All onus on Somkid to shepherd the Thai economy
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IF THE RECENT rejection of the charter draft means the Prayut Chan-o-cha administration can stay in power for at least another six months, it should also give enough time to the economic team led by Deputy Prime Minister Somkid Jatusripitak to fix the eco
When there is a slowdown in investments from large companies, grass-roots and small and medium-sized enterprises hold the key. When exports cannot be relied on as an engine of growth because of the global economic slowdown, domestic consumption and government spending are the answer.
A few weeks into his term, Somkid announced a series of stimulus packages, starting with financial assistance of about Bt60 billion focused on low-income earners via the Village Funds and the One Tambon One Product (Otop) scheme.
This week, he came up with the second phase of the economic stimulus package, focusing on SMEs by injecting money into the lending system with a target of Bt100 billion. This is aimed at helping them with soft loans at an interest rate of 4 per cent per annum via state-owned banks, with the government subsidising the interest rate and also the loan-guarantee fee.
Though Prayut denied that this measure was a populist policy, many businesspeople seem to be happy with “quick” packages and “getting to the point” policies that would not be like a dog chasing its tail.
This measure is because SMEs cannot access capital as cheaply as large firms can. Their requests for bank loans are often rejected.
Meanwhile, SMEs are also being given corporate-tax cuts for two fiscal years. In addition, venture-capital funds worth Bt6 billion in total will be established to help strengthen them.
Like a superman, Somkid, who is in charge of overseeing economic affairs, is fully empowered by National Council for Peace and Order chief Prayut. He was recently appointed as chairman and director of 20 important committees, which are established by laws and regulations of the Prime Minister’s Office covering all of the country’s key policies.
The committees are related to support and promotion of farmers and villagers, small and large enterprises, social enterprises, infrastructure development, industrial development, energy procurement, merchant marine, and road traffic towards international economic policy.
Recently, Somkid egged on the Transport Ministry to speed up work on pending infrastructure projects, especially the railway system, and pushed a plan to seek wider private participation in the state’s investments. Two out of four pending mass-transit-line projects are expected to be on the table of the Cabinet within this month.
The seventh meeting of the committee overseeing the Bt400-billion Thai-Chinese medium-speed railway project took place in Bangkok yesterday, which indicates the process is on.
Though the measures announced by Somkid are not brand new, they look better, more powerful, and more integrated as he is backed by Article 44 of the interim charter that empowers him to sweep away any obstacles.
It’s quite clear what shape the economy under Somkid’s management will take.
Thailand now has 2.7 million SMEs nationwide, representing about 97 per cent of all companies. They account for about 37 per cent of gross domestic product.
If the short-term economic stimulus plan is successful, a multiplier effect on the economy will see an increase of Bt1.94 trillion in money circulation as per the government’s expectation.
What if the economy does not recover over the next two years as expected?
Amid the new normal for the Thai economy, of growth but at a low level, Somkid must try hard to penetrate this situation.
Let’s wait to hear more on what the third phase of the package will be about.
