General news - Thursday December 13, 2007

RACE TO PARLIAMENT

Ruam Jai Thai's Populism 2.1

Small party says spending money is fine as long as governments have intelligent plans for making money

WICHIT CHANTANUSORNSIRI and CHATRUDEE THEPARAT

Ruam Jai Thai Chart Pattana doesn't hide from the reality that its economic platform is structured around tax breaks, state financial aid and other policies that some conservative economists deride as populist.

But one refreshing difference is the party's dose of realism. It recognises that to spend money, one needs to make money as well.

''The populist policies pursued by the [Thaksin Shinawatra] government certainly benefited the public. But there were more than a few bugs in the system. What we aim to do is use our knowledge and experience to fix this,'' said spokesman Kasemsant Weerakun.

''If you compare our policies to a computer system, we are offering version 2.1.''

The man responsible for much of Ruam Jai Thai's economic platform is Somkid Jatursripitak, a finance and commerce minister in the Thaksin governments. Short-term fiscal stimulus is a must, to help spur growth in consumption and investment, Dr Kasemsant said.

''We can't wait for long-term development programmes such as new infrastructure investment to boost the economy,'' he said.

Spending 1.7 trillion baht on new mass transit and infrastructure megaprojects over the next five years would only boost economic growth by 0.7 percentage points, according to the party's economic models, with the real benefits to the economy only coming two to three years after investments begin.

''We feel that we need to take measures to boost the economy starting today. Growth of less than 5% isn't enough, and already we can see signs of more factory closings and unemployment,'' Dr Kasemsant said.

From Ruam Jai Thai's perspective, aggressive fiscal spending to boost economic growth can pay for itself in terms of higher tax revenues later.

''For every one percentage point of additional economic growth, we see state tax revenues increasing by 1.1% of gross domestic product, or 100 billion baht,'' Dr Kasemsant said.

Like other parties, Ruam Jai Thai would press to eliminate obstacles to investors and controversial policies such as the 30% capital controls and efforts to tighten foreign business laws. The party aims to maintain economic growth of at least 5% over the next five years, with inflation stabilised at 3% per year and investment growth of at least 10% per year.

A fiscal budget deficit, if necessary, would be maintained at no higher than 2% to 2.5% of GDP, with public debt limited to less than 40% of GDP, a target even more conservative than the current law, which allows debt of up to 50%. Public debt now stands at 37% of GDP.

Ruam Jai Thai estimates that these targets could free up 600 billion baht in additional funds for fiscal stimulus programmes over a three-year period while maintaining fiscal policy well in line with international norms.

''Our policy platform aims to stimulate growth, but while still adhering to the concept of a sufficiency economy and fiscal discipline,'' Dr Kasemsant said.

Ruam Jai Thai's policies also stand out for the aggressive use of tax policies to boost household income and consumption. The party would waive personal income taxes for single taxpayers with income of less than 240,000 baht per year or joint taxpayers with income of 280,000 baht, up from 50,000 to 60,000 baht from current income rates.

Investors starting up new businesses would also be given tax waivers on non-salary revenues for personal income tax purposes for the first five years to help encourage entrepreneurship. Businesses must have annual revenues of less than three million baht to qualify.

For the farm sector, which employs as much as one-third of the labour force, Ruam Jai Thai borrowed a page from Thai Rak Thai's policies with a new farm debt suspension programme for small debt of up to 400,000 baht.

Up to two million households with debt owed to the Bank for Agriculture and Agricultural Co-operatives are estimated to qualify for the three-year debt suspension programme, which says participants must attend training programmes aimed at increasing core job skills and the use of technology and innovation in the agricultural sector.

In the education sector, Ruam Jai Thai would offer the estimated 130,000 teachers nationwide a three-year debt restructuring programme at subsidised interest rates. Vouchers worth 5,000 baht per year would also be offered to each teacher to attend training programmes.

Ruam Jai Thai would also push for a complete overhaul of the country's curriculum, with an increased focus on Thai culture, values and tradition.

Dr Kasemsant said education needed to be strengthened both inside and outside of the classroom to strengthen the country's competitiveness and skills.

New parents would be offered ''baby bonds'' of 20,000 baht for their first child to help cover educational expenses.

On transport, the party would build six new mass transit routes in Greater Bangkok, each linked with existing bus and boat systems to create an integrated multi-modal transport system.

Ruam Jai Thai projects its new mass transit investments to cost around 300 billion baht. The systems should be completed within four years. Another 80 billion baht would be invested in a commuter train system to link the capital with nearby provinces. The party would also commit 240 billion baht to an ambitious high-speed train system allowing travel to Korat, Hua Hin and Nakhon Sawan within 90 minutes from Bangkok.

Dr Kasemsant acknowledged that in many areas _ education, civil service reform, community development and logistics _ Ruam Jai Thai's ideas blurred with those of other parties.

''Actually, I think that each party should join together and establish a clear road map that everyone can agree upon, which will help create policy stability and a clear national agenda,'' he said.

Dr Kasemsant, a former executive of Thai Beverage before joining politics, said the Dec 23 election would not likely lead to an immediate healing of Thailand's political wounds.

''What we will gain from this election is an elected parliament. A national unity government is probably out of the question,'' he said. ''But what might be possible is a unity parliament, with each party committed to supporting reforms under a single 'Team Thailand'.''

Bangkok Post