After its first month in power, junta targets longer-term economic reforms

[webfact]

COUP ONE MONTH
After its first month in power, junta targets longer-term economic reforms
Somluck Srimalee
The Nation



BANGKOK: -- Boosting domestic spending by paying off rice farmers to the tune of Bt92 billion, expediting state spending, and extending the current rates of value-added and corporate income tax are among the economic measures carried out by the National Council for Peace and Order (NCPO) in the first month after the May 22 coup.

The next step is to reform the country's economic system by focusing on medium-to-long-term policy. This includes finalising the 2014-15 state budget to the tune of Bt2.6 trillion, considering an investment budget of Bt2.4 trillion, tax structure, agricultural policy, promoting foreign direct investment, and energy-policy reform.

"We have more issues to deal with in the economic sector that relate to financial institutions, energy, agriculture, infrastructure, and others. Short-, medium- and long-term plans are to be finalised this month," Air Chief Marshal Prajin Juntong, the junta's chief of economic affairs, said after meeting with all government economic agencies.

After solving urgent problems such as paying farmers owed under the pledging programme, capping the prices of diesel fuel and liquefied petroleum gas, and expediting the disbursement of the 2013-14 state budget, Prajin also has to finalise 10 economic policies for the medium to long term. These are:

1 State spending does not exceed the initial budget, maintain financial discipline and prevent increasing public debt;

2 Revive the confidence of foreign and domestic investors;

3 Proceed with delayed projects under the 2014 budget;

4 Projects that have legality issues will be re-prioritised based on their importance to the economy, such as the ousted democratic government's proposed Bt2.4-trillion mega-project for logistics systems and Bt350-billion water-management programme;

5 Consider special projects such as promotion of border trade for small and medium-sized enterprises;

6 The economic plans will adhere to rules and regulations of financial discipline, the capital market and registered companies;

7 Set up a private-sector fund to lower public investment;

8 Modernise state enterprises;

9 Achieve energy stability;

10 Economic plans will be based on transparency.

The main idea is to construct a road map towards sustainable economic growth that avoids populist policies, which the junta believes are harmful in the long run.

For example, the NCPO will assist farmers by lowering their production costs rather than guaranteeing the prices of their crops. Farmers have to manage their costs and adhere to market prices, according to General Chatchai Sarikalya, assistant army chief and deputy chief of the NCPO supervising economic affairs.

The goals of the economic road map are to achieve financial discipline, promote renewable energy, develop basic infrastructure and make Thailand one of the leaders in the Asean Community. The road map is to be followed by the new government the military plans to appoint in September.


-- The Nation 2014-06-23

[terryp]

window dressing...2014/15 is when the hits the fan..inflation will skyrocket then lets see how happy the average Thai will be....lets not forget the 3 trillion in loans will be done by then ....then what?

[Pib]

Actually, I'm surprised the military junta has focused so much on economic issues right after taking control. Very positive step.

[Chao Lao Beach]

Taking issues head on, wold be nice to last.

[Stradavarius37]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

window dressing...2014/15 is when the hits the fan..inflation will skyrocket then lets see how happy the average Thai will be....lets not forget the 3 trillion in loans will be done by then alt=blink.png> ....then what?

Can we call you on this when your prognostications turn out to be untrue? Your post is already bullsh#t because they said they would finance mega projects through the central budget and public/private partnerships, not massive loans like PTP. Guess you forgot or never read that part.

[lee b]

The futures bright, the futures Junta !

[soalbundy]

Boosting domestic spending by paying the farmers....... I doubt that, most of the money will go to the banks to pay off loans

[janpharma]

great job...

[HUAHIN62]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

window dressing...2014/15 is when the hits the fan..inflation will skyrocket then lets see how happy the average Thai will be....lets not forget the 3 trillion in loans will be done by then alt=blink.png> ....then what?

Can we call you on this when your prognostications turn out to be untrue? Your post is already bullsh#t because they said they would finance mega projects through the central budget and public/private partnerships, not massive loans like PTP. Guess you forgot or never read that part.

It's all slight of hand. Next years budget deficit which must be financed will be B 250 bn (thats if revenue budgeted for are collected). The average expenditure per year for the B 3 tn infrastructure projects will be more than B 430 bn per year. The greatest part of the infrastructure spending will be accommodated by the budget deficit that must be financed. Same same just another way of doing it, but most of the money will be borrowed.

