Somkid team reinvigorated the economy
MR PRIDIYATHORN Devakula, the former head of the government’s economic team, shunned most kinds of populist policies during his 15 months in office from May 2014 to August last year.
However, his successor Somkid Jatus-ripitak is more comfortable with a wide range of policies and measures to stimulate the economy.
Over the past five months, the Somkid team has tackled the sluggish economy at various levels with multiple tools, including some populist measures.
At the grass roots, the team revived the Village Fund scheme with an injection of funds worth several tens of billion baht.
For credit-strapped small and medium-sized enterprises, it offered a Bt100-billion soft-loan programme at a 4-per-cent interest rate. To kick-start private investment, the Board of Investment and the Finance Ministry introduced extra tax incentives to encourage Thai and foreign investors to quickly implement their projects.
For the longer-term goal of repositioning Thai industries, the team identified 10 “future” industries to be promoted by the government to uplift the country’s international competitiveness.
For infrastructure investment, the public-private partnership (PPP) model got a new lease of life with a big portion of projects worth a combined Bt1.79 trillion set for bidding next year. The Somkid team also led a delegation to Japan to revitalise foreign investors’ interest in the country.
The team also managed to boost domestic consumption with a surprise tax incentive for year-end shopping, making it the talk of the town in the final week of 2015.
In other words, the stage has been set for a stronger economy next year.
In hindsight, the Pridiyathorn team should be credited for stabilising the economy in the early months after the coup.
The team also implemented some tax reforms, with one notable example being inheritance tax, which will take effect on February 1. While the amount of inheritance tax to be collected might not be huge due to the watered-down rates and conditions, it represents a rare policy initiative aimed at social equity.
Also, legal and other moves for the “digital economy”, initiated by Pridiyathorn, have helped efforts to boost international competitiveness, as have measures promoting the setting up of international headquarters and international trading companies in Thailand, among other things.
Overall, the Pridiyathorn team was less adept at stimulating a slow economy, when compared to the speed and variety of moves implemented by the Somkid team, which has been more successful in restoring business and consumer confidence in Thailand.
