Kittiratt, Korn Go Head To Head Over Bt2-Tn Bill, Interest Rates, Rice Pledging

[webfact]

Competing visions on nation's future
Achara Deboonme
The Nation



Kittiratt, Korn go head to head over Bt2-tn bill, interest rates, rice pledging

BANGKOK: -- Every debate has its own attractions. When Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong and former finance minister Korn Chatikavanij convened for their first face-off on Thursday night, the audience was not disappointed.

Audience members were glued to their seats throughout the two-and-a-half-hour charitable debate - hosted by Nation Group to raise funds for Nation University - by the stark differences in the influential figures' views on a number of issues, chiefly the Bt2-trillion infrastructure investment, the policy rate direction and the rice-pledging policy. The following are excerpts of their arguments.

Bt2-trillion bill

Both share the view that Thailand could build up more debt, given the currently low public debt ratio of 44 per cent of gross domestic product.

Korn: The investment is necessary, but off-budget borrowing could jeopardise fiscal discipline. It is estimated that projects worth only Bt500 billion are ready for implementation, while many projects would not generate returns to the government. The Finance Ministry should stick to its role, to source low-cost funding. Some projects can be carried out through private partnership.

Kittiratt: I have no concerns about betraying an obsolete principle (on fiscal discipline). Some projects are not generating returns to the government - like some motorways, but the government needs to build them to facilitate transportation. In this case, the Finance Ministry still sticks to its role, but the government also realises that private partners always seek high returns. It's not difficult for the government to carry out some uncomplicated projects like motorway construction. We will only seek partners for projects that demand complicated management know-how.

Korn: Upholding fiscal discipline is not obsolete, taking the experiences of some European countries. Thailand's credit ratings have remained high, because we have relied on on-budget financing.

Kittiratt: Credit-rating agencies have been aware of this financing and remain comfortable with the public debt level. Even with the investment, the public debt will remain below the threshold, leaving some ammunition for unexpected developments.

Korn: The bill bypasses parliamentary screening, unlike on-budget financing.

Kittiratt: Parliament has never looked at the details of each project included in the annual budget bills. MPs never know why this project is allocated this sum, while nothing is allocated to that project, in a particular year. This bill requires the synchronisation of transport projects, to ensure continuity.

Korn: This increases the debt burden of all Thais. As a high-speed train network is costly and not accessible to all, why not focus more on double-track rail?

Kittiratt: We must look at the integrated picture. Rich people afford the high-speed train and along the way, their spending will benefit the poorer. I took this job with the intention of leaving after a few years. Now, I wish I stay on until I am 105, to see the last repayment under this bill.

Policy rate

Kittiratt: Huge inflows induce excess liquidity. Foreigners are encouraged by high bond coupon rates. Aside from sterilisation costs, the Bank of Thailand pays Bt10 billion monthly for the bonds. A lower rate will reduce gains from bond investments. A lower rate will not boost inflation, but inflows can. The stronger baht makes energy imports cheaper, but it severely hits the export sector. The rate should be slashed by as much as 1 percentage point, to address this. If the Bank of Thailand had heeded my advice when the baht was at 31 per dollar, a less severe cut might now be needed.

Korn: Thailand's economic circumstances are different from those of the US, the EU and Japan. We don't need low rates to spur the economy, and the Bank of Thailand's duty is to ensure financial stability. Regionally, Thai rates are the lowest, but for Taiwan's. A cut won't slow down inflows. Though inflows to the bond market may fall, these would go to the equity market.

Rice-pledging scheme

Korn: The government should instead sign cheques for farmers, as this scheme is corruption-ridden. The government can't survive the huge losses.

Kittiratt: We'll never back off. When you were in office, the Democrat government survived though the rice-price guarantee scheme, which caused a loss of Bt70 billion. Through this scheme, we intend to establish a new supply management scheme. In a restaurant, ever wonder why a rice dish costs less than a bottle of water? The process of making drinking water is short, but it takes a long process to harvest rice. The farmers deserve this. At least, under this scheme, they need to grow rice for the money. (Under the Democrats' scheme), just registering guaranteed them the money.

