Thread: Pheu Thai's election policies - Do and don't for Yingluck

http://www.nationmultimedia.com/2011...-30159966.html

Do and don't for Yingluck

By BUSINESS AND GENERAL REPORTERS
THE NATION
Published on July 11, 2011


Being the first female prime minister doesn't give Yingluck Shinawatra the right to try economic or welfare stunts. That's what experts are telling the new government. In this special report, key economic policies are subject to a cost-benefit analysis.

The results echo concerns expressed elsewhere: some initiatives are fine, but others had better be left on the drawing board.

What she shouldn't do

RICE-PLEDGING PROGRAMME ERODES THAILAND'S COMPETITIVENESS

Although a campaign promise, the Pheu Thai-led government should not bring back the rice-mortgage scheme, as the country's international prestige as a producer and exporter of high quality rice would be ruined in a flash.

The policy would undermine the Kingdom's competitive edge in the world market, as other exporting countries use Thai prices as their benchmark. With better yields, they can undercut Thai quotes. Thai rice may lose market share because faltering economies have caused consumers to focus on price rather than quality.



Exporters say the policy would discourage farmers from continuing to improve grain quality, as they could pawn their crops to the government at high prices without quality concerns.

It remains to be seen how the government could ensure that farmers will directly benefit from the scheme, as in the past, they suffered while millers were the real winners. A higher domestic price than in neighbouring countries would create smuggling problems from Cambodia and possibly Burma.

To promote sustainable development of rice, the government should concentrate on expanding the irrigation system and spending more on research and development of high quality, high yielding seeds.

HIKING THE MINIMUM WAGE AND STARTING SALARY COULD TIP SMEs INTO BANKRUPTCY

Raising the minimum daily wage to Bt300 and the starting salary of new graduates to Bt15,000, beginning with state enterprises and the civil service, would squeeze SMEs, which make up more than 90 per cent of businesses, and in some cases close down. Skilled workers and other staff in companies would be encouraged to push for higher pay. Firms would have to shoulder higher welfare expenses in line with payroll increases.

Manufacturers are already offering attractive wages now, which may be higher than the government's current minimum wage, due to labour shortages. For new graduates, the private sector pays an average Bt8,000-Bt15,000, while new civil servants will get Bt9,100.

Unreasonable wages would force SMEs with limited working capital to shut down when they cannot absorb significant cost increases. Labour-intensive exporters such as garment and shoe makers would have to shift to nations with cheaper wages to stay competitive. Thailand would be less attractive to investors.

According to the Office of Small and Medium Enterprises Promotion, 2.9 million companies are SMEs and account for 99.6 per cent of all businesses in the country. SMEs employ 10.5 million people, or 78 per cent of the workforce. They generate Bt3.75 trillion a year, accounting for 37 per cent of economic value.

What factors did the party use as the basis for calculating its rates? Workers' compensation should be developed step-by-step instead of launched in one go nationwide. Partial increases should be scheduled over time to allow manufacturers to prepare a cost management plan for the future. The rates should also take into consideration the different levels of economic development among the provinces.

The policy could actually end up creating an unemployment problem.

CORPORATE TAX SHOULD NOT BE CUT WITHOUT A PLAN TO REVAMP THE TAX SYSTEM

If the government cuts corporate income tax from 30 to 23 per cent next year, it should also raise the value-added tax from 7 to 10 per cent, or 8-10 per cent. Or it should increase other taxes, or introduce new taxes. The alternative solution is a corporate tax cut accompanied by cancellation of tax incentives under the Board of Investment's promotional schemes. However, Pheu Thai has promised only a corporate tax cut. No tax hike has been mentioned to make up for the revenue shortfall.

The corporate tax cut and a tax cut for first-time car and home buyers would set the treasury back about Bt100 billion in lost revenue, while firms might not be helped much by the corporate tax cut in reducing costs, due to the higher wages.

Pheu Thai believes the tax cut would actually boost tax collections, as the tax base would be enlarged. This remains to be seen.

Tax cuts would also result in a wider deficit for next fiscal year. And as the government has many populist policies to implement, such as cheap loans, cheap homes, cheap cars and free computer tablets, state expenditure would balloon. Combined with the budget for mega projects, the government runs the risk of triggering a fiscal crisis in the near future.

The government may have some money to spend for two years, as debt has not yet reached an alarming level. But after that, many economists doubt it will have money to spend. Currently, public debt is about 41 per cent of GDP. It would be dangerous if it shot up to 50 per cent of GDP.

