Lower your prices, Govt urges

Department stores and other retail chains are being urged to offer discounts of 10-20 per cent on their goods to help spur domestic consumption, as the government will start its Bt19-billion cash handout programme on March 26.

The programme is part of the Bt116-billion stimulus package aimed at steering the 2009 economy towards growth of up to 2 per cent.

Speaking at an Organisation for Economic Cooperation and Development (OECD) conference in Bangkok yesterday, Deputy Prime Minister Korbsak Sabhavasu said about 9 million low-income earners would each receive cheques for Bt2,000, and so it made sense for the retail industry to join forces with the government to boost sales.

Discounts of 10-20 per cent would encourage people to spend the money rather save it, he said.

The targets for the cash handout are those with a monthly income of Bt15,000 or less.

When the Japanese government launched a similar scheme, most people saved the money, and the attempt to boost domestic demand failed, Korbsak said.

As for the United States, most people use state benefits to stock up on food items, he said.

Worried that the cash recipients may do as the Japanese did, he urged department stores and other retail chains to come up with campaigns to encourage shoppers to use the government's cheques.

The first batch of cheques will be posted on March 26, after the mid-year supplementary Budget Bill containing the cash handout programme becomes law.

In addition, the government is considering giving vouchers to students for uniform purchases as part of another programme to provide 15 years of free education, said the deputy PM.

The government wants to boost aggregate demand in the short term, in order to cope with a sharp downturn in the world economy, Korbsak said.

Thailand will run another deficit for the next fiscal year, he said, adding that the government did not know yet when it would be able to return to a balanced budget.

Meanwhile, Australian Finance and Administration Secretary Ian Watt said his country's government had already launched two economic-stimulus packages - one last October and the other this month. He also said his government was concerned about the possibility of a sharp revenue fall this year.

Like other governments, such as those in the United States, China and Japan, Australia has aggressively expanded public spending, in order to boost economic growth.

The International Monetary Fund predicts the world economy will expand only 0.5 per cent this year, while some members of the "rich countries' club" - grouped under the OECD - could face zero or negative growth.