Middle-income trap

Korn: The Democrats would spend some money on infrastructure and allocate more to education and facilities to support the ageing society.

Kittiratt: Escaping the (middle-income) trap requires a higher GDP. Now, we are ready to make new investments to boost GDP. We also need to raise returns on government assets. Here's a message to the Bank of Thailand: when GDP heads up, don't be afraid of overheating.

Despite the heated arguments, both shared the views that an inheritance tax can wait and that currency inflows still have not sparked a bubble in property prices. Before leaving the stage with a handshake amid the long and loud applause, the men took turns commending each other.

"Khun Korn is one of the most talented in the financial sector. Pheu Thai and Democrats will inevitably take turns to run the country. Korn has a chance to be the prime minister? I'm convinced that in whatever position he holds, he would demonstrate his talents through extensive information gathering," Kittiratt said.

"Khun Kittiratt is a very committed and visionary man. He has initiated some creative projects beyond my expectation," Korn said.


-- The Nation 2013-04-20

[Locationthailand]

I would think any decision based on 'future' and 'possible' growth is simply living in fantasy lad without due care or responsibility to the posts they hold or in accountability to the Thai people and the country as a whole. A 50 year debt which they will not be around to see the consequences of their actions? My my - how intelligent...

[OzMick]

"Rich people afford the high-speed train and along the way, their spending will benefit the poorer."

The rich afford HSR, but everybody pays for it. How much spending is done while sitting in a high-speed train?

[Thai at Heart]

Both share the view that Thailand could build up more debt, given the currently low public debt ratio of 44 per cent of gross domestic product.

Hooooooray. Finally a logical view from both sides of the situation

[ballpoint]

"Rich people afford the high-speed train and along the way, their spending will benefit the poorer."

The rich afford HSR, but everybody pays for it. How much spending is done while sitting in a high-speed train?

The train will be stopping at every local station so that the vegetables can be loaded on, and allowing the meat on a stick vendors to board. Either that or the trash will be thrown off at regular intervals, allowing the poor to pick through it.

[OzMick]

Both share the view that Thailand could build up more debt, given the currently low public debt ratio of 44 per cent of gross domestic product.

Hooooooray. Finally a logical view from both sides of the situation

"Could" is not the same as saying it is a good idea.

[Thai at Heart]

Both share the view that Thailand could build up more debt, given the currently low public debt ratio of 44 per cent of gross domestic product.

Hooooooray. Finally a logical view from both sides of the situation

"Could" is not the same as saying it is a good idea.

No but the doomsayers who talk of Thailand becoming greece really do wear thin.

[Ricardo]

Khun Kittirat has no concerns about abandoning fiscal discipline, when plunging the country into long-term debt to fund infrastructure-projects like a high-speed passenger-railway which will be used only by the rich, how very reassuring for the proposed-lenders !

Yay for Red Economics !

[rubl]

With Pheu Thai party and PT-led government trying to position themself as "for the people and the poor', the "the rich spending will benefit the poor" sounds like the failed "trickle down concept" from right-wing conservatives.

[AleG]

With Pheu Thai party and PT-led government trying to position themself as "for the people and the poor', the "the rich spending will benefit the poor" sounds like the failed "trickle down concept" from right-wing conservatives.

Every time I heard Trickle-down theory I remember the words of B.P. Richfield:

"We'll have what I call my trickle-down theory.' See, rich folks tend to live in big houses on the tops of hills, so if we give them all the money, some of it's bound to slip out of their pockets and roll down to where those other folks (the poor) are."

@ 0:54

http://www.youtube.com/watch?v=x38B9y-pFcM&t=0m54s

By the way, utterly unimpressed by Kittirat responses, for example:

Korn: The bill bypasses parliamentary screening, unlike on-budget financing.

Kittiratt: Parliament has never looked at the details of each project included in the annual budget bills. MPs never know why this project is allocated this sum, while nothing is allocated to that project, in a particular year.

Paraphrasing: ah... pffff!... those MPs never read the small letter anyway, so why bother with oversight?, just give us the money and we'll let you know how it goes.

[billd766]

quote Korn: The bill bypasses parliamentary screening, unlike on-budget financing.


