Court ruling could worsen economic downturn
Written by Gunboy on Wednesday, December 3rd, 2008
Court ruling could worsen economic downturn
CHATRUDEE THEPARAT AND WICHIT CHANTANUSORNSIRI
The political vacuum created by the Constitutional Court ruling yesterday could result in further damage to Thailand’s ailing economy as key stimulus programmes and measures are delayed pending the formation of a new government.
Economic growth is already slowing fast, as the closure of Suvarnabhumi Airport has disrupted supply chains and crippled the key tourism industry in its peak season. The slowing global economy has also undermined exports and ravaged investor and business confidence, prompting some economists to warn of zero growth for 2009.
Key policies now requiring new political leadership include the 100-billion-baht supplementary budget, the infrastructure megaprojects and proposed assistance measures for the tourism sector.
Government spokeswoman Suparat Nakboonnum said that even a 1.5-billion-baht budget request to help stranded foreign tourists was delayed as cabinet ministers yesterday were forced to halt their meeting after the court read its verdict.
Other measures to help the tourist industry would also be held up until a new government is formed, she said.
The Tourism and Sports Ministry had earlier proposed offering foreign tourists 2,000 baht per person per day to offset lodging expenses while they waited for flights out of the country.
Hotels have now been asked to bear the costs and bill the new government later once the assistance budget is approved.
The ministry’s plans to set aside 10 billion baht to help small- and medium-sized tourist operators, tour agents, hotels and other businesses affected by the airport crisis will also be shelved due to the political vacuum.
Kanit Sangsubhan, the director of the Fiscal Policy Office’s Policy Research Institute, said caretaker ministers would be unable to implement new policies, meaning any tourism rehabilitation programmes would be delayed.
Other economic stimulus plans would also have to be postponed, including measures approved in September to help buffer the impact of the global recession on the local economy. These include construction contracts for two new mass transit routes in Bangkok and the 100-billion-baht supplementary budget.
Dr Kanit said a new prime minister may be named as early as Monday once the Parliament meets, although there was little guarantee that ongoing political tensions would ease.
Ekniti Nitihanprapat, an economist and Finance Ministry spokesman, said the continuing global economic crisis made this a poor time for policymaking to grind to a halt. “The global economic crisis is changing rapidly each day. We need to solve our domestic problems as quickly as possible, as we simply have no control over the external economic environment,” he said.
Policies to accelerate spending of budgets and state enterprise investment are also likely to be delayed pending the appointment of new ministers.
Direk Patmasiriwat, an economist at Thammasat University, said the new government should consider new fiscal measures including “workfare” programmes between the government and local administrations to hire workers for public projects.
Hiring 200,000 people at wages of 350 baht per day for 250 days would cost 17.5 billion baht, with the costs split between the central government and local authorities.
Dr Direk said long-term savings programmes and public bond issues should also be implemented to help mobilise funds and spur community investment.
In any case, private travel operators still grappling with the ongoing airport crisis could only shake their heads in frustration over the latest political developments.
Maiyarat Pheerayakoses, the president of the Association of Domestic Travel, shrugged when asked about the potential delay in assistance measures from the government.”It won’t really matter - the tourism industry has already collapsed,” she said.
“The best solution for the industry is if PAD can immediately vacate the Suvarnabhumi and Don Mueang airports.”
Estimated losses for the industry have already been placed at well over 150 billion baht, based on cancellations, lost business and other losses suffered due to the one-week closure of the airports.
Anake Srishevachart, the president of the Thai-Japan Tourism Association, said it would be at least six months before the sector could even begin to recover, making it imperative that policymakers implement assistance measures as soon as possible.
Bangkok Post
Wednesday December 03, 2008
