The future of the Thai economy
- Published: 26/11/2010 at 02:37 PM
- Online news:
An economics seminar this week began the informed debate that is needed more than ever after the redshirt-yellowshirt mudslinging of the last few years.
In the last two weeks, the Bangkok Post has featured a series of articles that provide deep insights into the Thai economy.
First, looking closely at the rise of the baht by award-winning Bangkok Post economics journalist Parista Yuthamanop (Read article).
Second, a mini-memoir by Dr. Tarisa Watanagase, the central bank governor who just recently stepped down (Read article).
Photo above of Prime Minister of Thailand Abhisit Vejjajiva addressing the seminar on the future of the Thai economy discussed in the article below.
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FISCAL POLICY: Economists: Reform the tax system by Parista Yuthamanop & Wichit Chantranusornsiri
The government must reform the tax system to ease fiscal constraints and narrow the wealth gap in order to survive amid heavier pressure in the sluggish world economy, economists told a forum yesterday.
The forum, hosted by the Thammasat Economics Association, with the Bangkok Post as a media partner, discussed the challenges facing the Thai economy.
Sakon Varanyuwatana, an economics lecturer at Thammasat University, said the government should make an effort to collect more tax revenue based on the capacity of taxpayers.
In terms of fiscal strength, there's no reason to worry. Cash reserves amount to more than 400 billion baht, and collection exceeds the target for the previous fiscal years" he said. "But we found there to be a wide gap between collection capacity and the ability to pay."
Assoc Prof Sakon said the government set aside an inadequate amount of money to bolster the domestic economy. Tax reforms should also aim at narrowing inequalities, as low-income earners have greater difficulty accessing financial services.
With the expected slower economic growth next year, the public sector will have more constraints on tax collection," he added.
However, the Finance Ministry earlier announced a tax reform plan for early 2011.
Deputy Prime Minister Trairong Suwannakhiri told the forum that insufficient revenue to meet increasing calls for social welfare will be among the main difficulties in the future.
The demand for expenditure is high, but income trends don't match it," he said.
Ours has become an ageing society, which is defined as having 10% of the population aged over 60, a threshold that Thailand passed in 2005. And we will enter this more fully in 2025, when the number of people above 60 will be 20% of the population.
Patamawadee Suzuki, the dean of Thammasat's economics faculty, said the country's public investment budget has decreased to 22% of the economy's size from 38% before 1997. Asean countries' average public investment is 28% of gross domestic product.
The economy also suffers a shortage of unskilled labour, while the quality of skilled labour falls short of market demand, she said. Farmers are heavily burdened with debt, while new technological breakthroughs to increase yields are not likely to be forthcoming.
We have a strong macroeconomic policy but weak microeconomic policies. And the public sector will see many constraints next year," she said.
Yuth Vorachattarn, the chairman of Kim Eng Securities, said low wages have played a role in political conflicts in recent years. The minimum wage, adjusted for inflation, declined from 172 baht in 1998 to 159 last year.
Despite the decline in real wages, personal income tax more than tripled from 100 billion in 1998 to 320 billion last year
This means that economic prosperity is concentrated in the corporate sector. Most labourers migrate to the city, and it's hard for them to upgrade their skills," said Mr Yuth
Not only is the tax base too narrow, but the level of taxes paid is too.
He believes tax avoidance among corporations should be addressed.
Pichai Chunhavajira, the chairman of Thai Oil Plc, said the private sector believes the government should focus more on agriculture, specifically raising farm yields, as farmers' incomes are stagnantly low. High fertiliser prices and land rental forms a large part of farmers' expenditures.
Some 70-80% of local industrial growth comes from domestic consumption. If the farm sector is not good, the industrial sector can never be good," he said.
Witoon Lianchamroon, the director of the Bio Thai Foundation, said farmers' main problem is their debt burden.
A study by the Fiscal Policy Office shows 60% of local farmers have to rent their land. Thus, clear policies by the the government regarding land reform to allow retail farmers to own their land would help," he said.
Somkid Jatusripitak, a former deputy prime minister, said the budget allocation currently failed to build competitiveness.
The government must prepare a budget to build competitiveness. The Science Ministry receives just 8 billion baht out of 2.2 trillion. The Defence Ministry receives 170 billion and the Interior Ministry 230 billion," he said.
Meanwhile, the budget for improving product quality stood at just 557 million baht and industrial promotion 9 billion.
