ECONOMY / STRATEGIC DIRECTION
The government's economic plans rely too heavily on exports, instead of promoting both exports and domestic consumption as envisioned in the "dual-track" approach of deposed prime minister Thaksin Shinawatra, Deputy Prime Minister Kosit Panpiemras has admitted.
The dual-track economy, better known as "Thaksinomics", was not a wrong or bad economic theory, he said. "But the Thai economy is not yet strong enough to adopt such a method," Dr Kosit said at a recent briefing with senior journalists.
"Even Japan still drives its economy by exports," he noted.
Even so, he believes the country should also focus on stimulating consumption to drive economic growth.
Thailand's exports now account for about 70% of gross domestic product, said Dr Kosit. Exports in the first quarter of the year grew dramatically by 18.2% to US$34.82 billion despite the stronger baht.
Bigger contributions are needed from other contributors to growth, such as government spending, local consumption and investment. But Dr Kosit admits that all three are now lagging.
In terms of government spending, he said, authorities had decided not to commit to any new major investment projects, given the fact that its term is supposed to end after the December elections are held. "But we will implement all of those that we already have in the pipeline."
On the investment side, he said the government had been trying to restore the confidence of both local and foreign investors to encourage them to commit more to Thailand. The recent free trade agreement with Japan would be an important driver for investment, particularly by Japanese businesses, in Thailand.
To improve local consumption, the government has introduced a "happy living" or yoo dee mee suk scheme, similar to the village funds promoted by the previous government. However, only productive projects would obtain funds from the scheme, Dr Kosit noted, referring to waste allegations under Thaksin's government.
He said the government would also introduce projects to solve poverty, poor environmental conditions and neglect of elderly people in rural areas.
"These three problems have prevailed for so many years. All previous governments vowed to tackle them but none were successful. This government intends to seriously solve them," he said.
Some of the funds from the happy-living scheme would be allocated for projects to address the three problems.
The budget for the programme is 10 billion baht this year, and it would increase in the next fiscal year, Dr Kosit said.
The Finance Ministry this week will ask all state-owned banks to set aside more funds for rural people, said Finance Minister Chalongphob Sussangkarn.
But the sufficiency-economy principle would be used so each borrower would not receive excessive loans, he added.