Second stimulus package must control damage

When identifying projects to be covered by the second package, Staporn said, it is essential that the government identify the main areas of damage caused by the global economic crisis, with a focus on employment.

"Private companies devise contingency plans that determine what they will do in the event of falling sales. The government must also have such a plan. If it is to help the private sector, it must consider how any financial assistance should be allocated. It must act in earnest," he said in an interview.

"Courage is necessary if the economy deteriorates to some extent. The money should go to the areas which offer high multiplier effect."

This week, the government is expected to consider the details of its second stimulus measure, to be financed by a Bt70-billion borrowing facility. The first package was aimed primarily at boosting consumers' spending power.

Last week, the government unveiled a plan to borrow Bt1.4 trillion to finance government investment projects over the next three years.

Staporn insisted that fiscal discipline must be maintained, despite the borrowing plans. Otherwise government borrowing could get out of control and lead to bankruptcy, he said, adding that this principle must be honoured regardless of who forms the government.

He said the third package should focus on investment that will support the country well into the future. The government must determine the appropriate areas to invest in, Staporn said. He suggested emphasising green energy and Thailand's strengths - food and tourism.

While efforts at developing renewable energy sources must be continued, Thailand can also benefit from its long history, he said. For example, a long-term plan should be devised to organise celebrations for the 777th anniversary of the founding of the Sukhothai Kingdom - the first Thai Kingdom - to be held in 2015.

Thailand must emphasise its strengths, Staporn said, such as its cuisine and design, for higher added value. Thailand has rich endowments, he said, but taking advantages of them requires investment. By way of example he pointed out that there are approximately 5,000 Thai restaurants around the world, which could be organised into a network. For a start, he recommended producing a standardised poster for all the restaurants.

"Importantly, the government must not take this businesses into its own hands, but rather support businesses with funding and expertise," he said.

To boost confidence in trade and investment, Staporn said, the government should open a one-stop administrative service centre for investors. The Cabinet could assign officials to man the centre, which should have its own office outside Government House, he said, adding that this would not only facilitate investment, but also minimise corruption.

Moreover, the government should set aside a certain amount of funds for public relations activities, particularly international communications, to restore the nation's tarnished image following the closure of airports late last year during the political turmoil, he said.

"At least US$10 million [Bt353 million) is needed. This is strongly recommended. It was necessary even for the Anand government [which took office after the bloody military crackdown on pro-democracy protesters in May 1992]."

Staporn said tourism - the industry that is most sensitive to political instability - should be the first to recover, as the bad news has ebbed following the reopening of the airports. The tourism sector's resilience was demonstrated by the quick recoveries following the 2004 tsunami and the airport closures, and the industry remains manageable, he said.

The premier's economic advisory team comprises Export-Import Bank of Thailand chairman Narongchai Akrasanee; Tourism Council of Thailand president Kongkrit Hiranyakit; financier Chinaves Sarasas; Thammasat University economics lecturer Prof Praipol Koomsup; and former Industry Ministry permanent secretary Chakramon Phasukvanich.

The team holds a weekly meeting, and Staporn attends every meeting of economic ministers. The advisers brief the prime minister on a monthly basis.

The advisers are focusing on three main indicators - GDP, employment and exports. Staporn said Thailand should be worried when the trade balance slides into negative territory. Another task for the advisers, he said, is to help economic ministers initiate projects.

The government's main objective for the second economic stimulus package must be oriented to damage control, with contingency plans to minimise economic deterioration, said Sathaporn Kavitanont, head of the prime minister's economic advisory team.

He said it is essential for the government to identify damage or the area of damage and focus on employment, when identifying projects to be covered by the second package.

"Private companies have contingency plans - what they would carry out in case of falling sales. The government must also have such plan. If it is to help the private sector, it must consider how the financial assistance should be allocated. Earnest is necessary," he said in an interview.

"Guts are necessary if the economy deteriorates to some extent. Yet, the money should go to the areas which offer high multiplier effect."

This week, the government is expected to consider details of second stimulus measure, to be financed by the Bt70 billion borrowing facility. The first package was primarily set to boost consumer spending power.

Last week, the government announced the plan to borrow Bt1.4 trillion to finance government investment projects in the next three years.

Sathaporn insisted that fiscal disciplines must be kept despite borrowing. If this is unlocked, it would spur government borrowings and lead to bankruptcy. The rule must be honoured no matter who forms the government, he said.

He said the third package should focus on investment, which supports the country's future. The government must find out the areas to put the investment in. His suggestion is to bank emphasis on green energy and Thailand's strengths mainly in food and tourism.

While focus on renewable energy must be continued, Thailand can benefit from its historical root. For example, a long-term plan should be plotted to celebrate Thailand's 777th anniversary in the next 7 years.

He said that Thailand must emphasise more on Thai strengths like food and designs for higher added value. Thailand has rich endowments, but it requires investment to maximise the endowments' benefits. For example, there are 5,000 Thai restaurants around the world and they could be pulled into a network. For a start, a poster for all is recommended.

"Importantly, the government must not take the businesses into its own hands, but rather support businesses with funding and experts," he noted.

In boosting confidence in trade and investment, the government is recommended to kick off a one-stop administrative service centre, to assist investors. The Cabinet should assign officials to man the centre, which should have its own office outside the Government House. While this will facilitate investment, it should minimise corruption.

Moreover, it should spend a certain amount in public relations activities, particularly on international communications, to restore the nation's tarnished image following the airports closure.

"At least US$10 million is needed. This is strongly recommended. It was necessary even in the Anand government (which took office after the 1992 May bloodbath)."

To him, tourism - the most sensitive to political instability - would be the first to recover with fewer bad news following the airports closure. Tourism strengths are evident, as shown through quick recovery after tsunami and the airports closure, and the industry remains manageable, he said.

The advisory economic team consists of Export-Import Bank of Thailand chairman Narongchai Akrasanee, Tourism Council of Thailand President Kongkrit Hiranyakit, financier Chinaves Sarasas, Thammasat University's Faculty of Economics lecturer Prof Praipol Koomsup, and former industry permanent secretary Chakramon phasukvanich.

The team now attends a weekly meeting and Sathaporn attends every economic ministers meeting. They brief the prime minister on a monthly basis.

In their focus are three main indicators - gross domestic product, employment and export. Sathaporn said Thailand should be worried when trade balance slides into the negative territory. Another task is to help economic ministers initiate projects.