Pheu Thai's Risky One-Upmanship

[webfact]

ANALYSIS

Pheu Thai's risky one-upmanship

By Wichit Chaitrong

The Nation

Economists fear extravagant promises are a recipe for disaster, hope they won't be implemented

Pheu Thai Party's policy platform has been likened to a casino, where the owners make very high profits at the expense of the gamblers.

They use strong marketing tools to lure misinformed people into playing harmful games.

Other parties' platforms are similar, but they are mini-casinos compared with Pheu Thai.

Economists, the business community and sensible voters have all voiced concerns. Many have predicted that Pheu Thai's populist policies, such as large amounts of "free cash" and easy loans, will move the country towards a public debt crisis like countries in Europe are now facing. Inflation may also get out of hand.

Former prime minister Thaksin Shinawatra and top adviser Olarn Chaipravat are believed to be the key designers of a game aimed only at winning, with no room for losing to their arch-rivals, the Democrats.

Whatever the Democrats propose, Pheu Thai has to top. For example, the Democrats have proposed increasing minimum wages by 25 per cent in two years. So Pheu Thai has offered Bt300 per day. Fierce competition between the two largest parties has encouraged a small party, Chart Pattana Puea Pandin, to offer a Bt350 minimum wage.

Pheu Thai has also tried to trump other Democrat offers: housing loans, price subsidies, debt refinancing and assistance to farmers. But the wage hike is the most controversial policy, as business groups are worried about rising production costs and productivity not catching up.

Korn Chatikavanij, deputy leader of the Democrat Party, defended his proposals by arguing that tax allowances would be applied to those agreeing to increase wages.

Olarn argues that the rises are part of a package to improve productivity. "It's well thought out and quantified," he promised. He is promoting an economic growth model driven by the grassroots. Thaksin and other members of the party have also claimed mega-projects would generate fast income - so don't worry about debt.

Are their words convincing?

Olarn may have miscalculated this time, just as he did when he nearly bankrupted Siam Commercial Bank (SCB) in the 1997 financial crisis.

Before the crisis, he was president of SCB, which loaned aggressively, creating a bubble in property and other sectors. Olarn was also chairman of the Thai Bankers Association, which fully supported the central bank defending the baht at all costs.

The result was the currency collapsed and the International Monetary Fund had to bail out Thailand. The Finance Ministry and Financial Institutions Development Fund, an arm of the central bank, had to bail out SCB and many other financial institutions.

Of course, other people also made serious mistakes at the time. But while others have learned the lesson, Olarn apparently has not.

Thaksin's motivation for large-scale populist policies may be to "un-do" the actions of the military after the 2006 coup that culminated in the confiscation of a large chunk of his personal assets early last year because of corrupt actions while he was PM.

His preference for risk taking in business is reflected in the party's platform. Former communists and leftists in Pheu Thai are also helping to fuel a spree of cash handouts promised to farmers and workers.

But reality is sobering. An artificially high rice price could mean Thailand losing out in export markets to Vietnam. Hiking wages too much could backfire if small and medium-sized firms cannot afford to employ workers. Large firms could choose to employ more machines or move production plants to other countries.

Spending beyond our means brings a higher debt burden for ourselves and future generations.

More spending is not bad, if more income is earned. But the Pheu Thai Party does not have a credible plan to generate income. Nor does it have a plan to deal with budget deficits and public debt now at 42 per cent of gross domestic product. Nor is there a plan for tax reform that targets the wealth of the rich - probably because politicians are rich, so they do not tax themselves.

Meanwhile, the Democrats plan to balance the budget in four years and introduce a property tax.

Yet spending on mega-projects can take time to materialise, due to the complexity of projects and negotiations for economic "rent" - corruption - among politicians. It might not cause rises in debt for a few years.

Sensible voters only have to hope that should Pheu Thai form a new government, they don't carry out their promises.

-- The Nation 2011-06-20

[whybother]

Economists fear extravagant promises are a recipe for disaster, hope they won't be implemented

Will this be an excuse by the PTP not to implement their policies if they get into government?

The problem is that they will have no choice. If they don't continue with their hand outs, they won't be able to keep their supporters on side.

They will also have a lot more trouble than during the Thaksin years, with the global economy currently being shot compared to the boom before.