The government presented a false premise to voters - low taxes but generous welfare. The US is now facing severe debt trouble due to its huge budget deficits. Many economists warn that the US runs the risk of defaulting on its debt. Greece has already been forced to implement an austerity programme in exchange for a bailout from its public debt crisis. Many countries in the eurozone are on the brink of crisis because the |governments have accumulated high debts.

TABLETS ARE "USELESS"

Academics do not agree with the Pheu Thai Party's "one tablet, one child" policy.

Some say it would be useless because tablets are only |hardware. Students would not learn anything without good software and academic content installed on them, while teachers do not know how to advise them to use the devices properly. Others say the tablets would be useless in rural areas especially where Internet coverage is not complete. Many see it as just a populist policy that helped the party win the election.

Another academic from Chulalongkorn University said personal tablets could make children become addicted to computer games and spend time with just themselves or a few friends.

Such a lifestyle would hinder children's physical and emotional development, he said.

Research shows most young children use computers for playing games and only 15 per cent use them as a learning tool. And research findings have confirmed that computer-game addiction was the reason behind so many dropouts.

He called on the government to choose the right age groups and train teachers on how to supervise their students' use of the tablets. Without careful planning, the handout would do more harm than good, he warned.

The policy promises to give a tablet to each Prathom 1 student. The devices could be bought from China or India for as little as Bt3,000-Bt5,000 apiece.

The party said it would start distributing the devices in January.

LANDBRIDGE NOT FEASIBLE, WHILE TOURISM SECTOR WOULD BE HIT HARD

The landbridge project in the South is not worth the investment. What the country stands to gain would be only long-term ground leases to foreign investors who will be granted investment privileges.

To make the project worthwhile, not only should the rail link between Pak Bara Port in Satun on the West Coast and Songkhla Port in Songkhla on the East Coast be constructed, but also an oil refinery, oil depot, oil pipeline and petrochemical plants, according to a study of Dubai World.

Another downside is that the tourism industry in the southernmost provinces would be adversely affected.

What she should do

CREDIT CARDS FOR FARMERS MAY WORK |BUT THE DEVIL IS IN THE DETAILS

The central bank has strict rules governing the credit card business to prevent runaway consumer debt that could threaten financial stability. Under the rules, cardholders must show income of at least Bt15,000 a month or Bt180,000 a year. Commercial banks can charge only up to 20 per cent in annual interest - including penalties for overdue payments.

Most of the 6.9 million farm households will not meet the central bank's criterion since average family income was Bt58,632 in the 2009-10 crop year.

However, state banks could lower the bar in order to accommodate farmers with business cards. The specialised financial institutions supervised by the Finance Ministry use different accounting practices from commercial banks.

Luck Wajananawat, president of the Bank for Agriculture and Agricultural Cooperatives (BAAC), said the credit card project could be implemented. Many people would agree with Pheu Thai that the cards could be used to store data on farm production. It could also be used for other purposes in the future, such as for records on cash handouts in time of economic crisis.

However, the crucial point is that Pheu Thai said the cardholders need not pay interest when they use the card. It is absurd and means the government will fully subsidise interest payments. The BAAC is unlikely to shoulder such a cost. Currently the bank charges about 7-per-cent interest on farm loans.

Easy credit could create a moral hazard, as farmers may not spend their credit carefully. The government will also need to allocate a budget to support this scheme besides the budget needed to support its price subsidy scheme for farm products.

Many developing and advanced economies have paid a high price in terms of economic and social crises stemming from easy credit policies. The government should proceed carefully.

ENERGY PRICES NEED RATIONALISATION

Pheu Thai shocked the energy market with its plan to abolish the Oil Fund. But its decision became palatable when it later decided also to end the Oil Fund levies on three products and to come up with other mechanisms to deal with energy prices in a broad picture.

Ending the fund would present problem, as it is in charge of moderating the prices of some products crucial for the masses like LPG and NGV. Yet, cutting the contributions from three products means the loss of only Bt120 million per day and it looks set to introduce other mechanisms. The fuel pricing formula will be changed to a lower ex-factory basis, which would eventually bring pump prices down. An oil reserve will be started and some petroleum concession royalties would be used to cover the subsidies.

But what the new government should really take into account is the fact that energy prices tend to move up, not down. A Thai Oil analysis shows that though oil prices will ease this year, they would remain above US$100 per barrel.

