Economic restructuring is the urgent pill Thailand needs
Populist policies will not heal Thailand’s economic wounds, the country will have a more stable economic future if it can achieve a 4% economic growth, an economist said.
Independent academic Asst Prof Dr Aat Pisanwanich explained that though achieving this “golden number” will be challenging, it can be attained if the government makes changes to the country’s economic structure right away.
Prime Minister Srettha Thavisin’s government has been in power for just over a month now and has implemented several policies to stimulate the economy.
However, Dr Aat said, spending on populist policies also means Thailand is borrowing more and pushing up the public debt.
If the economy does not grow fast enough to make up the numbers, the country will be in deep trouble, he warned.
The golden number
Citing the Pheu Thai-led government’s digital wallet policy, Dr Aat said that though it will boost the economy in the short term, it will not be sustainable in the long term. Also, he warned, it will boost public debt, which can only be overcome if 4% economic growth can be achieved.
“The government is still focusing on populist policies when Thailand should be building its capacity and restructuring the economy. Though results will not be evident right away, changes will have to be introduced simultaneously,” he said.
“For instance, 60% [of the budget] can go to populist policies, and the remainder can be devoted to restructuring, which are long-term solutions, such as boosting labour capacity, research and development, and even developing a low-carbon society to attract more foreign investment.”
Thailand’s economic growth has not risen beyond 3% over the past several years, while this year’s growth has been forecast at 2.8%.
When asked for a timeframe for this 4% growth target, Dr Aat said that he is working on the assumption that this government will serve its entire tenure of four years. Keeping that in mind, he said, the first step will be to attract more foreign investment, an effort that our ASEAN neighbours are also making.
Pros and cons of populism
Pheu Thai has implemented several populist parties with the hope of quelling negative feedback after it broke away from the progressive Move Forward Party to form a government.
To the relief of millions of farmers, Srettha’s Cabinet agreed to suspend their debts in September.
Dr Aat said this decision has both pros and cons. He said that though the suspension of debt repayment has put a bandage on the issue for now, it does not address the actual problem of how farmers will make ends meet or enhance their earnings in the future.
Debt repayment has been suspended many times before, but nobody has ever tried to develop farmers’ skills so they can boost their income as well as competitiveness on the world stage, he pointed out.
Hence, he said, if nothing tangible is done, the debt problem will return and even worsen once the suspension period is over.
Similarly, he said, efforts to reduce the cost of living by lowering the cost of electricity and fuel will be of little use if food prices continue rising. These, Dr Aat said, are structural issues that the government needs to tackle before finding out what exactly will help make a real difference.
