Somchai advises tailored policies
The country’s economic policies in the near future must be tailor-made for each province and industry, allowing policymakers to use appropriate problem solving measures, says permanent secretary for finance Somchai Sujjapongse.
The adoption of a more specific approach will help policymakers better deal with problems, he said. For example, the Industry Ministry may take action if Lampang province, a ceramics factory hub, has production problems, said Mr Somchai.
Thailand’s economy grew at the fastest pace in more than four years in the second quarter, posting 3.7% growth year-on-year after expanding 3.3% in the first quarter, supported by strong exports, tourism and massive state investment. But the recovery is not yet considered to be broad-based due to tepid private investment and consumption.
In the first half the economy grew by 3.5% yearon-year, prompting the National Economic and Social Development Board in August to raise its 2017 economic growth forecast range to 3.5-4% from 3.33.8% projected in May.
With robust export growth, the Bank of Thailand increased its full-year economic growth forecast slightly to 3.5% in July from 3.4%, while the Fiscal Policy Office forecast GDP growth of 3.6%.
He said the Finance Ministry will roll out a new set of indices to shed light on the six-month economic outlook based on each province and region to provide in-depth information and pinpoint economic problems in each area. This should allow the authorities to use the most appropriate policies when addressing problems.
Taking the wholesale business as an example, the new indices will point out whether they are improving only in key provinces, he said.
Even though exports are picking up rapidly, only 10 companies are enjoying the rebound, said Mr Somchai.
He said economic growth is highly likely to reach 3.7% this year but whether growth can reach 4% depends on several factors including investment in the Eastern Economic Corridor in the next three months and whether the rail infrastructure investment stays on track.
In related news, former finance minister Thirachai Phuvanatnaranubala urged Prime Minister Prayut Chan-o-cha to solicit all political parties to find solutions to avoid launching populist policies to draw voters in the next election.
Without a collective resolution, focus in implementing populist policies will be shifted to unnecessary issues such as the excise tax refund for firsttime car buyers and the rice-pledging scheme after policies for basic needs have already been launched, he said.
Even though the country has a 20-year national strategy in place, extreme populist policies will be employed again if political parties do not seek mutual guidelines for arranging economic policies in the future, he said during the launch of his book Thailand Reset: Thinking about the Thai economy in different angles with people-centric approaches.
The country’s priority is taking care of people in rural areas, who account for 40% of the total population, said Mr Thirachai. Surveying their needs is essential to upgrade their living standards because of the varying requirements in each community.
An ex-deputy governor of the Bank of Thailand, Mr Thirachai said he is concerned that the baht is too strong to support the country’s economy, and policymakers should discuss measures other than interest rates to slow down offshore fund inflows.
The baht has gained over 8% against the greenback this year, making it the top-performing currency in Asia.