Submitted on Thu, 19 Jun 2014 - 12:10 AM
Since the coup, the military government has repeatedly emphasized the need to curtail populist policies in order to stimulate an economic revival and domestic stability. Although there has been an active revision of policies implemented by the ousted government, it is observed that selective policies continue to be pursued. The junta has halted the contentious rice pledging and tablet schemes but is accelerating transportation development, reviewing water management projects and restructuring economic policies.
The policy implementations of the military government bear strong parallels to those of previous civilian governments. That said, the junta has reiterated the imperative to restructure and revive the ailing Thai economy. However, the current process of consolidation is debatable, with the complete suspension and abrupt cessation of certain policies incurring greater than expected losses. A more gradual approach to implementing revised policies and a more deliberative system might yield better results.
Annulment of the rice-pledging, tablet schemes
The junta took immediate action in paying farmers under the rice pledging scheme by borrowing funds from state-owned banks and cooperatives. It has been reported that as of 17th June 2014, all outstanding payments to farmers have been made. A total of 195.394 billion baht had been paid to the farmers who pledged their rice. On 14th June 2014, coup leader Gen Prayuth announced the decision to scrap the rice pledging scheme during a meeting on the 2015 budget and ordered the Agriculture and Cooperatives Ministry to find alternatives to improve the livelihood of rice farmers. This is a generally unpopular decision according to a poll conducted by the National Institute of Development Administration which indicated that 56% of 1,464 people surveyed felt that the NCPO should continue the rice pledging scheme. There is an overall consensus on the need to formulate an income guarantee system to protect farmers from fluctuations in rice prices.
The NCPO recently approved 6,600 million baht for compensation to aid rubber farmers, and another 5,400 million baht for people affected by natural disasters including the 2012 floods and the recent earthquake in northern Thailand.
Another key policy of the past to be discontinued is the tablet scheme. Education Ministry officials were quoted as saying that the tablet project for the 2014 academic year and the purchase of tablets for the northern and north-eastern provinces have been halted. According to Suthasri Wongsaman, Permanent Secretary, tablets should not be used as the main teaching tool for children who would be better off learning directly from teachers.
Reviving the 2 trillion transportation mega project
On 26th September 2013, then Prime Minister Yingluck Shinawatra launched the Building Thailand’s Future 2020 programme which emphasized transport infrastructure development. A total investment of 2 trillion baht was to bring about high speed trains, a dual track rail service and electric train lines. The launch of the programme was heavily critiqued, especially by the Democrat Party, who in response unveiled an alternative infrastructure project with the same budget to target four key areas of development: transport, education, development and research. On 3rd June 2014, the junta gave the go ahead for 10 dual-track projects while subjecting the high speed rail project to further cost benefit analysis. This move was backed by the Democrat Party who advocated its cost effectiveness. The approximate expenditure for the dual track projects is said to be around 1.3 trillion baht (US$40.1bn) out of the 2 trillion baht investment package to upgrade Thailand's transport infrastructure.
After mulling over water management projects under the previous government, the junta has called for a suspension of ongoing water management policies in order to consolidate and conduct an overall revision. This has inevitably affected the 350 million baht water scheme conceived under the Yingluck government. Experts have voiced opinions on the suspension of water management schemes as projects are required to resolve urgent water shortages and flood problems.
Keeping inflation low while boosting consumer spending
According to The Economist, at the heart of the junta’s economic policy is the imperative of raising consumer spending. This agenda bears an uncanny resemblance to those of previous civilian governments and similar administrative methods have been used to cap inflation. These include the continuation of energy subsidies, which in principal resemble the fuel price subsidies of 2004. There has also been talk of lowering the 7% VAT rate to encourage consumer spending, but nothing concrete has been implemented yet. The management of inflation is necessary to maintain a grip on political dissent.
In terms of restructuring economic policies, the resignation of Parnpree Bahiddha-nukara has given the junta a green light for reform. Parnpee, ex-chairman of the PTT board, submitted his resignation to ACM Prajin Juntong (Deputy Chief and Economics Affairs Chief of the NCPO) on 15th June 2014. Parnpee supposedly had a close relationship with the previous civilian government. Although the junta has said that they had no plans to restructure the boards of state enterprises, the resignation of Parnpee has undoubtedly facilitated the junta’s economic reform agenda.