For the central bank, there will be more checks and balance with a separate chairman from the governor under the new BOT Act. In the private sector, the roles of Boards of Directors in providing oversights and setting guidelines for business decisions, and having in place the proper risk management systems are essential to deal with market excesses. The ultimate aim is to enable the economy to adjust flexibly in keeping with changes in the financial environment. To facilitate this, key policies and regulations should focus on promoting market efficiency, as well as reducing distortions and unproductive risk-taking behaviours in the economy. Ladies and Gentlemen, The risks on growth and inflation make 2008 a very challenging year but we will be able to weather it because there is room for the right policy mix and we can capitalize on the economy’s resiliency. But we cannot be complacent about the medium-term challenges of improving and maintaining our competitiveness. Fortunately, the government has already committed to a number of important investment projects to address infrastructure deficiencies. Its investment plans for 2008-2012 focus on the entire spectrum of infrastructure, including the modernization of public transportation, housing and water resource management, as well as health and education spending. BIS Review 63/2008  3  Let me share my thought, in particular, on Thailand’s education system which has immense implications on labor productivity and labour market efficiency, hence competitiveness.
Up to now, monetary policy has remained accommodative to foster the growth momentum but the Monetary Policy Committee will be monitoring inflation developments closely, especially the second round effect of energy prices feeding through to core inflation. The aim is to prevent higher inflation from dampening the anticipated recovery of consumption and derailing the pick-up in investment. Indeed, the MPC has been holding the policy rate, in light of the fact that the growth recovery has remained on track and supported by fiscal policy, while closely following inflation developments. As the MPC meets next Wednesday 21 May, we will assess the latest data available and indicators on both growth and stability to decide on the appropriate stance of forward-looking monetary policy. Ladies and Gentlemen, Undoubtedly, the risks to global growth and inflation will not make macroeconomic management an easy task in the immediate term. But, I can reassure you that Thailand’s economy will maintain its resilience against potentially adverse developments, judging from the following four dimensions. First, policymakers today have sufficient room for maneuvering a flexible policy mix as a result of continued adherence to policy discipline. Our fiscal policy is not constrained by concern on public debt sustainability while monetary and exchange rate policies have room to safeguard economic stability and smooth out short-term fluctuations. Indeed, under the new Bank of Thailand Act, the Monetary Policy Committee will be charged with legal responsibility in the realm of both monetary policy target and exchange rate policy and management.