A GRAND OPPORTUNITY FOR POLITICAL PROFITEERING

       Stimulus must be transparent so that all its benefits go to the economy and to the people Last week Prime Minister Abhisit Vejjajiva unveiled the first Bt200 billion tranche of his administration's stimulus package. This represents a portion of the Bt1.43 trillion Thai Khemkhaeng (Invest for Strength) scheme to be implemented from 2009-2012. Overall, the administration claims that this Thai Khemkhaeng programme would help stimulate the economy and boost the country's competitiveness.
       The second batch of the stimulus package worth Bt100 billion would follow in the next few weeks. With this combined Bt300 billion, the government hopes to succeed in reviving the sluggish economy, which is expected to stage a recovery next year. This Bt300 billion spending impetus accounts for almost 3 per cent of gross domestic product.
       We hope that the administration sticks to transparency in its stimulus spending so that all the money really goes to benefiting the economy and the general public. Normally, politicians would love to squeeze some margin from stimulus projects. So Abhisit will have to make sure that the stimulus projects get his full attention.
       However, the apportioning of the budget for Thai Khemkhaeng looks like a grand design for political deals. The Transport Ministry will get Bt39.9 billion from this scheme to accelerate the implementation of the mass transit system in Bangkok and lay sealed roads in the countryside. This budget spending is under the oversight of the Bhum Jai Thai Party.
       The Public Health Ministry will be given Bt11.52 billion to spend from the stimulus scheme. It will use the funds primarily to renovate hospitals in the provinces and build new hospitals in local communities. This will not only help improve healthcare services for provincial people but also provide some construction work in the local economy.
       This budget spending is under the control of the Democrats.
       The Democrats also have a say in the stimulus spending for the Education Ministry, which will be provided with Bt45.39 billion. This ministry does not seem to be able to upgrade the education level of Thailand as a whole, even though it stands to get a good chunk of the budget outlay.
       The underlying reality is that most of the money goes into hardware - schools, computers, education equipment. To improve our education, the ministry instead needs to invest in the software side - teachers and more innovative instruction methods.
       But in general the people in charge of budget spending prefer investment in the hardware rather than the software of education because it is easier to get kickbacks from the budget. We would love for the Education Ministry to change its course of investment by focusing on hiring the best teachers and offering the best curricula to improve Thailand's academic standards.
       For the Agriculture Ministry, the Thai Khemkhaeng programme will earmark Bt48.1 billion - the largest slice of the pie - to support farmers, including investment in irrigation projects and water grids. The aim is to improve crop yields on 24 million rai of farmland.
       The Chart Thai Pattana Party of Banharn Silapa-Archa will orchestrate this spending.
       Again, the impression is that the Abhisit government is distributing the budget among the Democrats and coalition partners.
       Many analysts, including the Abhisit government, believe the economy will improve in the second half of this year thanks to lower inventories and global moves to boost consumption and investment. The stimulus spending of the government would turbocharge the recovery pace. Professor Somjai Phagaphasvivat said exports would be stronger than the first half as demand would rise in main markets such as Europe, Japan, Asean and China. He believes that the Thai economy would rebound to 2-3-per-cent expansion next year.
       We would like to caution against over-optimism in the recovery, which might not be sustainable due to the weakness of US and European consumption. If that were to be the case, any government spending must be carefully implemented to achieve the maximum results. Not a single baht should be wasted.