Subsidised Thailand: a fool's paradise all of us are funding

[webfact]

STREETWISE
Subsidised Thailand: a fool's paradise all of us are funding
Achara Deboonme

BANGKOK: -- The Supreme Court's decision last week to order former prime minister Yingluck Shinawatra to stand trial on May 19 over her government's rice-pledging scheme was not unexpected. But rather than feeling sorry for her or satisfied with her demise, Thai society as a whole needs to ponder the big picture.

The chief question we need to ask: Are subsidies, now and in the future, necessary for Thailand? If something goes wrong, who should be held responsible and on what grounds?

First, we need to realise that Thais are now accustomed to many forms of subsidies.

In the health sector, millions can seek medical treatment for Bt30 per visit.

In the agricultural sector, farmers enjoy price guarantees plus subsidised-fuel vouchers and discounts on fertilisers.

Rice farmers enjoy the lion's share of state benefits, worth about Bt200 billion per year according to official estimates.

Subsidies are also extended to farmers who grow rubber, cassava, oil palm or even red onion or garlic. If the world sugar price drops, we can expect sugarcane growers out on the streets demanding subsidies.

However, the biggest subsidies go to the energy sector. The most common methods the government uses to keep fuel prices low is to fix them below the world market rate, to offer grants such as fuel allowances for farmers and fishermen, to hand out free or discounted fuel (eg, lPG cylinders) and offer tax breaks for commercial or industrial users.

"Fuel and electricity subsidies are clearly benefiting some consumers, including the poor, who rely on subsidised liquefied petroleum gas (LPG) for cooking and free electricity. However, evidence shows that energy subsidies have unintended consequences for the economy, the environment and social equity. They strain public finances, encourage over-consumption, and benefit wealthier citizens far more than the poor," the International Institute for Sustainable Development said in its report "A Citizen's Guide to Energy Subsidies in Thailand".

Subsidies divert government budget away from productive investment. They also encourage over-consumption that leads to pollution. Subsidised diesel has proven especially popular among Thais, accounting for about half of all the petroleum products we consume. In 2012 alone, the subsidy bill for the energy sector cost the taxpayer an estimated Bt195 billion.

That amount is more than half of the budget the junta is setting aside for the high-speed rail link from Bangkok to Nong Khai, and nearly four times higher than the budget approved last week for water and road projects.

Still, few of us complain about the energy subsidies. One possible reason is that they benefit vehicle owners, the middle class. Another could be that nearly all of the 50,000-plus taxis have shifted from oil to gas in the past few years. Lower gas prices mean lower fares for passengers.

Things are a little different in agriculture.

Farmers who grow other crops cried foul over the Yingluck government's huge Bt200 billion handout to rice growers. Well, rice fields account for about 150 million rai of land, compared to just 49 million rai for other crops combined and 14 million rai for trees (with or without fruits).

Rubber growers also enjoy sizeable aid from the public purse. The junta government has added an assistance fund worth Bt8.5 billion to the Bt20 billion the Yingluck administration set aside to buy rubber for government investment stocks. This is on top of Bt10 billion for a low-interest-loan scheme. At 22 million rai, rubber plantations cover an area only one-seventh that of rice farms. Government assistance for rubber growers is one fourth of the amount enjoyed by rice farmers.

No one is asking who would take responsibility if the Bt10 billion loan scheme turns sour. The rice-pledging programme lost up to Bt200 billion annually, or Bt600 billion in total, according to the National Anti-Corruption Commission and public prosecutors. Few asked how much benefit actually reached farmers.

Subsidies are mostly politically motivated and few create long-term benefits.

There are exceptions: No one wants to scrap the universal health scheme, as public health services are a necessity. Likewise, part of the energy subsidy goes to renewable energy producers, which tend to benefit the environment on which we all depend. But generally, it is difficult to single out good subsidies from bad ones, which enables people in power to continue buying support through public funds. And the beneficiaries will always keep quiet.

In countries like Thailand that lack the administrative capacity to offer social and economic support through other policy mechanisms, subsidies will remain a tangible way for governments to show that they are supporting their people.

Sadly, bringing Yingluck to court will not end this vicious cycle. Worse, the international community is puzzled that a former leader may be convicted because of a government policy. It is unlikely that Obamacare, however poorly planned and executed, will lead to something similar.

Subsidies will only be done away with when policymakers and the general public as a whole realise that they do not equate to long-term benefits and that they just pass the burden onto other sections of the population. Everybody is footing the bill, one way or another.

Source: http://www.nationmultimedia.com/opinion/Subsidised-Thailand-a-fools-paradise-all-of-us-are-30256628.html


-- The Nation 2015-03-24

[Robby nz]

The first problem with that one Achara is that the rice pledging scheme was never a subsidy and was never touted as one, rather as a self funding scheme with an initial out of budget investment of 500 billion which would eventually run at a profit.

And yes, there are at least 2 reports that have detailed the benefits that farmers received from the scheme and gone into the corruption associated with it.

