Weekly highlights

The government launches supplementary economic stimulus package; the emergence of a new political force, Bhumjaithai party, and the steady decline of Puea Thai party.

The launch of the 115-billion baht economic stimulus package earlier this week marks the Democrat-led government’s first major undertaking to prop up the sagging economy and to help low-income earners and the poor to cope with the economic difficulty.

The package covers 18 projects which include a 2,000 baht one-off payment to eight million employees under Social Security Fund and 1.4 million civil servants earning less than 15,000 baht a month, 15 years free education, old-age pension, training for the unemployed, housing for junior police officers, health station improvement, tourism promotion, free bus ride in Bangkok and free rail service for another six months and free utilities for households for another six months.

The package however came under fire from several economists who doubted that it would help spur the economy as intended. Most criticized is the 2,000-baht one-off handout which aims to put money right into the hands of the people so that they can spend them quickly.

Former finance minister M.R. Pridiyathorn Devakula did not mince his words in criticizing the project and the men behind it. “I cannot imagine how the government came up with such a plan. I do not want to say that this is from an Oxford or Cambridge graduate,” he was quoted to have said. He doubted the 18 billion baht earmarked for this project would help spur the economy but would disappear immediately once they were disbursed.

Interestingly, most of the budget to implement the package was earmarked for ministries under the supervision of the Democrats. The coalition parties, meanwhile, were allocated with relatively much smaller budgets. The Transport Ministry under the supervision of the Friends of Newin faction, for instance, had its request for 15 billion baht fund for the dust-free road project in rural areas chopped to just 1,5 billion baht. The Commerce Ministry under the Bhumjaithai party’s quota was allotted only one billion baht for export promotion against its request for tens of billion baht budget.

Transport Minister Sophon Zaram reportedly complained bitterly about the cut but he was calmed by the prime minister who promised to tend to his problem later on. How the Friends of Newin feel about this treatment by the Democrats is not known yet. It remains to be seen whether disappointment will escalate in the future and threaten the government’s stability if the Democrats continue to deny their coalition partners a fairer share of the budget.

To complement the government’s stimulus package, the Bank of Thailand on Wednesday cut the key interest rate by 0.75 percentage points to 2% to jumpstart the sagging economy. It remains to be seen when commercial banks will follow in the same footstep and how much cut in interest rate it will make.

The cabinet on Tuesday also set up a council of ministers headed by Prime Minister Abhisit Vejjajiva to oversee development of five southern provinces, including the three strife-torn provinces of Yala, Pattani and Narathiwat. The two other provinces are Songkhla and Satun. It also decided to extend the enforcement of the emergency decree in the three southernmost provinces for another three months until mid-April.

The establishment of the council of southern ministers gave an impression that the government has paid special attention to the unrest problem in the region. In reality however, the council has little clout in dealing with security problem which remains tightly in the hands of the military. Earlier, the Democrats proposed the setting up of a new organization, to be called the Southern Border Provinces Administration Office, to replace the existing Southern Border Provinces Administration Centre, but they were forced to back off following protests from the military.

Dr Srisompob Chitpiromsri, a lecturer at Prince of Songkhla University’s Pattani campus, said he regretted the Democrats backtracked on the new organization. He added the council of border ministers would not be able to solve unrest in the region.

On political front, the official launch of the Bhumjaithai party represents a significant political movement. The new party is the merger between the Friends of Newin faction and the disbanded Matchimatippataya party. Claiming to have 30 MPs under its wing, the party has emerged as the second largest party after the Democrats in the coalition government.

Interestingly, several members of the “House No 111” disbanded Thai Rak Thai party showed up at the launch event held at a Bangkok hotel. Among them are Pongpol Adireksarn, Suriya Jeongruangreangkij, Suchart Tancharoen and Sora-ath Klinpathum. It was speculated that former finance minister Somkid Jatusripitak has been approached to head the party once he is off the hook from the five-year political ban. More former Thai Rak Thai MPs are likely to flock to the party which has emerged as a new formidable political force.

While the Bhumjaithai party appears to be on the rise attracting MPs from several other parties, the pro-Thaksin Puea Thai party seems to be on the decline. The party managed to win just five out of 29 House seats on January 11 by-elections although it was claimed by the party leadership that they were not fully prepared for the polls because of the time constraint. Worse still, the party appears to be rudderless and is struggling to find a real leader. The interim leader, Yongyuth Vichaidit, who is at best a nominee of the Shinawatra clan, has declined to accept the leadership post on permanent basis. The party’s rising star, Chalerm Yubamrung, also declined the offer claiming he was not ready to accept the challenge. It was speculated that Chalerm was reluctant to accept the offer because of the heavy financial burden to look after all the MPs that he has to bear for which he could not afford to do.

In desperation, the party finally approached General Chettha Thanajaro, the figurehead former leader of Ruam Jai Thai Chart Pattana party, who reportedly accepted the offer to head the party. Even so, he would eventually end up as just a nominee leader who has to take orders from the real defacto leader, Thaksin Shinawatra.