Confusion Still Reigns Over Incoming Thai Govt's Economic Policy

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WATCHDOG

Confusion still reigns over incoming govt's economic policy

By Nophakhun Limsamarnphun

Confusion and inconsistencies have reigned over the incoming Pheu Thai-led government's economic policy direction.

So far, what we have heard is not coherent. Nothing will be conclusive until Yingluck Shinawatra, leader of Pheu Thai party, is officially named as the new prime minister in the House of Representatives later this month or early next month.

At this stage, speculation and guesswork abound.

Take the energy policy, for example. Earlier this week, Yingluck, who is forming a five-party coalition government, suggested that the decades-old Oil Fund, a state mechanism used to stabilise domestic oil prices, would be scrapped.

Abolishing the Oil Fund is a big policy change. Over the past few decades, the Oil Fund has been effective in minimising volatility in oil prices.

As a net importer of crude oil, Thailand uses the mechanism to avoid spikes in domestic retail prices when crude oil prices jump in the world market, by imposing levies on key oil products when world prices are in decline.

These funds are then used to subsidise domestic prices when world market prices go up. When world market prices are falling, retail prices are largely kept unchanged, so that there are greater inflows into the Fund for use at a later date.

However, the Oil Fund has run into problems when politicians try to take advantage of the mechanism for political gain.

For example, the outgoing Democrat-led government has spent tens of billions of baht from the Oil Fund to keep diesel prices at Bt30 per litre, when the world market price for this product is much higher.

This has depleted the Fund and cost the government an annual Bt80 billion in subsidies.

Having stated earlier this week that the Oil Fund would be scrapped, incoming premier Yingluck recanted the following day, saying the Fund would remain intact, but some levies would be suspended temporarily so that gasoline and diesel prices would be even cheaper.

The Pheu Thai party also suggested that royalties collected from petroleum concessions amounting to Bt30-40 billion per year would also be used to subsidise the prices of oil and biofuels such as gasohol and biodiesel.

Another confusion concerns the country's exchange rate policy. Suchart Tada-thamrongvej, a former finance minister and currently a candidate for the finance portfolio in the new government, earlier this week suggested there should be a shift in the exchange rate policy, with greater role for the Finance Ministry and a more interventionist, or managed, exchange rate policy, for which he cited China and Singapore as examples.

However, Yingluck said the following day that the new government would continue to let the baht appreciate to curb inflation.

As a result, the exchange rate policy remains unclear.

Yet, some analysts believe that if all or most of the Pheu Thai party's election promises are executed later this year - especially the sharp hike in the minimum wage and the big cut in corporate income tax rates - there will be increased inflationary pressure in the Thai economy.

The new government will also likely face opposition from the private sector as far as the hefty wage hike is concerned.

In addition, the country's benchmark interest rate will likely be further increased when the Monetary Policy Committee holds its upcoming meeting.

-- The Nation 2011-07-09

[EnhancePlus]

I suggest they float the THB back to the 2004 rate 45THB to USD$1.00. Power to the people

[Awohalitsiktoli]

I suggest they float the THB back to the 2004 rate 45THB to USD$1.00. Power to the people

Hint: It will be the same (or very similar) policy that did not work in the past, caused GDP to go down in relationship to Thailand's neighbors (along with general global downturn), caused over ten years of economic pain for the majority and enriched the few. Unfortunately, sometimes you get what you wish for.

[WinnieTheKhwai]

So far, what we have heard is not coherent. Nothing will be conclusive until Yingluck Shinawatra, leader of Pheu Thai party, is officially named as the new prime minister in the House of Representatives later this month or early next month.

Indeed. But instead of waiting until there is an actual minister in charge of these things, who would be proposing actual policies which could then be debated on their merit, The Nation tries to spread confusion on their pages while there isn't even a government yet.

[noahvail]

So far, what we have heard is not coherent. Nothing will be conclusive until Yingluck Shinawatra, leader of Pheu Thai party, is officially named as the new prime minister in the House of Representatives later this month or early next month.

Indeed. But instead of waiting until there is an actual minister in charge of these things, who would be proposing actual policies which could then be debated on their merit, The Nation tries to spread confusion on their pages while there isn't even a government yet.

The "confusion" seems to be caused by certain people speaking out about policies before they are drafted. The Nation is trying to report the news as it comes to them. Rather than blame the newspaper (and there is a lot to blame them for), blame the people who are speaking out of turn.

I look forward to seeing the policies once they're firmed up. I hope they can help Thailand move forward in economic and social development.

[Crushdepth]

So far, what we have heard is not coherent. Nothing will be conclusive until Yingluck Shinawatra, leader of Pheu Thai party, is officially named as the new prime minister in the House of Representatives later this month or early next month.

Indeed. But instead of waiting until there is an actual minister in charge of these things, who would be proposing actual policies which could then be debated on their merit, The Nation tries to spread confusion on their pages while there isn't even a government yet.

It's increasingly obvious that PTP has no clue about basic economic principles, and didn't bother to do the sums on their election promises.

