Thai opinion: In economic policy, transparency rules

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STREETWISE
In economic policy, transparency rules
Achara Deboonme

BANGKOK: -- When it comes to economic policies, what I like the most about this junta is its plan to cut fuel subsidies.

Prime Minister General Prayut Chan-o-cha was right when he said that there is an imbalance between energy production and imports.

In the plan, diesel would be retailed at over Bt30 per litre for the first time since the subsidy scheme started in May 2011. Gas prices would also rise.

Thais should hail this decision. In 2013, David Lipton, deputy managing director of the International Monetary Fund, said "subsidy reform can lead to a more efficient allocation of resources, which will help spur higher economic growth over the longer term". Removing energy subsidies can also strengthen incentives for "research and development in energy-saving and alternative technologies", he said. He also noted that, while intended to benefit consumers, subsidies are often inefficient and "could be replaced with better means of protecting the most vulnerable parts of the population".

Our neighbour, Indonesia, is on the same course. Under its new president, fuel subsidies will be cut to divert budget to necessary investment projects. Last year, the country spent over $4 billion (Bt130 billion) on fuel subsidies. The decision has been made despite the country sitting on proven crude oil reserves of 3.59 billion barrels, compared to 449 million barrels in Thailand (as per US Energy Information Administration data).

Notably, Indonesia was the fourth-largest liquefied natural gas (LNG) exporter in 2013, behind Qatar, Malaysia and Australia. Thailand has been a net importer of gas for years.

Sadly, the junta's policy comes with a twist. In December, taxi fares in Bangkok will be raised by 8 per cent. Six months after that, if drivers improve their service by treating passengers better and wearing uniforms, fares will be raised by another 5 per cent. Inflation is the sole reason for the increase.

Would it be better if we allowed a bigger hike in return for hybrid taxis?

Well, I understand that we can't get everything we want.

Take the railway development plan as another example.

The junta in August approved the $23-billion transport project for two high-speed railways to link directly with China by 2021. In Beijing on Sunday, Prayut showed his support for the plan.

And there's no doubt it is a good plan. But it would be perfect if an international bid were opened, so as to prove the transparency that the military promised. Only then would we know the actual cost of the development and how we can pay for it.

Reports say that Thailand will finance the project through the export of agricultural products to China. If the cost is really $23 billion, that would involve the export of 77 million tonnes of jasmine rice, which now costs Bt15,000 ($300) a tonne. That should not be a problem for China, which consumes over 100 million tonnes of rice per year. But the question is whether cost of the rail project is right, without competition.

Talking about competition, proposed amendments to the Trade Competition Act will be tabled for the junta's consideration this month.

The Commerce Ministry's committee recently agreed to improve the guidelines on market domination. It is proposed that a business entity will be considered to dominate the market if it holds a market share of more than 30 per cent.

The argument is that revision was necessary because the country's product and service market is considered relatively small. For more than 10 years, the threshold has been set at 50 per cent (though the market size was relatively smaller).

Here's another twist: Those dominating the market will face legal action only if they use unfair practices. An official said if there are no complaints of unfair practice, an entity with a market share beyond 30 per cent would not face investigation. Well, if I were the CEO of a foreign company doing business in Thailand, I would hate this. It leaves room for intimidation and negotiation - again, something that runs counter to the junta's transparency policy.

First, the appropriate threshold should be settled. This should not be a blanket threshold, as industries which still need foreign input should enjoy a higher threshold.

Second, once the threshold(s) is agreed, it should be applied to all entities, regardless.

If the junta is serious about eradicating corruption, any room for negotiation should be closed.

Consequently, the Securities and Exchange Commission's request that the Foreign Business Act be reviewed should win support.

At a recent seminar, SEC deputy secretary-general Tipsuda Thavaramara said the list of industries protected by the Foreign Business Act could be shortened to lower foreign investment barriers. Annex 3 of the Act states that foreigners who provide a service that is not covered by the list must still obtain a foreign business licence prior to commencing operations. This demands that an exemption be sought case by case.

Thailand moved up two places to 26th in the World Bank's latest Ease of Doing Business rankings. If this murky environment is dealt with, that ranking should jump.

Source: http://www.nationmultimedia.com/opinion/In-economic-policy-transparency-rules-30247420.html

-- The Nation 2014-11-11

[djjamie]

Thai opinion: In economic policy, transparency rules

Previous government - Commerce Minister Boonsong Teriyapirom yesterday remained tight-lipped over the government-to-government (G-to-G) rice export controversy, saying details of rice sales are confidential and cannot be released to the public.

Current government - The junta in August approved the $23-billion transport project for two high-speed railways to link directly with China by 2021.

Maybe it is a fake transport project as was the G-to-G deals!!!

At least the "transparency thing" is going in the right direction now.

Edited November 11, 2014 by djjamie

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Thai opinion: In economic policy, transparency rules

Previous government - Commerce Minister Boonsong Teriyapirom yesterday remained tight-lipped over the government-to-government (G-to-G) rice export controversy, saying details of rice sales are confidential and cannot be released to the public.

Current government - The junta in August approved the $23-billion transport project for two high-speed railways to link directly with China by 2021.

Maybe it is a fake transport project as was the G-to-G deals!!!

At least the "transparency thing" is going in the right direction now.

In the pursuit of Junta transparency can you please post the G-G details of the Chinese rail deal that has Gen. Prayuth's agreement?