Wrong Policies Could Lead To National Crisis: Thai Editorial

[webfact]

EDITORIAL

Wrong policies could lead to national crisis

The Nation

BANGKOK: -- The World Bank warns Thailand to better manage its spending policy in the face of a worsening euro debt crisis that could affect the world economy

Although the government's fiscal bill managed to sail through its first reading in Parliament earlier this week, the government cannot be complacent about its massive spending spree on populist schemes. In fact, if the government thinks the budget debate was politically motivated by the opposition Democrat Party, it should instead think twice and heed a warning from the World Bank.

Earlier this week, the World Bank, led by one of its economists, Kirida Bhaopichitr, issued a warning to the Thai government about being more prudent on its spending plan. The reason: to be prepared for the possibility that the debt crisis in Europe will worsen considerably and begin to adversely affect other regions.

The World Bank cautions that the government should review its populist schemes in order to save money for future investment. These populist schemes include rice price subsidies, tax exemption for first-home buyers, tax rebates for first-car buyers, cuts in corporate income tax and diesel excise, increased incomes for civil servants and employees of public-sector organisations, free tablet computers for school students and a debt moratorium for farmers.

The World Bank warns that there is a high probability that the euro-zone crisis will deepen in the next few years, so the government needs to prepare for the impact of that on the Thai economy. The government should invest more on long-term projects instead of trying to stimulate short-term consumption via free handouts and subsidies.

The government of Prime Minister Yingluck Shinawatra has set its expenditure for the 2013 fiscal year at Bt2.4 trillion, with a deficit of Bt300 billion. Although the deficit of Bt300 billion appears to be a small amount, the government's off-budget borrowing could become a worrisome issue if it has to borrow even more to finance its spending on populism policies.

The government may be complacent in its confidence that it will be able to borrow as much as Bt1.15 trillion until the debt to GDP ratio hits 60 per cent. But if there is a renewed global financial crisis stemming from a prolonged slump in the euro zone, Thailand could run out of fiscal resources within two and a half years, warns the World Bank.

Some of these populist policies are aimed at simply boosting consumption, but they are very unlikely to have a positive impact in the longer run, and it is highly doubtful that they will boost the country's economy in a sustainable manner. The consequences of these projects so far are testament to the fact that there has been a lack of thorough study to ensure the money has been wisely spent.

As the opposition party pointed out during the budget debate, the first-car-buyer project, for instance, does not cater to only low-income earners, as it was supposed to. The energy subsidy policy promotes wasteful consumption, while the debt moratorium for farmers is likely to result in the encouragement of bad financial habits. We are thus likely to see more people defaulting on debt payments as they get used to being supported by the government.

The lower economic growth rate last year reflects all of these uncertain factors, but it seems that the government is not concerned about being prepared for the future. The massive flooding last year is an example of how unexpected incidents can always happen and how they will inevitably affect the country's economic performance.

It is understandable if the government has to borrow to finance recovery efforts after the flooding crisis. But some projects such as the rice price subsidy programme, which has already cost hundreds of billions of baht, do not really help improve the livelihood of farmers.

Thailand should not set its priority on short-term populist spending. Taxpayers' money should be spent to help the country realise a future vision. This money should be spent to help us stay competitive in a world where changes are driven by technology and people need ability to apply knowledge to gain an edge.

While the world is highly vulnerable to the effects of the debt crisis in Europe and its spill-over effect on the international economy, Thailand should exercise caution to cushion against whatever economic impact might be coming. After all, there is no such thing as being too careful.

-- The Nation 2012-05-26

[Moruya]

The overall debt will be much larger than is being admitted.

There is also the trillion plus that was parked with the BOT

Sent from my Galaxy Nexus using Thaivisa Connect App

[Unkomoncents]

Accordingly, if "wrong policies" only "could" lead to a national crisis, then am I to assume that such poor policies may not lead to one? Another classic The Nation editorial headline: nothing too aggressive or progressive. Just state the obvious and then leave open the possibility for all involved to save face. Good suggestions from the World Bank. Unfortunately, gently nudging the Thai government to engage in long-term planning ignores not only the inability to create a long-term vision but also the lack of political incentive. In a country where crowds of people can be bought for the day to cause chaos in the capital city, it seems unlikely that any MP will garner political kudos for putting the long-term interests of Thailand first. Thaksin's success was predicated on this realization: the public in Thailand (the whole country, not Bangkok) wants money in their pockets right now. They are too short-sighted to see beyond the now. This means that electoral victories are nearly guaranteed if funds can be allocated to handout programs for the general population. Buy them a car (don't worry about insurance, gasoline, etc, etc) because all they want to be able to do is show off their shiny new truck to their friends (nevermind that they live in a concrete shoebox). The truck will keep everyone distracted long enough for those at the top to go about their business buying and selling land and companies such that they may be wealthy beyond the wildest dreams of those they've recently bought off with the latest subsidy or cash handout.

