'stimulus measures are not a long-term answer'

The government's new stimulus measures might prime the pump by boosting consumption of the workforce, but will not help the economy over the long haul, business leaders said yesterday.

Dusit Nontanakorn, vice chairman of the Thai Chamber of Commerce, hailed the measures as a good move to rev up the economy through spending.

He said the measures cover different groups of people. While the special monthly allowance of Bt2,000 would help most workers, the Bt6.9-billion fund would create jobs amid the private sector's concerns over unemployment.

Hopefully, if the situation worsens, the government may consider raising this budget, he said.

"As low-income earners, the elderly and parents with [young] children are encouraged to spend more. Confidence has been somewhat restored. This should improve the domestic economy within three to six months," he said. But the government must implement the measures as soon as possible.

However, Tanit Sorat, vice chairman of the Federation of Thai Industries, said the government should initiate policies, like the one for skill development, that would help the economy in the long run. "This spending would just go down the drain," he said.

Based on gross domestic product of Bt9.3 trillion, the extra budget is too small. To effectively stimulate the economy, Thailand needs an injection of Bt300 billion-Bt400 billion, and this could be financed by the government issuing bonds and selling them to the Bank of Thailand. This way, foreign reserves would be used to boost the economy and liquidity would not be curtailed, he said.

Pan Wanwinit, secretary-general of the Social Security Office, said members of the Social Security Fund who are eligible for the Bt2,000 allowance number 8.01 million, out of the total base of 9.3 million.

Montri Sokatiyanurak, a financial expert from the National Institute of Development Administration, said several measures did not fit the current economic conditions, including the allowance to workers, as this will help only the employed and fails in encouraging the entire public to spend.

The Bt2,000 allowance to civil servants and company employees is not the right solution and the result could not be assessed, given that these people are low-income earners and are at the highest risk of losing their jobs. As such, they could tend to save rather than spend.

He favoured investment in construction projects to create jobs and restore public confidence. The Monetary Policy Committee is also urged to cut its policy rate at today's meeting by 50-100 basis points from 2.75 per cent.

Wilaiwan Saetia, president of the Thai Labour Solidarity Committee, said the measure was better than nothing, though workers still do not know what to spend the money on.

As this deals with a very short-term problem, she urged the government to focus on long-term policies such as the proposed cut in contributions to the Social Security Fund, which could affect the retirement fund.

Moreover, the measure covers only the fund's members, while the government should also extend the benefits to non-members.

Prathin Wekhawakyanon, chairwoman of the Network of Slums for Four Regions, said 23 million workers or more were missing from the measures, as well as the subcontracted workers of state enterprises.