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13 February 2014
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Business lobbies, academics blast rice subsidies, govt’s ‘insincere’ anti-graft sentiments

Some academics and private-sector representatives yesterday slammed the government over its controversial rice scheme and its “insincerity” in tackling the country’s chronic corruption problems.

Ammar Siamwalla, a scholar at the Thailand Development Research Institute (TDRI), said the National Anti-Corruption Commission should consider probing the government for “policy corruption” in the rice-pledging scandal.

“Can the NACC file a legal action against the government that issues a policy that obviously is not [economically] feasible but what certainly is possible is corruption created from monopoly power?” he said.

The rice-subsidy programme guaranteed farmers prices well above market rates and helped the Pheu Thai

Party win a landslide election victory in 2011, which led it in effect to monopolise the rice trade.

But hundreds of farmers are now rallying against the government for failing to find money to pay for their rice bought under the scheme.

Opponents of the programme say this is a result of the high pledging prices that make Thai rice uncompetitive in the world market.

Banyong Pongpanich, chief executive of Kiatnakin Bank, said there was “systemic corruption” in many parts of Thailand. Politicians, state officials and companies have formed “clubs” to collude in corruption, while others opposing the method simply leave the competition. The “economic rental costs” that Thailand loses from state procurements in information technology, for example, certainly run over Bt10 billion per year, he claimed.

Thailand is one of the few countries that have not provided legal contracts that are internationally accepted and thus it prevents leading international IT firms from directly bidding for Thai government projects, he said.

“I used to tell the NACC that an easy way was to ask the DOJ to investigate [Thailand’s state IT procurement contracts], like what it did on tourism,” said Banyong, apparently referring to a recent investigation by the US Department of Justice of a former head of the Tourism Authority of Thailand.

Vichai Assarasakorn, vice chairman of the Board of Trade, said public perception of corruption and political will were the two critical factors for combating graft.

However, a recent survey by the University of the Thai Chamber of Commerce revealed that the public had changed from accepting corruption to condemning it, thanks to campaigns initiated by the private sector during the past three years. But the government has lacked sincerity and the political will to tackle the problem, he claimed.

“The anti-corruption network has laid down all the plans. The problem is not that we don’t know what to do but that the people who are in power are not serious about this issue,” he said.

“If we really want to see change, there won’t be any change if there is no change of the ‘person’,” he said.

However, Pasuk Pongpaijit, an economics professor who closely followed up and conducted some corruption studies, argued that experience suggested that forming a non-elected government would not solve the corruption problem.

The academics and private-sector representatives were speaking at a seminar held by the TDRI.

TDRI president Somkiat Tangkitvanish said the institute decided to hold a series of seminars on reforming Thailand beginning with yesterday’s first session on the linkage between corruption and economic monopoly. It is unlikely the country can end its current political conflicts without implementing reforms of various aspects including corruption and economic monopolies.

Atchana Waiquamdee, former deputy governor of the Bank of Thailand and adviser to the Senate committee on monetary, finance, banking and financial Institutions, personally disagreed with the rice-pledging scheme, saying the government’s fiscal discipline went out the door from the first day it said it would set the rice price above market. The pledging price is about Bt5,000 per tonne above the market price.

While the rice-pledging scheme is moving on, many farmers are in trouble and relief measures should be taken. The suggested measure is to have the Bank for Agriculture and Agricultural Cooperatives (BAAC) issue securitised assets with the government’s rice stocks as collateral.

“This could be a way the government could have liquidity to make payments to farmers. The BAAC may issue a financial instrument at not-high rate with rice stocks as collateral and offer the issue to financial institutions.

“Whether the financial institutions that purchase the issue will be able to count the issue as liquid assets will depend on the central bank’s interpretation,” she said.

Thirachai Phuvanatnaranubala, a former finance minister, said securitisation was a good way but it needed rice inventory as collateral. Issuing an instrument raises a big problem as no one knows how much rice the government is stockpiling.

There could be three solutions to farmers’ problem in finance, marketing and political aspects, he said.

Paiboon Nititawan, vice chairman of the Senate banking committee, said the caretaker government might not be able to solve problems completely, given legal difficulties. The best solution is for the caretaker government to quit and if a new government is formed, all constraints will end.

“If the government ends, there will be a new government that acts as the middleman and the legal issues will end and society will accept it with sustainable solution.

“The important thing is to stop the rice-pledging system. If the new government does not fear the closing of the scheme’s account, the damage will be known,” he said.

The government has argued that the only constitutional way to establish a new administration is through a democratic election, which powerful and well-funded forces have been trying to sabotage for their own corrupt ends.


First published: The Nation,  February 12, 2014