On October 3, Prime Minister Thaksin Shinawatra revealed the composition of his new Cabinet as part of his overall effort to reform the country's bureaucracy. This year the reshuffle of the Cabinet is very significant, as it has taken place in tandem with the creation of six new ministries - the Tourism and Sports Ministry, the Culture Ministry, the Social Development and Human Security Ministry, the Natural Resources and Environment Ministry and the Ministry of Information and Communications Technology.
Also significant is the fact that the role and functions assigned to Thailand's six Deputy Prime Ministers has been widened to include responsibilities for specific policy issues in the fields of foreign affairs (General Chavalit Yongchaiyudth), social affairs (Mr Chaturon Chaisang), foreign affairs (Mr Korn Dabaransi), rural and community affairs (Mr Suwit Khunkitti), bureaucratic reform (Mr Vishanu Krua-ngam) and economic policy (Mr Prommin Lertsuridej).
Even more controversial is the decision to also give each Deputy Prime Minister administrative powers over a separate region of the country. Under this new set-up, General Chavalit is by far the most powerful of the six deputy prime ministers since he has been given administrative control over 20 provinces in the heavily populated Northeast region, in addition to his supervisory role over the Ministries of Defence, Interior and Justice. However, some critics claim this new arrangement is an attempt by Prime Minister Thaksin to ensure the smooth reelection of the Thai Rak Thai (TRT) and coalition party candidates in the next general election, rather than being a sincere effort aimed at bureaucratic reform.
For Thailand's privatization programme, the two most significant areas of change are those related to telecommunications and transportation. Previously, these two sectors of the economy were under one regulatory roof (e.g. the Ministry of Transport and Communication). Now, each of these sectors has its own ministry that has been given the task of spearheading change at the regulatory level, as well as the authority to push ahead with spending projects that are at the top of Prime Minister Thaksin's priority list for development of the country's infrastructure and technological capabilities.
Telecommunications: Under the new set-up, responsibility for telecommunication issues and policy lies with the newly established Ministry of Information and Communications Technology (MICT). Both TOT Corporation Public Co Ltd (TOT) and the Communications Authority of Thailand (CAT) are under the wing of the MICT.
The newly appointed MICT minister, Mr Surapong Suebwonglee, has already been dubbed the e-Minister for his ambitious goals of converting Thailand into a knowledge-based society, expanding access to the Internet into rural areas and promoting e-Government . Previously, Surapong worked for the Ministry of Public Health as a deputy to Minister Sudarat Keyuraphan (who retained her post in the new Cabinet) and was instrumental in implementing the Thaksin government's controversial - but politically popular - health care scheme that cut the per visit charge at approved hospitals to only Bt30.
In order to revive the privatization process for TOT and CAT, Minister Surapong has pledged that his first priority will be to tackle the sensitive issue of concession conversion between the private sector operators and TOT/CAT. In his view, a third way needs to be found to resolve the concession conversion issue, as past attempts using formulae from the Thailand Development Research Institute (TDRI) and Chulalongkorn University proved unable to break the log jam.
Significantly, Minister Surapong believes it is unnecessary at this stage to worry about the establishment of the National Telecommunications Commission (NTC). Already, progress towards setting up the NTC is more than two years behind schedule with no agreement in site even on the basic issue of how best to select its membership. According to Minister Surapong, only after the concession conversion issue is resolved can the IPO's for TOT and CAT move forward, which should then be followed by the establishment of the NTC. He has vowed that the compromise reached on concession conversion will be fair to all and that the MICT's new approach to this issue will be revealed in a few months time.
The main concern with Surapong is that as a medical doctor he has virtually no background in technology, which might give an unfair advantage to private sector operators during the course of the concession conversion process - especially when it comes to sorting out ownership and valuation issues regarding the network assets that have already been transferred to TOT and CAT under the build-transfer-operate concession.
However, Surapong's political skill in being able to implement new approaches to long-standing problems - such as the case of public health services - clearly encouraged Prime Minister Thaksin to give him a crack at untangling Thailand's messy telecom regulatory and operating framework.
Transportation: In this sector the changes in terms of government structure are less dramatic and should not have that much influence over the planned IPOs of the Airports of Thailand (AOT), the Port Authority of Thailand (PAT) and further share offerings to the public by Thai Airways International.
The new Transport Minister is Suriya Jungrungreangkit, who in the previous Cabinet headed the Ministry of Industry. In his new position Minister Suriya has promised to see to it that work on Bangkok's Suvarnnabhumi Airport is completed by the end of 2004, which is earlier than the AOT's own target of 2005. Within days of his appointment, Minister Suriya said he would be setting up a special task force to supervise construction of the airport that would monitor progress on a weekly basis.
However, it must be said that previous MOTC ministers have tried this same taskforce approach without much success. Only by applying pressure from the very top - starting with Prime Minister Thaksin - will Bangkok's new international airport have any chance of meeting its target completion date.
As Minister of Transport, Suriya is once again in charge of one of Thailand's "A-list" ministries that controls huge amounts of spending on spending on air, sea and land infrastructure. Also, Suriya was successful in persuading Prime Minister Thaksin to appoint one of his protoges - Somsak Thepsuthin - to replace him as Minister of Industry. Thus, Suriya now controls two A-list ministries, making him one of the most powerful members of the new Cabinet.
Whether this position of power will enable Minister Suriya to push through difficult privatizations in the transport sector remains to be seen. Already, the AOT's IPO - which had been given a green light just over a week ago - now appears to have been delayed until early 2003 according to the Ministry of Transport's permanent secretary Mr Srisook Chandragsu.
Weak equity markets are being blamed for the delay, but the Cabinet reshuffle and reorganization no doubt played a role as well. Until AOT's IPO is completed it will be difficult for Minister Suriya to tackle the much more controversial IPO at the Port Authority of Thailand (PAT) where opposition from its employees remains as fierce as ever. Likewise, the on-again, off-again share placement by Thai Airways will require careful attention if it is to proceed next year.
On balance, it would be fair to say that the new Thaksin Cabinet line-up and structure should be positive for the government's privatization policy - particularly in the telecommunications sector. However, progress on privatization of TOT and CAT can only take place if a solution on concession conversion can be found. Here, political skill and maneuverability will be paramount given the significant vested interests that are involved on both sides.
Danial Nielsen is an analyst for the Brooker Group. For more information about the Brooker Group please click here.
