Stimulus plan under fire

Top economists have given the thumbs down to the government's 115-billion-baht supplementary spending budget, saying it is designed to woo votes rather than prop up the sagging economy.

I cannot imagine how the government came up with such a plan. I do not want to say that I cannot believe this is from an Oxford or Cambridge graduate. PRIDIYATHORN DEVAKULA FORMER FINANCE MINISTER

Of 18 projects to be implemented in mid-March, a scheme to grant a one-off 2,000-baht allowance to eight million employees under the Social Security Fund and 1.4 million civil servants making less than 15,000 baht per month came under the most fire yesterday.

Former finance minister MR Pridiyathorn Devakula said the 2,000-baht grant scheme had caught him off guard.

"I cannot imagine how the government came up with such a plan. I do not want to say that I cannot believe this is from an Oxford or Cambridge graduate," he said of some cabinet members with backgrounds at prestigious British universities, including Finance Minister Korn Chatikavanij and Prime Minister Abhisit Vejjajiva.

"I am baffled. The 18 billion [earmarked for this scheme] will just disappear. It will not stimulate the economy because it is a one-time payment," he said.

"I think paying people 2,000 baht per head is to lure votes," he said.

He said of the total budget, only seven billion baht would be spent creating jobs.

MR Pridiyathorn also criticised the six-billion-baht skills training scheme aimed at creating new entrepreneurs, saying that at a time when the economy had slowed and purchasing power was limited, it was a bad idea to encourage small-scale operators to invest as there was a high risk of their businesses going under.

"It is like leading them to bankruptcy. I could not believe the government would be so silly. It is utterly silly," he said.

The most effective channel to spur the economy was to inject the money through tambon administrative organisations (TAOs).

But he complimented the Finance Ministry's decision not to cut corporate taxes from 30% to 25%, saying it was unlikely the businesses would use the money to invest.

Sauwanee Thairungroj, vice-rector of the Thai Chamber of Commerce University, said the 2,000-baht grant project would target the wrong groups.

She said the unemployed and those below the poverty line would not benefit.

Sakon Varanyuwatana, vice dean of the economics faculty at Thammasat University, said the economic stimulus package was a disappointment as it should have focused more on measures which would strengthen the economy over the longer term.

Direk Patmasiriwat, another Thammasat economist, said he disagreed with free water and electricity and cuts in petrol taxes, as the measures would give consumers the "wrong incentives". He also doubted whether the schemes would benefit the people in real need.

Lae Dilokvidhayarat, a Chulalongkorn University economist, said the government should have paid more attention to employees or sub-contract workers made redundant as they were directly affected by the economic slowdown.

Worawit Charoenlert, of Chiang Mai University, said the grant scheme was a charity fund and it could be used up in a few days.

"It will not stimulate the economy, but it will affect the tax system. The government will have to raise taxes to make up for the lost money," he said.

Prime Minister Abhisit defended the scheme, saying it was not a one-time payment as some were saying.

He said the scheme was in response to the Thailand Development Research Institute's suggestion that the government help employees contribute to the Social Security Fund and the 2,000-baht grant could be used to contribute to the fund. The grant would also reach people faster.

"The measures we are about to implement can be evaluated. We will see if domestic spending will increase or not," he said.

He also denied reports that 60% of the economic stimulus package funds were diverted to Democrat-controlled ministries and had disappointed coalition partners.