Incoherent Industry Policies – Badly Reported or Inherently Incoherent or Both?

MCOT is reporting that the Industry Ministry is outlining a set of five ‘short-term’ policies aimed at relieving economic difficulties – it is a curious mix of measures and it is difficult to know whether this is poor reporting (it has not appeared in any obvious form on other English language websites) or poor presentation of policies or, perhaps, simply a sign of muddled thinking (of course, this being Thailand, all three of these could be possible simultaneously or two out of three etc and so on).

The policies are said to be:

A budget of more than Bt16 billion is needed for implementation of the five strategies, which are designed to build investor confidence, preventing mass layoffs, reviving the struggling industrial sectors, and ending the unrest in the three southern border provinces.”

Well, industrial policy would be an important part of a sustainable solution to the southern issues (although not while the army continues to run wild there) but it is hardly a ‘short-term’ measure. ‘Preventing mass layoffs’ suggests subsidizing failing companies – who is going to decide which company deserves and which does not (assuming not every company can afford the 80 million baht to buy a seat in the cabinet)? Which industries are to be revived? Surely the problem is (as I intend to write shortly, perhaps tomorrow), that the economy has not yet sufficiently moved on from the industries which have got Thailand to the middle income stage but which will be unable to get it to the high income state (which is what the World Bank calls the ‘middle income trap’)?

[No point looking up to the skies now as it is dark and I am indoors. Well, I could look up and life my skinny fists etc but would arguably end up in a strait waistcoat sooner or later.]


Let Them Eat LPG

One year ago, there were only 100,000 cars running on Liquefied Petroleum gas (LPG) and now there are 700,000. It is expected that there will be 1,200,000 of them by this time next year. Energy Minister Poonpirom Liptapanlop has said that, with oil prices set to continue at a high level, drivers should use alternative fuels. Since demand for oil in Asia will continue to increase, irrespective of any increase in supply or bursting of speculative bubbles, it is possible that petrol will top 50 baht per litre in the foreseeable future. Indeed, there may be a sudden jump in prices if the government decides that it can no longer sustain its current subsidy program for fuel.

The Minister urged people to consider using Compressed Natural Gas (CNG) and said that the supply of such fuels was increasing now and was set to do so in the future. Just as well if so since, as I wrote previously, there is currently a significant shortage of outlets, as witnessed by the lengthy queues outside those garages that do sell the alternatives. Meanwhile, in Malaysia, Prime Minister Abdullah Ahmad Badawi has called upon people to stop converting arable land into areas for growing biofuel crops. The upsurge in growing biofuels has led to a significant rise in food prices – a World Bank study found that it caused 75% of the recent huge increases – and it is rapidly becoming apparent that this will not be a sustainable solution to high oil prices. Governments elsewhere are backing off supporting these alternative fuels and Thailand will, presumably, also have to do so in due course. This is an issue likely to figure highly in the current G8 talks and it is to be hoped that a coherent lead will be taken by that group.

The SET Index was down 1.68% yesterday and is another 7.6 points down today. Pending court decisions have the capacity to unleash political chaos. We wait.