No free lunch for Thailand

Thailand is likely to accept a bailout package worth up to US$14 billion at an international conference in Tokyo this week as part of a plan to jump-start the flagging economy. The government has been left with few choices. But as it concludes separate agreements with the International Monetary Fund and private foreign creditors it should do everything possible to maximize the interests of the nation.

The foreign credit and assistance should be productively used to restructure the Bank of Thailand and the financial sector. This will mean introducing good guidelines in terms of supervision and examination, ethics, and a sense of responsibility and responsiveness. The IMF, which has extensive experience worldwide, ought to be of great help.

The US$14 billion will more or less add to the state's budget expenditure on principle and interest payments. The less of it used, the smaller burden the Thai people will have to bear.

Among the top priorities are to consolidate industrial policies to deal with the idle capacity of Thai industries and work out short, medium and long term plans to improve their competitiveness, something little done in the past seven months and for which the Chat Pattana Party, which is in charge of industrial policy, must accept the blame.

Last but not least is the need for a heavy savings promotion program which must break free from the years of deadlock on tax incentives between the Finance Ministry and the Bank of Thailand. Household savings in this country have been on a decline and must be made to pick up. A new tax structure, however, is not in place.

The savings efforts must start from the top if the public is to follow. The prime minister must make his cabinet members be an example for the public.

-- The Nation, Bangkok