Korn slams excessive reliance on exports

Former finance minister |Korn Chatikavanij yesterday attacked the government’s weak-baht policy, the lack of investment in the railway system and a delay in implementation of the universal pension fund on the second day of the debate on the 2013 Budget Bill.
Democrat MP Korn argued that the government’s expenditure plan will not raise the country’s competitiveness. He said the government has sent a signal to implement a weak-baht policy, which would make the country even more heavily reliant on exports.
Export value now makes up about 72 per cent of gross domestic product, up from 20 per cent 20 years ago, or 35 per cent in the aftermath of the 1997 financial crisis, he said.
“Too much reliance on exports makes the country vulnerable to global market volatility,” Korn said. The export-led growth strategy has led to only high returns for capitalists, while the living standards of the workers had not improved, he said.
The government has raised the minimum wage to Bt300 per day but the cost of living has also increased significantly, Korn said.
The former finance minister criticised the low amount of capital spending – only Bt400 billion, or 18.7 per cent of the total 2013 fiscal-spending plan of Bt2.4 trillion.
He suggested that the government should invest more on railway transport to enable people in rural areas to access public services and economic opportunities. Korn said the government’s planned investment in the rail system was only Bt106 billion, or 4.5 per cent of the total budget, compared with China’s 10 per cent of budget.
Korn also criticised Finance Minister Kittiratt Na-Ranong for the delay in implementation of the universal pension fund scheme, which was initiated by the Democrat-led government.
“The finance minister has not yet signed many regulations essential for the implementation of the scheme,” said Korn. The government last year allocated only Bt250 million and Bt500 million under the 2013 Budget Bill, he said.
The new pension scheme would cover 30 million self-employed workers such as taxi drivers and street vendors, who are currently not covered by Social Security Fund and Government Pension Fund, Korn said. Under the law, the government has to make a matching contribution to the fund. For example, if a worker who is 50 years old deposits Bt100 into the fund each month, the government has to making a matching contribution.
Korn also raised the issue of farmers and other low-income groups not being able to access credit. He said the government planned to use half of the profits of the Bank for Agriculture and Agricultural Cooperatives (BAAC) to finance its debt-moratorium scheme.
“The BAAC has an annual profit of about Bt8 billion while PTT makes huge profits of as much as Bt100 billion. Why does the government not return part of PTT’s profits to the people?” asked Korn.
While the manufacturing and export sectors recovered in the first quarter of this year, the real income of farmers sank by 11 per cent because of the 12.2-per-cent fall in farm prices, said Korn, referring to the quarterly economic report released by the National Economic and Social Development Board. Korn said the government should look into the details instead of claiming that GDP this year would expand by 5-6 per cent.
While the government claimed it would reduce the budget deficit to Bt300 billion for the 2013 fiscal year from a deficit of Bt400 billion in the current budget, Korn argued that actual borrowing would be close to Bt1 trillion. The government earlier issued emergency executive decrees to borrow Bt350 billion to finance flood-prevention projects, and Bt50 billion to finance an insurance fund. He criticised the slow budget disbursement due to the government’s inefficient spending management.