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3 March 2014
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Amid clamour for ‘reform’, TDRI elicits practical suggestions to tackle economic, political woes

Erich Parpart

Amid the political turmoil and demands for the country’s reform, the Thailand Development Research Institute (TDRI), economists and academics have proposed efficiency, transparency, and good governance in every sector of the country.

The aim is to stamp out the country’s chronic economic and political problems in all aspects.

In each of the past three weeks, the TDRI has held a seminar on the reform issue. Panellists at the seminars put forward ideas to reform the country in three categories: corruption, inequality, and lack of government financial discipline.

Corruption reform

The TDRI believes that the current political turmoil stems from structural problems within the country’s economy and society. Lax enforcement, transparency and contingent liability also exacerbate the core structural problems.

However, the TDRI has also argued that these problems can be solved through reform under a democratic process, |which should be done as soon as possible.

“It is unlikely the country can end its current political conflicts without implementing reforms of various aspects including corruption and economic monopolies,” said Somkiat Tangkitvanis, president of the TDRI.

Pasuk Phongpaichit, emeritus professor of the faculty of economics at Chulalongkorn University, said corruption had existed throughout the country’s history in both democratically elected governments and those appointed after coups d’etat.

She suggested that the best way to tackle the problem of corruption was through harsher punishments and strict legal action against wrongdoers, which proved to be working in countries such as Singapore.

“Corruption reform and prevention are only effective if done according to the law and |the Constitution,” she said. Banyong Pongpanich, chief executive of Kiatnakin Bank, said a lack of decentralisation during the expansion of the government’s size and power in the past had caused corruption to run rampant among the few who held that power.

He also said the government should provide legal contracts that are internationally accepted so leading foreign firms could directly bid for Thai government projects.

This would reduce the problem of corruption during the tendering process.

Deunden Nikomborirak, research director of economic governance at the TDRI, said the Official Information Act needed to be revised to make the working processes of government institutions more transparent. Currently, government agencies can specify which official information they want to release, which hampered citizens’ ability |to access needed information. “The Official Information Act needs to be more open for the involvement of the general public,” she said.

Inequality reform

Meanwhile, economic inequality is also a problem the country needs to reform, said Somchai Jitsuchon, research director of inclusive development at the TDRI.
He added that previous governments had done too little to tackle this problem, and reforms in taxation and regulations were needed to ease disparities victimising the poor.

Somchai suggested an immediate draft of a “basic social-welfare bill” that guarantees equal treatment for all citizens. He also suggested implementation of the Property and Land Tax Act, which was drafted a long time ago, to increase the government’s income from wealth tax and use the extra funds to support policies or projects that benefit the poor. Other progressive taxes such as increased heritage and capital-gains levies were also proposed by Somchai because they would increase the contribution of the rich to government revenue.

“If the Property and Land Tax bill is fully enforced, the government can expect an annual increase of Bt100 billion in total tax revenue,” he said.

Apart from tax reform, Somchai suggested decentralisation of financial power to the rural areas in order to empower provincial authorities with the means to spend money on the improvement of human capital. He also suggested that more than 50 per cent of local budgets should be spent on human capital rather than infrastructure.

At the administrative level, he suggested establishment of an independent committee to oversee spending policy to make sure tax money were properly used. Members of the public should also have more involvement in the formation of the government’s policies through methods such as primary voting.

Worawan Chandoevwit, social-security adviser at the TDRI, said social-welfare reform was needed to combat the feeling of unfairness among the less fortunate. She proposed that people under the universal healthcare policy should be able to pay more to get a better service.

Fiscal budget reform

Nipon Poapongsakorn, director of the sectoral economic programme on industrial and rural development policy at the TDRI, suggested reform in fiscal budgeting, a ban on the use of populist policy, and added transparency and contingent liability to improve the government’s financial discipline. He said the government’s practice of unlimited off-budget loans to finance its populist policies had diverted funds that could have been used for the development of the country and was tarnishing the Kingdom’s competitiveness and growth.

According to Nipon, the exercising of off-budget loans to finance populist policy also created fiscal risks and raised the public debt to a dangerous level, and impaired the distribution of government revenue.

He suggested that fiscal budgeting should be more transparent and proposed the introduction of institutions such as a “parliamentary budget office” to oversee government financial policy.He said the government should provide regular reports to show the public what it was borrowing and spending for and how effective their projects really were to increase transparency and add contingent liability for government projects.

He also suggested that all off-budget loans should be monitored by the Office of the Auditor-General and should seek the approval of Parliament, and not just that of the Cabinet.


First published: The Nation,  March 3, 2014


Nipon Poapongsakorn, Ph.D.
Distinguished Fellow
Worawan Chandoevwit, Ph.D.
Advisor, Social Security
Somchai Jitsuchon, Ph.D.
Research Director, Inclusive Development
Deunden Nikomborirak, Ph.D.
Research Director, Economic Governance