Re: The Nation : DPM Trairong and Economic Policy
Dr.Samai Jai-Indr
Focus turned on policies to boost competitiveness: Trairong
THE NATION
Having stabilised the economy over the past year with a wide range of short-term measures, the government will now focus on longer-term policies to boost international competitiveness, Trairong Suwankhiri, the newly appointed deputy premier in charge of economic affairs, said yesterday.
"The second Bt400 billion to be borrowed by the government [as part of the Bt1.43-trillion Thai Khemkhaeng stimulus package covering fiscal 2009-11] must deliver long-term benefits. Otherwise, I will not endorse it, because such a huge borrowing would have to be paid back with interest by the younger generation," said the 66-year-old Trairong.
Last year, the Abhisit Vejjajiva government won parliamentary approval for its first Bt350-billion borrowing to stimulate the economy after Thailand faced a recession in the wake of the 2008-09 global economic crisis.
The country's gross domestic product contracted 2.8 per cent in 2009. This year, the economy is projected to grow by 3-3.5 per cent.
Trairong said biofuels, especially ethanol and biodiesel, would figure prominently in his alternative-energy policy. "I look forward to laying down a foundation for Thailand to better cope with the oil crisis in the next 30-40 years, when global supply will be completely finished or greatly diminished. By that time, no one knows how expensive crude oil will be.
"Given this scenario, we need to capitalise on our strong agricultural sector to develop biofuels on a scale more comparable with Brazil, which is a world leader in this field.
"At present, molasses [from sugar cane], tapioca and palm are our key biofuel resources. Besides the agriculture and industry ministries, I've talked to the Irrigation Department about expanding farmland with sufficient water supply.
"Now, only 12 million rai is irrigated nationwide, so we need to double the acreage to 24 million rai and properly formulate our policy for both food crops and biofuels, so that they do not compete against each other.
"Alternative energy and irrigation schemes have the potential to generate long-term benefits that will allow the future generations to pay back the borrowed funds," he said, adding that the government did not need any more quick-fix spending, because the economy had stabilised.
In a bid to boost private investment, which has not recovered since the 2008-09 crisis, Trairong also urged the private sector to upgrade machinery and equipment, to boost productivity and longer-term competitiveness.
"I think the global economy will fully recover in 2012 in a smoking-pipe shape, in which the recovery path will be longer than the recession itself. Definitely, it's not a V shape [or even a U shape].
"So it's a good time for Thai industries to invest in new machinery and equipment, so that they can lower production costs and become more competitive when global demand fully recovers.
"At this stage of recovery, China, India and other Asian economies are leading the way, but the G-3 [the US, the EU and Japan] will likely see a stronger recovery later on, around 2012, given that the G-3 recovery is still fragile and jobless.
"However, I don't think there will be a double dip [in which the US and other major economies face another round of recession].
"On interest rates, it's unlikely the policy rate in the euro zone will be raised in the next six months, largely because European unemployment is still in double digits," said Trairong.