Pridiyathorn defends sufficiency-economy concept

If Thailand still followed growth-inflated Thaksinomics instead of sufficiency economics, it might - in three years - fall into the same financial trap that Argentina faced in the late 1990s, Deputy Prime Minister MR Pridiyathorn Devakula said yesterday.

"The sufficiency economy is certainly better than Thaksinomics, which promotes excessive spending. Under the sufficiency concept, people will be more prudent in their spending," said Pridiyathorn, who also serves as finance minister.

During an economics seminar, Pridiyathorn defended the sufficiency-economy concept against criticism by some foreign media for triggering the current economic malaise.

The current government has been blamed by some foreign media for promoting a concept that turned its back on foreign investment, comparing the moderation concept with Thaksinomics, which was championed by deposed Prime Minister Thaksin Shinawatra and spurred expansion through free-wheeling state spending.

Pridiyathorn said comparisons of the two concepts were irrelevant. "They are in different classes."

He said if the new government had kept up the frenetic spending pace, it might eventually have run into a financial crisis of huge debt accumulated along the way, exactly like Argentina experienced.

"You won't cry until you see the coffin. But if we had continued this policy, you would certainly have been weeping in three years," he said.

Thaksin's world tour giving interviews to foreign media attacking the military-installed government was also condemned.

"Don't brag about bad things to make other countries misunderstand us and damage the country while you keep saying you love the country," he said.

Thaksinomics racked up large liabilities - both on and off budget - of Bt150 billion, through, for instance, the lottery and the loan schemes via state banks, he said.

"On the books, it might look like a good policy, but in fact it was done to benefit his cronies and accrued huge debt for the country," he said.

The previous government initiated some projects without proper consideration. For instance, the Elite Card project started with registered capital of Bt500 million and managed to accumulate losses of Bt900 million. That problem project is among several the current government inherited and must tackle, said Pridiyathorn.

He said sufficiency economics did not decelerate economic growth. The economy has become more resilient to cope with future developments. Sufficiency economics helps limit economic excesses, a premise also included in Keynesian economic theory.

Regardless of the criticism, some foreign investors still have keen confidence in Thailand. For example, six companies, including Hoya, Panasonic, Toyota and Diamond Land, have already committed to investing a combined Bt70 billion here this year, he said.

"If we concentrate on the real sector, our economic fundamentals will be strong. As a result, it should be reflected in the capital market," he said.

By June, the Stock Exchange of Thailand should hit 730 points, compared with about 650 at the moment, he said.

Board of Investment secretary-general Satit Chanjavanakul said the level of the baht would be the key deciding factor for fresh foreign investment in Thailand.

Former Commerce Minister Narongchai Akrasanee commented on the government's capital controls to prevent baht speculation. He said the Bank of Thailand should correct the currency's level through interest-rate cuts.

In fact, the interest rate should have been lowered in last year's third quarter, because inflation had already settled down to a more manageable level, he said.

He added that the government should also make the message clear to foreigners that it still maintained investment-friendly policies.

Anoma Srisukkasem

The Nation
Thu, February 1, 2007