Reduced Thai govt spending sparks fears of slowdown

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GOVT SPENDING
Reduced govt spending sparks fears of slowdown
Petchanet Pratruangkrai
The Nation

Joint standing committee concerned about falling crop prices; calls for cut in policy interest rate

BANGKOK: -- Thailand’s three most powerful private-sector organisations have expressed concern over delayed budget disbursement in the government sector, as well as falling crop prices, which could lead to an economic slowdown and low consumer spending.

To drive economic growth, the Joint Private Standing Committee - comprising the Board of Trade of Thailand, the Federation of Thai Industries, and the Thai Bankers Association - yesterday urged the government to accelerate its budget disbursement, and to provide subsidy measures for major crops - rice, rubber and sugar cane, in particular.

It also called for help for small and medium-sized enterprises (SMEs), and for the Bank of Thailand to lower the policy interest rate.

Yesterday's meeting was chaired by Supant Mongkolsuthree, chairman of the Federation of Thai Industries, who said the private sector was particularly concerned over delayed budget disbursement by the government, as public spending was a key driver of the economy.

Drop in government disbursement

As of the end of January, the government's disbursement and investment totalled Bt50 billion, just 13 per cent of the budgeted level for the current fiscal year, which began in October.

Over the same period in the previous fiscal year, government disbursement exceeded Bt120 billion.

Supant said that with slowing disbursement and investment by the government, budget spending and investment would account for only 30 per cent of the full-year target by the end of March - halfway through the fiscal year.

"Slow budget disbursement and investment by the government will affect the growth of private businesses, as they have waited for the government's projects. The government needs to stimulate its investment projects and spending, which would help drive growth for the private sector," he stressed.

The joint standing committee, meanwhile, has maintained its economic-growth projection for 2015 at 3.5 per cent, as it expects stronger economic expansion and more budget disbursement in the second half.

Export forecast cut

However, it has revised down its export-growth forecast from 3.5 per cent to just 2 per cent-2.5 per cent, due to the slow pace of global economic expansion, and depreciation of the currencies of the Kingdom's trading partners and export rivals in relation to the US dollar.

Supant said that since many negative factors would continue to hit Thai shipments, the export sector would not experience brighter growth this year.

The committee called for the central bank's Monetary Policy Committee to cut the policy interest rate by another 50 basis points in a bid to prevent an influx of foreign capital and a further strengthening of the baht.

Cutting the policy rate should also help increase Thai export competitiveness, he added.

Moreover, in order to help SMEs, the committee encouraged the government to provide financial support by reducing the tax burden on SMEs, as well as provide funding for them.

Asked about the government's performance now that it has been in place for almost half a year, Supant said that while the private sector acknowledged its good intentions in terms of driving the country's growth, few tangible results had been seen.

Deputy Finance Minister Wisut Srisuphan said yesterday that Bt1.43 trillion, or 41 per cent of the overall target of Bt3.5 trillion, was disbursed into the economic system during the first five months of the fiscal year, between October last year and February. He said that of the Bt1.43-trillion disbursed money had been divided into Bt1 trillion of the government’s regular expenditures, or 47.8 per cent of the budget set at Bt2.12 trillion; Bt80 billion of government’s investment from the original debts of Bt140 billion, or 17.9 per cent of the Bt449 billion budget.

Source: http://www.nationmultimedia.com/business/Reduced-govt-spending-sparks-fears-of-slowdown-30255288.html


-- The Nation 2015-03-04

[BSJ]

Part of the problem is the baht is valued to high. Exports would benefit greatly if it's true value was shown.

[davehowden]

"Supant said that while the private sector acknowledged its good intentions in terms of driving the country's growth, few tangible results had been seen."

Oh, the truth will out!

[billd766]

"Supant said that while the private sector acknowledged its good intentions in terms of driving the country's growth, few tangible results had been seen."

Oh, the truth will out!

The private sector is looking at less PUBLIC money being spent so the PRIVATE profits will fall and there will be less in the trough for the greedy this coming year.

Oh, the truth will certainly come out.

[elgordo38]

Part of the problem is the baht is valued to high. Exports would benefit greatly if it's true value was shown.

