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[June 22, 2014]
Marching to the army's tune [Bangkok Post, Thailand :: ]
(Bangkok Post (Thailand) Via Acquire Media NewsEdge) June 23--A big clean-up. That's how one would describe the military regime's whirlwind of activity in the past month.
After the army's seizure of power led by Gen Prayuth Chan-ocha on May 22, the junta has tried to sweep away persistent problems, starting with the swift payment of debts owed to farmers under the discredited rice-pledging scheme begun by the Yingluck Shinawatra government.
After that came the speedy disbursement of the country's fiscal budget, a boost in investor confidence via the approval of large projects, curbs in rising living costs and energy reforms.
The junta has also reviewed the stalled infrastructure plan, suspended the 4G spectrum auction, delayed set-top box coupon distribution, scrapped the One Tablet per Child policy, reshuffled state enterprise boards and shunted aside some senior government officials.
Most measures have drawn praise from the public and stirred hopes of avoiding a recession caused by the prolonged political conflict, while others have received criticism.
The Bangkok Post sums up the achievements of the military regime thus far.
RICE PLEDGING PAYMENTS The first action taken by the junta was fast-tracking payments to more than 800,000 farmers who had gone unpaid for months under the rice-pledging scheme after Ms Yingluck dissolved the House on Dec 9. Within a week, the National Council for Peace and Order (NCPO) began paying the long-overdue arrears of 92.4 billion baht, clearing the full amount by June 18.
The junta's working panel on rice issues recently agreed on short-term guidelines to help farmers cope with production costs.
Under the guidelines, vendors of chemical fertiliser, insecticide and rice seeds agreed to cuts in product prices, while the state-owned Bank for Agriculture and Agricultural Cooperatives is set to offer special low-interest loans to farmers and plans additional measures to raise paddy prices. The NCPO also committed to stabilising paddy prices at 8,500-9,000 baht a tonne.
Nipon Poapongsakorn, a distinguished fellow at the Thailand Development Research Institute (TDRI), hailed the junta's mission to resolve rice issues, calling it a step in the right direction.
But he warned that measures which rely on the government's coffers could turn into another populist trap for future governments and become a fiscal burden.
Any form of compensation or subsidy to ease farmers' production costs will ultimately bring about market distortion and weaken the farm sector. The vicious circle will then repeat itself.
Budget disbursement The military's seizure of power has undeniably eliminated legal hindrances to budget disbursement caused by the lengthy political impasse after Ms Yingluck dissolved parliament.
Government spending will play a greater role in jump-starting the tepid economy. With a better flow of budget disbursement, the Fiscal Policy Office is optimistic about the economy, forecasting full-year GDP growth of 2.6% and possibly as much as 3%.
The Bank of Thailand recently said the budget disbursement acceleration for this fiscal year could usher in second-half GDP growth of 3.5%.
As of May 31, 1.565 trillion baht or 62% of the 2.525-trillion-baht budget had been disbursed, compared with a 95% target set by the Budget Bureau for the full-year disbursement.
The fiscal year runs from Oct 1 to Sept 30. Of the disbursed budget, 1.375 trillion baht is for regular expenditure and the remaining 190 billion baht is for investment. The NCPO also approved next year's budget framework at 2.575 trillion baht.
Infrastructure plan A 2.4-trillion-baht infrastructure plan proposed by the transport strategy committee awaits approval from the NCPO. The amount was trimmed from 3 trillion baht proposed earlier by the same committee.
Most of the projects in the 2-trillion-baht plan drafted by the former government will remain intact in the new plan, but high-speed trains costing some 800 billion baht have been shelved. Water and aviation projects have gained in priority.
Government investment in the plan, spanning from 2015 to 2022, is expected to sharpen competitiveness by lowering logistics costs. Four-lane roads, dual-track railways and electric trains in Greater Bangkok are on the front burner.
Sumet Ongkittikul, a researcher in transport and logistics policy at the TDRI, estimates that the investment will contribute less than 0.5 percentage points to GDP growth in the first one or two years because the auction process is likely to be delayed.
Living costs and ENERGY Tackling the high cost of living and reforming energy prices are high on the NCPO's agenda.
In the second week after the power seizure, the junta ordered diesel pump prices to be kept below 30 baht a litre until a reform of the price structure is completed. The National Energy Policy Council, chaired by Gen Prayuth, has been hammering out an energy reform plan to be concluded by the end of the month.
On June 11, the Energy Policy Management Committee under deputy junta chief Prajin Juntong cut the diesel pump price by 14 satang a litre to 29.85 baht, citing an excessive marketing margin. In addition, the NCPO cut cooking gas prices by 50 satang a kilogramme from 22.63 baht.
There is a proposal to dissolve the Oil Fund as a means of reducing prices. But experts say that without the fund, LPG prices will rise by four or five baht a kg to 26 baht and gasohol prices will also surge. They said any energy reform must let the market mechanism play its role, with subsidies kept to a minimum.