At Tesco, towards the end of every night, the store staff place promotion price stickers on breads and meats that will go bad. When the staff begin doing this, they are descended upon by a horde of people with the disposition of a pack of wolves. It must be terrifying to be on sticker duty. If you've seen this, then you understand the mentality of the people in the Kingdom (both elite and otherwise). Toss them a bone and, in the ensuing melee, the cynical and patient make off with the peoples' houses, their precious subsidies, and everything else that was promised or given to them before. It's an unfortunate state of affairs, and it really begs the question: can democracy properly function in developing countries with large, undereducated, relatively impoverished populations (but who have enough money to access the internet and see what people in Bangkok or in other countries can buy)?

[MaxLee]

They don't care, as long as the Yingluck and her goons receive the Nation's tax money, they spend it all day without thinking, like spoiled children. Complacency attitude is nothing new in Thailand if you have money. If the rich peple think that way, so will their children and childrens's children, and the children's children's children, and so on and so forth...

The major part of the rich society, politicians, business men and whosoever rich people, treat the poor like a piece of trash without any further thought. The other thing is also the social pressure that their children have to bear, IF they don't play by the rules and start rebelling some day... I'm talking about things like, receiving gifts that you don't want, rich parent's rules that stink, and the "obligation to ACT like a high-so person", when deep down their hearts, some of these kids are different than their parents think.... That's the point that I'm trying to make here, that not all rich kids think and feel like that, BUT "their parents do everything to brainwash so much unethical sh#### in their heads to destroy their helpless minds"

Again, I don't say that all rich kids are like this,.. but the majority of those rich kids that grow up like money hungry social A%%%es, who think they can abuse everyone the way they want to be treated, starting from the top of Thai politics...

Knowledge doesn't matter here in a country like Thailand, but your family relation and status do...

[noitom]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank.org/en/news/2012/05/23/east-asia-pacific-economic-update-may-2012-key-findings-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

[Moruya]

They don't care, as long as the Yingluck and her goons receive the Nation's tax money, they spend it all day without thinking, like spoiled children. Complacency attitude is nothing new in Thailand if you have money. If the rich peple think that way, so will their children and childrens's children, and the children's children's children, and so on and so forth...

The major part of the rich society, politicians, business men and whosoever rich people, treat the poor like a piece of trash without any further thought. The other thing is also the social pressure that their children have to bear, IF they don't play by the rules and start rebelling some day... I'm talking about things like, receiving gifts that you don't want, rich parent's rules that stink, and the "obligation to ACT like a high-so person", when deep down their hearts, some of these kids are different than their parents think.... That's the point that I'm trying to make here, that not all rich kids think and feel like that, BUT "their parents do everything to brainwash so much unethical sh#### in their heads to destroy their helpless minds"

Again, I don't say that all rich kids are like this,.. but the majority of those rich kids that grow up like money hungry social A%%%es, who think they can abuse everyone the way they want to be treated, starting from the top of Thai politics...

Knowledge doesn't matter here in a country like Thailand, but your family relation and status do...

What is the PTP government spending its money on other than populist schemes?

Sent from my Galaxy Nexus using Thaivisa Connect App

[phiphidon]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

Indeed, in fact in their May 23rd Press Release the World Bank went as far as to say this

PRESS RELEASE

Thailand poised for full economic recovery, says East Asia and Pacific Update

May 23, 2012

Region needs to become less reliant on exports and capture new sources of growth, says World Bank East Asia & Pacific Economic Update

The region’s performance is still impressive on a global scale. In 2011, growth was about 2 percentage points higher than the developing country average world-wide, and poverty continues to fall..............

...............Slowing in 2011 was largely due to lower than expected growth in manufacturing exports as well as supply disruptions in the wake of the earthquake and tsunami in Japan, and severe flooding in Thailand. Domestic demand and investment were generally strong, aided by loosening of monetary policy in some countries............

................“Thailand has made considerable recovery from the devastating floods and full recovery is expected at the end of the second quarter this year. However, Thailand will also have to face the challenge of the global economic slowdown which would dampen exports further this year. As a result, growth will be around 4.5 percent this year,” said Kirida Bhaopichitr, World Bank Senior Economist for Thailand. “Thailand will need to be prepared in the event of severe global economic slowdown by ensuring adequate fiscal space while quickly improving productivity and competitiveness of Thai exports.”

http://www.worldbank...ong-but-slowing

Not quite Armageddon is it?

Edited May 26, 2012 by phiphidon

[MEL1]

No comment, as it's a ridiculous article which is applicable to any country.

-mel.

[Skywalker69]

PTP comment from dear Leader in Dubai.