[northernjohn]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

window dressing...2014/15 is when the hits the fan..inflation will skyrocket then lets see how happy the average Thai will be....lets not forget the 3 trillion in loans will be done by then alt=blink.png> ....then what?

Can we call you on this when your prognostications turn out to be untrue? Your post is already bullsh#t because they said they would finance mega projects through the central budget and public/private partnerships, not massive loans like PTP. Guess you forgot or never read that part.

It's all slight of hand. Next years budget deficit which must be financed will be B 250 bn (thats if revenue budgeted for are collected). The average expenditure per year for the B 3 tn infrastructure projects will be more than B 430 bn per year. The greatest part of the infrastructure spending will be accommodated by the budget deficit that must be financed. Same same just another way of doing it, but most of the money will be borrowed.

True but this time most of it will go to making up for work that is long over due and the money budgeted for it before had been shipped of to offshore bank accounts.

Yes there will be some money go missing as corruption is never completely wiped out. But some very needy projects will be completed rather than popular policies that gain nothing but heartache. If people don't understand that ask a rice farmer to explain it to them.

Edit

2 Revive the confidence of foreign and domestic investors;

That is some thing that if the government stays the course it is on I believe will bring in far more industry to the point where companies that want to come in can't because of lack of workers.

The tax income will make it easier to stay on budget.

Edited June 23, 2014 by northernjohn

[realenglish1]

One good area would be allowing entrepreneurs. Lift restrictions on start ups of foreigners working in a corporation. Start with a requirement of one Thai for one foreigner and then then after the first year of existence then add another to the 2nd year then the 3rd year 3 and the 4th year 4. Some will argue that some businesses with grow faster than 4 years. True so scale it.

based on cash flow. The larger the cash flow the faster you must higher Thais till the 4th Thai is on the books

The backbone, the very foundation of a growth market is small business not big business, This will without question spur major growth and foreign investment as foreigners will be more willing to invest and grow.

I doubt my suggestion will gain wheels but times have changed and rules and regulations have to change with the times not sit on the books for a millenuim

[northernjohn]

I would take exception with

3 Proceed with delayed projects under the 2014 budget;

4 Projects that have legality issues will be re-prioritised based on their importance to the economy, such as the ousted democratic government's proposed Bt2.4-trillion mega-project for logistics systems and Bt350-billion water-management programme;

I am being petty I realize but Proceed with projects under the 2014m budget is a bit unrealistic.

They were designed to put money into offshore bank accounts and need reviewing and restructuring and in some cases just plain dumping.

Also "ousted democratic government's"

should read ousted PTP government

Petty I know but I feel that it is important to get it right. Hard to call a government that 52% of the people didn't want Democratic.

[tonbridgebrit]

Boosting domestic spending by paying the farmers....... I doubt that, most of the money will go to the banks to pay off loans

Yes, but the money going back to the banks will help boost the bank's profits, or at least prevent losses. !

Actually, how about a second payment to the rice farmers, call it an advanced payment for this year's rice harvest. That will boost domestic spending even more !

[northernjohn]

One good area would be allowing entrepreneurs. Lift restrictions on start ups of foreigners working in a corporation. Start with a requirement of one Thai for one foreigner and then then after the first year of existence then add another to the 2nd year then the 3rd year 3 and the 4th year 4. Some will argue that some businesses with grow faster than 4 years. True so scale it.

based on cash flow. The larger the cash flow the faster you must higher Thais till the 4th Thai is on the books

The backbone, the very foundation of a growth market is small business not big business, This will without question spur major growth and foreign investment as foreigners will be more willing to invest and grow.

I doubt my suggestion will gain wheels but times have changed and rules and regulations have to change with the times not sit on the books for a millennium

Are you including all the on line one man operations in your idea?

Thailand has an awful lot of them already of them.

[HUAHIN62]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

window dressing...2014/15 is when the hits the fan..inflation will skyrocket then lets see how happy the average Thai will be....lets not forget the 3 trillion in loans will be done by then alt=blink.png> ....then what?

Can we call you on this when your prognostications turn out to be untrue? Your post is already bullsh#t because they said they would finance mega projects through the central budget and public/private partnerships, not massive loans like PTP. Guess you forgot or never read that part.