Investment BOOST Earlier this month, the Board of Investment (BoI) appointed Gen Prayuth as acting chairman in a move to boost investor confidence. Due to the political vacuum since last October, 400 big projects worth some 700 billion baht sat dormant pending approval by the board, which is normally chaired by the prime minister.
The first meeting of the new BoI board approved 18 projects worth 122 billion baht, including a 51.5-billion-baht investment package for Toyota Motor Thailand.
Meanwhile, the Industry Ministry has moved to simplify procedures for factory permits that have caused years of headaches for industrial operators.
The Industrial Works Department this month ruled that solar rooftop projects with a maximum capacity of one megawatt could proceed without requiring a factory permit.
By allowing some 100 such projects to move ahead, the decision is viewed as a catalyst for investment in renewable energy.
4G auction SUSPENSION The temporary suspension of the fourth-generation (4G) spectrum auction has drawn criticism from mobile operators and telecom-related companies, which say the junta's decision will create a domino effect and cause considerable damage to the overall industry.
Global IT research firms say the suspension will hurt businesses and cause an opportunity loss of up to US$4 billion, while delaying development of the country's telecommunications industry and infrastructure.
The postponement could make it harder for mobile operators to handle massive data traffic driven by smartphone users.
For its part, the NCPO deemed the suspension necessary to ensure transparency and proper functioning of the national telecom regulator.
Scrapped Tablets The Pheu Thai Party's contentious One Tablet per Child scheme is history after the NCPO called it a poor investment.
The weak specifications, possible negative health effects and short three-year lifespan of the devices were all cited as drawbacks.
The project is to be replaced by smart classrooms equipped with technology and interactive computer software.
Technology experts and academics have thrown their weight behind the junta's decision to scrap the One Tablet policy, saying it failed to meet objectives and lacked transparency.
Digital TV Coupon DELAY The NCPO at first decided to delay the 25-billion-baht digital TV coupon subsidy. Then it gave a green light to coupon distribution in mid-September after a 15-day public hearing to start this week.
Digital TV channel operators have voiced concerns about the delay. They claim to speak for viewers who still watch free TV and are keen to buy a digital TV set-top box to watch all 24 digital channels.
The Broadcasting and Telecommunications Research and Development Fund for the Public Interest (BTFP) earlier approved a coupon value of 1,000 baht, with distribution planned for late June or early July.
After getting information from the hearing, the National Broadcasting and Telecommunications Commission (NBTC) will revise the coupon scheme as appropriate.
State Enterprise RESHUFFLE Although a shake-up of state enterprise boards was not part of the NCPO's roadmap, the movement began immediately after the takeover.
During the first meeting with executives from 56 state enterprises on May 31, ACM Prajin, head of the NCPO's economic team, signalled that there would be "changes" in board composition.
The reshuffle showed the junta's eagerness to throw out figures linked to the former Pheu Thai-led government. The campaign also took aim at unreasonable perks and fringe benefits paid to board members, executives and employees.
Several chairmen, board members and state enterprise heads have stepped down, starting with Pol Maj Gen Attagrit Tharechat, the director-general of the Government Lottery Office and onetime head of ousted former premier Thaksin Shinawatra's security team, followed by others at Airports of Thailand, PTT, Krungthai Bank, MCOT, IRPC and Thai Airways International.
Bandid Nijathaworn, president of the Thai Institute of Directors and secretary-general of the Private Sector Collective Action Coalition Against Corruption, said the NCPO is "on the right track as it is necessary to build trust and boost efficiency of these state enterprises".
But the ultimate goal, he said, "should be to reform corporate governance, accountability, efficiency and transparency", with the rewards of chairmen and members based on performance of both the enterprises and the boards.
World Cup JOY The junta intervention on the eve of World Cup 2014 was pleasant news for Thai football fans, who could now watch all 64 World Cup matches on free TV. But the bill for this happiness will come in at 427 million baht for the NBTC, which approved the release of cash from the BTFP to shoulder the cost.
Critics disagreed with the use of the BTFP, a development fund, as a vehicle for what they saw as another populist policy.
On June 11, the Supreme Administrative Court had ruled in favour of RS Plc, the broadcast rights holder for the tournament, which sought to air just 22 football games on two free TV channels. The company brought the court case against the broadcasting regulator, which wanted to apply the must-have rule and pressure RS to air every single match on free TV.
RS agreed to the NBTC's compromise, but the actual payment will be made later. A working committee will be set up soon to review the payment, and RS must submit a detailed plan covering costs and opportunity loss.
___ (c)2014 the Bangkok Post (Bangkok, Thailand) Visit the Bangkok Post (Bangkok, Thailand) at www.bangkokpost.com Distributed by MCT Information Services
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