New Thai PM to tackle economy

Abhisit Vejjajiva, at 44 one of the world's youngest heads of state, was voted by Parliament to be the country's prime minister on Monday. He is the first leader of a civilian government led by an opponent of exiled Prime Minister Thaksin Shinawatra, who has loomed over Thai politics since he was ousted by a military coup in 2006.

"I will do my best to put the right man in the right job," Abhisit told reporters. "I will choose competent individuals to revive the country."

The U.K.-born prime minister faces the difficult task of unifying a country torn apart by months of violent anti-government protests culminating in a siege of Bangkok's two airports - demonstrations that battered the key tourism industry just as the global economy was slipping into crisis.

The economic slowdown could push Thailand's economy into recession, some economists said. The previous government forecast a contraction of up to 1 percent in the first quarter of 2009 and zero growth in the second quarter.

Democrat Party Secretary-General Suthep Thuagsuban said the economic team is likely to be led by Abhisit who has a strong economics background.

Korn Chatikavanij, deputy leader of the Democrat Party, is tipped to be the new finance minister, Suthep said.

Korn, 44, who was Abhisit's classmate at Oxford and former chairman of Thailand's JPMorgan Chase & Co., said the party's economic platform would be released before the new government formally presents its policy statement to Parliament by year's end.

Thailand's stock exchange has risen about 5 percent since Abhisit was voted in on Monday. Political instability contributed to this year's 48 percent decline in the country's SET index.

The Chairman of the Federation of Thai Industries, Santi Vilassakdanont, said that investor confidence should revive with Abhisit and Korn at the helm.

"(Abhisit's) rivals are unlikely to be able to do much to cause instability right now with many of (Thaksin's) former allies supporting the new government," he said.

Some Cabinet seats are expected to go to lawmakers who used to be trusted allies of Thaksin. A group of former Thaksin supporters, led by Newin Chidchob - once one of the ex-premier's closest allies - switched their allegiance during Monday's vote, giving Abhisit a thin majority in Parliament.

Another of Thaksin's former allies, Boonchong Wongtrairat, said his group recommended that the government retain populist policies - including cheap credit and health care - which characterized Thaksin's administration.

"To heal the political divide, the government needs to prove it cares about the rural areas," he said in a telephone interview. "The rural people are waiting to see if the government will continue to support rural development like Thaksin did."

Abhisit, who was expected to be endorsed later Wednesday by the constitutional monarch, King Bhumibol Adulyadej, is likely to struggle to heal the rift between the middle class that is his base and the rural poor who backed Thaksin.

The Democrats had been in opposition since 2001, when Thaksin, a former telecommunications tycoon, first took power.

Military leaders ousted Thaksin in September 2006, accusing him of corruption, keeping him in exile and controlling the country for an interim period until elections in December 2007 brought Thaksin's allies back into power.

He returned to Thailand in February 2008 to face corruption charges but later fled into exile again, and was convicted in absentia. However, he still enjoys significant support among Thailand's rural masses.

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