stock markets were in the red, with Taiwan, South Korea and Malaysia posting losses between 0.3% and 1.5%. Taiwan equities extended their decline into a second session, giving back some of the 5% gain accumulated earlier this month. Meanwhile, Jakarta's benchmark continued to outperform, rising for a 12th straight session, underpinned by optimism following a recent U.S. trade agreement and domestic policy easing. Singapore's Straits Times Index also retreated from record highs after 14 sessions of fresh peaks. Investors are now focused on the Monetary Authority of Singapore's policy meeting on July 30. In the currency markets, regional units moved in tight ranges as the August 1 deadline loomed for Southeast Asian nations to strike trade deals with the U.S. or face sweeping tariffs. The South Korean won and Thai baht edged lower, while the Malaysian ringgit posted modest gains. The MSCI index of emerging market currencies held steady but remains down roughly 1% from its July 3 record high. "We are in a backdrop of a fragile global environment where events ranging from Japanese upper house elections to U.S. President Donald Trump's tariff threats continue to create much uncertainty and cloud the outlook for markets," said Maybank analysts. Japan's Nikkei closed lower, while the yen softened slightly after weekend election results delivered a setback to the ruling coalition, though the outcome was broadly in line with investor expectations. HIGHLIGHTS ** Indonesian 10-year benchmark yield flat at 6.519% ** Philippines' Marcos to meet Trump hoping to secure trade deal ** Thailand foreign tourist arrivals fall 5.91% annually so far in 2025 - Reuters
Reuters
12 hours ago
- Business
- Reuters
Vitai Ratanakorn picked as Thailand's next central bank governor
BANGKOK, July 22 (Reuters) - Thailand's cabinet on Tuesday approved Vitai Ratanakorn, a state-owned bank head and former private sector executive, to be the country's next central bank governor. The cabinet's approval of the 54-year-old for the position is subject to royal assent. If endorsed, Vitai's five-year term running the Bank of Thailand would start on October 1. Here are some facts and background on Vitai: - He has served as president and chief executive of the Government Savings Bank, Thailand's largest state-owned lender, since 2020, when he was appointed by the government. - The GSB website says Vitai has a master's degree in finance from Drexel University in the United States, as well as master's degrees in political economy and business law from Chulalongkorn University in Thailand. He holds a BA in economics from Thammasat University. - He was head of the Government Pension Fund, managing assets worth about 1.4 trillion baht ($43 billion), from 2018 to 2020. He also served as acting president of the Islamic Bank of Thailand in 2017-2018. - He was chief financial officer at budget carrier Nok Air from 2011 to 2014, and was senior deputy managing director at agro-industrial conglomerate Charoen Pokphand Group in 2010. - In a social media post earlier this month, he said he could make decisions independently and free from any group's influence. - Last month, he said there was a need to cut interest rates deeply to support a stagnant economy. - Some analysts expect his appointment would improve the central bank's relationship with the government, as Southeast Asia's second-largest economy struggles with tepid consumption and high household debt amid global trade turmoil and renewed domestic political instability. ($1 = 32.39 baht)
The Star
12 hours ago
- Business
- The Star
Thailand names rate-cut advocate Vitai to lead central bank
BANGKOK: Thailand picked a rate-cut advocate with close ties to the government as its next central bank governor, defying concerns over a potential erosion of the monetary authority's independence. The cabinet approved the nomination of Vitai Ratanakorn (pic), as proposed by Finance Minister Pichai Chunhavajira, during a weekly meeting in Bangkok on Tuesday (July 22), according to government spokesman Jirayu Houngsub. The president of the Government Savings Bank was chosen over fellow finalist and Bank of Thailand deputy governor Roong Mallikamas. Vitai's cabinet endorsement was based on his "knowledge, expertise, and experience in economics and banking, and that he meets the qualifications prescribed by law,' Jirayu said. The decision was delayed last week when the cabinet did not discuss the proposal due to incomplete paperwork. This caps off a months-long BOT governor race that has been marred by concerns about the government encroaching on the central bank's autonomy as it repeatedly presses for lower interest rates to boost the economy. Similar tensions are brewing elsewhere with US President Donald