(Source: FISCAL POLICY: Economists: Reform the tax system, 25/11/2010, Parista Yuthamanop & Wichit Chantranusornsiri, link)
informed - based on good knowledge of the facts of a subject, knowledgeable, expert ซึ่งรอบรู้, ซึ่งเชี่ยวชาญ
informed debate - when discuss or argue about an issue using facts to support their argument
mudslinging - saying things publicly to harm the reputation of other people (usually facts are ignored or distorted) การสาดโคลน, การใส่ร้ายป้ายสี, การให้ร้ายป้ายสี, การใส่ร้าย, การกล่าวร้าย
reform - a change that is intended to correct a situation that is wrong or unfair การแก้ไข การปฏิรูป
ease - to make or become less severe, difficult, unpleasant, painful, etc ทำให้ง่าย, บรรเทา
fiscal - related to government spending and the government budget, i.e., public money เกี่ยวกับงบประมาณ
constraints - things that limit possible action and solutions to problems
fiscal constraints - limits to government spending (for example, because can't raise enough tax revenue or can't borrow money)
gap - a large difference between people or groups ช่องว่าง
wealth - how much money and assets a person or country owns
wealth gap - a big difference in how much money two groups have
narrow the wealth gap - make two groups more equal in the amount of money they have
survive - to continue to exist อยู่รอด สืบต่อไปได้
pressure - stress, cannot live comfortably (difficult decisions must be made) ความกดดัน ความตึงเครียด
sluggish - moving slowly, not performing or reacting as well as usual (เศรษฐกิจ) ที่ซบเซา
forum - a place where people can express their ideas and opinions, discuss and debate issues การประชุมแสดงความคิดเห็น
media - radio, television, newspaper, the Internet, considered as a group สื่อ
media partner - a media company that is working together with other companies to produce and stage an event
challenges - new and difficult problems to solve, that require effort and determination
effort - an attempt to do something ความพยายาม
collect taxes - process of getting tax money that governments and households must pay the government
tax collection (noun) - the activity of collecting taxes due to the government
revenue - income from taxes or business activities รายได้
capacity - the ability to do something
taxpayers - people who pay taxes (who don't want to see their hard-earned money wasted) ผู้เสียภาษี
reason - an explanation of an event, why an event happened เหตุ ; เหตุผล ; สาเหตุ
cash reserves - money kept for future use when it is needed เงินเหลือใช้ที่เก็บไว้
target - a goal เป้าหมาย
collection capacity - ability to collect
set aside - keep money for some special use in the future (do not use the money now)
inadequate - not enough, or not good enough for a particular purpose อย่างไม่เพียงพอ
bolster - to make something stronger or more effective ทำให้เข้มแข็ง
domestic - ในประเทศ within the country
domestic economy - the economy within one country (as opposed to the "international economy" of all countries)
reforms - improvements in the way that government works
aim - the thing you hope to achieve by doing something เป้าหมาย, จุดมุ่งหมาย
narrowing - decreasing in size
inequalities - meaning "income inequality" or "economic inequality"
income inequality, economic inequality - when most of a country's income and assets are possessed by a small group of people, not spread equally over the whole population (See a colour-coded map of world economic inequality as measured by the Gini coefficients and also Wikipedia on income inequality and income inequality metrics).
