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Thaksin Outlines Grand 5-year Plan


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Thaksin outlines grand 5-year plan

BANGKOK: -- Prime Minister Thaksin Shinawatra yesterday regaled international money managers with details of his government’s five-year, Bt1-trillion investment plan and predictions that state enterprises will accelerate investments to keep annual economic growth at 6-7 per cent.

In his remarks at the start of the Thailand Focus 2004 international conference yesterday, Thaksin said he has several infrastructure projects in the pipeline, including mass transit and logistics systems.

New investments will boost efficiency and enhance productivity for existing production and service industries, he told over 300 international fund managers at the start of the three-day government-sponsored forum.

Finance Minister Somkid Jatusripitak and Bank of Thailand Governor Pridiyathorn Devakula also sent similar messages and informed foreign money managers that the authorities would balance economic growth with stability.

“Though investment by both the public and private sectors would reach a combined Bt1 trillion over the next five years, no macroeconomic imbalances will be permitted,” Somkid said.

With GDP growth at 6-7 per cent, the government intends to maintain a balanced or surplus budget every year starting from fiscal year 2005.

Somkid said public debt would be reduced from 47 per cent to 35 per cent of GDP and the debt burden in the annual budget to 15 per cent of GDP. The government also aims to stimulate national savings to 34 per cent of GDP, compared to the present 31 per cent.

The current account deficit, if there is any, would not be allowed to exceed 2 per cent of GDP, while official reserves would be kept to at least 3.5 times the short-term foreign debt, Somkid said.

Dr Olarn Chaipravat, an economic adviser to Somkid, further outlined the investment plan by both the public and private sectors, which would represent supply creation as the country shifts away from demand-led growth.

A survey of investment intentions of state-owned enterprises in mega-projects indicates that the rate of increase in capital expenditure for Bangkok’s mass-transit system, energy related investment, aircraft, new airport facilities and low-income housing will be very large during the next three to five years. But Olarn said the planned public investment in telecommunications networks is relatively small, as is the telecommunications investment by private companies.

A similar survey of the investment intentions of SET 100 companies, 100 multinational corporations, housing developers and some small and medium-sized firms, seems to indicate that these enterprises do not intend to increase capital spending as much as state-owned enterprises.

The 50 state-owned enterprises plan to invest capital expenditure from about Bt216 billion in 2004 to an average of about Bt350 billion per year during 2005 to 2008, representing a cumulative growth rate of about 30 per cent a year.

Private enterprises indicate much lower rates of growth, with planned nominal capital expenditures of 15 per cent for multinationals, 15 per cent for SET 100 firms, 20 per cent for housing developers and 15 per cent for SMEs per year.

The preliminary results indicate the rate of increase in private-sector capital investment during the next three to five years will come to around 16 to 17 per cent per year, compared to about a 30-per-cent growth rate for the 50 state-owned enterprises.

The growth rate is expected to be 10 per cent per year for central and local government investment in infrastructure capital, such as highways and irrigation facilities, Olarn said.

Total combined price investment in the Thai economy is likely to grow at the rate of about 20 per cent annually during the next three to five years. This is about the same rate of growth for 2004, in which oil prices have been high and investment begun to speed up, but there has been no apparent negative impact on inflation or the current account.

Olarn was cautious about sources of funds to finance large investment.

“A high-powered and high-performance economy can be sustained only when domestic savings are enough to fund all investment requirements without inflationary pressure and without experiencing excessive current account deficit,” he said.

“And if foreign savings are needed, they should be in a currency and in a form that does not invite the possibility of the country having a double-mismatch problem again,” Olarn said.

The government will provide more incentives to encourage companies to convert their old pension fund arrangements into new provident fund schemes, he said, or set up new funds to be managed by professional fund managers.

He said there is room to increase household savings in Thailand by 10 to 15 per cent from about Bt650 billion at present to about Bt730 billion.

Olarn said Asian bonds will shortly be traded in the Stock Exchange of Thailand, and will be a long-term source of funds for investment.

Productive long-term investment projects with stable and adequate cash flow of state enterprises, large corporations and special purpose vehicles will be financed by retained earnings, new equity issues, and straight, convertible and securitisation bonds, Olarn said.

Meanwhile, Pridiyathorn said the central bank is focusing on maintaining economic stability.

He said the central bank raised its policy interest rate to curb inflation pushed by higher oil prices. The central bank is also keeping a close eye on sectors such as real estate, as well as household debts and the banking sector.

