Business sees many benefits

Businessmen welcomed the government's Bt40-billion welfare-cum-economic-stimulus package announced yesterday, while economists and academics expressed strong reservations about its provisions.

Total Access Communication (DTAC) chief commercial officer Thana Thienachariya said the measures would be good for the economy and low-income earners, since they included hefty tax cuts on diesel and gasohol, free public-bus rides and free electricity and tap water for low-use households.

Federation of Thai Industries chairman Santi Vilassakdanont said the measures were necessary, because they would help ease the burden of poor people suffering from the higher cost of living, even though they would last for only six months.

However, Phatra Securities managing director and economist Supavud Saicheua said he was opposed to the Bt2-a-litre cut in the diesel tax, because the poor would not benefit. On the other hand, the subsidy will distort pricing mechanisms, and the government will find it hard to end the tax cut after six months.

Of the Bt40-billion package, diesel and gasohol subsidies will amount to Bt32 billion.

Thailand Development Research Institute economist Duenden Nikomborirak is also opposed to the diesel-tax cut, saying it will lead to higher energy consumption.

"The excise tax on diesel is like an environmental tax, so the move runs counter to efforts to reduce the effects of global warming," she said.

Duenden warned free electricity and tap water for low-use households could be abused, resulting in a heavy burden on taxpayers. However, she supports free public-bus transport for low-income people in Bangkok, where 800 buses will be provided.

Dhurakij Pundit University's Pairoj Vongvipanond said handing out subsidies was a bad policy, since actual costs will not be reflected, but efficiency will be reduced. However, the package will please voters and boost the government's popularity, especially among the poor.

"People have adjusted to the new environment of high oil prices by reducing their commuting or relocating to places closer to work. The government should focus on promoting alternative energy," he said.

The director of the University of the Thai Chamber of Commerce's Economic and Business Forecasting Centre, Thanawat Polvichai, said the government must find longer-term measures to boost economic growth, such as lifting people's incomes and speeding up mega-infrastructure projects.

"These short-term measures are aimed at boosting the government's popularity. However, economic growth should also rise 0.3-0.5 per cent as a result," he said.

Pramon Sutivong, chairman of both the Thai Chamber of Commerce and the Board of Trade of Thailand, agreed the measures would serve mainly to boost the government's popularity.

Kasikornbank's Banthoon Lamsam said fiscal measures like these were needed to boost the economy.