[Crushdepth]

I suggest they float the THB back to the 2004 rate 45THB to USD$1.00. Power to the people

An excellent suggestion. And they can just print more money if things get tight. Woohoo!!!

[Pib]

The confusion is caused by "inexperience" closely followed by "reality setting in." Hopefully, the confusion will die down with focused, thought-out policies being issued.

[hellodolly]

Yes it will certainly be interesting to see the difference's in policy between what they said to get elected and what they actually try to implement.

I say try to implement because I am sure they will find out some of there policies can not work.

Interesting times ahead. More than likely expensive ones.

[Steely Dan]

Why is anyone surprised by this? During their entire time in opposition Pheu Thai were akin to a policy vacuum, unless you count giving tablet PC's to school children and bringing back the old paternal despot that is. I'm sure policies are being typed out poolside a few timezones away and should arrive as soon as financial positions have been adopted to benefit from them.

[Crushdepth]

Populist policies don't need to be feasible, they just need to be popular.

[animatic]

The confusion is caused by "inexperience" closely followed by "reality setting in." Hopefully, the confusion will die down with focused, thought-out policies being issued.

Pretty much, they are in the reconciling election blathered promises

with hard reality phase... and yes random voices talking out of turn.

[philw]

So far, what we have heard is not coherent. Nothing will be conclusive until Yingluck Shinawatra, leader of Pheu Thai party, is officially named as the new prime minister in the House of Representatives later this month or early next month.

Indeed. But instead of waiting until there is an actual minister in charge of these things, who would be proposing actual policies which could then be debated on their merit, The Nation tries to spread confusion on their pages while there isn't even a government yet.

The "confusion" seems to be caused by certain people speaking out about policies before they are drafted. The Nation is trying to report the news as it comes to them. Rather than blame the newspaper (and there is a lot to blame them for), blame the people who are speaking out of turn.

I look forward to seeing the policies once they're firmed up. I hope they can help Thailand move forward in economic and social development.

Spot on and dead right.

Sadly, disinformation and manipulation of news against PT is what we are going to get...........

[whybother]

The "confusion" seems to be caused by certain people speaking out about policies before they are drafted. The Nation is trying to report the news as it comes to them. Rather than blame the newspaper (and there is a lot to blame them for), blame the people who are speaking out of turn.

I look forward to seeing the policies once they're firmed up. I hope they can help Thailand move forward in economic and social development.

Spot on and dead right.

Sadly, disinformation and manipulation of news against PT is what we are going to get...........

Yep ... spot on and dead right, Noahvail. I'm glad you agree, Phil.

The PTP are speaking out about policies before they are drafted, and the Nation are reporting what they are saying.

You can't really blame the Nation for reporting what the PTP are saying, can you? The blame should go to those PTP members that are jumping the gun.

[mrtoad]

Unbelievable that the elected party don't really have any policies ready to implement. That video link to Dubai must be down at the moment.

[Ricardo]

The "confusion" seems to be caused by certain people speaking out about policies before they are drafted. The Nation is trying to report the news as it comes to them. Rather than blame the newspaper (and there is a lot to blame them for), blame the people who are speaking out of turn.

I look forward to seeing the policies once they're firmed up. I hope they can help Thailand move forward in economic and social development.

Spot on and dead right.

Sadly, disinformation and manipulation of news against PT is what we are going to get...........

An optimist might have hoped, that the policies which PTP campaigned-on had been thought-out & costed and agreed to be communicated throughout the party and supporters, before the election.

That there appears to be so much confusion & contradiction, at such an early stage, suggests that this might not have been the case after all, and that they were just promising whatever bright-idea Thaksin had, that he thought might win them votes. Certainly you can't blame the journalists, for reporting what different people are saying, and then not saying, day-by-day.

Fair enough, but now PTP & Ms Yingluck have a country to run, and the cost of confusion or mistakes will be real, rather than merely theoretical. Perhaps DL had better get busy, and start telling them all what to think, so they are singing from the same song-sheet ?

After all, they have promised to fix everything & make all Thais rich, withing six months of the election, and the clock is now ticking !

[OzMick]

I suggest they float the THB back to the 2004 rate 45THB to USD$1.00. Power to the people

While i can appreciate that this would enhance your lifestyle (and I would like B50 or so to the AUD), i'm not so sure it would be a good thing for Thailand to depreciate their currency by 50% because another country has completely F***ed their own economy and that of a lot of the rest of the world.

if you would like the USD to regain its strength, you might like to assist in cleaning your own home before taking a dump on the carpet in someone else"s.

[EnhancePlus]

I suggest they float the THB back to the 2004 rate 45THB to USD$1.00. Power to the people

While i can appreciate that this would enhance your lifestyle (and I would like B50 or so to the AUD), i'm not so sure it would be a good thing for Thailand to depreciate their currency by 50% because another country has completely F***ed their own economy and that of a lot of the rest of the world.

if you would like the USD to regain its strength, you might like to assist in cleaning your own home before taking a dump on the carpet in someone else"s.

