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Thai govt adviser argues against economic stimulus


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Junta adviser argues against economic stimulus

The Nation


BANGKOK: -- The government could come under pressure to shift the economy out of idle, but gross domestic product should grow on its fundamentals, not from an injection of capital, Somkid Jatusripitak, an adviser to the National Council for Peace and Order (NCPO), said yesterday.

After the military's seizure of power from the elected government, Thailand has entered a "reform phase" and an election will follow. However, there remains a challenge for the country to stage a recovery or repeat its earlier steps, and short-term stimulus should be carefully considered, he said.

"I've seen people's concern over the economy, that it has not yet made a recovery. The NCPO expects lower growth in 2014 and 2015, piling pressure on the government to launch economic stimulus measures.

"However, economic stimulus should be done when necessary only. Any spending should be in line with the key agenda for the country's rehabilitation," he said.

GDP growth should be based on its capability to develop products in terms of innovation and strength, which could help the country compete with others. A capital injection could only boost the economy temporarily.

Stimuli attempted over the past 10 years were not worthwhile, he claimed, as high borrowings followed. If stimulus is necessary, it should coincide with long-term solutions for a proper growth rate.

The National Economic and Social Development Board is planning five special economic zones in Mukdahan, Tak, Songkhla, Trat and Sa Kaew provinces. This could help disseminate prosperity to economic-zone cities. Thailand is also a strategic centre for the Asean Economic Community. Problems could ensue if we do not have good connectivity.

As for the reforms pushed by the military regime, the important thing is to make people forget the past and start anew with more collaboration, Somkid said.

"What I'm concerned about the most is the rumour [that I am having] a conflict with Deputy Prime Minister MR Pridiyathorn Devakula, who is in charge of economic affairs. I feel uncomfortable about this.

"He and I worked together on the country's rehabilitation after the 2007 financial crisis. Now, he is a deputy prime minister and I'm part of the NCPO and help him on specific assigned issues," he said.

The government may have to accept two-way communication with the people through the media, and that would bring about people's participation in the reform process.

Source: http://www.nationmultimedia.com/business/Junta-adviser-argues-against-economic-stimulus-30248149.html

-- The Nation 2014-11-20

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The Government appears to be clueless when it comes to setting the economy in the right direction.

The fixation is proving that they are the good guys, with this vague threat of reforming corruption. Not even this goes far enough.

The media has its hands tied around its back, unable to report on how Thais are really feeling.

They really need to get projects going. The other problem is that they may even stall the economy or put it into recession. The rest of the world will not wait for Thailand to get their act together, as they want to see a free election before they go spending or investing in Thailand.

"What I'm concerned about the most is the rumour [that I am having] a conflict with Deputy Prime Minister MR Pridiyathorn Devakula, who is in charge of economic affairs. I feel uncomfortable about this.'

And if you go too far with comments, people sue you for hurting their feelings?

The concentration of developing hate against the past government has now run out of steam. If they don't start managing the economy properly, they will cause wide spread problems in society, that the rice scheme will become a distant memory.

Edited by Chris Lawrence
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"Stimuli attempted over the past 10 years were not worthwhile ..."

Let the record (or chart in this case) show the success of previous economic stimuli. The Junta's economic policies have been to recreate a similar stimulus.

All the current predictions thus far by the Government, BOT, and World Bank for sustainable growth for 2015 at 3.5% and higher depends on the domestic economy as exports may likely suffer low growth due to sinking European, Russian, and Japanese economies in the near term. Economic stimulus is vital for 2015 growth to get a 4% GDP growth. Both Finance Minister Sommai Phasi and BOT Governor Prasarn Trairatvorakul agree there must be an economic stimulus to drive growth in 2015.

But now we have Somkid as advisor to the NCPO who doesn't agree. I've said before that Juntas are likely to be fiscally conservative and not resort to much capital investment into the economy at a time when the nation most needs such stimulus to recover from the economic disruption created by military coups. Somkid's position is causing a major conflict within the administration on the economic direction of the nation for 2015. Who will General/PM Prayuth of the NCPO listen to for guidance - the Insider Somkid or the Outsiders?

Frankly, I don't think it really makes any difference whose advice Prayuth follows - it's too late for 2015 already.

I believe that Prayuth gambled that the payoff of the rice pledge program subsidies to the rice farmers, the new subsidies to both rice and rubber farmers, and domestic price controls would immediately jump start GDP growth for 2014Q4 and that would continue to carryover into 2015 at an increasing rate. It didn't happen thus far. The funding for infrastructure investment in 2015 requires 3-5 years to trigger growth and part of that funding was essentially diverted for the 2014 economic stimulus - a rob Peter to pay Paul scenario.

Gen. Prayuth may wish for the simple days as a General.


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