New Thai govt will aim for 'bottom-up approach'

THAILAND - The new government expected to be led by the Pheu Thai Party is likely to brand itself as pro-change and pro-reform, and to encourage a "bottom-up" approach to development.

These ideas, partly formulated by Dr Olarn Chaipravat, the party's chief economic strategist, are seen as a continuation of those set by its predecessor, the now-defunct Thai Rak Thai Party.

Olarn told a gathering of foreign business people at a seminar organised by The Nation and Asean TV that his party would, in government, want to narrow the income gap between the rich and poor by implementing a "bottom up" economic model.

The party wants to increase the income of farmers, labourers and office workers. Promised measures include a pledging guarantee of Bt15,000 (S$600) a tonne for unhusked rice, a minimum wage of Bt300 (S$12) per day and an increase in salaries for new graduates to Bt15,000 per month.

During the election campaign Olarn and other Pheu Thai members promised to increase the competitiveness of the business sector. The party plans to cut corporate income tax to 23 per cent from 30 per cent in its first year in office, then to 20 per cent in later years.

The party also promised to develop a land bridge in the South linking the Gulf of Thailand to the Andaman Sea, and to invest in high-speed rail projects linking Bangkok and other key cities. It promised to extend and build 10 mass transit lines in Bangkok. The party also promised to build a new city "on the sea", to act as a dam to prevent seawater flooding Bangkok.

It wants to set up a sovereign wealth fund by drawing international reserves from the central bank to invest in natural resources and energy - oil, diamonds and gold in Africa.

The party will work to resume diplomatic harmony with Cambodia, as part of a broader effort to strengthen Asean and the coming Asean Economic Community.

Olarn promised to manage the price of farm products, fuels and other consumer products, saying he wanted to help create fair prices for all parties.

Former prime minister Thaksin Shinawatra said during an interview with TV3 yesterday that government priorities were national reconciliation - letting an independent panel led by Kanit na Nakorn continue their factfinding - and to reduce the high inflation.

Sompop Manarungsan, an economist at Chulalongkorn University, said he feared that populist policies would drag the country's progress due to their high costs with little productive gains.

"The Pheu Thai Party has an ambitious plan to increase GDP from US$300 billion (S$370 billion) to $800 billion (S$982 billion) in the next 10 years, but populist policies [cash handouts and easy credit] would drag [down] growth," Sompop said.

He said that the Democrat Party lost the election because it had implemented populist policies but their scale could not match those promised by Pheu Thai - the successor to Thai Rak Thai, the party that initiated populist policies. So people who formally voted Democrat either voted "no" or voted for a third party.

Economic policy implemented by the Democrat-led government was not market friendly, he argued, saying businesses and the middle classes felt frustrated by it.