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Apparently, the recovery of the Thai economy is actually in the form of a V shape similar to that of Japan, while those of the US and EU are more in the form of a U.

More interesting is the fact that the Thai economy is recovering at a faster pace than those of Japan, the US and EU. The recovery in Quarter 2 and Quarter 3 of this year has brought the Thai economy back half way from the contraction while the G-3 economies have recovered little from their lowest point.

It is still a long way back to the level before the crisis, and yet there is not any indication the G-3 economies will recover faster than their current pace. This implies Thailand and other East Asian countries cannot rely much on exports to the G-3 as a growth engine to support the relatively high growth experienced in the past. In order to grow as high as 5-6 per cent as before, Thailand needs to depend more on domestic demand.

The Thai Khemkhaeng (TKK) stimulus budget is designed to increase domestic demand by increasing government expenditure and government investment.

A great number of investment projects throughout the country would create jobs and increase disposable income for the unemployed, which would lead to additional consumer spending.

This TKK budget was well received in the early period of its introduction. However, rumours of corruption has slowed the disbursement in some projects.

I would request the Ministry of Finance to follow up and encourage various ministries to move on with their projects so that the economy can be mobilised continuously.

Meanwhile, due caution should be exercised to prevent corruption, but one should not be too suspicious that a project makes no progress.

Two other domestic demands needing to be boosted are private consumption and private investment. Private consumption has recovered a little after employment- which decreased in the early part of the year and pushed unemployment to peak at 2.1per cent in April - recently increased as the industrial sector began to rehire, which brought the unemployment rate down to 1.8-1.9 per cent in September.

As a consequence, the private sector has gained more disposable income, leading to higher consumer spending.

Another factor leading to an increase in higher private consumption is the price of crops. In any year that these prices are high and generate profit for farmers, consumer spending in the rural area increases correspondingly.

Looking at prices of every major crop - we can see the current rubber price generates good profit for farmers and good income for workers in rubber plantations, while the current world price of sugar, which is quite high, means a high price for sugarcane as well.

The price of tapioca should continue to be high with increasing demand for tapioca as a raw material for ethanol, an important ingredient of gasohol, while the price of palm nut should remain high as it is being used to produce bio-diesel on top of palm oil.

The only concern is the price of rice which had dropped much in the last two months (up to two weeks ago) as implementation of the price guarantee programme was slow.

Registration of farmers joining the programme is not widespread and fast enough, while a great number of farmers still do not understand the price guarantee scheme.

As a consequence, the price had gone down steadily. Luckily for Thailand, India, which in the past few years was our competitor in exporting rice, two weeks ago announced it cannot produce enough rice this year and has to import.

This news caused an increase in the world price of rice as well as in Thailand.

It is believed the price of rice should hold reasonably high for the whole season well into next year.

 As the prices for all major crops are high and should remain so, private consumption in the rural area will increase and help support the growth of the Thai economy throughout next year.

The only major concern is in private investment, which shrank heavily during the economic recess, as in other countries.

We are lucky that during the past two years some big industries, Thai and foreign, decided to invest in expansion projects in Thailand while waiting for the recovery of the world economy. But the government was slow in arranging proper measures and procedures for the industries to comply with the health impact assessment requirement in Clause 67 of the Constitution - until finally the administrative court ruled in favour of people in nearby communities, stopping all activity in 76 plants which were ready to start up.

The private sectors were upset tremendously as they had followed every step required by the Thai authorities and were prepared to comply with the health impact assessment, but could not do so as the government had not arranged a proper mechanism for it. These investors had placed a large amount of money in the projects after obtaining continuous approval for their activities.

This matter did not only affected the confidence of the project owners but also spread to the whole private business sector.

Every embassy in Thailand criticised us on this issue.

Recently, the government petitioned against the ruling of the administrative court. I hope the ruling will be more lenient and fairly accommodate the projects.

However, I would really like to see the government accelerate the preparation of mechanisms and procedures to allow the health impact assessment to be carried on effectively, as I believe the confrontation will cease only after the assessment has been performed to the communities' satisfaction.

I have learned that the meeting of the National Environment Board on October 30, chaired by the prime minister, assigned the Ministry of Natural Resources and Environment to prepare and announce the required mechanisms and laws to support the health impact assessment. The progress is not yet known.

Under normal circumstance, actions after the ruling of the administrative court are not slow. However, under a situation where investors, Thai as well as foreign, are upset and such feeling is spreading rapidly to other foreign investors, the government's actions were not considered quick enough.

Among many incidents affecting investor confidence, this health impact confrontation is considered the most serious.

It is totally necessary for the government to hasten in finding a way out for the 76 plants.

If this problem is taken care of fairly and the projects move ahead under the proper health impact assessment without undue delay, the Thai economy should resume its recovery, supported by the various domestic demand factors mentioned earlier, in the existing pattern of V shape.

Until Next Monday.