Kittiratt: Parliament has never looked at the details of each project included in the annual budget bills. MPs never know why this project is allocated this sum, while nothing is allocated to that project, in a particular year. This bill requires the synchronisation of transport projects, to ensure continuity.

WHY has Parliament NEVER looked at the details of each project included in the annual budget bills?

AleG just beat me to the send button.

Edited April 20, 2013 by billd766

[Thai at Heart]

quote Korn: The bill bypasses parliamentary screening, unlike on-budget financing.

Kittiratt: Parliament has never looked at the details of each project included in the annual budget bills. MPs never know why this project is allocated this sum, while nothing is allocated to that project, in a particular year. This bill requires the synchronisation of transport projects, to ensure continuity.

WHY has Parliament NEVER looked at the details of each project included in the annual budget bills?

AleG just beat me to the send button.

Because they never have. That is what they have select committees for elsewhere in the world to scrutinise this stuff.

You think it is only the USA that has 1000 USD bins in budgets.

In Thailand you don't even get the bin.

[473geo]

Rather surprising for you guys on Tvisa that the educated Korn did not rubbish all the potential projects, the need or investment is not questioned, the ability of Thailand to carry further debt is not questioned, the suitability of the subsidy for farmers is only criticised regarding the implementation.............I guess Korn is not absorbing your comments on Tvisa guys......I always said...smart guy......I believe his response to a question with regard the finanacial aspects of Thaksinism.......was....."Thaksinism? more of the same"

[Thai at Heart]

Rather surprising for you guys on Tvisa that the educated Korn did not rubbish all the potential projects, the need or investment is not questioned, the ability of Thailand to carry further debt is not questioned, the suitability of the subsidy for farmers is only criticised regarding the implementation.............I guess Korn is not absorbing your comments on Tvisa guys......I always said...smart guy......I believe his response to a question with regard the finanacial aspects of Thaksinism.......was....."Thaksinism? more of the same"

He railed against the cost of transportation years ago because of reliance on trucks.

He realises that a developing country running debt to GDP of 40% but with growth of GDP of 3 to 6% can afford to borrow to grow. He f realises that for Thailand to make the next step, schools, roads, hospitals and infrastructure all has to grow or growth will not come in the next generation.

Not all debt is bad if it really stimulates growth and people running around on here talking about ALL debt being bad and communist in some bizarre nature don't understand how it works.

40 to 55% debt is easily serviceable for Thailand. The question is not whether to borrow, it is to make sure the money is well spent. That is the crux where ptp fails.

[HeavyDrinker]

Korn rock!!! He should have this in the background.....

[473geo]

Rather surprising for you guys on Tvisa that the educated Korn did not rubbish all the potential projects, the need or investment is not questioned, the ability of Thailand to carry further debt is not questioned, the suitability of the subsidy for farmers is only criticised regarding the implementation.............I guess Korn is not absorbing your comments on Tvisa guys......I always said...smart guy......I believe his response to a question with regard the finanacial aspects of Thaksinism.......was....."Thaksinism? more of the same"

He railed against the cost of transportation years ago because of reliance on trucks.

He realises that a developing country running debt to GDP of 40% but with growth of GDP of 3 to 6% can afford to borrow to grow. He f realises that for Thailand to make the next step, schools, roads, hospitals and infrastructure all has to grow or growth will not come in the next generation.

Not all debt is bad if it really stimulates growth and people running around on here talking about ALL debt being bad and communist in some bizarre nature don't understand how it works.

40 to 55% debt is easily serviceable for Thailand. The question is not whether to borrow, it is to make sure the money is well spent. That is the crux where ptp fails.

I must be in the wrong forum, most of what I read here intimates that the PTP borrowing is for 'populist' policies, yet the core policies are supported by all forward thinking politicians? PTP may not have the perfect solutions but they are in there striving to make significant changes to the infrastructure and improve the lives of the Thai population.

