Poor get further reprieve

The new Abhisit government plans to extend water, bus and electricity subsidies for six more months to help assist low-income households struggling with the sharply slowing economy.

Economic ministers yesterday also agreed to push for a new 100-billion-baht spending bill to finance job training programmes and community development projects.

The decision, made at a meeting chaired by Prime Minister Abhisit Vejjajiva, will extend the six-point programme initiated by the Samak Sundaravej government last year to help ease financial pressure on households beleaguered by soaring oil and food prices.

Ministers also agreed to press local administrations to accelerate spending of some 140 billion baht in funds already budgeted for new road construction in remote areas.

Mr Abhisit said further measures would be discussed next week to help the economy, including possible new tax incentives and financial aid for employees and companies.

The Thai economy has slowed sharply in recent months, with the Bank of Thailand recently cutting its 2009 growth forecast to just 0.5% to 2%, less than half the growth posted last year.

While 2008 was dominated by concerns of inflation amid record-high oil prices, the concern has turned to unemployment and slowing growth, with the export and tourism sectors particularly in dire straits due to the global economic crisis and political infighting and protests of the past several months.

The stimulus programme will extend for another six months free bus and rail travel, subsidised water and electricity for small households and price subsidies for liquefied petroleum gas (LPG).

But one measure from the Samak government - excise tax cuts for gasohol and diesel - was not extended yesterday, with officials saying an extension was unnecessary as pump prices had already fallen sharply in recent months with declines in crude oil prices.

Kobsak Sabhavasu, a deputy prime minister, said the government had decided to extend the anti-inflation programme from the previous government due to its direct benefits given to the poor.

"The government wants to keep the public utilities support programme as low-income residents have directly benefited from it," Mr Kobsak said.

Meanwhile, the 100-billion-baht supplementary budget, which is likely to go to parliament within the next few months, will finance nine programmes aimed at assisting farmers, factory workers, small businesses, students, poor residents and other groups.

The budget will include funds to help prop up prices of farm commodities and encourage new job creation. Unemployment is a major concern for the government, with some business groups warning that unemployment could more than double to one million people by the end of the year as a result of the slowing economy.

Some 30 billion baht will be set aside to finance education costs for 13 million students nationwide under a Democrat policy to provide 15 years' free education to the public.

Labour Minister Paitoon Kaewthong said 5.2 billion baht would also be allocated for retraining and skills programmes for up to 500,000 unemployed this year.

Mr Abhisit said new funds would also be allocated to helping rebuild confidence among foreign investors and tourists.

Thailand's international image has suffered greatly in recent months, particularly following the eight-day closure of the Suvarnabhumi airport by the People's Alliance for Democracy in protest against the then-Somchai Wongsawat government.

Implementation of the programmes is expected to begin before April 1, with further details to be discussed next week by economic ministers before final cabinet approval on Jan 20.

Economists agree that additional fiscal spending should give priority to addressing the problems of unemployment.

Nibon Poapongsakorn, president of the Thailand Development Research Institute, said public resources should focus on helping the crisis in the industrial and tourism sectors.

He said declining inflation meant that less priority should be given to helping white-collar workers or civil servants with regular income.

"The government must have a clear target to ease the impact for those most affected [by the economic slowdown]. It should not help those who are not really in trouble," Mr Nibon said.

He said it was important that new programmes be closely monitored and fully transparent to maximise efficiency in spending. Crop guarantee programmes should have prices set at reasonable levels relative to costs, to maximise results.

"Frankly, I wonder whether programmes such as short-term training for the unemployed to become entrepreneurs will really be effective," Mr Nibon said.

"And expanding the role of the Social Security Fund could be risky for future beneficiaries."

Among the policy initiatives being discussed by the government is the mobilisation of funds from the Social Security Fund for loans to workers and companies in cooperation with local banks.