Private sector says parties making wild promises; seeks stable post-poll govt
The private sector has warned political parties of budget constraints if they propose contesting populist policies in the coming election while many businesses want to see political stability as a priority.
The post-election government should focus its economic policies on promoting Thai-manufactured goods and industry 4.0 transformation, support small and medium enterprises (SMEs) and boost Thai exports, they said.
Most political parties are espousing economic policies that involve high budget spending when the country has a limited revenue potential from the current tax system, chairman of the tax and regulation committee of the Board of Trade, Kitipong Urapeepatanapong, said.
“No political party is stating clearly how they will finance their populist policies. This means all their economic policies, especially those involving spending for ageing people, lower-income people and children cannot be implemented when they form the government,” Kitipong said.
For example, one political party has a policy to increase monthly payments to citizens aged above 60 to Bt3,000 per month.
Currently, the government spends between Bt60 billion and Bt70 billion for a monthly subsidy of Bt600 per person, per month, according to Finance Ministry reports.
When this monthly subsidy is hiked to Bt3,000 per head monthly, the government will need much more than the current Bt70 billion a year, but the political party does not say how it plans to increase revenue to fulfil its promise, he said.
“In my view, most of the economic policies that promise payments to people cannot be implemented, as parties are not revealing how they will meet the budget demands, which cannot be achieved without increasing tax revenue,” Kittipong said.
Some policies will involve amending taxation laws but they do not say what they will do, he said.
“That’s the reason why their economic policies cannot be implemented when they form the government,” he said.
Punyapon Tepprasit, chief executive officer of MVP Consultant and MBA lecturer in industrial management, Ramkhamhaeng University, said it is a matter of concern that most political parties are proposing populist policies to gain votes by targeting segments of society. Populist policies in many foreign countries have led to collapse of the economic system, Venezuela being a prime example. Political parties mostly likely to receive a majority of votes are Democrat, Pheu Thai and Phalang Pracharat, he said.
While the Democrats are focused on tackling poverty, its rival Pheu Thai is laying emphasis on strengthening SMEs, which cover a large section of domestic businesses in almost all sectors as a real driver of the economy for the long term, he said.
The pro-junta Phalang Prachart formulated its policies in line with the 20-year national strategy for continuity of the current economic regime, Punyapon said.
Investors in the stock market, however, hope for political and economic stability after the election to boost capital inflows into the Stock Exchange of Thailand. “For investors, it is not important which political party forms the new government, as long as it can offer stability and there is no political turmoil,” said Paiboon Nalinthrang-kurn, chairman of the Federation of Thai Capital Market Organisation (Fetco). Political protests after the election could damage the economy and hurt investor sentiment, he said.
Also, he added, foreign investors were particularly worried that the new government would be weak, which could lead to political unrest.
The new government should promote industrial goods that are made in Thailand with a “make in Thailand” policy in order to support the growth of the manufacturing sector, suggested Kriengkrai Thiennukul, vice chairman of the Federation of Thai Industries (FTI). The new government should give priority to the distribution and consumption of Thai manufactured goods, he said.
“Furthermore, the new government should continue to support the development of industry 4.0 in the country,” he added. “This includes supporting industrial transformation through promoting the adoption of new innovative technology by manufacturers, or through increasing the workforce’s digital capabilities.”
Kriengkrai also urged the new government after the election to continue to develop S-Curve industries in the Eastern Economic Corridor (EEC), a flagship project launched by the junta-backed government.
Speaking on the sliding export figures since mid-2018, the FTI vice chairman urged the post-election government to push for new free-trade agreements in new markets, mentioning Africa and Russia as potential targets for Thai exports.
The new government should support the development of SMEs, especially their digital transformation, as well as the reskilling of the workforce, said Yunyong Thaicharoen, first executive vice president and head of Siam Commercial Bank (SCB)’s Economic Intelligence Centre.
He called for a holistic and detailed action plan by the new government to support SMEs and develop the skills of the Thai workforce.
With people seeking higher incomes, the most effective method to increase the workforce’s income would be to add value to both SMEs and the workforce through digitisation and reskilling, respectively, he said.
Furthermore, the new government should also continue the current public investment plans, especially in infrastructure, such as mega-transport projects, or in the EEC,” he added.
“Public investment will be a key driver of economic growth this year. We have predicted that public investment will grow by up to 7.2 per cent, and will be directed to the EEC and other mega-projects initiated by the government,” he said.
Yunyong said he did not think that the upcoming election would have any disruptive impact on the overall public investment figures.