Wealth gap remains under Thai military rule

In theory, Thailand’s coup-installed military regime should be better placed than elected governments to push through unpopular legislation such as tax hikes without the democratic pressure of needing to please voting constituencies.

In practice, Prime Minister Prayut Chan-ocha has failed to implement any serious redistributive tax reforms after four years in power. With new polls looming in 2019, his junta government is running out of time to significantly address the kingdom’s yawning wealth gap.

When Prayut seized power in a May 2014 coup, one of his professed priorities was to implement tax reforms that guide Thailand towards a more equitable society. That vow was partly a response to mass “Red Shirt” demonstrations that rallied against the huge income gap between urban and rural areas.

The “Red Shirts” were mobilized by self-exiled, ex-premier Thaksin Shinawatra, the billionaire businessman-turned-politician whose populist policies delivered by three of his led or backed governments earned him strong support both among the urban and rural poor.

Prayut’s first finance minister, Sommai Phasee, whose last name ironically sounds like the Thai word for “tax”, was tasked with drafting tax legislation that would redress the rich-poor divide.

Prior to being removed in a 2015 Cabinet reshuffle, Sommai pushed through a watered-down inheritance tax, but was pressed by Prayut to postpone a more onerous land and building tax that would have more squarely hit Thai elites, the key backers of his coup-installed regime.

Continue reading Asia Times: Wealth gap remains under Thai junta rule

Advertisements

As debt levels rise, more Thais struggle to keep up

c1_1531118_620x413
Leaflets touting quick loans abound in Bangkok. (Bangkok Post file photo)

Pimpa Panlao, 31, is struggling to pay off an 80,000-baht bank loan and spends a third of her income from selling women’s accessories at a Bangkok market to repay the loan.

“Business is bad and it’s very tough when you have debt,” Ms Pimpa told Reuters, who used part of the loan to finance her business. She is not alone.

With a debt mountain of 12.17 trillion baht at the end of March, the equivalent of 77.6% of gross domestic product, Thai households are among the biggest borrowers in Asia and they are finding it increasingly difficult to keep up with payments.

In addition, their debt pain could increase because the central bank has signalled it is likely to follow other central banks around the world and raise interest rates from near-record lows.

Non-performing mortgages, defined as those that have not been serviced in more than three months, were 3.39% of total home loans at the end of the second quarter, the highest level since the end of the global financial crisis in 2009.

Auto loans that have been delinquent for one to three months rose to 7.25% at the end of June, the highest since September last year, and compared with 6.97% at the end of March.

Private consumption is a critical element driving the Thai economy, accounting for half of its $490 billion GDP.

Consumers continued to borrow at a robust pace in the second quarter, when overall consumer debt rose 8% from a year earlier. That included a 6.2% rise in mortgage loans and a 12.4% jump in car loans.

But the risk is that an increasing debt burden will drag on Southeast Asia’s second-largest economy.

Continue reading: Reuters

 

“Unequal wealth distribution, graft among major challenges facing Thailand”

Unequal wealth distribution is one of the most pressing problems facing Thailand with the richest one percent owning more than half of the total household wealth while entrenched corruption is threatening the country’s long-term growth, Governor of the Bank of Thailand Veerathai Santiprabhob said today.

He also said low financial literacy and high household debt level hamper the ability of individuals to pursue new opportunities and secure long-term financial security.

“Essentially, widening wealth and income inequality is a major contributor to the fragility of the Thai society and is frequently used as an excuse to draw public support for a number of costly and unsustainable populist policies,” Veerathai said in opening remarks at a forum on sustainable banking organized by the central bank.

He also pointed out that Thailand as an ageing society is facing a declining labour force. “And yet a number of public policies have focused on creating short-term stimulus rather than on encouraging the necessary adjustments to address long-term productivity issue,” he said, adding that the educational standards have not been able to prop up the low productivity level and lag behind in many important areas.

Another challenge facing Thailand is the environmental and ecological issues. He said continuing irresponsible actions—from massive burning of fossil fuels to excessive use of plastic containers—contributed to the overall deterioration of the global environment. “And, as we have observed, climate change has resulted in increasing frequency as well as severity of natural disasters. The painful experience of the great floods of 2011 should be a case in point, as these floods were the result of rampant deforestation, new developments blocking natural water ways, and clogged drainage system from careless waste disposal.” he said.