"The World Bank is´nt our Father"

[retarius]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

Man, you are missing the anti-Yingluck narrative on TV...facts don't matter....the important thing is to rail against everything Shinawatra....if it's a feel good piece say, about a blind lady recovering her sight, you have write on TV that Yingluck, ordered to by Thaksin, blinded her by throwing acid in her face...it's a sort of nasty cult religion....

[animatic]

It definitely should have read:

Wrong policies 'WILL' lead to national crisis

because that is the path they have us all on,

Thai or non-thai residents, and companies alike.

Edited May 26, 2012 by animatic

[bigbamboo]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

Man, you are missing the anti-Yingluck narrative on TV...facts don't matter....the important thing is to rail against everything Shinawatra....if it's a feel good piece say, about a blind lady recovering her sight, you have write on TV that Yingluck, ordered to by Thaksin, blinded her by throwing acid in her face...it's a sort of nasty cult religion....

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

Man, you are missing the anti-Yingluck narrative on TV...facts don't matter....the important thing is to rail against everything Shinawatra....if it's a feel good piece say, about a blind lady recovering her sight, you have write on TV that Yingluck, ordered to by Thaksin, blinded her by throwing acid in her face...it's a sort of nasty cult religion....

Oh dear, TV posting sinks to a new level.

Edited May 26, 2012 by bigbamboo

[nurofiend]

^ i know... double quoting someone is a new low.

Edited May 26, 2012 by nurofiend

[bigbamboo]

^ i know... double quoting someone is a new low.

Not intentional.... but so bad it was shamed twice!

[hellodolly]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

Here is the report make of it what you want.

"

Key Findings

• In 2012, Thailand’s real GDP is predicted to be at 4.5%. Growth is due to lower global prices, government corporate tax reduction, a strong banking sector, and high international reserves. China's considerable economic growth and signs of recovery in Japan and the USA have also had a positive effect on Thailand’s economy.
  
• The Government of Thailand’s flood recovery and rehabilitation programs, as well as its income support policies, have helped boost confidence. Reconstruction and public investments will help the GDP growth in 2012, but imports will also rise.
  
• The challenges the Thai economy will encounter in 2012 are: (1) The Eurozone crisis may affect exports; (2) Fall in rice exports due to uncompetitive prices; (3) Inflation, estimated at 3.5%, is due to Government income/consumption support policies, and reconstruction needs; (4) The threat of floods, which may affect consumer and investor confidence.
  
• Thailand will need to be prepared in the event of the severe global economic slowdown by ensuring adequate fiscal space while quickly improving productivity and competitiveness of Thai exports."
  

While it dosen't use the term populist schemes. Items 2 and 3 in my opinion would fit right in. Also it pointed out in a diplomatic way that Thailand is making no preparation for circumstances out side of their control.

Also it points out that China Japan and the United States have a positive effect on Thailand's recovery. What happens if one of the goes backwards. What is the Thai Government doing to protect itself from going down with them.

[tlansford]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

From the information on the site, you are certainly correct.

I found this article interesting : http://www.worldbank.org/en/news/2012/05/10/thailand-public-finance-management-review-report

from earlier this month, which notes that public spending is heavily centered in BKK - 72% of spending, 17% of population, & 26% of GDP, whereas the northeast gets 6% of the public spending and has 34% of the population.

Basically, government spending needs to be more equitably distributed throughout the country.

[OzMick]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

From the information on the site, you are certainly correct.

I found this article interesting : http://www.worldbank...t-review-report

from earlier this month, which notes that public spending is heavily centered in BKK - 72% of spending, 17% of population, & 26% of GDP, whereas the northeast gets 6% of the public spending and has 34% of the population.

Basically, government spending needs to be more equitably distributed throughout the country.

For a start, they could spend B3-400 billion on schools instead of rice subsidies. Subsidise school uniforms and texts instead of cheap gimmicks.

[animatic]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

Here is the report make of it what you want.

"

Key Findings

• In 2012, Thailand’s real GDP is predicted to be at 4.5%. Growth is due to lower global prices, government corporate tax reduction, a strong banking sector, and high international reserves. China's considerable economic growth and signs of recovery in Japan and the USA have also had a positive effect on Thailand’s economy.
  
• The Government of Thailand’s flood recovery and rehabilitation programs, as well as its income support policies, have helped boost confidence. Reconstruction and public investments will help the GDP growth in 2012, but imports will also rise.
  
• The challenges the Thai economy will encounter in 2012 are: (1) The Eurozone crisis may affect exports; (2) Fall in rice exports due to uncompetitive prices; (3) Inflation, estimated at 3.5%, is due to Government income/consumption support policies, and reconstruction needs; (4) The threat of floods, which may affect consumer and investor confidence.
  
• Thailand will need to be prepared in the event of the severe global economic slowdown by ensuring adequate fiscal space while quickly improving productivity and competitiveness of Thai exports."
  

