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Thai PM elect seeks to dispel inflation fears.

Thailand's prime minister elect, Yingluck Shinawatra, sought on Friday to dispel fears of a crippling inflationary backlash from populist promises made in her election campaign, saying she would weigh up the consequences of big spending.

In an interview with Reuters, the sister of fugitive former premier Thaksin Shinawatra held out no promises for the return of her billionaire brother and said her immediate focus was on stimulating the economy, Southeast Asia's second biggest.

The 44-year-old businesswoman, who will be Thailand's first female prime minister, said she wanted an acceleration in telecommunications reforms along with the privatisation of state assets, both of which she said could help quicken long-term growth and make the Thai economy more efficient.

She also clarified that her government would not influence the direction of the Thai baht, saying the currency should be left entirely to market forces.

A member of her Puea Thai Party who is seen as a candidate for finance minister said this week he favoured steering the baht's exchange rate to make it more competitive, but Yingluck said that was not party policy.

The baht currently floats freely, with the central bank intervening to avoid excessive volatility. It has firmed slightly since the election as foreign money has flowed back into the stock market and political tension has eased.

INFLATION TO RISE "A BIT" When asked about the inflationary impact of her campaign promises, including an average 40% increase in the minimum wage from January, she said: "We would like to see consumption increase and grow GDP ... Inflation may not increase a lot but may increase a bit in the future." She said she was focused on finding ways to cut costs, citing a promised reduction in the corporate tax rate to 23% from 30% in the first year and to 20% the year after.

She saw room to privatise state companies to make Thailand more competitive but declined to identify which might be affected. The government has big stakes in Thai Airways International and second-largest lender Krung Thai Bank.

The Bank of Thailand had urged parties campaigning in the election to be cautious in pursuing their populist promises. Private economists warned Thailand could face a wage-price spiral if Puea Thai followed through on all campaign pledges.

THAKSIN'S RETURN She said her brother's possible return to Thailand depended on the Truth for Reconciliation Commission, set up to investigate political violence in April and May last year.

"I don't know when he can come back. It is up to the committee," she said. The telecommunications tycoon turned prime minister fled into exile in 2008 shortly before being found guilty of abuse of power charges and sentenced to jail.

Thaksin remains revered by the rural masses at the heart of a red-shirted protest movement that helped bring Yingluck to power.

To the poor, he is seen as a mould-breaking prime minister, the first to pay attention to their needs.

But to the urban middle class and royalist elite who backed former Prime Minister Abhisit Vejjajiva, Thaksin is a terrorist and a crony capitalist who plundered the economy while in power from 2001 until a 2006 military coup and then led a movement that reduced parts of Bangkok to smouldering ruins last year.

During the election campaign, Thaksin said he would like to return in December but he has since been more vague about his plans. If he returns without an amnesty, he would be jailed.

The red shirts want justice for its members killed or maimed when the army moved against them during last year's protests. But analysts say Yingluck must avoid antagonising the army in a country scarred by 18 coups since the 1930s.

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Publication:Financial Mirror (Cyprus)
Geographic Code:9THAI
Date:Jul 8, 2011
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