Democrats grill PM over the economy

Abhisit Vejjajiva, Democrat leader, challenged Samak to be decisive on monetary policy by making it clear to investors whether the People Power Party-led coalition would honour its promise to end the 30-per-cent reserve requirement.

The PPP and the Democrats both said during the election campaign that they would end capital controls if they were elected. However, Finance Minister Surapong Sueb-

wonglee last week seemed to back off - at least until March or April before he embarks on an international roadshow. Thai exporters may lose their competitiveness if the measures, designed to halt the baht's rise, are cancelled.

"The finance minister should show his leadership by showing a clear stance on this issue by announcing his decision soon to restore investor confidence," Abhisit said.

Abhisit said if the government would like to remove the capital controls under which the Bank of Thailand requires foreign investors to deposit 30 per cent of their funds for one year, it should go ahead. If it is not sure, it should make it clear that it would like more time, instead of allowing uncertainty to continue.

Democrat Korn Chatikavanich, finance minister in the shadow government, attacked Surapong on his delayed decision. He said Surapong's decision to wait revealed a lack of clarity of economic policies and this could lead to lack of confidence among investors.

During the first day of the three-day debate, Samak pledged to stimulate the economy by continuing populist policies championed by ousted prime minister Thaksin Shinawatra. He said the government would invest in large-scale projects and rail projects, boost foreign direct investment, promote tourism, restructure rural debt and provide soft loans to villages and small businesses.

Samak said the government would introduce pro-growth policies amid rising global oil prices and mounting inflation and would ensure economic stability and help stabilise the baht and bring inflation under control. But he was short of being specific on how to achieve these goals, which invited criticism from the opposition.

Korn questioned the credibility of the government's economic policies, citing that some contradict existing development plans and require excessive investment. Combined, they are unlikely to materialise.

The mass-transit development alone will require an investment of Bt500 billion. While Thailand's public debt must not breach 50 per cent of gross domestic product, the current debts stand at 38 per cent and 40-42 per cent inclusive of off-balance spending. Based on the GDP size of Bt8 trillion, this leaves room for the government to borrow only Bt600 to Bt800 billion, he said.

"The amount would not be sufficient for all projects and the government should prioritise the projects that should be completed first. If it embarks on all the projects and they are not completed and incur losses, who would shoulder responsibility," he asked.

He said the government did not mention the funding method for each project. It also failed to specify how to improve the income generating from state enterprises that control assets worth Bt300 billion, but generate only 1.5 per cent of GDP per annum.

"How will the government finance all these projects? It's difficult to raise taxes given that from 35 million working people, only 5.5 million pay taxes," he noted.

The Nation