Stimulus measures will remain in place over the next one to two years, Finance Minister Korn Chatikavanij said yesterday, adding that his ministry was assessing how long Thailand could support budget deficits as a result of fiscal injections.
"The Finance Ministry is producing a five-to-10-year plan, to establish how many years budget deficits can continue and what will be the ratio of public debt to gross domestic product.
"If the government needs to take the lead in investment, and there is a low capacity to handle deficits, we'll need to welcome more local and foreign investment participation. State enterprises should also play a bigger role," he said.
The minister said if the government could not boost private participation or the role of state enterprises, Thailand would see low investment as government revenue alone could not support investment.
He also highlighted the possibility of reforming the tax system and introducing new taxes. Tax income at 15-16 per cent of GDP is too low when compared with 20-50 per cent in some countries, he said.
Siam City Bank president and CEO Chaiwat Uthaiwan agreed that to roll back stimulus packages now would be dangerous for the economy, as the recovery had only just started.
Separately, Budget Bureau director-general Walairat Sriarun said the bureau was ready to finance Thai Khemkhaeng projects with annual budgets, if the Bt400-billion borrowing bill did not win parliamentary approval.
Projects that provide economic returns and create jobs will be the priority, and the 2011 fiscal budget will be allocated for them, she said.
She said the annual investment budget for fiscal 2011 - which starts on October 1 this year - is only 16 per cent of the overall budget, and much of it is allocated to ongoing projects. Therefore, if the borrowing bill were passed, more investment projects could materialise.
She added that the bureau would try to raise the investment budget to 25 per cent of the total.
Meanwhile, Korn signalled the government might not extend the property-tax incentives, which expire at the end of March.
"The measure was imposed during the crisis. Now that the crisis is over, we must restore discipline. Some measures are benefiting business operators, while others benefit consumers. You may know what is happening. Anybody buying or transferring property should rush before the measure ends," he said.
The finance minister said some economy-boosting measures worked satisfactorily, while the ministry was reviewing other measures in a bid to restore fiscal discipline.
It was reported earlier that out of the government's five cost-of-living measures, free water bills could be scrapped.
On the devaluation of the dong, Korn said it would not affect Thailand's overall competitiveness. He believes Vietnam will weaken its currency even further, in order to address deficits in the budget and its trade and current accounts.
A Fiscal Policy Office report has confirmed the Vietnamese currency devaluation is unlikely to affect Thailand's export competitiveness, as the two countries' exports do not overlap significantly.
Moreover, Vietnam suffers from higher inflation than Thailand, which will affect its exporters' competitive edge.
However, the office said the authorities would need to closely monitor the competitiveness of rice and computer exporters, as these are areas in which Vietnam is strong.
In the short term, regional currencies must be closely monitored, to ensure an equal real exchange rate as well as fund-flow stability.
In the medium term, Thailand should diversify its exports to more countries and promote domestic spending.
Meanwhile, it should encourage technology and human-resources development for sustainable economic expansion, the office said.
