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Published on April 22, 2008

Wichit Chaitrong

The Nation

While the world is facing a food crisis, the government is preparing to launch a rice and water strategy aimed at increasing productivity.

At the same time, it will also restructure the capital gains tax to meet international practices and deepen  capital market development.

At a seminar hosted by the Economic Reporters Associa-tion, Deputy Prime Minister and Finance Minister Surapong Subwonglee said the government will soon meet to come up with strategies to increase rice production and expand irrigation capacity.

 Farmers should be able to grow rice several times a year and export more, he said. A large part of rice fields have not yet been covered by a water grid system. Thailand's rice productivity falls behind other rice producing countries.

Surapong said the government would also look into the possibility of waiving the capital gains tax on bond trading. Currently stock transactions are free from the capital gains tax.

 Surapong hinted that the government would waive taxes related to mergers and acquisitions. Currently, firms that merge their businesses cannot receive tax cuts for losses incurred by one party.

United Nations Secretary-General Ban Ki-moon warned Monday that the rapidly escalating global food crisis has reached emergency proportions and threatens to wipe out seven years of progress in the fight against global poverty, according to the Associated Press.

"The rapidly escalating crisis of food availability around the world has reached emergency proportions," Ban said. "The World Bank has estimated that the doubling of food prices over the last three years could push 100 million people in low income countries deeper into poverty." 

In Thailand, critics have blamed the government for a slow response to the world food crisis - one that Thailand, the world's largest rice exporter, could benefit from.

 Korn Chatikavanij, shadow finance minister and deputy secretary general of Democrat Party, urged the government to export its rice stocks of 2.1 million tonnes. The stockpile is a product of previous rice pledging projects or price subsidies for farmers.

 Then the government could channel gains from rice exports to help farmers by providing lower prices for chemical fertilisers, he suggested.

 "Still I suspect that the government might not have rice stocks of 2.1 million tones as it claims," said Korn.

 Korn argued that the government has not yet developed a clear policy on what it will do as rice prices increase sharply.

 Meanwhile Somchai Jitsuchon, research director at the Thailand Development Research Institute (TDRI) suggested that the government to focus mainly on food production rather than on bio-fuel production.

 In the long run, the bio-fuel project is unlikely to be promising due to high production costs. To lessen dependence on imported oil, Thailand should introduce nuclear energy instead, he said.

"The government should implement a nuclear policy quickly. We don't have much time," said Somchai.