Its the same old song and dance going on in the rest of the world cut interest rates and hurt the savers and help out? all those over extended people who have borrowed to the hilt to borrow more. You know the people that have their nose glued to the mobile shop window looking for the next bigger and better phone that they really cannot afford but expense be hanged they want it now. They more than likely have a drawer full of older models still functioning but outdated. Plus it gives big business almost free money to buy back their own stock or buy out their competition. I can remember the day we did not buy things till we had cash in hand. Our hard earned cash now people rush to the friendly neighborhood bank and load up on as much cash as they can get to buy frivolous things. This mountain of debt must soon collapse.

[Strangebrew]

If baht show true value many Thai billionaires would be millionaires only. But like I said last year the end of the over inflated baht is nearing an end.

[angiolo]

You think that the value o the BAHT will come down>> oh I hope so ,the gbp/thb is bad news for UK farang

[mike324]

people should not fear a slowdown, its better than having a bubble burst and fake growth like we had in the past 2 years driven by rice scheme and first car scheme which were all unsustainable and ends up biting the country and its citizens in the butt in the end

[Srikcir]

Government touts its economic policies a success:

“Deputy Prime Minister M.R. Pridiyathorn Devakula stated Friday that the government will not be implementing a second round of economic stimulus package in light of indications that previous budgetary injections have made a significant impact on the country’s economy.” 2015-02-07

“Government spending is accelerating in Thailand, but its efforts are paying off. The country’s economy is picking up as urban consumption improves. The improvement comes after political turmoil slowed economic growth in 2014.” 2015-02-15

Rather they been a failure:

- “The military has promised to unleash billions of dollars on much-needed infrastructure projects….But the money is yet to kick into the economy.” 2015-02-11

- “As Barclays Capital put it in a note last month: "The main impediment to growth at present is the slow pace of fiscal spending, which is also delaying investment and consumption decisions." 2015-02-11

- “Thailand's economy slowed sharply in 2014 to grow at its slowest pace for three years, as political turmoil engulfing the kingdom compounded a fall in agricultural prices and waning exports. The figure is the weakest since 0.1 percent in 2011, when the country was battered by devastating floods.” 2015-02-16

The Junta alone must bear the responsibility for Thailand’s continued failing economy. It has the power to make unrestrained and massive investments in the infrastructure but Prayuth declines to do so. Unfortunately, it is because of his power that no one can challenge its policies.

[rubl]

Government touts its economic policies a success:

“Deputy Prime Minister M.R. Pridiyathorn Devakula stated Friday that the government will not be implementing a second round of economic stimulus package in light of indications that previous budgetary injections have made a significant impact on the country’s economy.” 2015-02-07

“Government spending is accelerating in Thailand, but its efforts are paying off. The country’s economy is picking up as urban consumption improves. The improvement comes after political turmoil slowed economic growth in 2014.” 2015-02-15

Rather they been a failure:

- “The military has promised to unleash billions of dollars on much-needed infrastructure projects….But the money is yet to kick into the economy.” 2015-02-11

- “As Barclays Capital put it in a note last month: "The main impediment to growth at present is the slow pace of fiscal spending, which is also delaying investment and consumption decisions." 2015-02-11

- “Thailand's economy slowed sharply in 2014 to grow at its slowest pace for three years, as political turmoil engulfing the kingdom compounded a fall in agricultural prices and waning exports. The figure is the weakest since 0.1 percent in 2011, when the country was battered by devastating floods.” 2015-02-16

The Junta alone must bear the responsibility for Thailand’s continued failing economy. It has the power to make unrestrained and massive investments in the infrastructure but Prayuth declines to do so. Unfortunately, it is because of his power that no one can challenge its policies.

Fortunately PM Prayuth doesn't use his alleged power to make unrestrained and massive investments. That's better left to elected governments with PMs who like to take credit for such schemes but not the responsibility that goes with it.

[BadBouy]

Seems I have heard a similar story before using the term shovel ready projects,

then we find out the projects were not so shovel ready but still the money is gone

and can not be found.

[fatfather]

And who is minding that a certain lobby enjoy cheap purchases abroad and secure their THB well, as long as the bubble don't burst? Things are going the way as they go, "check bin" will be later. It's Thailand and the current government is not able to change "tradition" in such a short time, even they try hard.

Fatfather

[Robby nz]

The PM has been telling the ministries to ramp up their budget payment for some time but it seems someone is not listening.

Time for some serious ass kicking Mr PM.