[timekeeper]

'''Sensible voters only have to hope that should Pheu Thai form a new government, they don't carry out their promises.''''

i don't think sensible voters wil have anything to worry about in this respect...........

[Ricardo]

"Take what you want, said God, take it but PAY for it !", old (Greek I think ?) proverb.

[virtualtraveller]

Unfortunately we have an electorate who are mostly too dim to understand this, no insult to them, but economics is headache stuff and no matter how much your best and brightest warn about populist policies bankrupting the country, a simple farmer only understands that 300 baht a day minimum wage is better than 250 baht, even if he doesn't realise that half the workforce would be fired and the other half put to greater work to justify their increase.

Perhaps the route to go is let the parties outdo each other with populist policies that land us in the same position as Greece, then the people can re-evaluate their trust. But, half the populist policies that secure votes never see the light of day since the parties know they can't sell them to the business community, of course that's all forgotten come next election.

We are entering a populist era that could well lead to the next financial crash, and who will take the heat for it?

[sbk]

Notification to all political posters:

Defamatory posts will not be tolerated

Abusive posts will not be tolerated

Inflammatory posts will not be tolerated

This nonsense will cease in these threads. Members will find their posting rights suspended until after if they cannot maintain civility and follow forum rules and this will be done without any prior notification other than the warn. This IS your notification.

TONE IT DOWN NOW

[OzMick]

Watch PTP step on their dick wearing golf shoes! The B20,000/t figure seems to have stuck, so the rice subsidy will now be ~B200 billion, and it is likely the majority of that will not reach farmers. The only way to pay for it is to cut back on govt services; where-ever you do it, people won't be happy!

The alternative, tell 15 million odd voters (correction, that's workers, who have voting families) that it was all a mistake, that stupid woman's fault. Even if you dump her, not many PTP pollies will be going to Isaan for their holidays, likely to be lynched. And they better hope the boys don't decide to come to town again - after all, you taught them how to do it.

Som nom na.

[OzMick]

"Take what you want, said God, take it but PAY for it !", old (Greek I think ?) proverb.

The Greeks don't seem to know of it.

[lannarebirth]

Watch PTP step on their dick wearing golf shoes! The B20,000/t figure seems to have stuck, so the rice subsidy will now be ~B200 billion, and it is likely the majority of that will not reach farmers. The only way to pay for it is to cut back on govt services; where-ever you do it, people won't be happy!

The alternative, tell 15 million odd voters (correction, that's workers, who have voting families) that it was all a mistake, that stupid woman's fault. Even if you dump her, not many PTP pollies will be going to Isaan for their holidays, likely to be lynched. And they better hope the boys don't decide to come to town again - after all, you taught them how to do it.

Som nom na.

Is that ฿20,000/mt for milled rice or paddy rice? What are the current farmgate prices for the rice they refer to?

http://www.thairicee...or.th/price.htm

Edited June 20, 2011 by lannarebirth

[OzMick]

Watch PTP step on their dick wearing golf shoes! The B20,000/t figure seems to have stuck, so the rice subsidy will now be ~B200 billion, and it is likely the majority of that will not reach farmers. The only way to pay for it is to cut back on govt services; where-ever you do it, people won't be happy!

The alternative, tell 15 million odd voters (correction, that's workers, who have voting families) that it was all a mistake, that stupid woman's fault. Even if you dump her, not many PTP pollies will be going to Isaan for their holidays, likely to be lynched. And they better hope the boys don't decide to come to town again - after all, you taught them how to do it.

Som nom na.

Is that ฿20,000/mt for milled rice or paddy rice? What are the current farmgate prices for the rice they refer to?

http://www.thairicee...or.th/price.htm

Figures quoted in OP a couple of days ago was B8000/t market price, B11,000 insured price (Dem), B15,000 PTP promise, upped by Yingluk to B20,000 at a rally (how much do you want? B20,000, OK) No mention of type, quality or stage of processing, but I am assuming farm gate price. A farmer's org was quoted as saying 60% of PTP scheme will go to millers.

[animatic]

It would be economically quite dangerous,

if they ACTUALLY PLANNED TO DO IT.

The Dems promises are reasonable and potentially do-able. at least showing SAOME thought to implementation, the PTP are just saying whatever makes them look more the friend of the poor. No consideration that their policies could easily make the poor MUCH poorer in the foreseeable future, like during the PTP term in office. Utterly irresponsable talk.

