Prime Minister Surayud Chulanont yesterday vowed to act tough against remnants of the previous government once and for all while promising to create a level playing field in the foreign business law and tighten rules to tackle government corruption and also reform the police force.

Surayud sought to reassure some 700 members of the Joint Foreign Chambers of Commerce and the international business community that his interim government was capable of overseeing political and economic stability during its brief term.

"I am confident that this current transition will also be accomplished successfully, although no one should underestimate the great challenges we face," he said.

"Deeply entrenched vested interests will struggle to defend their special access to power and money while this interim government is committed to eradicat-

ing their influence once and for all. No one should underestimate our resolve in this matter either."

Surayud's speech was closely monitored by foreign investors and businessmen following a series of mishaps that have eroded the credibility of his government. The Bank of Thailand's capital controls, the Bangkok bombings on New Year's Eve and the Cabinet's approval of revisions to the Foreign Business Act have spooked offshore investors, who feel uneasy about the future direction of the country.

Surayud said Thailand will emerge as a stronger society after the watershed event - the September 19 coup - which will be similar to the aftermath of the October 1973 and 1991-1992 incidents when Thailand laid a stronger foundation for democracy.

He went on to convince the global community that in spite of the Bangkok bombings, the timeline for the return to democracy will be kept. The government will be installing a comprehensive surveillance system to protect public safety.

The government will continue to work relentlessly to achieve reconciliation in the deep South. The newly restored Southern Border Provinces Administrative Centre will be given the resources it needs to pursue its coordination work.

"It will be difficult to eliminate violence altogether, but over the next few months the space for extremism will be reduced. Development activities will be strengthened, including cooperation with neighbouring countries in the Indonesia-Malaysia-Thailand Growth Triangle, so as to expand opportunities for people living in the area," he said.

He promised to strengthen the rule of law by eradicating government corruption and improving the justice system. High on the agenda is a revamp of the police force, which is on the front line in administering and enforcing the justice system.

"Again, difficult choices are involved, but it is my determination to press forward with this reform within the term of this government," he said.

The government will continue to embrace an open-door policy for foreign investment as a catalyst of economic growth and prosperity.

This year the government will give priority to infrastructure investment as well as legal reform to improve productivity.

He barely touched on the sensitive issue of capital controls, but gave his assurances that despite upward pressure on the baht, the government will implement an expansionary fiscal policy to achieve growth of 4-5 per cent.

The proposed changes to the foreign business law have reportedly caused panic in boardrooms but he moved to accentuate the positive aspects.

"Let me stress that the proposals will not affect existing foreign companies in manufacturing industries, export businesses, BOI-promoted industries or those businesses not listed under the Act. We merely seek to put an end to the previous precarious position many investors had been put into as a result of the investigation into complaints about Foreign Business Act violations. This determined, above all, the timing of the revision.

"We know businesses welcome predictability. We know businesses like to see fairness and transparency, without selectivity. The measure is aimed to achieve these objectives by creating a level playing field. The amended Act is expected to strengthen our capacity to oversee, address previous loopholes, while avoiding the creation of unnecessary obstacles to foreign direct investment.

"Indeed, where impediments are found, we will be looking to see how we can inject additional elements of liberalisation into the measure, just as increasing flexibility is being shown over the question of capital reserve requirements."

The draft amendment of the foreign business law would still need to go through various processes before the National Legislative Assembly votes on it.

Surayud also emphasised that amending the foreign business law does not mean that Thailand was turning its back on liberalisation as it merely represents legal and technical adjustments rather than any fundamental change in the overall economic strategy.

"As I have repeatedly stressed, the Royal Thai Government will uphold its international obligations. What we do will therefore be WTO-compliant and will be consistent with our international undertakings," he said.

"I would urge that all stakeholders take time before coming to any firm conclusion about proposed adjustments. You can be assured that we are looking at the long term. We will not, by design or by default, kill the goose that lays the golden egg."

Surayud also mentioned the principle of sufficiency economy, calling it a pillar of development policy. Thailand will stay focused on stable growth, sound macroeconomic discipline and the equitable sharing of economic benefits as it competes in the globalised world.

PM Surayud's Full Speech