Thai govt plans boost to flagging economy next year amid global risk factors

[webfact]

EXCLUSIVE INTERVIEW
Govt plans boost to flagging economy next year amid global risk factors
Suphannee Pootpisut
The Nation

Sommai

BANGKOK: -- WITH looming risk factors around the globe, Thailand's Finance Ministry plans to spend an additional budget worth Bt260 billion next year in an attempt to stimulate its languishing economy.

The amount represents about 2 per cent of gross domestic product.

"After the government announced and implemented the economic stimulus, there has been [a limited] budget disbursement, while the export sector that drives about 70 per cent of GDP is faced with global economic risks," Finance Minister Sommai Phasee said in an exclusive interview with The Nation Group.

He believes that the economic stimulus package that could be disbursed is only 20 per cent of total budget, as there is a limit to the country's bureaucratic process.

However, he said, if the budget disbursement was in line with the plan, there was no need to spend the additional budget for fiscal 2015. The extra budget would be set aside for spending on any projects that were not in the fiscal 2015 budget.

"Personally, I think the additional budget of Bt260 billion - or about 2 per cent of GDP - is the appropriate level," he said.

Sommai said the government now contributed only 20 per cent to GDP. Meanwhile, the country relies on exports, accounting for 70 per cent of GDP. If Thailand could collect from its tax income as much as 40 per cent of GDP - like Scandinavian countries - the country would have money for more spending, he said.

"Now, the government has tried to increase revenue. So, it has set a tax-reform plan in a bid to increase tax income to 20 per cent of GDP in 2017 from 18 per cent currently," said Sommai, adding there would be an economic boost with the news of a general election. He believed that if the government seriously worked out tax reform - and the public understood more about what the government had done to help the economy - the reform plan could move forward.

In the meantime, the ministry would try to block tax loopholes as well as widen the tax base, focusing more on those not in the tax payment system.

As for the inequality problem, Sommai said tax could be just one solution. There would be others as more funds became available in social welfare.

"So far, the Thai economy has been growing slowly because we have invested too little money. We also focus only on the promises of a balanced budget - and that's an illusion. So, we no longer spell out that word [balanced], as it would force the economy to grow more slowly," he said.

Thailand was able to pay its way though it had a low debt burden, said Sommai, adding the country had a public debt representing only 46 per cent of GDP.

He said the country's biggest challenge was its export sector and the competition from bigger economies. Though these factors were not to be overly feared, the country could be affected. Therefore, its strategy was to cooperate with all parties, especially Asean countries.

"The spending power of Thailand's neighbouring countries is still high. So, when I address international financial institutions, I ask them to give our neighbouring countries financial aid, instead of Thailand. This is because if our neighbours are doing well, we will be also do well," said Sommai.

Regarding the export growth next year, he declined to estimate whether it would reach 5 per cent, but said there would be strong competition. Investors would like to see an elected government soon.

Sommai said he was not sure there would be a large amount of foreign direct investment right now.

As for the tourism sector, if the global economy was in a good situation, foreign tourists would return to the country.

"We cannot hope too much for the country's economy overall. But, we have to be patient," Sommai said.

Source: http://www.nationmultimedia.com/business/Govt-plans-boost-to-flagging-economy-next-year-ami-30250875.html

-- The Nation 2014-12-29

[davehowden]

Finance Minister Sommai Phasee said:

"We cannot hope too much for the country's economy overall. But, we have to be patient,"

Patient for what, the patient to recover?

[worgeordie]

It will just result in throwing money down a black hole,

i can never see why Governments all talk about growth,

it would be a lot better for the World with less growth,

everything in the World is finite and economies and

especially the population cannot keep on growing,

Regards Worgeordie

[timewilltell]

It will just result in throwing money down a black hole,

i can never see why Governments all talk about growth,

it would be a lot better for the World with less growth,

everything in the World is finite and economies and

especially the population cannot keep on growing,

Regards Worgeordie

Unfortunately in a world of fiat currencies that rely on nothing but the trust of the people, growth is essential for otherwise the whole system will implode. It will implode eventually and something else will take the place of money as we know it but we are not there yet.

[lil fluffy clouds]

Time to face up to the facts, thailands going down along with all other countries who believe that life can be found in a shopping mall, seems to be very little understanding of primary sources in this world, all these so called economies are based in coersion and comparison to others and indexed by how much each individual can stuff in their mouth at any one time...

[rickirs]

"He believes that the economic stimulus package that could be disbursed is only 20 per cent of total budget, as there is a limit to the country's bureaucratic process."

The Government is run by a military Junta. The Junta answers to no one. There are NO limitations to what it can do unlike the bureaucratic process one has with an elected government and the attendant checks & balances.

The Goverment's fiscal year began October 1, 2014 and ends September 2015. Other than subsidies to the rice and rubber farmers to stave off embarrassing public protests, there has been no actual substantial government investments in the country. There have only been plans for projects mostly beyond 2015. The government has even gone in the opposite direction to putting capital into the economy by taking on foreign debt, ie., the Chinese-financed dual rail system.

Thailand will be lucky if it gets a GDP growth rate of 3% in 2015, and 50% of that growth will rely on domestic consumption. With household debt at a nine-year high and the highest of the Asian countries, domestic consumption will not drive higher GDP in 2015. Meanwhile, the military is pushing for a new submarine!

[Strangebrew]

From the mouths of Babe's Don't there have a clue? With the Russian's going to hell in a handbasket European countries going bankrupt and the US surging forward. The dollar gets stronger every day baht is weakening daily. Rice scam destroying Thailand's leadership in rice exports not to mention shady commerce on the streets companies will be leaving like rats on a sinking ship. Way to high import fees and export fees vat also. Oh well Thainess at it's finest" GREED". NUFF SAID.