Second phase in government service (1959-1976) 

Director General of Bureau of the Budget


In 1959, the Bureau of the Budget has been established under the jurisdiction of the Office of the Prime Minister, branching off the budget work from the Comptroller-General’s Department. Dr. Puey, the Economic and Public Finance Counsellor at the Royal Thai Embassy in London, was appointed its first director on 14 February 1959. His first assignment was to remake the law governing budget procedure by repealing all existing budget laws and promulgating the Budget Procedure Act, 1959, in order for the Act to become the law for preparation and administration of Thailand’s budget in accordance with international standards. Moreover, he has also improved important treasury rules and procedures as follows:

1. The budget procedure has combined the ordinary and extraordinary budget expenditures, to be called the fixed expense statement and branching off the investment expenditure, to be called the investment expenditure statement, analyzing the expenditure categories such as economy, education, public health, defense, etc., in order to have a clear picture on the allocation of budget as to which directions to benefit the country.

2. In the past, the requisition of the budget was a very slow process and causing private companies to sell the goods and services to the government at higher-than-normal prices. Dr. Puey has improved the rules on requisition of money by imitating the British system by decentralizing the authority to various ministries. In this regard, each ministry shall appoint its own civil servants to verify the requisition instead of the Comptroller-General’s Department. At its own satisfaction, each ministry may make the payment by producing the vouchers to be signed by the permanent secretary and its treasury officers. These vouchers may be cashed or deposited by the private sectors receiving them at any banks without having to submit the requests for payment at any agencies again and thus facilitating the requisition process.

3. As to the revenue of the state, Dr. Puey proposed the government to collect more direct taxes in other categories. For the government to rely solely on indirect revenue, particularly the customs tax and duty, should the economic conditions of our trading partners become deteriorate, our revenue shall also be lower. He proposed the simplification of taxation system, correction for the tax rules to be concise, lowering taxes at high rate in order to discourage tax avoidance, improving the discipline and practice of tax and duty officers at the same time and for the state enterprises, there should also be the outlook of investment and profit/loss account of all state enterprises within the annual government 

Dr. Puey resigned from this position on 30 September 1961 after the successful implementation of the system.

Later on in 1959, during his trip to attend the International Tin Council meeting in London, there was an occurrence of event affecting the position of Minister of Finance who was also in the position of Governor of the Bank of Thailand. In this respect, Dr. Puey wrote in his memoir as follows:

“When Khun Joti Khunakasem had to leave the positions of Minister of Finance, I was still in the midst of I.T.C. meeting in London. Field Marshal Sarit Thanarat sent me a telegram asking me to assume the position of Minister of Finance instead. At that time, he was very powerful and capable of deciding the matter of life-and-death. I was not certain what would happen if I were to refuse him but I had to refuse him anyhow. I replied him by telegram that I could not accept this position because I had made a vow upon joining the Free Thai Movement that I shall not accept any political position until my retirement from the government service (in order to be certain that I had joined the Free Thai Movement not for my own personal interest). The field marshal sent me another telegram pressing me to accept the position. He said that ‘the country is now in critical situation, only you can help me…’ and again I replied him by telegram that I was willing to help the country in every way but not as a minister. His Excellency certainly would not want his minister to go back on the vow. He stopped asking me and appointed someone else instead. Upon my return from the I.T.C. meeting, the field marshal appointed me as Governor of the Bank of Thailand.”

Governor of the Bank of Thailand (1959-1971)

On 11 June 1959, Dr. Puey assumed the position as the seventh governor of the Bank of Thailand for a period of 12 years, the longest tenure in the history of the central bank. He resigned from the position on 15 August 1971. His tenure as the Governor was considered as the time during which the Bank of Thailand was completely free from any political influence, whereas people with political power and bankers were all considerate and cautious of him owing to their confidences in his capability and integrity and it was the time when strong confidence in Baht currency loomed domestically as well as overseas. Its value was at the level of 20-21 bahts per U.S. dollar throughout the 12-year period during his tenure.

