Back to Thaksinomics in Thailand?

FORMER Prime Minister Thaksin’s economic czar, Somkid Jatusripitak, has been recalled. His task — to change Thailand’s economic fundamentals. But will the Generals give him enough time?

BANGKOK — As Prime Minister of Thailand from 2001 through 2006, Thaksin Shinawatra was lionised at home and abroad for economic policies that produced rapid growth rates while putting money in the pockets of long-neglected, mostly rural consumers.
But the former policeman turned telecommunications tycoon turned politician did not dream up the programmes and policies that bore his name: Thaksinomics.
They were the brainchild of a small coterie of economic advisers.
Now, the anti-Shinawatra clique of Generals that first ousted Thaksin and more recently his sister, Yingluck, as Prime Minister, and promised to eradicate the “Thaksin Regime”, has recruited one of Thaksin’s most important advisers to try and turn around Thailand’s faltering economy. In August, former General now Prime Minister, Prayut Chan-o-cha, named Thaksin’s former economic czar, Somkid Jatusripitak, as his new Deputy Prime Minister overseeing the economy.
Economic hardship can fuel simmering political discontent, so Prayut welcomed Somkid, along with new Finance, Commerce and other Economic Ministers, with a pronouncement that they need to show tangible positive results in a matter of months. That’s a tall order, even for someone as solid and respected as Somkid.
A marketing guru who has authored books with Philip Kotler, Somkid created Thailand’s national Asset Management Corporation and the Village Fund micro-credit programme to boost grassroots economies.
But Thailand is a very different country in 2015 than it was in 2001. Although back then Thailand was still recovering from the 1997 economic meltdown, its economy was trending upward. Today, just about every indicator is moving in the opposite direction.
Whereas most think tanks, the Central Bank and Government agencies originally and optimistically forecast growth this year to be around 4.0 per cent, with almost every passing month they shave points off on those earlier predictions.
Most recently, the Bank of Thailand said growth this year would only reach 2.7 per cent because exports are weak. Thailand is still heavily dependent upon exports, and, with a tepid world economy,  its economy is suffering.
It should be noted that while many have blamed military rule for the sorry state of the economy, exports and other sectors had been doing poorly for at least two years before the military assumed power.
Upon his appointment, Somkid was sanguine about Thailand’s state of affairs, comparing the economy to a polio victim. His assessment of the problem was astute: Thailand can no longer compete with cheaper competitors for manufacturing, and can’t compete with more advanced economies in producing high-value products. The country’s economic fundamentals, he said, need to be changed.
But changing fundamentals takes time. More time than Prayut has ostensibly given him.
In response, Somkid unveiled two of three expected stimulus packages, the first targetted at the grassroots economy and the second at small and medium-sized enterprises. The final package, which the business community is anxious to see, will address domestic and foreign investment.
With commodities prices, including rice, continuing to spiral downward on world markets, and the disastrous and loss-ridden rice-pledging programme of the Yingluck Administration scrapped, farmers and rural consumers have been bearing the brunt of hard times.
The economic czar has begun reviving the Village Fund micro-credit programme to get
rural consumers spending again to help jumpstart the economy. Somkid is making access to credit more readily available to small and
medium-sized businesses. Lack of credit from commercial banks has been a major problem for such businesses, constraining their expansion and potential success.
SME’s account for 98.5 per cent of all businesses in Thailand, 37 per cent of its gross
domestic product and about 80 per cent of the workforce.
On trade, Somkid has voiced interest in Thailand joining the United States-led Trans Pacific Partnership, although Prime Minister Prayut has been much more noncommittal because of opposition from public health advocates and other groups who have sound reasons to be wary of some its provisions.
Attempts to forge a free trade agreement with the US during Thaksin’s time met with fierce domestic opposition.
The TPP could potentially provide more of a boost to Thailand’s trade, however, than the ASEAN Economic Community. A full 40 per cent of Thailand’s trade is with TPP countries, while the AEC accounts for 23 per cent.
Critics question whether dusting off old Thaksinomics programmes such as the Village Fund will be effective in the current economic environment. Somkid insists that if they aren’t, he has other arrows in his quiver that he is ready to pull out and try.
The overarching goal, he says, is to lay the foundation for a shift in Thailand’s economic fundamentals towards more reliance on consumption and higher-value manufacturing. Those were essentially the same goals he had over a decade ago — that never reached fruition. Nonetheless, many economists agree that they are the correct goals.
Some degree of credit should also be given to Prime Minister Prayut. While remaining fairly rigid on political matters and dissent, his appointment of Somkid shows that, at least on certain issues, he can be flexible and successfully reach out to some who reside across the political divide.
That is a positive sign and offers some hope that Thailand can begin to regain some of its former economic prowess.