Edited April 20, 2013 by 473geo

[Baerboxer]

Rather surprising for you guys on Tvisa that the educated Korn did not rubbish all the potential projects, the need or investment is not questioned, the ability of Thailand to carry further debt is not questioned, the suitability of the subsidy for farmers is only criticised regarding the implementation.............I guess Korn is not absorbing your comments on Tvisa guys......I always said...smart guy......I believe his response to a question with regard the finanacial aspects of Thaksinism.......was....."Thaksinism? more of the same"

He railed against the cost of transportation years ago because of reliance on trucks.

He realises that a developing country running debt to GDP of 40% but with growth of GDP of 3 to 6% can afford to borrow to grow. He f realises that for Thailand to make the next step, schools, roads, hospitals and infrastructure all has to grow or growth will not come in the next generation.

Not all debt is bad if it really stimulates growth and people running around on here talking about ALL debt being bad and communist in some bizarre nature don't understand how it works.

40 to 55% debt is easily serviceable for Thailand. The question is not whether to borrow, it is to make sure the money is well spent. That is the crux where ptp fails.

Spot on TaH. How much of this very large amount will actually ever be spent for the benefit of the Thia people? Transparency, accountability, value for money etc. Don't think those words appear in the financal doctrine 473geo refers to.

[ramrod711]

"Rich people afford the high-speed train and along the way, their spending will benefit the poorer."

The rich afford HSR, but everybody pays for it. How much spending is done while sitting in a high-speed train?

Not to mention that the country doesn't control their own energy needs, will the train run when Myanmar closes their gas fields every april? double tracking makes much more sense.

[473geo]

"Rich people afford the high-speed train and along the way, their spending will benefit the poorer."

The rich afford HSR, but everybody pays for it. How much spending is done while sitting in a high-speed train?

Not to mention that the country doesn't control their own energy needs, will the train run when Myanmar closes their gas fields every april? double tracking makes much more sense.

Actually on that line of thinking investing in nuclear power makes more sense......although personally I'd go for hydro.... ....I also believe there is a large amount of double tracking planned along with the HST links.

[rubl]

As for the details in the 2.2 trillion Baht bill, with about 2 pages per project (and 100 projects) the fine print might require a microscope to be able to read it all.

[Baerboxer]

Rather surprising for you guys on Tvisa that the educated Korn did not rubbish all the potential projects, the need or investment is not questioned, the ability of Thailand to carry further debt is not questioned, the suitability of the subsidy for farmers is only criticised regarding the implementation.............I guess Korn is not absorbing your comments on Tvisa guys......I always said...smart guy......I believe his response to a question with regard the finanacial aspects of Thaksinism.......was....."Thaksinism? more of the same"

He railed against the cost of transportation years ago because of reliance on trucks.

He realises that a developing country running debt to GDP of 40% but with growth of GDP of 3 to 6% can afford to borrow to grow. He f realises that for Thailand to make the next step, schools, roads, hospitals and infrastructure all has to grow or growth will not come in the next generation.

Not all debt is bad if it really stimulates growth and people running around on here talking about ALL debt being bad and communist in some bizarre nature don't understand how it works.

40 to 55% debt is easily serviceable for Thailand. The question is not whether to borrow, it is to make sure the money is well spent. That is the crux where ptp fails.

I must be in the wrong forum, most of what I read here intimates that the PTP borrowing is for 'populist' policies, yet the core policies are supported by all forward thinking politicians? PTP may not have the perfect solutions but they are in there striving to make significant changes to the infrastructure and improve the lives of the Thai population.

Really............... you mean they're not in there lining their own pockets and trying to create family dynasties? No one has perfect solutions all the time, but PTP - what have they delivered that really improves the infrastructure of lives of the populace? Rice pledging scheme, tablets for schoolchildren, constant contradictions and "white lies", and crude attempts to manipulate or bypass the law, especially aimed at benefiting one person.

The industrious merit of the PM, constantly skyping instructions from Dubai is there for all to see. Yep, they're all really in there ok. Give them 6 months and everyone will be rich.

[473geo]

Rather surprising for you guys on Tvisa that the educated Korn did not rubbish all the potential projects, the need or investment is not questioned, the ability of Thailand to carry further debt is not questioned, the suitability of the subsidy for farmers is only criticised regarding the implementation.............I guess Korn is not absorbing your comments on Tvisa guys......I always said...smart guy......I believe his response to a question with regard the finanacial aspects of Thaksinism.......was....."Thaksinism? more of the same"

He railed against the cost of transportation years ago because of reliance on trucks.