Dr. Puey played the vital role in preserving the economic stability by implementing prudent monetary policy consistent with the fiscal policy in looking after the national economy. At one time, he assumed both the positions of Governor of the Bank of Thailand and Director General of the Fiscal Policy Office, whereas he was able to use both the monetary policy and fiscal policy as the tools to create and preserve stability in economic system. He used the theory he himself called the “Theory of Balloon with Three Pistons”, whereas it is deemed that, in any economic system, there are three factors causing the changing of financial economy, namely:

1. Fiscal pump: Input/output as income/expenditure;

2. International finance pump: Inward payment/outward payment from trading/transfer for other purpose;

3. Domestic finance pump:  The Bank of Thailand has a direct control in pumping money supply into and out of the economy while the credit expansion of the banking sector will result in more money input into the system.  As a consequence, the balloon will become bigger, thus, an inflation and may fly away.

All the three pumps, namely, the Fiscal, international finance, and domestic finance, must be put into effect through appropriate fiscal measures and monetary measures in order to have suitable money supply for the then economic condition to avoid inflation or deflation.  Should domestic factors or external factors at any time cause an instability, measures under the pumps must be properly applied to bring the situation back to stable condition

Moreover, Dr. Puey had initiated the development of bond market and treasury bill market together with stipulating the guideline for implementing the monetary policy measure in looking after the money supply to be consistent with the economic condition as well as prescribing the Thai baht parity to facilitate the international balance of payments and to have sufficient international reserve. He introduced the implementation of monetary policy measure in the same manner as practiced in developed countries and thus bringing up performance standards of the Thai central bank to be on par with those of international standards.

As for the supervision of financial institution system, he deemed that financial institutions should be the intermediary to assist in the realization of efficient saving and investment and also to help reduce the dependence on foreign investment. In order for the economy system to grow with stability, the monetary system must also be strongly developed at the same time.

It is thus necessary to reinforce the strength of the commercial bank system, particularly Thai-owned banks, starting from amendment of the law governing commercial banks until the promulgation of the Commercial Bank Act, 1962, granting the Bank of Thailand the authority to supervise and control the operations of commercial banks under international standard. It was considered an important framework of modern commercial banking system in reinforcing the foundation of Thai banking system to be more secure.

To prevent foreign commercial bank expansion from dominating Thai economy, the Commercial Bank Act, 1962, provided that only Thai commercial banks were able to expand their branches in Thailand. It laid the groundwork for Thai commercial banks to grow rapidly and commanded the market share covering Thai economy more than that of foreign commercial banks.

As the governor, Dr. Puey seriously took care of the stability of Thai commercial banks. When Thai Development Bank (or Thai Pattana Bank) rapidly expanded such that its financial situation became weak to the point of near bankruptcy, he took the lead in asking other Thai commercial banks to join in increasing its capital and looking after the operations of this bank until its recovery back to normal.

Dr. Puey was the governor who took care of all aspects of administration. For the workplace, he made arrangement such that Bangkhunprom Palace came under ownership of the Bank of Thailand and has been used as its workplace to this day. In connection with the employees, he improved the rules and regulations on personnel as well as salary and welfare structure. Moreover, he has also established the Thai banknote printing office for printing banknotes on our own, whereas the printing office was opened in 1969.

One major contribution that he did for the Bank of Thailand was to prepare qualified workforce. He initiated the scholarship program for high school graduates to study abroad in the fields required by the Bank of Thailand in various countries to obtain diversity of knowledge for the benefit of Thailand. Later on, more scholarships were also granted to students at undergraduate level, both in Thailand and abroad, to further their studies at master’s degree and Ph.D. levels.

These students came back to work at the Bank of Thailand and progressed in their line of duties as key members of the central bank continuously up to today. Four of these former students had already attained the governorship positions of the Bank of Thailand and there are still many more persons capable of continuously serving Thailand in this field.

Director General of the Fiscal Policy Office


Prior to the establishment the Fiscal Policy Office, there were already the Fiscal Economy Division and the Statistics Division within the Office of Permanent Secretary of the Ministry of Finance, acting in the capacity of technical arm for the ministry. Later on in 1959, a reorganisation of government agencies has been properly made, whereas in October 1961 the Act of Reorganisation of Agencies in Ministry of Finance has provided the establishment of the Fiscal Policy Office under the jurisdiction of Ministry of Finance, acting as if in the capacity of chief of staff of Minister of Finance in studying various trends and important matters of treasury for providing advices and technical assistance, including recommendation of national fiscal policy to the minister.