Just a suggestion ... sheesh, mang. I can NOT clean my own house when I'm not the criminal that stole from it and depleted our work force and continues to start wars and give money to needy governments like CHINA and THAILAND and to countries that HATE us. Geez, man, why'd you think I left. Wait 'til Oz goes belly up too.

Edited July 9, 2011 by EnhancePlus

[moe666]

PTP policies: bring Thaksin back, grant pardon. give him all of his money back, pay him for any inconvience he may have endured, all govenment policies will now require that Thakisin recieves 25 percent kickback for being such a great leader. anything else they can screw Thailand over.

[LindsayBKK]

Confusion? Really? I am very sure that the incoming government doesn't know what policies they have.

They have to wait till Hong Kong on the 10th to meet with party president Thaksin on where to start.

That's where the extra oil money will be transferred to, for lost Shin-Corp funds.

I wonder if the red shirt mafia is going to Hong Kong on the 10th.

Edited July 9, 2011 by LindsayBKK

[EnhancePlus]

PTP policies: bring Thaksin back, grant pardon. give him all of his money back, pay him for any inconvience he may have endured, all govenment policies will now require that Thakisin recieves 25 percent kickback for being such a great leader. anything else they can screw Thailand over.

Agreed. Justice will be served

[animatic]

PTP policies: bring Thaksin back, grant pardon. give him all of his money back, pay him for any inconvience he may have endured, all govenment policies will now require that Thakisin recieves 25 percent kickback for being such a great leader. anything else they can screw Thailand over.

Agreed. Justice will be served

SWERVED...

[hammered]

Hopefully when the government is formed there will be a policy statement released. Hopefully the government formation wont take very long. Right now the incoming government hasnt been formed and we dont know who the ministers are, so any statement is best ignored although the incoming government should try and form quickly as in politics the longer there is a vacuum the more games get played.

[mccw]

Such a major policy as the exchange rate, which will have huge impacts for the whole nation, should be clear and worked out way before this point. Already proof of what most with a brain could see from the outset- that PTP have no grasp on economics or how to run a country, only interested in getting their noses in the trough and prepared to promise anything to get there. Maybe by the next election the ignorant greedy masses will wake up to what a load of bullshit they've been fed; or more likely, even though everything has got much rorse for everyone except ptp elite, they'll blame everything on the old amart, make some even more crazy promises, maybe even start confiscating land and giving farmers falangs houses and things. Anything to keep on power to rob the country of everything they can.

[siampolee]

But one word is needed to describe the electoral statements regarding the fiscal policy of the incoming a ministration. " BANKRUPTCY.".

[hansnl]

Unbelievable that the elected party don't really have any policies ready to implement. That video link to Dubai must be down at the moment.

They have a policy, one only: Mr T back.

[cup-O-coffee]

Dear Ms. / Mr. Nophakhun Limsamarnphun

Why in Hades are you jumping the gun and stirring up a bunch of crap way before the new PM even has a chance to settle in?

Are you mad?

The former party had years to get things right, and they did NOT, and this is one of the first elections in recent history where the candidate won "DECISIVELY".

Give the lady a chance!!!!!!!

Geeze!!!

[cup-O-coffee]

Unbelievable that the elected party don't really have any policies ready to implement. That video link to Dubai must be down at the moment.

They have a policy, one only: Mr T back.

Unbelievable that you two think that things run here the way they might in your native land! When did you two step off the plane?

Name one leader in the history of history who is has / had less financial means than his or her own fellow countrymen, and then I'll refrain from suggesting that you take a leap off the deep end for the "T-back" statement.

[patjem]

Dear Ms. / Mr. Nophakhun Limsamarnphun

Why in Hades are you jumping the gun and stirring up a bunch of crap way before the new PM even has a chance to settle in?

Are you mad?

The former party had years to get things right, and they did NOT, and this is one of the first elections in recent history where the candidate won "DECISIVELY".

Give the lady a chance!!!!!!!

Geeze!!!

Unqualified, and merely an election mascot, who made excuses for being unable to join a pre-election debate. Sorry if you can't see through the charade.

[SteeleJoe]

Name one leader in the history of history who is has / had less financial means than his or her own fellow countrymen, and then I'll refrain from suggesting that you take a leap off the deep end for the "T-back" statement.

That doesn't make any sense. Plenty of leaders have been poorer than the richest of their country's citizens and obviously richer than their poorest. Some even came from very humble backgrounds. And few of them were billionaires like Khun Thaksin (and that in a country where the poor were exceedingly poor) -- except perhaps for the particularly odious oligarchs found in some developing countries.

And no one can name one person who "has / had less financial means than his or her own fellow countrymen" because there is no one level of financial means for a whole country. But if you want one name in all of history of a leader that wasn't especially wealthy and was well below the level of many in his countrymen, one that comes to mind (surely not the only example) is Abraham Lincoln. Or Harry Truman. Or Ho Chi Minh. Or...

But how is that even relevant? Do you think that the complaint people have about Thaksin is that he's wealthier than (most of) his fellow countrymen?

Edited July 9, 2011 by SteeleJoe