> Editorial: Spend crisis fund wisely

In an attempt to keep the economy alive, the government has come up with a plan to spend 400 billion baht by June to boost the economy at the grassroots level. While the move is on the right track as Thailand’s other economic engines are not expected to recover soon, the cash injection must be managed carefully to avoid burdening future generations.

This is important because in light of the Covid-19 crisis, out of all the engines driving the economy — local consumption, private investment, government spending and net exports of goods and services, including tourism — only the state can function at full steam.

While the Covid-19 situation has improved, globally the outlook remains tough. International logistics and trade — including foreign tourism and private investment, which have ground to a halt due to current uncertainties — are unlikely to recover soon.

Domestically, consumption has also dropped due to the decreasing purchasing power caused by the economic downturn brought on by Covid-19.

However, if the government manages its expenditure efficiently, it can reinvigorate local consumption, thus bringing back another economic engine.

The cabinet recently passed a decree to borrow one trillion baht, of which 600 billion baht will go towards financing welfare and health-related schemes for individuals whose businesses and/or livelihoods were affected by the pandemic.

The rest is meant for economic and social rehabilitation through projects aimed at creating jobs, strengthening communities and improving infrastructure.

Deputy Prime Minister Somkid Jatusripitak said the 400-billion-baht fund will be channeled through existing rural and urban administration and community funds, as well as foundations which focus on local development projects.

State agencies, such as the National Village and Urban Community Fund Office and related ministries, have also been instructed to present to the government their plans to make use of the cash injection.

The plan looks like a new instalment of the Thai Niyom Yangyuen (“Sustainable Thainess”) programme, which launched about two years ago. The 150-billion baht scheme saw 200,000 baht granted to more than 80,000 villages and urban communities nationwide.

This time around, however, the scheme is much larger. In fact, it will one of the largest grants ever to be injected through the village and community funds.

If these funds are productive and the cash directed to viable local businesses, the scheme will create a multiplier effect and benefit everyone beyond local communities.

Unfortunately, we learnt from Thai Niyom Yangyuen that much of the the money was wasted on unproductive activities.

One of problems is the projects’ frameworks were determined in a top-down manner, so the beneficiaries were not included in the planning and execution in a systematic way.

In some cases, the scheme benefitted equipment suppliers more than it did local communities.

Although the underlying goal of the new scheme is to inject money into the economy, boosting activity, the government must not cut corners in screening project proposals.

It should be more prudent and effective, as this time around the projects will be funded by loans.

As such, any inefficiency will not only have an adverse impact on the economy, but also create a burden for future generations.