It may be a good thing if they win, because then, eventually through their pain, the people will really FINALLY see PTP and Team Thaksin for the inept charlatans they seem to be to most thinking people. They only saw them milking the system during high times, never seen them during a world wide low. Then maybe they can be proved clueless and incompetent.

Edited June 20, 2011 by animatic

[happyjune]

"Meanwhile, the Democrats plan to balance the budget in four years and introduce a property tax." quote from article.

I am not criticizing the property tax proposed that was mentioned in the article, but does anyone have any information on it please?

Edited June 20, 2011 by happyjune

[MunterHunter]

I think, regardless of the Result on July 3rd, there is a lot more trouble ahead for Thailand...

[lannarebirth]

Watch PTP step on their dick wearing golf shoes! The B20,000/t figure seems to have stuck, so the rice subsidy will now be ~B200 billion, and it is likely the majority of that will not reach farmers. The only way to pay for it is to cut back on govt services; where-ever you do it, people won't be happy!

The alternative, tell 15 million odd voters (correction, that's workers, who have voting families) that it was all a mistake, that stupid woman's fault. Even if you dump her, not many PTP pollies will be going to Isaan for their holidays, likely to be lynched. And they better hope the boys don't decide to come to town again - after all, you taught them how to do it.

Som nom na.

Is that ฿20,000/mt for milled rice or paddy rice? What are the current farmgate prices for the rice they refer to?

http://www.thairicee...or.th/price.htm

Figures quoted in OP a couple of days ago was B8000/t market price, B11,000 insured price (Dem), B15,000 PTP promise, upped by Yingluk to B20,000 at a rally (how much do you want? B20,000, OK) No mention of type, quality or stage of processing, but I am assuming farm gate price. A farmer's org was quoted as saying 60% of PTP scheme will go to millers.

The millers are the feudalists. They absolutely love TRT/PTP. Their kids go to good schools, open companies to exploit locals, offer loans at 2%-10% interest per month. Go around asking everyone "Do You Know Who My Father Is"? The Chinese killed all those folks like that that hadn't fled already, and they were right to.

[whybother]

"Meanwhile, the Democrats plan to balance the budget in four years and introduce a property tax." quote from article.

I am not criticizing the property tax proposed that was mentioned in the article, but does anyone have any information on it please?

Here's a good article about it - http://thailand-business-news.com/real-estate/20044-thailand-condo-thailand-remains-commited-to-new-property-tax

[whybother]

There is going to be a fair amount of rice illegally imported from neighboring countries with them being able to get 20,000 baht a tonne. (Is it per tonne?)

[lungmi]

"The millers are the feudalists"

The other way works in my poor rural area. (Dem stronghold all the time)

We have a agricole cooperative with a rice mill included.

High profile manager (Studies in Denmark for cooperative systems).

School for the member-farmers (bio-farming, 15% less for fertilizers, 15% more for quantity and quality).

Savings Bank for the members with a little bit more interest for deposit, less interest for loans in comparision to normal banks.

System of micro-credit is on the road.

http://en.wikipedia.org/wiki/Microcredit

A retailer (PTP adapted in the hometown of my wife, 80 km away) no more goes to buy his rice in his PTP dominated province. "No stable price, no stable quality". He comes with his mini-truck to buy here. "Sure middle price, sure middle quality".

[lannarebirth]

"The millers are the feudalists"

The other way works in my poor rural area. (Dem stronghold all the time)

We have a agricole cooperative with a rice mill included.

High profile manager (Studies in Denmark for cooperative systems).

School for the member-farmers (bio-farming, 15% less for fertilizers, 15% more for quantity and quality).

Savings Bank for the members with a little bit more interest for deposit, less interest for loans in comparision to normal banks.

System of micro-credit is on the road.

http://en.wikipedia....iki/Microcredit

A retailer (PTP adapted in the hometown of my wife, 80 km away) no more goes to buy his rice in his PTP dominated province. "No stable price, no stable quality". He comes with his mini-truck to buy here. "Sure middle price, sure middle quality".

I am a strong believer in agricultural cooperatives. I am absolutely hate the patron / client relationships that PTP fosters.