Subsidies must be scaled back so that energy is used at actual cost. Only then will real demand for alternative energy increase. Just remember that 90 per cent of energy consumed is imported to the tune over Bt1 trillion a year, or over 10 per cent of GDP. In the short term, it should also relieve all petrol users of all subsidies, if fairness is to be ensured.

ELECTRIC, HIGH-SPEED TRAINS AND DOUBLE-TRACK RAILWAYS TO IMPROVE LOGISITICS

Extending the mass transit system throughout Bangkok makes sense, especially the Blue Line (Bang Sue-Tha Phra and Bang Khae-Hua Lamphong sections) and Green Line (Bearing-Samut Prakan section). These extended lines will help connect with the existing two lines, BTS Skytrain and MRT subway, while the Red Line's Bang Sue-Taling Chan section and the Purple Line's Bang Yai-Bang Sue section are under construction.

These are projects that Pheu Thai should push ahead with to save energy and ease traffic congestion in the capital.

The government should also proceed with the high-speed train projects for both passengers and freight. Because of financing limitations, it should start with the priority rail routes or the routes that are most interesting to investors, such as the Bangkok-Korat-Khon Kaen-Nong Khai line. This route will connect with South China's high-speed railway, which will extend from Kunming via Vientiane in Laos to Thailand's Nong Khai. The property industry is most likely to experience a boom, especially in areas with stopover stations.

To reduce logistics costs, which amount to as much as almost 20 per cent of gross domestic product, the double-track rail routes are sorely needed. For the first phase, about six routes with a total length of 873 kilometres have been promised by Pheu Thai.

^^ That'll be that Thaksin fella not getting involved in politics again then....and not setting policy....and and and....

Oh dear. Poor Yingluck, with a brother like that, who needs enemies....

Interesting to note that Thaksin has now revealed that the minimum wage of 300 Baht is only going to be for Bangkok.....ah, the devils in the details....

From the blog world....

A new city for Thailand?

A new city for Thailand?

In today’s Bangkok Post, former Prime Minister Thaksin has introduced an idea about establishing a new city to the south of Bangkok, yes, that means by reclaiming land from the Gulf of Thailand.

It all seems very strange to me. Thailand is not exactly short on land area, I can see the argument for Hong Kong but Bangkok?

Can you explain the new city project?

In the Gulf of Thailand, the water level is relatively shallow for some 15 kilometres from the shore. We will build a dam 10 kilometres out. Beyond the dam, land will be reclaimed to another five kilometres out to help deepen the water, which will in turn help clean the ocean.

Behind the dam, land will be reclaimed to create 200,000 rai, or 300 square kilometres of new land. This will form the base of a new city.

Whatever Bangkok lacks now, we can build there. For instance, we can build a modern Asian financial centre, or a global software development centre, or a film development centre similar to India’s Bollywood. We can build new ports. Power will come from new wind farms. It will be a modern, green city.

The investment cost will be small, say 12,500 baht per square wah. If we reclaim 300,000 rai, 200,000 will be for public use and the remainder sold. Assuming a profit of 20 million baht per rai, that’s 2 trillion baht in revenue.

These profits in turn will help finance other projects, such as water management.

The reclaimed land would be up to 15 km out from the existing shoreline (10km to dam and a further 5 km thereafter), and that the area behind the dam will have 300 square kilometers.

I’d like to know what it would look like. So based on what we know I have attempted to put those figures into a visual format.

We know that this project will feature a dam 10kms from the shoreline, so this could be an area of 30km by 10km, which would look something like this:-



OK it’s unlikely to be a box and perhaps more likely will be closer to the coast for the most part sticking to the light blue areas seen in Google Maps, but if this sticks to the 300 sqkm area that’s being discussed then this could look like this:



But I think both of these are (hopefully) unlikely because this would put this right in front of the mouths of the Chaopraya and Bangpakong Rivers, home to some of the world’s largest, majestic, and endangered species of what has come to be known as Mega Fish, the Giant Mehkong Catfish (GMC) and the Giant Freshwater Stingray (GFS).

Scientists have recently found out ”that Mekong catfish are anadromous, (moving from coastal waters into fresh waters to spawn) [this discovery] has surprised even scientist’s long-held notions of freshwater species. It may be that many other species of catfish also have similar migration habits, and that other species of freshwater fish may be found living part of their lives at sea. It certainly gives new meaning to the concept of “freshwater fish”, if they spend part of their lives living in the salty waters of a marine environment.” Giant Mekong Catfish

The research into these mega fish species which are unique to these waters is relatively recent, so I wonder just how much of these findings have been incorporated into the environmental impact assessment for Thaksin’s ”modern, green city”?