[zaphod reborn]

Achara, no, it is not unlikely that Obamacare would result in a criminal prosecution of the President, but impossible. The Constitution immunizes the President from criminal prosecution of actions taken as the President (but not as a private citizen, cf Jones v. Clinton). If Thailand could ever get its act together and properly draft laws and a Constitution, maybe it too could enjoy the stability created by a rational and predictable legal process.

[bangkokfrog]

Irrespective of what the U.S.A. does, constitutions should never immunize a President (Prime Minister) against criminal prosecution for their actions. For me the issue with Ms. Yingluck and the rice pledging scheme is that, although she was the person in charge, she was either too busy jet-setting around the world to attend meetings or directed to stay out of it. In doing so, she ignored all the warnings about the way the scheme was being exploited for the benefit of her cronies.

[trogers]

Achara, no, it is not unlikely that Obamacare would result in a criminal prosecution of the President, but impossible. The Constitution immunizes the President from criminal prosecution of actions taken as the President (but not as a private citizen, cf Jones v. Clinton). If Thailand could ever get its act together and properly draft laws and a Constitution, maybe it too could enjoy the stability created by a rational and predictable legal process.

That is why a very wealthy country is now the world's most indebted nation...

[klauskunkel]

Subsidised Thailand: a fool's paradise all of us are funding

or

Subsidized Thailand: a paradise for few funded by fools

[lucky11]

Achara, no, it is not unlikely that Obamacare would result in a criminal prosecution of the President, but impossible. The Constitution immunizes the President from criminal prosecution of actions taken as the President (but not as a private citizen, cf Jones v. Clinton). If Thailand could ever get its act together and properly draft laws and a Constitution, maybe it too could enjoy the stability created by a rational and predictable legal process.

So you are saying that if Thailand adopted similar laws and constitution to America then whoever was in control in Thailand could continue to bribe/fool the people in order to gain power and keep on racking up multi-100's of billion baht deficits and be immune to it - even when they were warned against implementing this scam as it was assured to accumulate massive losses. Not only that, they carried it on when they realised what a disaster it was turning out to be because it was Thaksin's baby and they hoped that everything would miraculously turn out all right in the end!!!

Yeh, great idea of yours - why don't they go for 'immediate' democracy and repeat all of these mistakes? Anything else that the US can offer up to help Thailand? I'm sure that Prayut would listen to your ideas.

[trogers]

Achara, no, it is not unlikely that Obamacare would result in a criminal prosecution of the President, but impossible. The Constitution immunizes the President from criminal prosecution of actions taken as the President (but not as a private citizen, cf Jones v. Clinton). If Thailand could ever get its act together and properly draft laws and a Constitution, maybe it too could enjoy the stability created by a rational and predictable legal process.

So you are saying that if Thailand adopted similar laws and constitution to America then whoever was in control in Thailand could continue to bribe/fool the people in order to gain power and keep on racking up multi-100's of billion baht deficits and be immune to it - even when they were warned against implementing this scam as it was assured to accumulate massive losses. Not only that, they carried it on when they realised what a disaster it was turning out to be because it was Thaksin's baby and they hoped that everything would miraculously turn out all right in the end!!!

Yeh, great idea of yours - why don't they go for 'immediate' democracy and repeat all of these mistakes? Anything else that the US can offer up to help Thailand? I'm sure that Prayut would listen to your ideas.

The prove is in the eating. Give Thaksin the keys to the US Treasury for 5 years and then tell us again...lol

[SOTIRIOS]

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[Tatsujin]

Achara, no, it is not unlikely that Obamacare would result in a criminal prosecution of the President, but impossible. The Constitution immunizes the President from criminal prosecution of actions taken as the President (but not as a private citizen, cf Jones v. Clinton). If Thailand could ever get its act together and properly draft laws and a Constitution, maybe it too could enjoy the stability created by a rational and predictable legal process.

So you are saying that if Thailand adopted similar laws and constitution to America then whoever was in control in Thailand could continue to bribe/fool the people in order to gain power and keep on racking up multi-100's of billion baht deficits and be immune to it - even when they were warned against implementing this scam as it was assured to accumulate massive losses. Not only that, they carried it on when they realised what a disaster it was turning out to be because it was Thaksin's baby and they hoped that everything would miraculously turn out all right in the end!!!

Yeh, great idea of yours - why don't they go for 'immediate' democracy and repeat all of these mistakes? Anything else that the US can offer up to help Thailand? I'm sure that Prayut would listen to your ideas.

The prove is in the eating. Give Thaksin the keys to the US Treasury for 5 years and then tell us again...lol

Someone's already been at the gold reserves ... Germany is still waiting (I think) on all their gold stored there that they asked to be returned to them.

[godden]

zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

[soalbundy]

maybe the ruling elite prefer to pay subsidies rather than see a guillotine erected outside parliament.

[Baerboxer]

Irrespective of what the U.S.A. does, constitutions should never immunize a President (Prime Minister) against criminal prosecution for their actions. For me the issue with Ms. Yingluck and the rice pledging scheme is that, although she was the person in charge, she was either too busy jet-setting around the world to attend meetings or directed to stay out of it. In doing so, she ignored all the warnings about the way the scheme was being exploited for the benefit of her cronies.

