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[Lite Beer]

EDITORIAL
It will take more than 'Somkid-nomics' to lift us up
The Nation

BANGKOK: -- The government's financial stimulus package is a drop in the ocean compared to Thailand's massive loss of export muscle

In a clear bid to shore up flagging public support, Prime Minister Prayut Chan-o-cha's military-led government is attempting to revive the sluggish economy with the same brand of populist policies that its deputy premier, Somkid Jatusripitak, previously deployed during the Thaksin Shinawatra administration.

"Somkidnomics" - basically a sub-set of the "Thaksinomics" once vaunted throughout the land that still retains many admirers today, though it's regarded with contempt by others - extended to village funds, loans to small and medium-size businesses and the One Tambon One Product scheme, all subsidised from the taxpayer's pocket. Those sorts of policies, however, will not work this time around.

Somkid was Thaksin's right-hand money man in the early 2000s and together they implemented what was called a "dual-track economic policy", in which the export sector drove GDP growth while populist domestic policies aided entrepreneurs at the grass roots, from village craftsmen to the SMEs. The average citizen soon found he had more purchasing power and small and medium businesses flourished.

The global economy, buoyant in the advent of a new millennium, was strong and favourable to such undertakings, allowing Thai exporters to play a leading role in contributing to GDP growth, which rose as high as 5 per cent per annum. The Village Fund, Otop and other schemes were just as successful in driving the domestic economy. With both tracks functioning robustly, hand in hand, Gross Domestic Product surged.

Today, however, the global economy is in trouble, with fresh concerns arising over China's worse-than-expected slowdown. Given its importance to the world economy, China's problems inevitably hurt everyone, and particularly exporting nations like Thailand and its Southeast Asian neighbours.

Statistics confirm the peril facing Thai exporters: Shipments dropped by 4.6 per cent in the first seven months of this year compared to the same period last year, an unprecedented loss of momentum.

With exports accounting for 60 to 70 per cent of Thailand's GDP, the negative effects of our spluttering export engine are unlikely to be offset by any gains made through the populist policies now being implemented by the government's new economic team.

The Somkid team has vowed to add Bt130 billion to the economy with an initial cash injection, comprising Bt60-billion soft loans disbursed through the Village Fund. Another Bt36 billion will be distributed on a fast-track basis through provinces and municipalities to assist low-income earners and farmers hit hard by the depressed market prices for rice and other commodities. Finally, Bt40 billion is earmarked for small investment projects, again under the purview of local government. Additional measures are also planned to bolster investment and other financial activities.

The initial Bt130-billion stimulus package will account for just 1 to 3 per cent of GDP, with some multiplier effects. It is unlikely that the positive effects will be enough to compensate for the loss of the export sector's massive contribution to GDP. We have lost the combined power of the dual-track approach that succeeded so well in the early 2000s.

Nor is domestic consumption expected to improve much as a result of the new stimulus policy, largely because household debts have risen so significantly in the past several years. They currently account for 88 per cent of GDP, meaning consumers will be unable or unwilling to take on further debt as they did in the far more optimistic times of the early 2000s.

The unavoidable conclusion is that "Somkidnomics" is highly unlikely to restore even a semblance of Thailand's former prosperity. The government is wasting time with wishful thinking.

Source: http://www.nationmultimedia.com/opinion/It-will-take-more-than-Somkid-nomics-to-lift-us-up-30268171.html

-- The Nation 2015-09-05

[Praematura]

But military governments are known for efficiency and transparency necessary for growth. All the bs about the world economy but no introspection here. Why is it Burma, Cambodia, Vietnam, ANY SE Asian country is doing better than this country by several points at a minimum. Thailand <deleted> itself not the world economy. Deal with the source and don't expect Thais who are in debt up to their eyeballs to provide domestic consumption.

[worgeordie]

You cannot export ,if no one is buying.and the domestic market

will shrink,because the majority of Thais,are in a lot of debt already.

throwing money at the problem will not help anyone,in the long run.

regards Worgeordie

[WitawatWatawit]

Wouldn't that 130 billion stimulus package be better spent on setting up soup kitchens around the country?

[Jon Wetherall]

You cannot export ,if no one is buying.and the domestic market

will shrink,because the majority of Thais,are in a lot of debt already.

throwing money at the problem will not help anyone,in the long run.

regards Worgeordie

True, all the thrashing about and blaming other people for the problems Thailand created for itself, isn't going to help. My opinion is that falling exports is at least in part a credibility issue - the international community appears not to be very impressed with Thailand's behaviour as made visible by an illegal coup d'etat and revelations about illegal fishing and human traficking.

It is not possible to know if people are not buying because they can't afford it, or not buying because they don't want anything to do with Thais. In the first instance, they will be too embarrassed to say, in the second, too polite.

[Jon Wetherall]

Wouldn't that 130 billion stimulus package be better spent on setting up soup kitchens around the country?

Or used to develop some people-centric welfare programs to look after the poor Thais that many decades of mismanagement by the rich and powerful have created and who even now suffer from poor health. poor diet and poor education. In the 21st Century.

It's mot 'populism' it's humanitarian.

Edited September 5, 2015 by Jon Wetherall

[jaywalker]

Wouldn't that 130 billion stimulus package be better spent on setting up soup kitchens around the country?

If they did that then 99% of the street vendors would be out out of a job, and umm, err...... on the street?

130 billion baht of free noodles does sound tasty though.

[Srikcir]

"household debts have risen so significantly in the past several years."

Try "in the past year."

In July 2014 household debt was the highest in nine years.

This month household debt is the highest in ten years.

Credit card defaults rose 28% in the second quarter of 2015.

Meanwhile Thailand's high growth of household debt has become the highest in Asian countries. This endangers ASEAN Community investment and trade in Thailand. If the ASEAN countries cannot find an adequate market for goods and services in Thailand, it might as well dissolve or re-organize without Thailand.

Edited September 5, 2015 by Srikcir