Thai interview: Push for economic restructuring

[webfact]

EXCLUSIVE INTERVIEW
Push for economic restructuring
Sasithorn Ongdee
The Nation


Pridiyathorn

Restructuring taxes, fixing 'weak points', revamping investment, driving economy

BANGKOK: -- Within the year or so that the Prayut Chan-o-cha government is in office, five main issues will be pushed for economic structural change, Deputy Prime Minister MR Pridiyathorn Devakula says.

These are maintaining economic momentum, laying the foundation of a digital economy, resolving "weak points", restructuring taxes and revamping investment promotion.

In an interview with The Nation last week, Pridiyathorn, who is responsible for economic affairs, insisted that he would be in power for just one year, saying that clinging on to power was dangerous.

Although building a digital economy will challenge him most, the huge losses from the rice-pledging scheme may give him the most headaches.

"We might face an accumulated loss of up to Bt800 billion from the rice pledging [scheme]," he said, explaining that there were Bt200 billion in losses for all types of agricultural crops, but mostly paddy, before 2010 and Bt500 billion in losses for crops from 2011-13.

"The rice-pledging scheme, which is one single policy, has incurred the biggest damage on the country… perhaps that might be considered the biggest damage in the world."

He said the government may resolve this burden by leaving it to be paid off via a long-term bond issue - similar to the Bt780-billion Financial Institutions Development Fund (FIDF) bonds, which was part of some Bt1.3-trillion in debt left from the financial crisis of 1997. The FIDF bonds were issued to the public with a 30-year maturity. However, the amount of bonds to be issued would depend on exact figures delivered by a subcommittee auditing the rice scheme.

"This will help ease the load upfront of the government's burden so it has capacity left for budget allocation for investments," Pridiyathorn said.

While awaiting the figure for the rice scheme losses, the government needs to tackle the slowing economy by injecting money directly to rice and para rubber farmers, as it believes cash handouts will help to reboot the economy most effectively.

Pridiyathorn said the two packages to rice and rubber farmers were expected to cost not more than Bt50 billion but no further measures needed. Investments would be the next "engine" to prod the slow economy to grow. The bidding process for the construction of rail links - part of the national infrastructure development plan - would be sped up. The private sector would be also encouraged to participate in the projects via public-private partnership in a bid to reduce state spending.

"When the investment budgets are put in place, the real estate business will move on and that will help spur the economy for next year - all year," he said.

In regard to the "digital economy" plan, Pridiyathorn said he wanted to see a draft of the digital economy act that will be put to the National Legislative Assembly this year. If the bill could be passed before year-end, the government would have a full year to push the direction it should aim for, or what features it should have.

"To serve this, empowering or reinventing will be needed to upgrade the ICT [information communications technology]," he said, adding that the year may only be enough time to lay the foundations and the next government would need to carry out action plans and implement the task.

Pridiyathorn also said the government needed to resolve several weak points - not only in regard to fuel prices, so they reflect real costs - but other things in other sectors. However, the Energy Ministry was restructuring fuel prices.

In regard to taxes, he said he expected Thailand would not only be a regional hub of operating headquarters for multinational firms, but should focus on becoming a hub of international operating headquarters instead. But that would be tied to no taxes.

Lastly, Pridiyathorn said the government would focus more on "out-bound" investment promotion to help Thai companies expand their businesses broad. Though lacking Board of Investment support, he said that many Thai companies have spread to most of the Asean markets.

Source: http://www.nationmultimedia.com/politics/Push-for-economic-restructuring-30245819.html


-- The Nation 2014-10-20

[Robby nz]

Although building a digital economy will challenge him most, the huge losses from the rice-pledging scheme may give him the most headaches.

"We might face an accumulated loss of up to Bt800 billion from the rice pledging [scheme]," he said, explaining that there were Bt200 billion in losses for all types of agricultural crops, but mostly paddy, before 2010 and Bt500 billion in losses for crops from 2011-13.

"The rice-pledging scheme, which is one single policy, has incurred the biggest damage on the country… perhaps that might be considered the biggest damage in the world."

Interesting that there are still 200 billion debts from previous schemes still to be paid back and as he says, the full loss from the Yingluck pledging scheme is still being assessed.

There are still ongoing costs mounting up for storage and maintaining of what is there as well as the costs of selling and shipping what is saleable and disposing of the rest.

A billion Baht total cost when it is all added up could well be on the low side.

That is without taking into consideration that farmers are deeper in debt than they have ever been.

[rickirs]

Just more useless hyperbole.

“… perhaps that might be considered the biggest damage in the world."

Did it eclipse worldwide loses as a result of the collapse of global banks and housing markets primarily in the West that cost the US economy alone between $6 trillion - $14 trillion (USD)? The Junta plans to payoff its rice pledge program debt in seven-ten years; a fairly short time in terms of government borrowing.

