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Published on January 25, 2008

He said that if the government only approves one-third of the pending 11 petrochemical projects, which have a combined investment of Bt200 billion, it would stimulate another 34 related projects that have been waiting for approval for more than a year.

"If the government approves all projects by March, domestic investment should grow by double digits and possibly reach 20 per cent. I believe the new government will not obstruct these projects because they can stimulate the economy," he said at a seminar yesterday.

Pridiyathorn's suggestion came amidst fears that companies this year might not enjoy a rise in exports as they have in the past. The Federal Reserve's rate cut on Tuesday reflects fears that the US economy, one of the main markets for Thai exports, may be slipping into recession. Therefore, Bangkok needs to jump-start domestic consumption to maintain growth.

Although the government will take some time to implement big infrastructure projects, these petrochemical projects can be kicked off immediately upon approval.

PTT, for instance, planned to invest Bt238.79 billion over a five-year period ending in 2010. The company has, however, had to delay some of its projects because of political and economic uncertainty.

Pridiyathorn said the new government should be ready to deal with the fallout from the US mortgage-securities crisis. However, he said it should not rush into ending capital controls too soon.

"We should wait until the baht rises in line with other regional currencies," he said. The yuan has risen by 13.3 per cent, the ringgit by 14 per cent and the Singaporean dollar by 13.3 per cent over the past year. The baht, however, rose by 15.7 per cent in the period.

Board of Trade of Thailand chairman Pramon Suthivong said the government should inject an additional Bt80 billion into the economy on top of the original fiscal 2008 budget of Bt1.6 trillion. Consequently, there will be a budget deficit of no more than Bt200 billion, accounting for 2.5 per cent of gross domestic product.

Pramon said the government should spend half of the additional money to cut taxes for low-income earners to promote entrepreneurs and the other Bt40 billion to construct public utilities in rural areas to create jobs.

"The new government should immediately kick-start the projects, injecting the money to offset slow spending approval in the first quarter of fiscal 2008," he added.

Pramon said the government should also facilitate border trade by ending red tape, as well as promoting tourism.

On the Bank of Thailand's requirement for the investors to deposit 30 per cent of funds with the central bank for at least one year to halt the rise of the baht, Pramon said the new finance minister should carefully consider the impact before deciding whether to end capital controls.

Earlier, the People Power Party said it planned to end the reserve requirement immediately after it became the government.

Pramon said the prospects for exports were not so bleak. He said the upsides in the next six months are the clearer political situation, rising farm prices and the expected return of foreign investors once an elected government takes office. The US sub-prime crisis, however, will dampen exports, and product prices will rise along with energy prices.

Exim Bank chairman Narongchai Akrasanee agreed that investment would become a major driving force to replace exports.

He added that the Thai economy this year should grow by 4.5 to 5 per cent, but it depends on how the US sub-prime crisis unwinds. Oil-price rises will push inflation higher than last year. Every one-dollar rise in crude in the Dubai market will push inflation up by 30 basis points.

The Nation