Bangkkok Post 11/03/08
Democrats offer plan to help govt on economy
I have been given the opportunity by the Bangkok Post and Post Today to write a bi-weekly column in my capacity as a Bangkok MP in the opposition and, primarily, in my capacity as the Shadow Finance Minister _ hence the title of the column.
It is less my intention to box the government minister into a corner than it is to be a constructive critic, a monitor and sometimes even a provider of advice. It will be tinged with a political angle and the reader should naturally be aware that the column is written by a member of the opposition.
Economic issues have been at the forefront of politics ever since the elections _ economic conditions having been particularly poor as a result of the recent political crisis as well as the perceived poor performance of the previous non-elected government.
It is no surprise, then, that the main focus of the new government has been the economy.
Indeed, if the received wisdom is correct and there is another election within two years, then for the government to have a good chance of returning to power, the minimum requirement would be for them to have achieved a strong recovery in the economy. This poses an interesting challenge for the Shadow Government _ we are in a bit of a catch-22 whereby the better we do our job of pointing the government in the right direction, the stronger the government's position will be. In reality, it is in the end a no-brainer since doing nothing is not an option, and mindlessly opposing everything is worse. So, we are all committed to doing our job as elected officials as well as possible; we'll worry about the election challenge later.
Indeed, we feel we have a lot to offer _ within the Shadow Cabinet, we have two ex-deputy Ministers of Finance in Dr Trairong Suwannakhiri and Khun Pichet Charnvichartkul. Our Party Leader is probably as well-versed in economics as any leading politician in the world (he didn't just graduate first class honours in the subject at Oxford, but also had a brief stint teaching the subject there) _ and of course, there is myself. I bring the private sector experience to the table with 19 years' employment in financial services. I have two deputies in Dr Sansern Samalapa and Juti Krairerk who are both experienced politicians as well as economists.
That's all on paper, but it is worthless unless we can deliver _ and our first major salvo was delivered directly into Finance Minister Surapong's hands last week, with our recommendation to the government as to how they could significantly improve the economy beyond what they can hope to achieve with their tax-reduction plans announced a few days earlier. We were of the view that the government's plans, while clearly with merit, were lacking in two clear areas: alleviating the high cost-of-living conditions for the poor, as well as in the plan's effectiveness as a stimulus for domestic consumption, and thus the economy as a whole.
The tax relief programme was heavy in the provisioning of incentives for higher savings, through life insurance and mutual funds. While certainly worthy in itself, this has an opposing effect on consumption, while tax reduction plans tend also to have a delayed impact on spending patterns. Tax savings, of course, only directly benefit those who pay tax, and out of 36 million employed workers in the country only six million or so pay income tax. The scheme falls short in its ability to impact the economic conditions of those with the greatest needs. The Democrat plan was thus to urge government to seek parliamentary approval for a Supplementary Budget of 50 billion baht, specifically to finance four strategies to both reduce the financial burden of those in need and to more directly stimulate the economy. The four strategies include:
i) the provision of a genuinely free education,
ii) the provision of a stipend for the 800,000 health volunteers,
iii) the creation of a Sufficiency Fund to finance cost-reduction programmes for grassroots at the tambon level, and
iv) providing a monthly stipend for the six million elderly without pensions.
The last was, of course, a campaign policy of all political parties, though the government has been strangely silent on the issue.
We are confident that the 50-billion-baht programme (just over 0.5% of GDP) will have an immediate impact on consumption, with a multiplier effect that would lead to economic growth being upped by at least 1%. We are particularly confident because the plan is one with almost no possibility of ``leakage'' since the budget will be delivered directly into recipients' pockets, with no need for procurements, etc, with all the possibility of corruption that remains endemic in the disbursement system.
We hope the government takes up our suggestion _ I even joked with Dr Surapong that a successful execution of our plans would most likely make it even more of a challenge for us to catch them in the popularity stakes. We will know soon enough how he reacts, as I believe he now realises his announced plans by themselves will be insufficient to ensure the economic recovery we all need.
Indeed, it is clear to us in the Democrat party that the measures we propose are merely what is needed in the short term. More important issues related to the need to enhance the ability of Thais to compete and generate wealth in a sustainable manner have barely been discussed. More on this in the future.
Korn Chatikavanij