Thai Chamber urges shift of money from populist schemes to recovery efforts

October 14, 2011
Petchanet Pratruangkrai
The Nation

The Thai Chamber of Commerce yesterday urged the government to delay its populist policies and save enough money for flood rehabilitation, which could cost Bt300 billion to Bt400 billion.

"The government should prioritise each scheme and delay some of its populist policies to ensure the country's growth after the flooding," said Chatchai Boonyarat, TCC vice chairman.

The severe floods in 47 provinces dragged down the Consumer Confidence Index in September to its lowest in four months. The survey by the TCC's university showed that consumer attitudes edged down from 83.4 points in August to 81.8 in September.

Chatchai said the government must review budget allocations for next year, as cutting only 10 per cent of the budget for each ministry would not be enough.

As an immediate measure, the government should set up a Bt50-billion fund to provide zero-interest or soft loans to help enterprises devastated by flooding.

Somkiat Anuras, another vice chairman, said the first-car and first-house programmes and the Bt300 minimum-wage increase should be put on the back burner.

As a long-term measure, the government must devise a national strategy to manage city planning and water resources to ensure a balanced supply of water in the dry and rainy seasons.

Thanavath Phonvichai, director of the Economic and Business Forecasting Centre of the University of the Thai Chamber of Commerce (UTCC), said the flooding would continue to dent consumer sentiment in the following months as the impact will be prolonged.

The government should urgently prioritise measures to help relieve the impact from flooding.

As one such action, the Bank of Thailand should cut the policy interest rate to lower the operating costs of businesses and stimulate domestic spending, Thanavath said.

The UTCC study found that flooding had already caused losses of Bt156.71 billion, or 1.3-1.5 per cent of gross domestic product.

Of those total losses, Bt50.35 billion is from industry, Bt12.34 billion from trading, Bt8.2 billion from tourism and the rest from property and personal assets.

So far, 8.29 million rai (nearly 1.33 million hectares) of rice fields, which can produce about 5 million to 6 million tonnes of paddy rice, have been damaged.

Saowanee Thairungroj, vice president of the UTCC's research division, said consumer confidence remained very fragile on concerns over continued flooding, the rising cost of living and the global economic slowdown.

The impact from flooding to trading, farming and industry, expected lower incomes in the future and the sober spending mood of consumers could drive economic growth down to 3-3.5 per cent this year.

Most indices related to consumer confidence dropped last month.

Confidence in future income fell from 102.1 points in August to 100.3, while the index for future employment opportunities dropped from 74.4 to 73.

TCC chairman Phongsak Assakul said the chamber had set up an ad hoc committee to estimate the losses from flooding and seek proposals on remedial measures for presentation to the government during the next meeting of the Public-Private Joint Standing Committee.