Thailand Heads For Choppy Waters?

[bambob]

Date: Fri, 08 Jul 2005 08:54:08 +0800

Local: Fri,Jul 8 2005 1:54 am

Subject: EDITORIALS: Thailand Inc in troubled waters

http://nationmultimedia.com/20 05/07/08/opinion/index.php?new s=opinion...

EDITORIALS: Thailand Inc in troubled waters

Published on July 08, 2005

Deficits and continued subsidies reveal govt policies to be myopic and

unrealistic The latest economic analysis and forecast by the Thailand

Development Research Institute (TDRI) make for depressing reading. The

bleak outlook projected by the independent think tank is attributed to

mostly unforeseen negative factors, including high world oil prices, the

killer tsunami, bird-flu outbreaks, violence in the South and a slowdown in

export growth.

The Thai economy, which had been on track to a strong recovery during the

past few years, showed signs of weakness in the first half of this year

when the country ran a current account deficit equivalent to 2.6 per cent

of GDP. In May, Thailand’s trade deficit rose sharply by 106 per cent

mainly due to a 124-per-cent spike in oil imports. Even the usually upbeat

Thaksin administration has revised downward its economic growth

projections.

It cannot be emphasised enough that the twin problems of trade and current

account deficits and the oil subsidy reflect poorly on the government’s

economic policy, which is mostly short-range in nature and rests on the

basis of unrealistic assumptions. None of the government’s wrong-headed

policies is as stark as its retail oil price subsidies introduced by the

Thaksin I administration on January 10, 2004. Although the government

decided to float the retail petrol prices late last year, it has stubbornly

clung on to diesel price-fixing by reducing the subsidy only gradually.

With the continued upswing in the world oil prices, the Oil Fund, which is

used to subsidise retail fuel prices, continues to slide deeper into the

red, currently approaching the Bt100-billion mark. The folly of the fuel

subsidy is now evident for all to see: not even subsidies can prevent the

rising retail diesel price from raising the costs of manufacturers of

consumer goods and transportation operators. Prices of consumer goods and

transportation are set to rise significantly – those that haven’t already –

even as the government is trying its best to delay the effects of the

current oil shocks from directly affecting consumers in a big way. The

rising cost of living is expected to hurt consumers even more amid economic

uncertainties.

The government has made a habit of resorting to market intervention in a

bid to produce short-term results, purportedly to mitigate negative impacts

and presumably lessen the pains of consumers in difficult economic times.

But it has invariably ended up creating long-term financial liabilities

that will take years to correct. In reality, such irresponsible actions

were designed mainly to distract the public from ill-conceived myopic

policies, economic mismanagement and a serious lack of sound stewardship.

Worse, they also tend to lull consumers into a false sense of security and

provide disincentives for them to adapt to new economic realities, which

point to an economic slowdown – if not worse.

Prolonging the necessary adjustments by businesses and individuals through

market intervention will only cause unnecessary pain. Continuing to keep

consumers in the dark about impending economic woes is downright dishonest.

--------------------------------

[cclub75]

A very courageous, clear minded analysis and without compromise !

Perfect.

"mostly short-range in nature" and "unrealistic assumptions", the 2 keywords about the governement's policy.

And of course, because we are in Thailand, you can be sure that none of them will make their mind, change their opinion. Face....

Next week, they will announce a "package" to stimulate the economy on the short term. They will repeat the same mistake.

[Diggerbasher]

It certainly looks as though the shit may hit the fan.

[chaiyapoon]

Thailand is certainly struggling with the high oil prices and its doubtful if they can truely compete with the Chinese export machine.Agricuture is inefficient and poorly paid. At the moment doesn't look good.I don't think there is any quick fix for these issues.

[Nam Kao]

Translation = More expensive for ex-pats to live here / More crime as the economy tanks / Desperate bar girls / New and improved Buffalo stories

Edited July 10, 2005 by Nam Kao

[OldAsiaHand]

Well, not exactly...at least with regard to the first part of your observation. Most ex-pats hold their spare cash in foreign currencies, so the depreciation of the baht makes it cheaper for us to live here in most ways or, at the very least, no more expensive (since local prices like that of petrol are primarily driven by USD pricing anyway). It's mostly the Thais who suffer from the depreciation of the baht, not foreigners.

[bakachan]

its doubtful if they can truely compete with the Chinese export machine.

<{POST_SNAPBACK}>

Nobody can compete with the chinese. globalization is a dirty word in manufacturing

centers outside of china.

The one positive from high fuel costs is fewer cars on the roads

Wish they would outlaw those ###### 2 cycle motors!

[Mogli]

Well, not exactly...at least with regard to the first part of your observation. Most ex-pats hold their spare cash in foreign currencies, so the depreciation of the baht makes it cheaper for us to live here in most ways or, at the very least, no more expensive (since local prices like that of petrol are primarily driven by USD pricing anyway). It's mostly the Thais who suffer from the depreciation of the baht, not foreigners.

<{POST_SNAPBACK}>

[Mogli]

Sorry for the glitch....but what exactly is a two cycle motor?

[Kringle]

2 stroke 2 cycle means they run on a gas oil mix and complete a cycle of the engine in 2 revolutions. The new stuff is all 4 cycle or 4 stroke. no oil in the gasoline or petrol as others would say, cleaner running, less pollution.