He realises that a developing country running debt to GDP of 40% but with growth of GDP of 3 to 6% can afford to borrow to grow. He f realises that for Thailand to make the next step, schools, roads, hospitals and infrastructure all has to grow or growth will not come in the next generation.

Not all debt is bad if it really stimulates growth and people running around on here talking about ALL debt being bad and communist in some bizarre nature don't understand how it works.

40 to 55% debt is easily serviceable for Thailand. The question is not whether to borrow, it is to make sure the money is well spent. That is the crux where ptp fails.

Spot on TaH. How much of this very large amount will actually ever be spent for the benefit of the Thia people? Transparency, accountability, value for money etc. Don't think those words appear in the financal doctrine 473geo refers to.

There appears to be more transparency now than ever before........just an observation, I'm sure the opposition will be very much on the scene to assist in the fanancial controls.....but of course given the Dems track record, there is always a possibility of failure in this area too......

Edited April 20, 2013 by 473geo

[Thai at Heart]

Rather surprising for you guys on Tvisa that the educated Korn did not rubbish all the potential projects, the need or investment is not questioned, the ability of Thailand to carry further debt is not questioned, the suitability of the subsidy for farmers is only criticised regarding the implementation.............I guess Korn is not absorbing your comments on Tvisa guys......I always said...smart guy......I believe his response to a question with regard the finanacial aspects of Thaksinism.......was....."Thaksinism? more of the same"

He railed against the cost of transportation years ago because of reliance on trucks.

He realises that a developing country running debt to GDP of 40% but with growth of GDP of 3 to 6% can afford to borrow to grow. He f realises that for Thailand to make the next step, schools, roads, hospitals and infrastructure all has to grow or growth will not come in the next generation.

Not all debt is bad if it really stimulates growth and people running around on here talking about ALL debt being bad and communist in some bizarre nature don't understand how it works.

40 to 55% debt is easily serviceable for Thailand. The question is not whether to borrow, it is to make sure the money is well spent. That is the crux where ptp fails.

I must be in the wrong forum, most of what I read here intimates that the PTP borrowing is for 'populist' policies, yet the core policies are supported by all forward thinking politicians? PTP may not have the perfect solutions but they are in there striving to make significant changes to the infrastructure and improve the lives of the Thai population.

Really............... you mean they're not in there lining their own pockets and trying to create family dynasties? No one has perfect solutions all the time, but PTP - what have they delivered that really improves the infrastructure of lives of the populace? Rice pledging scheme, tablets for schoolchildren, constant contradictions and "white lies", and crude attempts to manipulate or bypass the law, especially aimed at benefiting one person.

The industrious merit of the PM, constantly skyping instructions from Dubai is there for all to see. Yep, they're all really in there ok. Give them 6 months and everyone will be rich.

Times maybe different, but do you genuinely believe that political dynasties weren't built all over the country on the back of dodgy government business?

[473geo]

Rather surprising for you guys on Tvisa that the educated Korn did not rubbish all the potential projects, the need or investment is not questioned, the ability of Thailand to carry further debt is not questioned, the suitability of the subsidy for farmers is only criticised regarding the implementation.............I guess Korn is not absorbing your comments on Tvisa guys......I always said...smart guy......I believe his response to a question with regard the finanacial aspects of Thaksinism.......was....."Thaksinism? more of the same"

He railed against the cost of transportation years ago because of reliance on trucks.

He realises that a developing country running debt to GDP of 40% but with growth of GDP of 3 to 6% can afford to borrow to grow. He f realises that for Thailand to make the next step, schools, roads, hospitals and infrastructure all has to grow or growth will not come in the next generation.

Not all debt is bad if it really stimulates growth and people running around on here talking about ALL debt being bad and communist in some bizarre nature don't understand how it works.

40 to 55% debt is easily serviceable for Thailand. The question is not whether to borrow, it is to make sure the money is well spent. That is the crux where ptp fails.