I suspect the latter. She was directed to never attend meetings and make sure she kept as far away as possible. That way, so they thought, she could plausibly deny knowing anything was wrong and not be held responsible. The scheme was always intended as a scam to divert money to the "right" people and certainly not the poor farmers. Keeping Yingluck well away from the workings was essential so she could always deny complicity or any knowledge of anything. Didn't work because someone was dumb enough to make her chair of the meetings (no doubt a salaried position). That opened up the door for negligence charges as she never bothered to attend (wonder if the took the salary?). Plus she also denied the issues and dismissed negative comments even from the IMF and World Bank - so involving herself and asserting she was sole in charge.

She really has shot herself in the foot several times. The "escape" plan was always to get Thaksin back and get their hands on the 2.2 trillion baht off budget loan. Then all could have been covered with a huge corrupt income set up for decades.

This whole facade is nothing to do with subsidies to farmers and farm products - something most developed nations do. It's simply a get richer very quick scheme for certain politicians and their cronies. And it was working as intended and would have continued as such had Thaksin not overplayed his amnesty whitewash and the PTP regime not been brought down.

[elgordo38]

Achara, no, it is not unlikely that Obamacare would result in a criminal prosecution of the President, but impossible. The Constitution immunizes the President from criminal prosecution of actions taken as the President (but not as a private citizen, cf Jones v. Clinton). If Thailand could ever get its act together and properly draft laws and a Constitution, maybe it too could enjoy the stability created by a rational and predictable legal process.

So you are saying that if Thailand adopted similar laws and constitution to America then whoever was in control in Thailand could continue to bribe/fool the people in order to gain power and keep on racking up multi-100's of billion baht deficits and be immune to it - even when they were warned against implementing this scam as it was assured to accumulate massive losses. Not only that, they carried it on when they realised what a disaster it was turning out to be because it was Thaksin's baby and they hoped that everything would miraculously turn out all right in the end!!!

Yeh, great idea of yours - why don't they go for 'immediate' democracy and repeat all of these mistakes? Anything else that the US can offer up to help Thailand? I'm sure that Prayut would listen to your ideas.

If the dung hits the fan hey crank up the printers and print more bahts.

[Jonmarleesco]

'... evidence shows that energy subsidies have unintended consequences for the economy, the environment and social equity.' Unintended they might be, but hardly unpredictable.

Edited March 24, 2015 by Jonmarleesco

[Srikcir]

Achara, no, it is not unlikely that Obamacare would result in a criminal prosecution of the President, but impossible. The Constitution immunizes the President from criminal prosecution of actions taken as the President (but not as a private citizen, cf Jones v. Clinton). If Thailand could ever get its act together and properly draft laws and a Constitution, maybe it too could enjoy the stability created by a rational and predictable legal process.

That is why a very wealthy country is now the world's most indebted nation...

"now the world's most indebted nation";

No.

And what country wouldn't want to trade economic places with the US?

Edited March 24, 2015 by Srikcir

[trogers]

Achara, no, it is not unlikely that Obamacare would result in a criminal prosecution of the President, but impossible. The Constitution immunizes the President from criminal prosecution of actions taken as the President (but not as a private citizen, cf Jones v. Clinton). If Thailand could ever get its act together and properly draft laws and a Constitution, maybe it too could enjoy the stability created by a rational and predictable legal process.

That is why a very wealthy country is now the world's most indebted nation...

"now the world's most indebted nation";

No.

HighestDebtNations.jpg

And what country wouldn't want to trade economic places with the US?

HighestGDPNations.jpg

The world's most indebted nation at over US$18 trillions. Japan comes a close US$13 trillion.

Great figures on trade, but many US families need credit just to buy toilet paper. They don't have the cash. Trading on credit?

[maidee]

i pay about 50.000 baht in taxes per year

what do i get in return :: nothing

sorry, hastle to do yearly beggin at immigration & 90 days reporting THAT I STILL DID NOT MOVE HOUSE

[trogers]

i pay about 50.000 baht in taxes per year

what do i get in return :: nothing

sorry, hastle to do yearly beggin at immigration & 90 days reporting THAT I STILL DID NOT MOVE HOUSE

Is that fifty baht?

[soalbundy]

i pay about 50.000 baht in taxes per year

what do i get in return :: nothing

sorry, hastle to do yearly beggin at immigration & 90 days reporting THAT I STILL DID NOT MOVE HOUSE

you should change your accountant

[Suradit69]

First, we need to realise that Thais are now accustomed to many forms of subsidies.

In the west they give stuff away by issuing debt or printing paper currency with no hope of it being paid back. It's sort of like magic. Pay for health care, subsidize education, underwrite public transport, build stuff that nobody wants or needs & hire your brother-in-law to do the work at twice the market rate, fight trillion dollar wars ... and you don't even need to pay for it. Ever.

Thais have a long way to go before they can master that special farang magic.

Edited March 24, 2015 by Suradit69