Prime Minister Abhisit Vejjajiva said on Sunday that his government is preparing to propose terms for borrowing some Bt70 billion next week as part of the government’s measures to fight against economic slump in the country.
Global trade now demonstrates shrinkage of 20-30 per cent and a need for money to be injected into the economic system, Mr. Abhisit said. The government plans to invest about Bt1.4 trillion in the next three years and planning for it is taking place now.
The planned investment will be spent on high-speed rail, road improvement, building water resources to assist farmers, education and public health, said Mr. Abhisit.
The prime minister said the investment plan will be presented to economic ministers for consideration this Wednesday.
In January Mr. Abhisit’s government announced a Bt116.7 billion (US$3.35 billion) stimulus package aimed at boosting Thailand’s sagging economy, hit by last year’s airport blockade and by the global financial crisis.
The plan is comprises of a mix of cash handouts for low earners, tax cuts, expanded free education and subsidies for transport and utilities.
Mr. Abhisit has said that he plans to meet his economic team to evaluate the effects of the global financial crisis on the domestic economic situation while the government would initiate a second round of economic stimulus package.
The first government economic stimulus package — including Bt2,000 grants for employees earning less than Bt15,000 monthly, monthly pension payments of Bt500 to persons over 60, and free 15-year education to children will be gradually implemented from late March, said Mr. Abhisit.
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PM: Government to propose terms for borrowing Bt70 billion
Recent Trade Reforms in Thailand
Economists and analysts forecast gloomier times, predicting Thailand’s GDP to contract by 0-3 percent while the country descends into a deflationary spiral. Moody’s Economy.com says Thailand could be the Asian economy that suffers the most from the global financial crisis. Plus the spectre of further political unrest remains on the horizon. However, there are some signs that Thailand can ride out the economic firestorm. Government debt-to-GDP remains below average regionally speaking, the financial sector learnt from the 1997 meltdown and remains relatively well capitalised and liquid, and Board of Investment privileges are some of the best in Southeast Asia.
Volumes of untreated domestic sewage, industrial wastewater and solid hazardous wastes have risen dramatically in recent years. The result is that roughly one third of Thailand’s surface water bodies are considered to be of poor quality. Clearly Thailand needs to focus on more effective enforcement of environmental laws; stronger institutional capacity, both national and local; and increased investments in pollution prevention and control, with private sector participation.
Demand from businesses have increased rapidly over the years in Thailand
Import tariffs on machinery are waived for regional operating headquarters. The Board of Investment cancels import tariffs on machinery used in conducting research and development activities by regional operating headquarters (ROHs). This is in addition to the existing privileges such as a permission to own land and remit foreign currency abroad as well as preferential corporate and income tax rates. Looking forward, related agencies such as the Revenue Department, the Bank of Thailand, and the Department of Business Development plan to streamline other rules and regulations that help to promote ROHs in Thailand.
For the year 2008, the Thai economy decelerated from the previous year, particularly in the last quarter where global economic downturn and internal political unrest adversely affected manufacturing production and tourism. Nonetheless, farm income in Thailand still expanded well from higher major crop production and price compared to the previous year. On the demand side, private consumption and investment declined notably in the last quarter, despite falling inflation during the second half of the year in line with lower oil prices. Both export and import expanded satisfactorily during the first three quarters. However, during the last quarter, export contracted following trading partners’ economic slowdown while import decelerated markedly in line with export and domestic demand conditions.