While it dosen't use the term populist schemes. Items 2 and 3 in my opinion would fit right in. Also it pointed out in a diplomatic way that Thailand is making no preparation for circumstances out side of their control.

Also it points out that China Japan and the United States have a positive effect on Thailand's recovery. What happens if one of the goes backwards. What is the Thai Government doing to protect itself from going down with them.

(3) Inflation, estimated at 3.5%, is due to

Government income/consumption support policies, and reconstruction needs

All these are Populist without saying so in a word, the reconstruction being less so, but still popular.

Even more so is that the corruption involved means 'so much more than needed', is spent to do the jobs,

it boosts inflation again, without getting distributed to the greater public except as later campaign expenses. Even that goes out mostly to cronies in printing, communications and crowd segment manipulation.

Edited May 28, 2012 by animatic

[ginjag]

They don't care, as long as the Yingluck and her goons receive the Nation's tax money, they spend it all day without thinking, like spoiled children. Complacency attitude is nothing new in Thailand if you have money. If the rich peple think that way, so will their children and childrens's children, and the children's children's children, and so on and so forth...

The major part of the rich society, politicians, business men and whosoever rich people, treat the poor like a piece of trash without any further thought. The other thing is also the social pressure that their children have to bear, IF they don't play by the rules and start rebelling some day... I'm talking about things like, receiving gifts that you don't want, rich parent's rules that stink, and the "obligation to ACT like a high-so person", when deep down their hearts, some of these kids are different than their parents think.... That's the point that I'm trying to make here, that not all rich kids think and feel like that, BUT "their parents do everything to brainwash so much unethical sh#### in their heads to destroy their helpless minds"

Again, I don't say that all rich kids are like this,.. but the majority of those rich kids that grow up like money hungry social A%%%es, who think they can abuse everyone the way they want to be treated, starting from the top of Thai politics...

Knowledge doesn't matter here in a country like Thailand, but your family relation and status do...

Agree, and even Issan farmer/rural folk.. look at Laos people as trash inferior to even them. low end has a similar attitude. I understand we are talking general 80 per cent--usually Chinese Thai.

[metisdead]

Posts discussing and comparing current members with a former member have removed as well as the replies. A bit off topic.

[tlansford]

The actual World Bank summary didn't state "populist schemes" or anything like it - it listed 4 points - http://www.worldbank...ngs-on-thailand - Its point about investment in recovery was very positive and that it should boost confidence. Another which was "inflation " of 3.5% and another was rice exports would slow as the result of high rice prices.

No where was it evident that the World Bank referred to "populist schemes" spending should be curtailed, but yet The Nation chose to word its editorial as such and distort the World Bank statement.

Here is the report make of it what you want.

"

Key Findings

• In 2012, Thailand’s real GDP is predicted to be at 4.5%. Growth is due to lower global prices, government corporate tax reduction, a strong banking sector, and high international reserves. China's considerable economic growth and signs of recovery in Japan and the USA have also had a positive effect on Thailand’s economy.
  
• The Government of Thailand’s flood recovery and rehabilitation programs, as well as its income support policies, have helped boost confidence. Reconstruction and public investments will help the GDP growth in 2012, but imports will also rise.
  
• The challenges the Thai economy will encounter in 2012 are: (1) The Eurozone crisis may affect exports; (2) Fall in rice exports due to uncompetitive prices; (3) Inflation, estimated at 3.5%, is due to Government income/consumption support policies, and reconstruction needs; (4) The threat of floods, which may affect consumer and investor confidence.
  
• Thailand will need to be prepared in the event of the severe global economic slowdown by ensuring adequate fiscal space while quickly improving productivity and competitiveness of Thai exports."
  

While it dosen't use the term populist schemes. Items 2 and 3 in my opinion would fit right in. Also it pointed out in a diplomatic way that Thailand is making no preparation for circumstances out side of their control.

Also it points out that China Japan and the United States have a positive effect on Thailand's recovery. What happens if one of the goes backwards. What is the Thai Government doing to protect itself from going down with them.

(3) Inflation, estimated at 3.5%, is due to

Government income/consumption support policies, and reconstruction needs

All these are Populist without saying so in a word, the reconstruction being less so, but still popular.

Even more so is that the corruption involved means 'so much more than needed', is spent to do the jobs,

it boosts inflation again, without getting distributed to the greater public except as later campaign expenses. Even that goes out mostly to cronies in printing, communications and crowd segment manipulation.

let's try this again -

Do you expect anyone to believe this unsubstantiated set of claims? Does it even sound believable to you? Corruption boosts inflation? Really? All the money goes to cronies?

What money, which cronies, what proof....

These kinds of posts are just generic blathering ...

[Thaddeus]

These kinds of posts are just generic blathering ...

Hello pot............