Chalongbhop, a 56-year-old former World Bank economist, was expected to be appointed finance minister yesterday. He had said earlier he thought the controls were too severe. Chalongbhop believed the measure would worsen development of not only the Thai bond market but also the Asian bond market.

Tarisa said it was natural that there were some people who supported the measure and some who opposed it. The BOT insisted the measure was introduced for the sake of exporters and the agricultural sector as they would have been severely hurt by the rapid appreciation of the baht.

The BOT imposed a 30-per-cent one-year withholding tax on capital inflows in mid-December in a bid to halt the rise of the baht, which hit a nine-year high against the US dollar last year.

Nonetheless, Tarisa said she welcomed Chalongbhop's appointment because of his credentials as a top economist.

Deputy Prime Minister Kosit Panpiemras yesterday said  if Chalongbhop, president of the Thailand Development Research Institute, were appointed as the new finance minister replacing MR Pridiyathorn Devakula, he himself would oversee the overall economic scenario. Kosit would, however, consult Chalongbhop on economic issues.

"From now on, I will prioritise economic issues for the government in the remaining seven months," he said.

The prospect received a lukewarm response from markets, which, dealers said, remained under pressure after a week of heavy losses on exchanges around the globe.

The markets were unsure if Chalongbhop could turn things around and improve sagging consumer and investor confidence.

The Stock Exchange of Thailand's main index yesterday closed at 674.24 points, down 0.7 per cent.

The baht yesterday was stronger by 0.34 per cent from last Friday and opened at Bt35.27 against the US dollar.

BOT Assistant Governor Nitaya Pibulratanagit, said the strong baht was partly caused by the appreciation of the yen and also the country's current account surplus.

"But the baht continues to be in line with regional currencies, which help to maintain competitiveness," she said.

Santi Vilassakdanont, chairman of the Federation of Thai Industries, said Chalongbhop was largely unknown to the private sector as he is more of an academic.

"But we have to wait to see his performance in one or two months to see whether he can restore investor confidence, especially that of foreigners," he said.

He added the new finance minister should also consult the BOT on economic measures to avoid baht volatility. Santi nonetheless urged the incoming minister to act quickly because this government has less than a year in office.

Santi also noted that the commerce, industry and banking joint committee will ask the new minister to extend company debt restructuring to 10 years as some companies hit by the 1997 financial crisis have yet to complete the process.

Revenue Department director-general Panit Rangnoi said he would ask the incoming minister to maintain value-added tax at 7 per cent, which was due to be raised to 10 per cent in June, as the higher rate will affect domestic consumption.

Board of Trade chairman Pramon Sutheewong said Chalongbhop is a welcome choice because he is a knowledgeable economist.

Nonetheless, he urged the incoming minister to act quickly to continue ongoing policies especially the amendment of some business-related laws.

 He also urged the incoming minister to be cautious regarding the baht, if capital controls are to be lifted.

"The new minister should ensure that the baht does not swing sharply. I feel the current rate to be about right," he said.

Sommai Phasee, acting finance minister, said that he would be happy to work with Chalongbhop.

"I have known him for a long time," he said. However, Sommai said he was not certain if there would be some revision of policy in the future.