So where would make sense? Well perhaps here:-



Quite what this would do to the fertile ecosystem of the Mae Klong River is of course also unknown at this time. However, it is also currently home to large delicious freshwater shrimp which of course is food to the mega fish described above

However if it really is to be here, the numbers look off. Thaksin is expecting a profit of 20,000,000 Baht per rai = 50,000 Baht per square wah, from an initial investment of 12,500 Baht / sqwah. This means the asking price for this land would be at least Baht 62,500 / sqwah or Baht 25,000,000 per rai.

I can’t quite see why anyone would pay out this sort of money for reclaimed land in this location (or indeed any of them), when there are land parcels available at much more competitive prices closer to the capital. Land in Samut Prakarn for instance sells from 4 million / Rai (far from a main road with limited access) to 20 million / rai for land parcels with direct frontage to the Bangna-Trad Highway.



The whole idea seems to be providing a real estate solution to a problem which doesn’t yet exist.

Whatever Bangkok lacks now, we can build there. For instance, we can build a modern Asian financial centre, or a global software development centre, or a film development centre similar to India’s Bollywood. We can build new ports.

Errrr.. who asked for a new place for a modern Asian financial centre or a global software development centre? – This is yet another example of what I call the Field of Dreams Development Philosophy (Build it and they will come). There are plenty of places where film studios and office buildings can be built on the mainland already.

What’s needed first and foremost is support for the service sector (education, and training to up-skill the existing labour force), and especially SME’s, perhaps some sort of incubation to help these newly skilled entrepreneurs start up their own business driving demand for office space, as the growth of the service sector leads the development of the country.

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A couple of pieces from the past.....note the date....

http://www.asiantribune.com/news/200...ion-dream-city

Nakhon Nayok chosen to host PM’s vision for a dream city

Thu, 2003-11-20 06:00 — admin

By Piyanart Srivalo

Bangkok, Nov. 20: A new two trillion baht “dream city” will be built in Nakhon Nayok, the government announced yesterday.

The predominately residential project will be completed before His Majesty the King’s 84th birthday in 2011, government spokesman Sita Divari said.

Sita said Prime Minister Thaksin Shinawatra yesterday held a meeting of the government agencies in charge of the new city’s construction and greenlighted it being built on a 150,000rai plot.

Most of the plot is in Ban Na district but it also straddles three to four other districts, the spokesman said

“The prime minister wants it be a dream city for living and it will use Tama in Japan as the model,” Sita said, adding that Thaksin wants only one or two government agencies built on the land.

He said no factories would be allowed in the city, which would be linked to Bangkok by a motorway and rail system capable of reaching the capital in around an hour.

“It will be a pollutionfree, hitech city for living,” he said.

Sita said a reservoir would be built to provide water for the city and all power cables would be installed underground.

The government would set up a special corporation to manage the city, which would be run like Pattaya City, and grant tax breaks to residents.

Sita said the government would use several methods to expropriate land for the city’s construction, including using government bonds as payment.

Another method would be to allow landowners to exchange the expropriated property for governmentowned land using market prices.

- The Nation -

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http://2bangkok.com/forum/showthread...-Nakhon-Nayok&

New Town - Nakhon Nayok

There's an article in the Bangkok Post about the new town at Nakhon Nayok proposed under Thaksin administration

http://www.bangkokpost.com/News/08Jan2008_news28.php

(I copied the texts from Bangkok Post in case the above link expired)

some background info on 2Bangkok site
http://2bangkok.com/2bangkok/MassTransit/newcity.shtml

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NEW TOWN, OLD IDEA
Residents of Nakhon Nayok's tranquil Ban Na district wonder whether Thaksin's plans to build a new city there will ever come to fruition

SOMBAT RAKSAKUL

Water buffalos graze in a dry paddy field in Nakhon Nayok's Ban Na district while buses from Bangkok pass by.

Remember the days when you were busy catching up with the new projects and initiatives launched when Thaksin Shinawatra was in power?

Apart from a variety of populist schemes, there was also a series of megaprojects which always sparked debate in society.

