All eyes on the new cabinet
Prime Minister Srettha Thavisin poses for a group photo with members of the new cabinet at Government House in Bangkok on Sept 5. Chanat Katanyu
The new cabinet started work last week as Prime Minister Srettha Thavisin led the members to be sworn in at Government House. Many new ministers did not wait for the policy announcement, scheduled for today, checking in at their new offices right away.
As soon as the 43-page draft policy statement was issued on Friday, it was widely scrutinised and criticised by the public over the lack of policies that coalition parties proposed during their election campaigns.
With many key economic ministries allotted to the Pheu Thai Party, the private sector hopes integration between different ministries will be more seamless, as frequently occurred in the past.
As a number of ministries are in the hands of the old camp from the outgoing government, this is an opportunity to see how well the Srettha administration can integrate all the key economic sectors.
Mr Srettha, centre, addresses the media next to members of the new cabinet at Government House on Sept 5. AFP
Nonarit Bisonyabut, research fellow at Thailand Development Research Institute, said the prime minister, who also holds the position of finance minister, needs to manage the economy based on measurable conditions as political expectations and political reality are two different things.
The government probably wants to do everything it pledged during the campaign, but managing an economy differs from election promises, said Mr Nonarit. The finance minister needs to choose the appropriate scale and timing of stimulus measures, he said.
Mr Nonarit said the economic environment puts pressure on the government to use stimulus measures this year as growth is projected to tally only 2.8%, lower than projections of 3.7-3.8%. The government will require a total budget of 200 billion baht if it wants to raise GDP by one percentage point through stimulus, he said.
However, if the government decides to implement the 10,000-baht digital handout policy for citizens age 16 and older, it will require a total budget of around 560 billion baht, which some analysts consider an excessive and inefficient stimulus measure.
Stimulus should be targeted towards vulnerable groups who are more in need than other groups, said Mr Nonarit.
He said excessive government spending may not derail fiscal stability immediately, but it will create a burden for future generations. Similar to spending using a credit card, too much government spending will reduce its credit line, said Mr Nonarit.
This could pose a long-term risk to fiscal stability if the government needs to use more money in the future, he said.
Payong Srivanich, chairman of the Thai Bankers’ Association, said the new government should prioritise the reduction of small and medium-sized enterprise (SME) and household debts in a broad and sustainable manner.
He said the Bank of Thailand and financial institutions including commercial banks, specialised financial institutions, and non-banks should cooperate to solve the country’s swelling household debt problem. The collaboration should pay attention to the vulnerable segment, covering low-income earners, farmers and SMEs.
Mr Payong said economic expansion is a key factor to strengthen the debt payment ability of borrowers, as the income of both business and household sectors can improve.
Mr Phumtham conducts a ritual during his first day in office as commerce minister.
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the private sector is confident in Mr Phumtham’s ability to collaborate and drive trade growth substantially.
He said the chamber plans to present the new commerce minister with proposals, including using the Joint Public and Private Sector Consultative Committee on Commerce as a platform for dialogue and to address trade obstacles.
This committee includes the chamber, the Federation of Thai Industries (FTI) and the Thai National Shippers’ Council (TNSC).
Given the slowing economies of trade partners such as the US, the EU and China, the chamber proposes the new commerce minister beef up expansion of international trade markets and accelerate free trade agreement negotiations with the EU, the Gulf Cooperation Council and other potentially lucrative markets.
In addition, new strategies and measures should be implemented to control raw material costs in the business sector, said the chamber, enabling companies to compete both domestically and globally with the goal of improving exports to grow or a minimal contraction by year-end.
For 2024, the chamber believes the Commerce Ministry and private sector must work diligently together to achieve 3-5% growth in exports.
TNSC chairman Chaichan Chareonsuk proposed Mr Phumtham focus on addressing production costs for manufacturers and exporters, especially electricity bills and fuel oil prices, which play a vital role in promoting exports amid heightened competition.
The new minister is also urged to speed up bolstering financial liquidity, especially for SMEs, as the sluggish economy, rising production costs and interest rates have strained their financial liquidity.
Mr Chaichan also emphasised the importance of environmental integration, as the imminent threat of severe El Niño conditions, expected to persist until next year, poses a significant risk to agricultural products, food and related exports.
Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association, said she hopes Ms Sudawan understands and adopts policies to develop the supply side in order to increase tourism value in Thailand, instead of seeking high numbers of tourists as with past administrations.
“We should prioritise developing new products that can cherish our traditions and create more value. The tourism minister should end the era of zero-dollar tours, making sure they don’t return when the market recovers,” said Mrs Marisa.
The Pheu Thai Party drew up a major plan for tourism before establishing the government as its team met with the private sector to discuss the outlook. The party presented a plan to set up the Thailand Creative Content Agency (Thacca), with tourism as one of eight targeted industries, together with films, arts, books, food, music festivals, sports and fashion design.
If Thacca becomes part of government policy, the private sector would like to know the structure of this authority and its long-term plans, she said.
If Thacca aims to systematically bridge the entire supply chain by offering one-stop services for the private sector, as well as provide funds for development, Mrs Marisa said it will benefit operators seeking to tap new potential markets, such as the Mice industry (meetings, incentives, conventions and exhibitions), medical and wellness, and community-based tourism.
She said she hopes the guidelines for tourism development will create more opportunities for operators to enhance the market using data, upgrade workforce skills, remove legal obstacles and help tourism operators save costs by reducing relevant taxes.
Ms Pimphattra during her first day as industry minister on Sept 7.
The FTI wants the Industry Ministry to help stop the influx of cheap Chinese goods to protect local businesses, especially SMEs.
The federation said this should be a priority for Ms Pimphattra, who vowed on her first day in office on Sept 7 that she will offer better support to SMEs and promote a new electric vehicle (EV) incentive package to draw more foreign investment.
“We would like the ministry to launch measures to control Chinese goods importers,” said Kriengkrai Thiennukul, chairman of the FTI.
“Up to 25 of the 45 industries under the FTI have already been affected by the influx of Chinese goods. A slow response to this problem may deal a blow to the whole industry.”
Mr Kriengkrai suggested Ms Pimphattra discuss the issue with the Thai Industrial Standards Institute, which certifies product standards and safety, to find ways to better regulate the import of Chinese goods.
If Chinese imports continue to increase, Thai capacity utilisation will decrease as local companies cannot compete with Chinese manufacturers, who have much lower operating costs, he said.
“During the first six months of this year, we witnessed a rapid increase among Chinese goods,” said Mr Kriengkrai. “The country also posted a trade deficit with China of several million baht.”
Industry Ministry assistance is needed as exports dropped for a 10th consecutive month in July, affecting manufacturers across many industries, he said.
Mr Kriengkrai supports Ms Pimphattra’s plan to promote the domestic EV industry through a new incentive package as foreign investors, especially from China, want to expand their businesses here.
He also wants the new minister to work closely with businesses and pay attention to their proposals to come up with timely solutions to economic problems.
While many businesses want the Energy Ministry to continue to subsidise diesel prices, SET-listed Scan Inter (SCN), a compressed natural gas seller and clean power operator, said the authorities should consider curbing diesel usage to improve air quality as this fuel is a major source of PM2.5 ultra-fine dust.
New Energy Minister Peeraphan Salirathaviphak seems to have different policy priorities, indicating he wants to help the government speed up plans to reduce energy prices, including for diesel, to ease the cost of living and firms’ operating costs.
Littee Kitpipit, chief executive of SCN, blamed the diesel price subsidy programme under the Oil Fuel Fund for partially worsening dust pollution, especially in Bangkok.
He acknowledged slash and burn farming practices emit PM2.5, a particulate matter sized 2.5 micrometres in diameter, but this practice has occurred for decades in Thailand and rarely caused severe dust problems. Mr Littee said diesel is the real culprit as a high number of diesel-powered vehicles increase levels of PM2.5.
If the new government focuses only on enforcing stricter laws to curb burning in the farm sector, it will barely dent the PM2.5 problem if the policy to cap diesel prices remains, he said.
In early 2019, Bangkok was shrouded in PM2.5 dust, which did not subside even with the use of water cannons. Diesel engine emissions coupled with stagnant air patterns prolonged the hazardous conditions, said Mr Littee.
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