But it is entrenched corruption that Veerathai believes is a major obstacle to achieving long-term focus. “Paying bribes and granting favors are harmful practices that incur unnecessary costs and create distortions in resource allocation,” he said.

He pointed out that despite years of anti-corruption campaigns, Thailand’s level of corruption has been largely unchanged and blamed practices in the financial sector as part of the culprits of corruption.

Veerathai said these challenges are a result of actions taken without regard for moderation, responsibility and long-term consequences “and they should serve as a wake-up call for all of us.”

“For without a proper remedy, we would be transferring unfair burden to future generations, thus impairing long-term sustainability and prosperity,” he said and called on all sectors to make collective efforts to address these challenges.

Veerathai urged the financial sector in particularly to take the lead in making changes toward sustainability that can be achieved if the focus is on long-term goals. He said the objective of the sustainable banking forum is to raise awareness of the various issues of sustainability and identify gaps within the financial sector.

“It is now up to all of us—financial institutions, policymakers, and leaders—to embrace sustainability and incorporate its guiding principles in our daily lives and business practices,” said.

Source: Thai PBS

Thai Government Accused of Stealing $3.2 Million From Poverty Fund

Thailand’s military government has been hit with a graft scandal involving the misappropriation of 85 percent of funds that were allocated for the poor and for HIV patients, the Office of Public Sector Anti-Corruption Commission (PACC) said on Tuesday after finding evidence of US$ 3.2 million missing.

The money is usually distributed to the poor and to the patients by the Social Development and Human Security Ministry in the form of grants of up to $100, according to Reuters.

Maha Sarakham University students reported the possible embezzlement back in January, the Bangkok Post writes.

Korntip Daroj, PACC’s secretary-general, told Reuters that they had “investigated and found corruption-related instances and evidence in about 49 out of 76 provinces.”

Continue reading: Organized Crime and Corruption Reporting Project

Bangkok: Push to tear down slums, clear streets of vendors continues

It is a side of Bangkok that tourists seldom see: not far from the Buddhist temples, glitzy malls and go-go bars, is a neighbourhood of shacks and squat homes in narrow alleys with open gutters in the city’s oldest and largest slum.

Klong Toey is home to about 100,000 people, mostly rural migrants from northern Thailand who came to the city for jobs.

While many live in brightly painted homes with motorbikes parked outside, others live in shacks without running water or electricity.

It’s not that different from the days when 66-year-old Prateep Ungsongtham was growing up there with her six siblings.

“The number of people living here has doubled since the time I was a kid – yet their condition is not that much better,” she said in an interview at her Duang Prateep Foundation in Klong Toey.

Continue reading: TODAY Online

Thailand Brief: Compilation of News

Interesting and informative articles regarding Thailand:

  1. ‘Always a fight’ for Bangkok’s slum dwellers, says activist of 50 years https://www.reuters.com/article/us-thailand-landrights-women/always-a-fight-for-bangkoks-slum-dwellers-says-activist-of-50-years-idUSKCN1GJ194
  2. Bank accounts for fishermen in Thailand can help end abuses, officials say http://news.trust.org/item/20180308072224-ylx1f/
  3. Unfair Pay, Labor Abuse Persist in Thailand’s Fishing Industry, UN Says https://www.benarnews.org/english/news/thai/thailand-immigrants-03072018152409.html
  4. ‘Progress and persistent abuses’ in Thailand’s fishing industry, says U.N. http://news.trust.org/item/20180307060022-1komn/
  5. Thai rubber farmers urged to cut down trees to drive up prices http://www.dpa-international.com/topic/urn:newsml:dpa.com:20090101:180306-99-359935
  6. Thailand receives Fukushima’s first fish export since 2011 nuclear disaster http://www.straitstimes.com/asia/se-asia/thailand-receives-fukushimas-first-fish-export-since-2011-nuclear-disaster
  7. Blind singers break through Bangkok’s sound barrier https://www1.nst.com.my/world/2018/03/342479/blind-singers-break-through-bangkoks-sound-barrier