Yet the establishment of this agency has not been made until 1 October 1962 when Dr. Puey has been appointed the first director of the Fiscal Policy Office together with transferring 23 civil servants from the Fiscal Economy Division and the Statistics Division in the Office of Permanent Secretary of the Ministry of Finance to carry out the tasks in this new agency. Under his leadership, the Office of Fiscal Policy was the pool of prominent economists later to be well known of their performances, for example:

Mr. Chanchai Leethavorn (Minister of Finance, 1979-1980)

Mr. Nukul Prachuabmoh (Governor of the Bank of Thailand, 1979-1984 and Minister of Transport, 1991-1992)

Mr. Pundit Bunyapana (Permanent Secretary of Finance, 1992-1993)

Mr. Aran Dharmano (Permanent Secretary of Finance, 1993-1995)

Mr. Chamlong Tohtong (President of Bank for Agriculture and Cooperatives, 1976-1989)

Mr. Kraisee Jatikavanij, Mr. Manus Leevirabhand, and Mr. Suntorn Sathirathai (Civil servants at director-general level of Ministry of Finance)

Thereafter, a new generation of foreign-educated technocrats climbed on the bandwagon. One of them was M.R. Chatumongol Sonakul, who became the Permanent Secretary of Finance, 1995-1997, and Governor of the Bank of Thailand, 1998-2001.

Dr. Serm Vinijchaikul, formerly Permanent Secretary of Finance, commented that, 

“Only Khun Puey could hold the group of these young people intact.”

It goes without saying that Dr. Puey was the one who laid down the foundation for operations of the Fiscal Policy Office in every aspect of creating the Fiscal discipline for looking after the government expenditure discipline such that it was kept within appropriate extent and also for controlling the creation of public sector debts by limiting the borrowing of the government in each year not to exceed 20% of the expenditure budget. This principle became an effective measure in preventing successive elected governments from creating debts in excess of the limit. Moreover, he also laid down the guideline for recommendation of fiscal policy appropriate to the national economy situation, which has been continuously kept in practice to this day.

Ramon Magsaysay Award

th numerous performances made during 1949-1965, Dr. Puey has been endowed with the Ramon Magsaysay Award for government service in recognition of his achievement as follows:

Puey Ungphakorn
1965 Ramon Magsaysay Award
Government Service
in recognition of dedication, unquestioned inlegrity
and a high order of professional skill brought to
the management of Thailand’s public finance.
Manila on 31 August 1965

An excerpt from the announcement in his honor during the Magsaysay Award ceremony stated that:

“Dr. Puey’s career confirms that a single individual can make significant contributions to the progress of his country, despite a tendency toward official corruption evident in many developing lands. Thailand’s relative prosperity and steady growth matched by stable finances are a measure of his accomplishment.”


Dean of Faculty of Economics,

Thammasat University (1964-1972)

H.S.H. Prince Naradhip Bongsprabandha, the Rector of Thammasat University at that time wrote in his memoir as follows:

“I have tried to seek for a person to become the dean of Faculty of Economics and deemed that Dr. Puey Ungphakorn is the most suitable person. However, I am not sure whether or not he would agree to accept the position owing to his numerous duties in the government service, all of them were important duties. I thought that I would have to request him at least three times to explain the importance of the dean position in my opinion before he would accept the position but, to my surprise, he agreed to it at my first request. He has shown himself to be an educator seeing the importance of education and being interested in education…”

Throughout the eight-year period of his tenure as the dean, Dr. Puey has greatly improved the Faculty of Economics, a leap forward to important developments as follows:

• Increasing full-time faculty members from 6 to 60, seeking grants of scholarship for studying abroad, promoting faculty members to engage in other duties such as research, consulting service to agencies or assisting external social services;

• Improving the undergraduate curriculum in economics to be the first Thai curriculum of high standard and opening the night-class degree program in 1966;

• Opening the English program undergraduate level in 1966 and establishing the English program master’s degree project in 1968 such that Thammasat’s Faculty of Economics has been recognized as one of the best economic faculties in Asia. Later on, the Thai programme master’s degree project has also been improved;

