Populist Policy Doubts Eroding Public Confidence: Thai Editorial

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EDITORIAL

Populist policy doubts eroding public confidence

The Nation

Uncertainty over cost of schemes is factor in people's negative outlook

BANGKOK: -- Prime Minister Yingluck Shinawatra may say that rising living prices exist in the public's imagination but there may be sources of truth in complaints about prices of goods soaring.

Yingluck may simply want to dodge the question by dismissing such claims, by suggesting the public imagines that prices have increased. But she, and her economic team, cannot be complacent with this issue.

In fact, if the cost of goods increases in line with an increase in people's income and production, that should not be worrisome. Yingluck may be right in saying that the cost of most products has barely increased. But there is also another factor to drive prices up - that is the expectation of inflation.

A series of incoherent populist policies has helped to create uncertainty among the public over the consequences in the medium term from the government's policies.

Poor scores

A recent survey by economists at leading Thai organisations gave poor scores for the government's performance in dealing with the country's economic problems. The survey by Bangkok University's Research Institute or Bangkok Poll gave an average score of 3.83 out of 10 in key economic areas. It gave the government only 3.03 points in fuel price management, only 3.75 for how the administration has dealt with public debt and 3.17 for how it has tackled rising consumer prices.

The low scores in these key areas illustrate the factors that create a public perception about the cost of living in the future. The government said that costs have not actually increased. But the market prices are dictated by various factors such as actual demand and supply, as well as public expectation.

These economists gave the government 3.17 out of ten for the way it has managed consumer product prices. The Commerce Ministry said that the cost of many materials had barely increased. But consumers feel the value of money in their wallets is decreasing because the cost of a product has increased sharply from its original source to the end of the supply chain, partly because of ineffective energy consumption.

In addition, there has also been inflationary pressure from the 40-per-cent rise is the minimum daily wage.

Minimum daily wage in Malaysia

By comparison, Malaysia introduced a minimum wage for the first time. From the first of this month, Malaysian workers now earn a minimum monthly pay of 900 ringgit ($297) in peninsula Malaysia and 800 ringgit ($264) in the poorer eastern states of Sabah and Sarawak. Malaysia's minimum wage is almost the same level as here. (One Malaysian ringgit is around Bt10.2).

While Malaysia's minimum wage level is thus almost equal to that received by Thai workers who get Bt300 per day, although Malaysian GDP per capita is much higher than Thailand's. According to statistics from the International Monetary Fund (IMF), Malaysia's GDP per capita in 2011 was estimated to be around US$8,616, compared to Thailand's $5,281.

Even with that, it was reported that some small and medium sized companies in Malaysia were concerned about diminishing cost competitiveness.

In other categories, in the Bangkok Poll survey, the government received 3.75 for is management of public debt and only 3.47 for its effort to tackle economic inequality.

The government cannot simply ignore the views from these surveyed economists nor dismiss the criticism by saying the reality is different from what the public perceives. If the public feels they are adversely affected, the government should look at flaws in the system and fix them. It would be wise to accept that things are as bad as people may think.

In this case, the government can address the expectation of inflation by facing the issue head-on and answering every doubt the public has regarding implications of the daily wage rise or how the government will finance its mega-policies without hurting the fiscal stance of the country.

Uncertainty breeds negative anticipation. And politics is, in the end, all about public perceptions.

-- The Nation 2012-05-07

[MaiChai]

Malaysia has cheap fuel and we all know the cost of fuel affects everything. Thus Malaysia is more competitive than Thailand if the wage costs are the same.

[TomTao]

This government needs to listen to the concerns of the people, then government cannot simply tell the people who are hurting financially that all the pain is just a figment of thier imagination, when governments don't listen and do what they think the people need instead of actually looking at what the people need, you end up with a new government, either by way of an election loss, or by the government being replaced without elections.

[Pib]

Rising prices is just our imagination....I'm glad PM Yingluck told us our problem.

But I do have one question: why have prices changed so much on price labels, menus, etc? I could have swore one menu price changed as I was looking at it...but that was probably just my imagination.

[LuckyLew]

but yesterday we had a poll showing .........

"Poll: People most content with PM after 9 months in office"

They should hire all farmers to work as poll takers

and get all the people who lost their jobs due to floods to take start working as poll takers

Heck, why not get every citizen in Thailand to work as poll takers

That way everyone is employed.

Thailand can become the HUB of poll taking

[Skywalker69]

Rising prices is just our imagination....I'm glad PM Yingluck told us our problem.

But I do have one question: why have prices changed so much on price labels, menus, etc? I could have swore one menu price changed as I was looking at it...but that was probably just my imagination.

I can´t imagine she is right.

[BudRight]

I'm really glad that the costs haven't increased. It's much more worrisome that the entire country is apparently delusional.

It does speak to the manner by which the government came to power however. I wonder if the Thais also imagined they were electing competent leaders. That would make sense; it would at least be consistent.

Perhaps the Commerce Ministry is right - there is at least one commodity that remains cheap....and it isn't asbestos.

[allan michaud]

The Commerce Ministry said that the cost of many materials had barely increased. But consumers feel the value of money in their wallets is decreasing because the cost of a product has increased sharply from its original source to the end of the supply chain, partly because of ineffective energy consumption.

So they are suggesting that energy consumption in Thailand has suddenly become even more inefficient? They seem to be clutching at straws

[belg]

my humble guess, they are asking 400.000 baht in the bank for 2 months for farangs, soon you might expect 500.000 or more to be there for some good period of time doing nothing

let us see who's imagination it will be

[Searat7]

The restaurant in my building in Silom raised prices on most items by 25% two months ago. This weekend I noticed McDonalds had some price increases as well.

[hellodolly]

Well I have to be honest I though it was a pretty good article until they brought in the poll's.

I reallly doubt there is a pollister in the country who could manage a honest poll. Every poll I have seen was to prove one point

It was done by asking a small amount of people over a great area.

I do believe that their are some who are having second thoughts about the Governments ability to put their populist programs in place. Next year there will be no need for rigged poll's. The average hai on the street will be able to tell you Government no good talk lie.

[noitom]

It's all in their mind. We are trying our best to control their minds. The new thought control programs will crackdown on that and assure this, as well as stating that.

[BigJohnnyBKK]

my humble guess, they are asking 400.000 baht in the bank for 2 months for farangs, soon you might expect 500.000 or more to be there for some good period of time doing nothing

let us see who's imagination it will be

Just having money in the bank is nothing; it would be much more effective to simply require documented proof that all farang are spending say over B100,000 per month.

Exceptions of course would be those on work permits and permanent residents.

That'll sort out the riff-raff, also help keep those uppity Isaan in their place.

[mic6ard]

The Commerce Ministry said that the cost of many materials had barely increased. But consumers feel the value of money in their wallets is decreasing because the cost of a product has increased sharply from its original source to the end of the supply chain, partly because of ineffective energy consumption.

So they are suggesting that energy consumption in Thailand has suddenly become even more inefficient? They seem to be clutching at straws

Price of production = wage!! Increase wage obviously increase cost of production.

You have to increase wage for

1 housekeepers

2 delivery drivers

3 stock boys/girls - moving stuff from trucks to warehouse

4 petrol price increases

So let's say you're importing your material in to the country. You would have to pay the driver from port/airport to warehouse, another form warehouse - factory. Don't forget people driving the lifters in and out of trucks. And it just goes on and on. Therefore price of raw material (sugar cane) is the same, but the price of processed material (sugar) increases. "Sugar cane - Sugar" are just random example of raw material - processed material, so don't go flaming me about inaccurate figures.

Edited May 9, 2012 by mic6ard