Thai Police Bust Multi-Million Baht Sex Toy Smuggling Ring

[webfact]

Govt firm on subsidies

By The Nation

Published on March 8, 2011

Insists it will maintain diesel price till end of April and expand rice price scheme; salaries of civil servants, MPs raised

In pre-election mode, the government yesterday insisted it would subsidise the price of diesel fuel until the end of April, while expanding its multibillion-baht guarantee scheme for rice prices.

The diesel subsidy is likely to cost another Bt18 billion from the start of this month till April 30, while the rice-price scheme will cost an estimated Bt60 billion for the year.

Earlier, Prime Minister Abhisit Vejjajiva, who is expected to call a general election by the

end of June, also raised the salaries of civil servants and MPs, costing another Bt13 billion per year.

Another major spending item is free electricity for households using 90 units or less per month, a measure that costs more than Bt10 billion per year.

While it has been used by previous governments, the free-electricity scheme has been made permanent by the Abhisit administration, which said it would design a cross-subsidy mechanism to charge more from people who were heavier users.

Energy Minister Wannarat Charnnukul said after meeting Abhisit and Finance Minister Korn Chatikavanij yesterday that the Oil Fund still had a net cash flow of Bt21 billion, so the diesel price subsidy would continue until the end of April.

However, it is understood that the Oil Fund still owes PTT Bt7.5 billion for NGV (natural gas for vehicles) subsidies and has a liability towards the end of June of another Bt7 billion from LPG (liquefied petroleum gas) subsidies.

Hence, less than Bt7 billion is currently left for the ongoing diesel subsidy. Earlier, it was suggested that the government might have to borrow up to Bt16 billion to cover the subsidy until end of next month.

According to Korn, the Oil Fund has a cash flow of Bt35 billion, including Bt14 billion allocated for NGV, LPG and other subsidies. This would leave Bt20 billion to subsidise diesel.

The finance minister has refused to cut the excise rate on diesel, which is currently about 18 per cent on the oil price.

On the rice-price guarantee scheme, Vatchari Vimooktayon, director-general of the Internal Trade Department, said the National Rice Policy Committee had agreed to boost the budget for the second crop (2010-11) from Bt19 billion to Bt30 billion.

This will allow the government to cover a higher guaranteed quota of rice, as well as higher prices. For paddy, the guarantee price will rise from Bt10,000 to Bt11,000 per tonne, while the guarantee for Pathum Thani fragrant rice will rise from Bt10,000 to Bt11,500. For glutinous rice it will rise from Bt9,500 to Bt10,000 a tonne. The quota per farming family was also raised, from 25 tonnes to 30 tonnes.

When the expenses for guaranteeing the major rice crop are included, the budget will double to Bt60 billion for a total of 9 million tonnes.

Farmers had asked the government earlier to boost the average guarantee price to Bt14,000 per tonne, but this was considered too high.

Meanwhile, Songtham Pinto, a senior official at the Bank of Thailand, said that if the world crude-oil price stayed at a high level for an extended period, government subsidies would be bad for the economy.

"If it's on the up-trend, the government's measure [for diesel] will not help much because it's not sustainable. It's better to follow the market mechanism, so people can adjust by using less energy or turning to alternative fuels or boosting machinery efficiency," he said.

-- The Nation 2011-03-08

[tragickingdom]

Not only are fuel subsidies a bad idea when it puts the bill with the poor motorcycle drivers and small car drivers, while subsidizing lazy fat cats who refused to modernize their fleets, it prevents businesses from doing research. The Abhisit government is far worse than the Thaksin governments when it comes down to populism, the big difference is that it acknowledges the aristocrats in Thailand, which will eventually lead to Nepalese/, Egyptian outbursts of violence. No matter how much you subsidize certain groups if you are seen as a human rights abuser you will not satisfy your people. The EU and the US should on top of that look very carefully to industries benefitting from the subsidies and tax their imports so competition will not be distorted.