• Establishing the library of Faculty of Economics, opening for service in April 1965, for collection of academic papers on economics, promotion of studies and research by students and faculty members, beginning as a small library until becoming library specialized in economics having the largest collection of economic textbooks and research papers. Eventually, this library has been named “Puey Ungphakorn Library”;

• Regarding the administration of the Faculty of Economics, Dr. Puey expanded the structure of the board of directors to include representatives of faculty members, civil servants, and Alumni Association. He also led the staffs to scrutinize the construction of the new building of the faculty. In educating stdents, besides providing academic knowledge, he also emphasised on ethics and morale. He announced ‘Cheating incurred in any exam results only in absolute dismissal

Rector of Thammasat University (1975-1976)

Few people know that the wish of Dr. Puey was not politics, but the matter of education and rural development. He wanted to raise the academic standard and lead the university for the benefit of the people though its involvement in rural development. He used to
say that 

“Whoever said that I had no ambition in life, in fact my
lifelong goal was to become the rector of Thammasat University.”

He was the first true son of Thammasat to become its rector. Throughout the period of one year, eight months and eight days in this position, a variety of events has occurred to the nation and involving Thammasat University. It may be said that he was the most industrious administrator in the history of Thammasat.

Important foundations as laid down by Dr. Puey are as follows:

• Initiating to expand the university to Rangsit as the second campus by exchanging areas with Bangchan Industrial Estate. This project has been proposed in the fourth  National Economic and Social DevelopmentPlan (1977-1981) as a continuing project for 20 years;

• Initiating to improve the academic structure.  As Thammasat already had provided education in social science for a long time, the next direction was the expansion into science as both academic fields would support each

• The concept of autonomy university was also initiated by him by establishing the task force to study the form and feasibility of separating Thammasat University from the government service;

• Improving fundamental curriculum and prescribing various faculties to overhaul the bachelor degree curriculum and allowing broader base of subjects to be selected by student.

• Revising the method of admission by allowing more students from rural communities.  This was followed by Khunying Nongyao Chaiseri who, as a rector, introduced White Elephant programme to attract talented students from rural communities.;

• Textbook project to enable faculty members in the translation or production of Thai textbooks for teaching in a variety of subjects.

Thammasat and its aim to serve the society was originated from his repeated sayings that the university owed its existence to the taxpayers and subsidies from public. Therefore, the university deemed it to be an important duty to provide academic services to serve the needs of the society, such as:

• Faculty of Law initiated the project of bringing law to rural communities;

• Faculty of Social Administration opened kindergarten and elementary school in Khlong Toei slum area;

• Volunteer Graduate Project;

• Project of Rural Development in Mae Klong River valley, whereas Dr. Puey has invited Kasetsart University and Mahidol University to join in the project;

• Education Reinforcement Project was originated from the idea conceived by Dr. Puey on continuing educationor education for life to broadly educate the public for those who sought for but lacked the opportunity, under the distinct principle of not awarding any degree.

Amidst many severe storms, both from the left and right political activities, following the events of 14 October 1973, the student power has been overtly and falsely praised to the point of capable to do anything in excess of the line of duty. Owing to its convenient location, Thammasat has become the breeding ground for holding political activities of every organization. At the same time, there were also several counter movements against the students being formed, such as the New Power Group, Red Gaur Group, etc. In this regard, Dr. Puey diligently put in his effort to calm the students down and to prevent unfortunate events. On 4 October 1976, the demonstration at Sanam Luang (or Royal Cremation Ground) had moved into Thammasat. In one of the stage plays showing one actor being hanged in protest of the hanging of two political activists up country in neighbouring Province of Bangkok, the picture of the actor was altered by one newspaper to make it looking alike H.R.H. the Crown Prince in order to instigate public outrage against the students. One radio station belonging to the army armored unit broadcasted the news provoking the public to execute the students and the people holed up in Thammasat. Finally, the security and police forces entered the ground to arrest the demonstrators in Thammasat during the night of 5 October 1976 until the dawn of 6 October 1976 and roused the village scouts to lynch the rector of Thammasat University. As a consequence, Dr. Puey deemed that it was no use for him to stay on and thus resigned from his position on 6 October 1976 and left Thailand for his own safety that night to reside in England.

The reporter interviewed Dr. Puey at Don Muang Airport on 6 October 1976 before he left from Thailand.