But I do agree with Pridiyathorn that being “in power for just one year … that clinging on to power was dangerous.” Maybe he can convince his boss to step down after May 2015?

[rickirs]

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

Although building a digital economy will challenge him most, the huge losses from the rice-pledging scheme may give him the most headaches.

"We might face an accumulated loss of up to Bt800 billion from the rice pledging [scheme]," he said, explaining that there were Bt200 billion in losses for all types of agricultural crops, but mostly paddy, before 2010 and Bt500 billion in losses for crops from 2011-13.

"The rice-pledging scheme, which is one single policy, has incurred the biggest damage on the country… perhaps that might be considered the biggest damage in the world."

Interesting that there are still 200 billion debts from previous schemes still to be paid back and as he says, the full loss from the Yingluck pledging scheme is still being assessed.

There are still ongoing costs mounting up for storage and maintaining of what is there as well as the costs of selling and shipping what is saleable and disposing of the rest.

A billion Baht total cost when it is all added up could well be on the low side.

That is without taking into consideration that farmers are deeper in debt than they have ever been.

The 4%-5% growth rate for GDP in 2014 expected by the Yingluck administration as a result in part of making massive government payments for the rice pledge program would have virtually wiped out the 2013 rice debt.

But after the shutdown of the government from the anti-government protests and abandonment from the parliament by the Democrats, the government was not only unable to make major international rice sales (ie., China cancelled because of political conflict) but also unable to borrow funds to pay the farmers. And to make economic matters worse, the coup itself by overthrow of the Interim government and seizure of all governmental elements through its martial law has cost the nation about 2%-4% growth rate for GDP in 2014. Now add to these problems the Junta’s Bt.50 billion for new rice and rubber supports, new household goods price controls, etc., and you will have a downward spiraling of GDP growth going into 2016. Pridiyathorn's leaving after a year may be more an abandonment of the coup economics than an ethical decision.

[rubl]

Just more useless hyperbole.

“… perhaps that might be considered the biggest damage in the world."

Did it eclipse worldwide loses as a result of the collapse of global banks and housing markets primarily in the West that cost the US economy alone between $6 trillion - $14 trillion (USD)? The Junta plans to payoff its rice pledge program debt in seven-ten years; a fairly short time in terms of government borrowing.

But I do agree with Pridiyathorn that being “in power for just one year … that clinging on to power was dangerous.” Maybe he can convince his boss to step down after May 2015?

I'm sure PM Prayut will not step down before the 24th of August, 2015 (a year after having become PM). He might even please you with staying on a wee bit longer.

Anyway, you're right, this loss is nothing, peanuts on the global scale, something a rich country like Thailand can easily afford.

Mind you, the paying back of a debt guaranteed by a previous government is indeed normal. It's just that it was somewhat unexpected what with the Yingluck Administration choosing a revolving funds financial mechanism as the RPPS was supposed to be self-financing. If the RPPS had not been neglected but properly managed with budget allocation in the National Budget, we could now have sufficient financial leeway for the coming seven or eight years to claim the financing for the two double track 160km/h rail links. Instead the Thai government has to do both now.

[rubl]

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

Although building a digital economy will challenge him most, the huge losses from the rice-pledging scheme may give him the most headaches.

"We might face an accumulated loss of up to Bt800 billion from the rice pledging [scheme]," he said, explaining that there were Bt200 billion in losses for all types of agricultural crops, but mostly paddy, before 2010 and Bt500 billion in losses for crops from 2011-13.

"The rice-pledging scheme, which is one single policy, has incurred the biggest damage on the country… perhaps that might be considered the biggest damage in the world."

Interesting that there are still 200 billion debts from previous schemes still to be paid back and as he says, the full loss from the Yingluck pledging scheme is still being assessed.

There are still ongoing costs mounting up for storage and maintaining of what is there as well as the costs of selling and shipping what is saleable and disposing of the rest.

A billion Baht total cost when it is all added up could well be on the low side.

That is without taking into consideration that farmers are deeper in debt than they have ever been.

The 4%-5% growth rate for GDP in 2014 expected by the Yingluck administration as a result in part of making massive government payments for the rice pledge program would have virtually wiped out the 2013 rice debt.

But after the shutdown of the government from the anti-government protests and abandonment from the parliament by the Democrats, the government was not only unable to make major international rice sales (ie., China cancelled because of political conflict) but also unable to borrow funds to pay the farmers. And to make economic matters worse, the coup itself by overthrow of the Interim government and seizure of all governmental elements through its martial law has cost the nation about 2%-4% growth rate for GDP in 2014. Now add to these problems the Junta’s Bt.50 billion for new rice and rubber supports, new household goods price controls, etc., and you will have a downward spiraling of GDP growth going into 2016. Pridiyathorn's leaving after a year may be more an abandonment of the coup economics than an ethical decision.

Bravo, you hit another record and I can only wonder why you weren't nominated or won the Nobel Price for Economy.