Govt policies are 'unsustainable'

Bank of Thailand Governor Prasarn Trairatvorakul has slammed government policies as geared towards short-term consumption, saying they have shortcomings and cannot sustain economic competitiveness in the long term.

In a speech to Asean ambassadors and high-ranking officials at the Foreign Ministry yesterday, he said policy-makers needed to be goal-oriented, consistent, proactive and to coordinate with one another, because the country is bracing for greater challenges in light of rapid changes in the global economy.

Meanwhile, academics at a Thai Publica seminar, “Brainstorm on Fiscal Cliff, Thai Government Debts”, also attacked the government yesterday for policies not designed to boost long-term national competitiveness, saying they could create a Thai version of the “fiscal cliff”. Global challenges – particularly the slowdown of the Chinese economy – were a warning that Thailand, at the national and individual levels, must be more cautious in spending. In the first quarter, Thai household debts reached 77 per cent of gross domestic product (GDP), mainly due to stimulus measures launched in recent years. 

Prasarn urged the government to pay more attention to national development plans, which cover all areas of society and the economy, and require action. 

“Any subsequent policies must be drawn in line with national goals. The goals and national development plans should not be left idle on the shelf,” he said. 

Aside from setting goals, policy-makers should not shift focus. Singapore and Malaysia had advanced quickly because of policy consistency, he said. 

Policy-makers should also be alert to global challenges and be willing to coordinate, as no single party can achieve success. 

“If Thailand is a ship navigating in the sea, the ship has travelled a long distance. Yet, it will have to sail further and the destination is not within sight. Our journey has suffered from monsoons and we have been side-tracked and unknowingly got involved too much with ad-hoc problems, which cost us time and money. Yet, if we regain our senses, set sail at full speed and lead the ship towards our goal, we won’t be vulnerable to monsoons and reach the goal in a fast and sustainable way,” he said.

At the Thai Publica seminar, Sethaput Suthiwart-Narueput, chief of the Thailand Future Foundation, said future budget allocation must answer national strategies and be in line with expected returns and cost-benefit analysis. All projects with costs that cannot be defined, like the rice-pledging scheme, must be scrapped, Sethaput said.

A foundation study found that in 2009-10, government annual expenditure rose 9.2 per cent on average – above average growth of 7.2 per cent. Funds were allocated on a ministerial basis, rather than according to national strategies. In these years, little money was put to scientific and technological innovation or energy to boost competitiveness. 

Generally, the allocation pattern did not support the evaluation of economic returns, particularly the evaluation of central budgets, he said. At some ministries like Education, which saw its budget double in 10 years, the level of Thai scientific knowledge, according to PISA rankings, in 2009 was lower than in 2010. And logistical competitiveness fell from 31st in 2007 to 38th in 2012, although budgets for the Transport Ministry increased every year.