However, after the Sept 19, 2006 coup which ousted Mr Thaksin's government, the fate of these controversial projects was left hanging in the balance and many have wondered what is happening with them.

One of the deposed prime minister's ambitious plans was the creation of the "new town" project in Nakhon Nayok's Ban Na district.

Located about 100km northeast of Bangkok, Ban Na - which literally means "home of paddy fields" - is a little world of its own where farmers work all day in paddy fields and buffalos graze on grassland. Mr Thaksin planned to turn this farmland district into a modern metropolis. He even coined a name for it - Nakhon Nayok Muang Mai, or New Town.

After all the publicity given to Mr Thaksin's plans for the area, land prices increased tenfold to as much as one million baht per rai, especially in the central parts of the district, with most of the property speculators coming from Bangkok.

"The New Town project was good news to me," says Charoenporn Bamrungkij, the kamnan of tambon Ban Na. He was among groups of local and provincial leaders who enthusiastically attended meetings at the provincial hall last year to discuss the project.

An elderly woman sells fruit from her farm in Ban Na district on the side of a road.

The 47-year-old kamnan started to compile a list of land owners in the tambon who want to sell their plots of land to build New Town.

"I still have the list of land owners who want to sell about 500 to 600 rai of land altogether," he says.

Plots of land located far from roads may have sold for 200,000 to 300,000 baht per rai, while those plots closer to roads may have sold for up to one million baht per rai.

"Now I really don't know what has become of that project," says Mr Charoenporn.

To cater to the ever increasing population of Bangkok, which now has more than nine million people, the Thaksin administration initiated the new city project on approximately 60,000 rai of land in Ban Na district, plus some adjacent areas of Wihan Daeng and Kaeng Khoi districts of Saraburi.

However, not much progress has been made with urban planning. The town planning has been altered time and again along with changes to cabinet members in charge of the project, not to mention the change of government after the coup.

Former interior minister Wan Muhammad Nor Matha was the first to supervise the scheme. He once said the new city would be modelled on Japan's Tama district, where government offices, public schools, hospitals and first-class hotels would be built.

Then, following a cabinet reshuffle, former deputy prime minister Visanu Krue-Ngam came up with the idea of making it a satellite town of Bangkok where an information technology centre would be built.

Imitating 'cyber cities' abroad, under Mr Visanu's plan the Ban Na IT town would be divided into four zones.

A high-speed train in Shanghai, China, which would be a model for a mass transit system for the New Town.

Zone 1 would house a residential area, Zone 2 would be a cultural zone featuring sports and entertainment complexes, Zone 3 would become a commercial complex and Zone 4 would house libraries and schools. But that plan went nowhere and ended in inconclusive seminars.

The last time villagers in Nakhon Nayok heard about the stalled project was in March, 2006, when Mr Thaksin, then the caretaker prime minister, pledged to revive it during his election campaign in the central and eastern regions. The former Thai Rak Thai leader insisted he would bring prosperity to the whole province by reviving the new city project, which would have such mass transit systems as a skytrain and high-speed train.

Since the end of the Thaksin government, the Ban Na city project has apparently been shelved again.

Nobody has heard anything about it. Officials and residents of Nakhon Nayok assumed the entire project had finally been scrapped.

However, relevant agencies insisted the heavily-promoted project was still alive.

"The project has not been scrapped. It's just been shelved temporarily," said Suporn Vechakorn, an official at the Department of Public Works and Town and Country Planning.

"In fact, we have already finished the concept design of the new town," she said, adding that the design and planning sheets had already been forwarded to the Office of the Public Sector Development Commission.

To save costs on land expropriation, the committee - consisting of officials of the Nakhon Nayok provincial hall and the Department of Public Works and Town and Country Planning - resolved not to build major facilities or a government office centre on any privately owned plots of land, she said.

To turn Ban Na district's paddy fields into a modern town, the committee plans to build a mass transit system in addition to existing roads and highways. The mass transit system has been designed to link the new town with the capital city and Suvarnabhumi international airport.

"Among those mass transit systems which we have planned is a high-speed train like the one in Shanghai, China," she said.

Confirmation by the relevant agencies that Mr Thaksin's project is not dead, and the likelihood that the Thaksin-backed People Power party will form the next government, might give new hope to those eager to reap benefits from such a megaproject. But those who don't want to see the tranquil, green district of Ban Na transformed into another metropolis, or don't want to see vast amounts of taxpayers' money spent on the new town, will have to pray that the new government will not dust off the project."