We're all in for trouble unless we learn to save
Apart from a promise to make Bangkok a more liveable megacity, the campaign promises of Sukhumbhand Paribatra, now governor-elect, and his former arch-rival Pongsapat Pongcharoen, are interesting as they reflect the national economic condition.
MR Sukhumbhand promises to continue with life-long care for people campaigns which involve welfare for mothers and kids, schooling aides, 1,000-baht health care and an allowance for the elderly. He also vowed to reduce public transport fares and cap the interest rates of city pawnshops operated by the Bangkok Metropolitan Administration.
Pol Gen Pongsapat, who coined the term "seamless coordination" with the Yingluck Shinawatra administration, focused on the creative economy in Bangkok, offering financial and non-financial aids for SME start-ups; and turning the capital into a knowledge centre.
He pledged also to upgrade public transport management and facilitate transportation through the creation of common tickets and develop new logistics centres to serve international linkages.
Obviously, better transportation, commercial opportunities and improving credit access are among top priorities for Bangkokians. Who's surprised at that?
From a broader perspective, an increase in debt and a shortage of savings both at the household and national levels are becoming serious.
The problem is manifested partly in the decision of the Monetary Policy Committee (MPC), the Bank of Thailand's interest rate-setting body, to keep the policy interest rate static at 2.75%, ignoring pressure from the Finance Ministry which wanted to cut the rate to tackle volatile short-term foreign capital inflows by preventing overexuberant economic activity.
In maintaining the rate, the MPC cited the robust domestic economy and loose financial conditions as key reasons.
In fact, the domestic policy interest rate _ which stands at 0.7% below the expected rise in consumer prices _ is relatively looser than many developing Asian economies. The central bank has indicated that it has a dilemma in deciding whether to bolster incentives for savings by increasing the interest rate _ that would be a move that would risk drawing volatile global liquidity.
The National Economic and Social Development Board's latest social survey mirrored the central bank's indication. The survey showed that about half of Thai households do not have the capacity to save. This result is in line with the surge in consumer loans by 30% last year from the year before and an increase in defaults by 20% last year.
The national fiscal front has shown a more worrisome development. Though public debt which currently stands at a little over 40% of gross domestic product is still considered in the safety zone, it could snowball rapidly in the foreseeable future from liabilities of the government's populist spending _ mainly the much-criticised rice pledging scheme.
The government is viewed by many as riding on the tiger's back with the rice scheme. For political reasons, the government cannot afford to scrap it immediately despite grave financial damage. But it could dilute the programme by lowering the pledging prices _ 15,000 baht per tonne for white rice and 20,000 baht for Hom Mali rice, or it might end up bankrupting the economy.
The country cannot afford to continue with rice pledging. It it estimated the scheme will run up a 200-billion-baht loss every year for the next six years.
Back to savings. The country can't have long-term wellbeing unless citizens start to save for the future.
Few have realised, however, that self-employed workers who form the largest share of the workforce in the country were deprived of their right last year to benefit from the national savings fund established by the Democrat government. This is because the Yingluck government kept delaying implementation beyond the legal timeframe.
Without state assistance in facilitating savings, either at the municipal or the national level, the country is doomed.
Parista Yuthamanop is senior economics reporter, Bangkok Post.