I must be in the wrong forum, most of what I read here intimates that the PTP borrowing is for 'populist' policies, yet the core policies are supported by all forward thinking politicians? PTP may not have the perfect solutions but they are in there striving to make significant changes to the infrastructure and improve the lives of the Thai population.

Really............... you mean they're not in there lining their own pockets and trying to create family dynasties? No one has perfect solutions all the time, but PTP - what have they delivered that really improves the infrastructure of lives of the populace? Rice pledging scheme, tablets for schoolchildren, constant contradictions and "white lies", and crude attempts to manipulate or bypass the law, especially aimed at benefiting one person.

The industrious merit of the PM, constantly skyping instructions from Dubai is there for all to see. Yep, they're all really in there ok. Give them 6 months and everyone will be rich.

Ahh then I am in the right forum.....thanks.....a couple of reasonable balanced comments had me worried for a while....

[khunken]

Just in case the PTP acolytes would have you believe that Korn supported the HSR - he didn't. He supported more borrowing for projects that are ready to be implemented - not airy fairy trains for the rich.

He also was clearly not in favour of Kittirat's interference in the BOT.

It was a very gentlemanly debate.

As an aside, I don't agree with everything the Korn or the Dems say, unlike the brown-nosed brigade who seem to blindly accept everything the PTP comes out with. I would have blasted Kittirat for his trains for the rich comment because he's put his foot in his mouth again.

[ZhouZhou]

. At least, under this scheme, they need to grow rice for the money. (Under the Democrats' scheme), just registering guaranteed them the money.

good argument.

[ZhouZhou]

"Khun Kittiratt is a very committed and visionary man. He has initiated some creative projects beyond my expectation," Korn said.

Kinda agree with Korn here. never thought i would.

[Thai at Heart]

Just in case the PTP acolytes would have you believe that Korn supported the HSR - he didn't. He supported more borrowing for projects that are ready to be implemented - not airy fairy trains for the rich.

He also was clearly not in favour of Kittirat's interference in the BOT.

It was a very gentlemanly debate.

As an aside, I don't agree with everything the Korn or the Dems say, unlike the brown-nosed brigade who seem to blindly accept everything the PTP comes out with. I would have blasted Kittirat for his trains for the rich comment because he's put his foot in his mouth again.

Bizarre huh. Trains for the rich. Where they all going? Between korat and Bangkok all the time?

[473geo]

Just in case the PTP acolytes would have you believe that Korn supported the HSR - he didn't. He supported more borrowing for projects that are ready to be implemented - not airy fairy trains for the rich.

He also was clearly not in favour of Kittirat's interference in the BOT.

It was a very gentlemanly debate.

As an aside, I don't agree with everything the Korn or the Dems say, unlike the brown-nosed brigade who seem to blindly accept everything the PTP comes out with. I would have blasted Kittirat for his trains for the rich comment because he's put his foot in his mouth again.

Bizarre huh. Trains for the rich. Where they all going? Between korat and Bangkok all the time?

How soon you guys forget, Thaksin is making everybody rich, and the spending on the infrastructure will go some way to achieving this aim (all be it a little later than 6 months originally forecast) So no issues the HST will benefit all.

[khunken]

Just in case the PTP acolytes would have you believe that Korn supported the HSR - he didn't. He supported more borrowing for projects that are ready to be implemented - not airy fairy trains for the rich.

He also was clearly not in favour of Kittirat's interference in the BOT.

It was a very gentlemanly debate.

As an aside, I don't agree with everything the Korn or the Dems say, unlike the brown-nosed brigade who seem to blindly accept everything the PTP comes out with. I would have blasted Kittirat for his trains for the rich comment because he's put his foot in his mouth again.

Bizarre huh. Trains for the rich. Where they all going? Between korat and Bangkok all the time?

How soon you guys forget, Thaksin is making everybody rich, and the spending on the infrastructure will go some way to achieving this aim (all be it a little later than 6 months originally forecast) So no issues the HST will benefit all.

Ah, I seemed to have sniffed out an acolyte.

If you had added a smiley to your comment, I could have shared the laugh.