--The Nation 2004-09-21

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Thaksin outlines grand 5-year plan

He said there is room to increase household savings in Thailand by 10 to 15 per cent from about Bt650 billion at present to about Bt730 billion.

Savings hub? Don't make me laugh. Outside the top 10 - 20 % of earners I doubt if there's much more than a few hundred billion baht in genuine savings out there. Even at 650 billion, that still works out at only 10,000 baht for each person in the country, which ain't a lot, when one considers the levels of public and private debt. Nearly everyone is up to their eyeballs in debt and it's accumulating fast. Check out the used car sales "tents" to see the rate of repos and people trying to get out of debt. The bubble look's pretty near to bursting in some sectors I'd say, but the property sector might have a year or two to play out. Depends largely how the downturn in long-haul tourism, due to higher airfares and jumpy tourists plays out over the coming cool season, when a lot of tour operators and hotels could feel the heat big time and start a downturn. That would lead to a lot of cancelled projects and unemployment would start to rise. The stats here take a helluva long time to show the "true" picture and that's often just a massaged version.

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Savings hub? Don't make me laugh. Outside the top 10 - 20 % of earners I doubt if there's much more than a few hundred billion baht in genuine savings out there. Even at 650 billion, that still works out at only 10,000 baht for each person in the country, which ain't a lot, when one considers the levels of public and private debt. Nearly everyone is up to their eyeballs in debt and it's accumulating fast. Check out the used car sales "tents" to see the rate of repos and people trying to get out of debt. The bubble look's pretty near to bursting in some sectors I'd say, but the property sector might have a year or two to play out. Depends largely how the downturn in long-haul tourism, due to higher airfares and jumpy tourists plays out over the coming cool season, when a lot of tour operators and hotels could feel the heat big time and start a downturn. That would lead to a lot of cancelled projects and unemployment would start to rise. The stats here take a helluva long time to show the "true" picture and that's often just a massaged version.

Very astute and very accurate. Given those factors you mention, I see turmoil on the horizon.

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its all smoke and mirrors and lovely words and numbers. no details. you can't improve effiency by saying "we are going to improve efficiency"

"Somkid said public debt would be reduced from 47 per cent to 35 per cent of GDP and the debt burden in the annual budget to 15 per cent of GDP" - actually, I don't understand the second part , unless it is supposed to be talking about interest payments.

Then, in the same article, at the same press conference I suppose, some other dude says

"Olarn said Asian bonds will shortly be traded in the Stock Exchange of Thailand, and will be a long-term source of funds for investment. "

isn't issuing more government bonds going to INCREASE public debt? maybe I have a poor understanding of economics. Then again, what the ###### is an Asian bond?

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Found this on the net, HUB of Graft maybe

CORRUPTION-THAILAND:

Thaksin's Anti-Graft Drive Challenged

Marwaan Macan-Markar

BANGKOK, Sep 23 (IPS) - On the eve of launching a battle against corruption, the Thai government is facing charges that this anti-graft drive may be a smokescreen to go after its political opponents ahead of a general election.

Such criticism has been shaped by the accusations of land fraud levelled by a powerful cabinet minister against a popular political figure, who has openly challenged the sincerity of the ruling Thai Rak Thai (Thais Love Thai - TRT) government in recent months.

On Thursday, the accused in question, Chamlong Srimuang, hit back through the media, saying: ''Don't ever think that you can use your power anyway you want. The power belongs to the people, not politicians.''

Till early this year, Chamlong was regarded as Thai Prime Minister Thaksin Shinawatra's political mentor and a friend of the TRT.

In May 1992, Chamlong - a former Bangkok governor - led huge pro-democracy demonstrations against the military government of Gen. Suchinda Karpayoon. Democracy was restored in the country, on the intervention of the King, after scores of protesters were shot dead by the Thai military.

''The case being brought against Chamlong is disturbing. We are afraid the government may use the war against corruption to go after its political opponents,'' Nirand Pithakwatchara, who chairs the human security and social development committee in the Senate, said in an interview.

This campaign will look good ahead of the elections, he said, since it is aimed to ''create an illusion'' among the people that the government is attacking corruption.

''If they were really serious about corruption and bringing about change, they should not have waited till the end of the term,'' he asserted.

The Thaksin administration's four-year term in office ends in January next year and a general election is due to be held weeks after.

