ECONOMISTS SEE some economic improvement during the term of the junta-backed government but are disappointed at the paucity of its major economic reforms.
The National Council for Peace and Order ended the controversial rice-pledging scheme implemented by the Yingluck Shinawatra government but is still providing subsidies to farmers albeit at a much smaller scale than previously.
Somchai Jitsuchon, economic director at the Thailand Development Research Institute, estimated that four years of support to farmers under the Prayut Chan-o-cha premiership equalled less than one year’s spending by Yingluck’s and said the new, hard-line stance had severely affected many people.
“Cutting large subsidies combined with lower prices globally for farm products, have significantly reduced farmers’ income,” said Somchai addressing the deteriorating conditions affecting millions of Thais who depend on the agricultural sector.
The second policy to affect the poor had been the removal of large numbers of stalls from Bangkok’s pavements in order to clear street clutter and ease traffic flows.
“Those good intentions have resulted in huge income losses for street vendors, estimated at Bt60 billion to Bt70 billion a year,” said Somchai.
The government has implemented a welfare card programme for the needy, providing cash and credit worth Bt300-Bt500 per month for each of the 11.4 million welfare cardholders.
However, Somchai doubts the accuracy of the card database and fears that not only are many poor people not benefiting but also many others who do receive cash and loans may in fact not be eligible.
He said it was vital that the database be reviewed and updated.
One aspect of the economy that gives Somchai cause for optimism is the government-initiated Eastern Economic Corridor (EEC), which he hopes can be used to drive the next cycle of economic growth.
“It has a potential to be a game-changer,” he said.
Other than the EEC, though, Somchai said it was hard to find beneficial reforms that the government could take credit for.
He said the NCPO had not tried hard enough to help small and medium-sized enterprises (SMEs) to adopt and adapt to new technologies. This had the potential to enhance the management of their companies without requiring expensive training, he said.
The government had also failed to provide training appropriate to the new economic landscape to low-income groups while Prayut himself had not paid sufficient attention to education reforms that could have contributed to economic development and reduced inequality.
Somchai wants to see an increase in government spending on social protection.
“Currently the government allocates less than Bt4 billion to support infants up to the age of three. The budget should increase to about Bt17 billion to Bt18 billion in order to ensure that no poor kids are left behind,” he said.
Many economists also say that the government has failed to loosen its controls over the nation’s finances, opting instead to consolidate its power and create many regulations which impede economic decentralisation, said Somchai.
He hoped to see a leaner public sector and the privatisation of many state-owned enterprises – but he admitted that would be an uphill task.
Pairoj Wongviphanond, former dean of Chulalongkorn University’s economics faculty, expressed his disappointment with the government’s tax policy.
It should allow local governments to collect more in property tax but the law being drafted by the government has been watered down from the first draft proposed by Finance Ministry officials,” he said. “Nor has the government succeeded in collecting heritage tax from the rich, thanks to large exemption clauses.
“The overall picture has seen no big change, only incremental changes.”
Vimut Vanitcharoenthum, economist at Chulalongkorn University, also spoke about private investment remaining sluggish and far below its pre-1997-crisis peak.
“Thailand’s firms have in recent years invested a lot overseas because investment returns are higher there,” said Vimut.
However, he pointed out that it was partly because Thailand was becoming an ageing society, so consumers spend less compared with those in other emerging Asean countries such as Vietnam, Indonesia and the Philippines. The government faces tough challenges, he said.
Nevertheless, the Thai economy has started building momentum for higher growth – GDP in the first quarter of 2018 rose 4.8 per cent, its highest rate in the past 20 quarters, largely due to recovery in the global economy and public spending on investment projects.
Prinn Panitchpakdi, managing director of CLSA Securities Thailand, however, said while the headline number looked good, it wasn’t so rosy if you dug a little deeper and saw that the grassroots economy had not yet recovered and SMEs were struggling to survive.
This is partly responsible for the current net outflow of capital -– foreign investors have withdrawn about Bt100 billion so far this year.
Political uncertainty has also increased as the government cannot guarantee there will be no further delays in the holding of the general election.
Opposition politicians, non-government organisations and university students have started to intensify their campaign for a poll this year.
“Should the election be delayed much longer than a few months from the schedule of February next year, it could damage confidence and limit the local stockmarket index’s ability to rise above 1,900 this year,” he added.