income - money that people receive from work or some other source, used for household consumption and savings
expected - believe will happen คาดว่า (จะเกิดขึ้น)
constraint - something that limits the possible actions you can take, limitation, confinement, restraint ข้อจำกัด, เงื่อนไขบังคับ
sector - a part of the economy ภาค (ทางเศรษฐกิจหรือสังคม) (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
public sector - the government
insufficient - not sufficient, not enough ไม่พอ
social welfare - good care and living conditions, in this case ความสะดวกสบาย, ความมีสุขภาพดี, สวัสดิภาพ
demand - the need and desire to buy goods and services by households and businesses
expenditure - spending money
match - to look the same as or very similar to something else ซึ่งไม่คู่ควร
population - all the people who live in a country or an area or city within the country
aged - very old สูงอายุ
threshold - at the entrance to something ทางเข้า, the level or point at which you start to experience something, or at which something starts to happen จุดเริ่มของประสบการณ์หรือเหตุการณ์ใหม่ๆ
dean - a senior official at a college or university; the head of a faculty, school or administrative division in a university or college คณบดี (ทางการศึกษา), หัวหน้า, ผู้อาวุโส
faculty - a group of departments in a college which specialize in a particular subject or group of subjects คณะ
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
budget - the amounts of money that an organisation has available to spend on different things during a period งบประมาณ (See Wikipedia)
shortage - when there is not enough of something การขาดแคลน
falls short - not enough, did not reach goal or target
falls short of market demand - supply not enough to meet global demand
debt - an amount of money that you owe หนี้
yields - how much crop a farmer gets from farming one hectare of land ผลผลิต
forthcoming - happening or coming soon ที่กำลังจะมาถึง
macro - large size
micro - small size
macroeconomic - the study of the behaviour of economies of whole countries (See Wikipedia)
policy - a plan of action to guide decisions and achieveoutcomes นโยบาย (See Wikipedia)
wages - the amount of money earned per hour by a worker
role - the position or purpose that someone or something has in a situation, organisation, society or relationship บทบาท
conflicts - angry disagreements between people or groups ความขัดแย้ง
wage - an amount of money that you earn for working, usually according to how many hours or days you work each week or month ค่าจ้าง
a minimum wage - the lowest pay rate that a company can legally pay workers, legally set by the governent to ensure that people can look after their families, economists claim that minimum wages can create unemployment (See Economist glossary) ค่าแรงขั้นต่ำ
inflation - the level of prices rising in the economy as a whole (See Wikipedia and The Economist glossary) ภาวะเงินเฟ้อ (See Economist Glossary) อัตราเงินเฟ้อ
income - money that people receive from work or some other source, used for household consumption and savings
income tax - a percentage of a person or company's income that must be paid to the government (See Wikipedia)
personal income tax - tax paid by individual people on the income they earn each year
prosperity - when people are making money, doing well financially ความเจริญรุ่งเรือง, ความมั่งคั่ง
concentrated - activity directed at one place (with great intensity) มุ่งไปที่
migrate - if people migrate, they travel in large numbers to a new place to live temporarily อพยพ
upgrade - improve; make new, modern, and up-to-date
skills - a type of work or task requiring special training and knowledge ทักษะ ความสามารถเฉพาะทาง
tax base - tax collected by the government from an economy (that in turn supports government programs)
tax base too narrow - too few people and companies are paying the taxes (that they owe according to the law)
corporations - a large company (registered with the government as separate legal entity, owned by many shareholders) (See Wikipedia)
tax avoidance - tax evasion, (See Wikipedia)
address a problem - take action to try to solve a problem
focus - think about and work on one thing (rather than waste time on many), concentrate time and attention on one thing ให้ความสำคัญ
specifically - in an exact and detailed way
farm yields - the amount of crops produced by farmers
stagnant - slow moving, increasing only very slowly
fertiliser - a natural or chemical substance which is spread on the land or given to plants, to make plants grow well ปุ๋ย (See Wikipedia)
local - in or related to the area that you live, or to the particular area that you are talking about ท้องถิ่น
consumption - money spent by households and families on goods and services การบริโภค (See Wikipedia)
domestic consumption - total consumption by households within the country
burden - a responsibility, a difficult thing that must be done, a heavy load to carry ภาระ (See glossary)
debt burden - the money that a person or organization has borrowed and has to pay back (and it is difficult to pay back, perhaps because they borrowed too much)
Fiscal Policy Office - the Thai government agency that researches policy related to Thai government spending and financing debt to cover spending deficits (when tax receipts are not enough to cover spending)
rent - to pay money for the use of something for a period of time เช่า
clear - easy to understand
land reform - a government program to take the ownership of land from large land owners (the rich, the government) and give it (redistribute) to poor small farmers (See Wikipedia)
retail - to sell directly to the public for their own use ขายปลีก
retail farmers - small farmers (who probably sell their produce directly to people in the local market)
deputy - the person whose rank is immediately below that of the leader of an organisation รอง, ตัวแทน,ผู้รักษาการแทน
allocation - an amount or share of something that is given to someone การแบ่งส่วน
budget allocation - the part of the budget that is given to a certain project or department
competitiveness - how well a business can do compared to other firms (does it have lower price or higher quality?) การแข่งขัน
build competitiveness - take actions to increase the competitiveness of a company, sector or whole economy
About the author
- Writer: Jon Fernquest
Position: Online Writer