Thai Prime Minister Surayud Chulanont's pledge to put people's happiness above economic growth may not be a sign for foreign investors to hit the panic button.

But it's unlikely to draw them in the short term to a country where economic growth has slowed this year, under pressure from high oil prices and a political crisis that has delayed the national budget and billions of dollars in infrastructure projects.

I think foreign investors will be looking at the market very carefully, Marco Sucharitkul of JP Morgan said a day after the retired general was sworn in following the September 19 coup that ousted Prime Minister Thaksin Shinawatra.

I think a lot of people have overblown that, he said of fears that Surayud's comments signalled anti foreigner sentiment. I don't think we're going to go towards economic nationalism at all.

He said investors are watching Surayud's choice of lieutenants to run the economy over the next year while a new constitution is drawn up and fresh elections are planned.

Central bank governor Pridiyathorn Devakula, the market favourite for finance minister, said on Monday he had agreed to join the cabinet, but his post had not been finalised.

Analysts said Pridiyathorn is well respected outside Thailand and his appointment as economic tsar would help calm fears that the interim government may follow a path less friendly to business and foreign investors.

Surayud raised eyebrows on Sunday when he pledged to focus on a self sufficiency economic model espoused by revered King Bhumibol Adulyadej after the 1997 Asian financial crisis.

We won't concentrate so much on the GDP numbers, Surayud said, signalling a change of style from Thaksin who made a habit of forecasting GDP numbers.

We would rather look into the indicators of people's happiness and prosperity, the devout Buddhist said in a move likely to draw comparisons to the Gross National Happiness index espoused in the Himalayan kingdom of Bhutan.

SMILING INVESTORS?

King Bhumibol's back to basics economic model emphasises frugality, avoiding excessive debt and using local products to reduce reliance on international markets.

Whether or not we are a tiger is unimportant. The important thing is for the economy to be able to support our people. We should rely on our own economy, he said in December 1997 in the midst of the country's worst economic crisis in decades.

During the Thaksin era, some analysts say the government's rural largesse including cheap credit for farmers and free village handouts competed with royal development projects and fuelled the tension between the government and palace.

Surayud's comments appeared to be more aimed at national reconciliation, one analyst said. Others also felt they did not herald a wave of protectionist sentiment at a time when Thailand badly needs foreign investment to reverse slowing economic growth.

Until the coup, Thailand was run by a caretaker government which could not make major decisions, including those related to $42 billion (22 billion pounds) in mega projects it hoped would drive long term economic growth.

Some analysts say the projects including rail lines, roads and irrigation schemes could be delayed six months to a year.

Vincent Milton, managing director at Fitch Ratings in Bangkok, expected the new finance minister to continue with a policy open to trade and investment.

There is a broad consensus among policy makers here that they need to attract foreign investment for longer term economic growth. I would be surprised to see that turned back, he said.

But other analysts said Surayud is unlikely to push hard on contentious issues such as free trade talks with the United States and the privatisation of state assets pet projects of the Thaksin government which often drew fierce protests.

Some observers worried that efforts to redraw the constitution to prevent Thaksin's return will lead to an emasculated executive unable to make strong economic decisions.

The main point of the constitutional revision exercise seems to be to reduce the power of the prime minister's office, so that it can never again challenge the Bangkok power elite or the army, said John Stuermer, a fixed income specialist at Bear Stearns in Singapore.

Thailand