It's all slight of hand. Next years budget deficit which must be financed will be B 250 bn (thats if revenue budgeted for are collected). The average expenditure per year for the B 3 tn infrastructure projects will be more than B 430 bn per year. The greatest part of the infrastructure spending will be accommodated by the budget deficit that must be financed. Same same just another way of doing it, but most of the money will be borrowed.

True but this time most of it will go to making up for work that is long over due and the money budgeted for it before had been shipped of to offshore bank accounts.

Yes there will be some money go missing as corruption is never completely wiped out. But some very needy projects will be completed rather than popular policies that gain nothing but heartache. If people don't understand that ask a rice farmer to explain it to them.

If you have proof of money thats been shipped offshore I am certain the junta will be interested to get the facts from you, untill then I will take it for what it seems to be - colour code blindness. Most of these projects was planned in any case and aren't new and as yet I have seen no improvement in the transparancy in the spending of this money, all I have is someone telling me they will spend my tax money in a transparant way. As to your blah blah blah about the rice farmers, you must reserve your questions to them for when the changes regarding the rice scheme kicks in, they will sing a different tune then. Thai rice farmers produce per rai half of what Vietnamese farmers are producing and their costs are nearly double, B 500 per rai will not make a dent in their profitability. As to the notion that input cost can be brought down, is only that a notion. How will you get a multi national like Yara to sell fertiliser cheaper to Thailand than to the rest of the world? If they subsidise fertiliser they will open a can of worms, because then there will be more scams with the cheap fertilizer than what there where with the rice scheme.

[Stradavarius37]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

window dressing...2014/15 is when the hits the fan..inflation will skyrocket then lets see how happy the average Thai will be....lets not forget the 3 trillion in loans will be done by then alt=blink.png> ....then what?

Can we call you on this when your prognostications turn out to be untrue? Your post is already bullsh#t because they said they would finance mega projects through the central budget and public/private partnerships, not massive loans like PTP. Guess you forgot or never read that part.

It's all slight of hand. Next years budget deficit which must be financed will be B 250 bn (thats if revenue budgeted for are collected). The average expenditure per year for the B 3 tn infrastructure projects will be more than B 430 bn per year. The greatest part of the infrastructure spending will be accommodated by the budget deficit that must be financed. Same same just another way of doing it, but most of the money will be borrowed.

Government deficit spending is common the world over, and is covered by GDP growth tax revenue. Its actually the sign of a healthy economy (and will be healthier with investments, taxes collected, etc spurred by these infrastructure investments. Is there anyone who is saying "Don't invest in infrastructure"? No. Getting a 2 trillion baht loan in one go, half of which would be tea money payouts is not. Plus putting it into the central budget makes it subject to many scrutiny mechanisims that would otherwise not have happened.

[citizen33]

Also "ousted democratic government's"

should read ousted PTP government

Petty I know but I feel that it is important to get it right. Hard to call a government that 52% of the people didn't want Democratic.

But we do get so little right on TVF. We might remember that the last elected government was a coalition government, and that the coalition parties taken together did receive more than half of the votes cast.

[tonbridgebrit]

Also "ousted democratic government's"

should read ousted PTP government

Petty I know but I feel that it is important to get it right. Hard to call a government that 52% of the people didn't want Democratic.

But we do get so little right on TVF. We might remember that the last elected government was a coalition government, and that the coalition parties taken together did receive more than half of the votes cast.

This 52% that did NOT vote for the Thaksin Party. Point taken.

Back home in England, when Tony Blair and Labour ran Britain for over a decade, how many people did NOT Labour ? Was Labour a democratically elected government ?

And what about David Cameron and the Conservatives today ? What about Mrs Thatcher and the Conservatives back in the 1980s, and the 90s ??

[Pinot]

I don't know what will happen going forward. From the above comments...anarchy

I want to believe the Generals will do the right thing. Living in Phuket, I'm overwhelmed with what they've done so far here.

[soalbundy]

I don't know what will happen going forward. From the above comments...anarchy

I want to believe the Generals will do the right thing. Living in Phuket, I'm overwhelmed with what they've done so far here.

I'm sure that they will do the right thing but come election time the clock will be turned back, nice try general, right ideas,wrong country.