Trump publicly deriding Federal Reserve Chair Jerome Powell and even discussing his possible removal in a quest for deeper rate cuts. The baht was up 0.2% versus the dollar at 32.28, while the Thai 10-year yield is down 1 basis point at 1.50% as the currency and bond held into gains following the BOT announcement. The 54-year-old Vitai is seen as a proxy candidate of the Finance Ministry. During his tenure as the head of the state-owned GSB, he led government efforts to provide financial relief to small businesses and households who borrowed heavily during the pandemic. Vitai's selection signals the government's support for a candidate who has advocated for more aggressive easing to shore up a faltering economy and ease the burden on borrowers saddled with record debt. He has also called for closer coordination between fiscal and monetary policymakers, which could mean a break from the stance of incumbent Governor Sethaput Suthiwartnarueput, who has resisted calls for rate cuts and a higher inflation target. The government earlier attempted to install its own nominee as BOT chair, but it was opposed by former Thai central bank chiefs and economists. Vitai faced similar criticism, with an ex-BOT governor saying he wouldn't be able to make independent decisions because of his ties to the government. A group of academics also posted an open letter on Monday, saying the one with central banking experience should be the most appropriate for the job. Vitai defended himself in a Facebook post on July 8, saying: "My experience and strong self-identify offer the confidence that I can make decisions independently, based on principles. Seeking the best interest of the country is important, without being influenced by any group.' The incoming governor faces a challenging economic landscape, including the region's highest household debt, sluggish credit demand, negative inflation and weakening consumption. His five-year term is set to begin on Oct 1, pending royal endorsement as required by the Thai central bank law. Despite a cumulative 75-basis point reduction in borrowing costs since October, growth remains subdued, further threatened by punitive US tariff on Thai exports and a slowdown in foreign tourist arrivals - both critical drivers of the economy. The policy rate should be significantly lowered for a sustained period to revive the stagnant economy, Vitai told local media last month after applying for the governor's role. More importantly, though, commercial banks must also pass on the reduction to customers. "This is a deep and prolonged downturn, and while interest rate cuts are necessary, they are not enough. Additional supportive measures are required,' the Bangkok Post reported, citing Vitai on June 23. Although interest rates are decided by majority vote, Vitai, as the head of the policy panel, is expected to have influence over its direction. Vitai will chair the Monetary Policy Committee for the first time on Oct 8. The next scheduled meeting of the committee is on Aug 13. The central bank last month left the benchmark interest rate unchanged at 1.75%, citing the need to preserve limited policy space to respond to future shocks. "The job at hand for the incoming governor will be to ensure that market participants perceive his policies as independent and based on economic fundamentals,' said Lavanya Venkateswaran, an economist at Oversea-Chinese Banking Corp. in Singapore. "Notwithstanding, we expect the BOT to remain dovish in its bias and have another 50 basis points in rate cuts for the remainder of this year.' As the chief of the Government Savings Bank, which was established in 1913 by King Rama VI, Vitai has managed its more than 3 trillion baht (US$92 billion) of assets since 2020. Tasked to be a "social bank' that focuses on development returns instead of profitability, GSB has been the government's key tool in extending hundred billions of soft loans to vulnerable groups. Vitai holds master's degrees in finance from Drexel University in Pennsylvania, and in law and political economy from Chulalongkorn University in Bangkok. As a son of Siriluck Ratanakorn, the first female head of the Stock Exchange of Thailand during 1982-1985, he started trading stocks since high school. Vitai positioned himself as a "change leader' who could turn around organisations. His past experience includes serving as the chief financial officer at debt-ridden Nok Airlines as well as acting president at the Islamic Bank of Thailand. "I like challenges and I like a tough job,' he said in a interview VDO clip with local media the People in 2022. "I think I am suitable for the job of rehabilitating, changing strategy and re-positioning of an organisation. It will be fun if we can do that.' - Bloomberg