The fight against corruption was one of the pledges Thaksin made at the 2001 poll, but he has waited till late this year to pursue it. This drive to clean the country of fraud is to be launched on Sept. 30.

It begins two week's after an anti-graft activist revealed that state officials, politicians and others had pocketed 1.2 trillion baht (300 billion U.S. dollars) through bribes and kickbacks for over a decade.

To that can be added a laundry list of fraud involving a broad spectrum of people in key institutions of the country. An academic from Bangkok's Chulalongkorn University, for instance, has revealed in a study that the police force is the most corrupt state institution in the country.

In 2002, the police had taken in over 19 billion baht (475 million dollars) from gambling dens, 11 billion baht (275 million dollars) from an underground lottery, 3.4 billion baht (8.5 million dollars) from massage parlours and three billion baht (7.5 million dollars) from motorcycle taxis, states Sundsidh Piriyarangsan, the academic.

Just how it works was revealed last July after a falling out between the king of Bangkok's massage parlours, Chuwit Kamolvisit, and the police. Chuwit said he had to pay 12 million baht (300,000 dollars) in bribes monthly to the police to keep his six palaces of pleasure open.

Two international watchdogs have also shed light on this South-east Asian country's problem with corruption. In its 2003 report, Transparency International placed Thailand 70th among 133 countries on its corruption perception index.

Meanwhile, the Political and Economic Risk Consultancy (PERC) gave Thailand a score of 8.55, close to the worst indicator of 10, in a review of corruption and 8.45 for cronyism.

Corruption also rears its head during elections, say researchers, pointing to the brazen manner in which candidates dish out money and gifts in their respective constituencies to buy votes.

Newspapers have estimated that close to 30 billion baht (75 million dollars) was spent by candidates in the eight weeks leading up to the 2001 general elections.

The country's poor have felt the pinch of corruption when assistance meant for them through development programmes have not been fully transferred, Bantorn Ondam, a sociologist and advisor to the Assembly of the Poor - a broad network of rural grassroots groups - told IPS.

Farmers promised 100 head of cattle, for instance, have only received 50, he said. ''This is the work of the bureaucrats involved. They always cheat the poor.''

But Thaksin's pledge to end corruption within the bureaucracy is not enough, say some analysts, given the new face of corruption that has evolved in Thailand.

''The old style of corruption, of bureaucrats taking a slice off a government project, is being outstripped by the new style of corruption - corruption by policy,'' David Streckfuss, a U.S. academic researching Thai political culture, said in an interview.

By that he meant politicians linked with the country's business empires pushing through policies where they stand to gain in the long run. ''This is very indirect, less crude and may be difficult to trace,'' Streckfuss added.

Pasuk Phongpaicht, a Thai economist and one of the country's authorities on the culture of corruption, argues like wise in a book and articles published recently.

It stems from the TRT being led by Thaksin, a telecommunication business tycoon, and having in its ranks big business families linked to the media, hotels, property, construction, infrastructure and finance, she said.

Thai-language newspapers like the 'Post Today' have argued in editorials that the government should not only punish civil servants but politicians who abuse power for their personal gain.

''Mr.Thaksin must also tackle corruption arising from abuse of state policy. This is often committed by politicians with connections to business interests,'' the 'Post Today' commented on Sunday.

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war on corruption starts Oct 3, general elections early next year... hhmmm...

"''The case being brought against Chamlong is disturbing. We are afraid the government may use the war against corruption to go after its political opponents,'' Nirand Pithakwatchara, who chairs the human security and social development committee in the Senate, said in an interview."

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It begins two week's after an anti-graft activist revealed that state officials, politicians and others had pocketed 1.2 trillion baht (300 billion U.S. dollars) through bribes and kickbacks for over a decade.

Just how it works was revealed last July after a falling out between the king of Bangkok's massage parlours, Chuwit Kamolvisit, and the police. Chuwit said he had to pay 12 million baht (300,000 dollars) in bribes monthly to the police to keep his six palaces of pleasure open.

T

ok 1,200,000,000,000 baht divided by

10 years

80,000,000 thais

means 1500 baht each per year.

or chuwit

300,000 dollars divided by

6 establishments

they must have been highly profitable enterprises to have that much money as an additional overhead every month.

Darth Bangkok

war on corruption starts Oct 3

its only a 30 or 90 day plan

:o

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