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Turbulent Thailand

Thai prime minister puts bread and butter issues at top of agenda

Prayuth's program focuses on lifting economy out of 'middle-income trap'

Thailand's Prime Minister Prayuth Chan-ocha laid out his policy agenda in a speech to parliament in Bangkok on July 25. (Photo by Rie Ishii)

BANGKOK -- Thailand's newly elected prime minister, Prayuth Chan-ocha, put bread and butter concerns and improving the welfare system at the top of his policy agenda in a speech to parliament on Thursday, indicating his government will focus on the economy first.

Prayuth, who headed the previous junta for five years following a 2014 coup, said, "We must develop our country to move out of the middle-income trap." 

The program comprises 12 main policies and 12 urgent ones. The main policies highlight the ideological principles that will guide how the country is governed. These include protecting and upholding the monarchy, preserving Thailand's religion and culture, and building the country's strength through a bottom-up approach.

Urgent policies, on the other hand, are the practical steps the Prayuth's cabinet seeks to take, such as helping farmers innovate and enhancing workers' skills. These policies are aimed at improving Thailand's competitiveness and lifting the country out of the middle-income trap -- the tendency for economic growth to slow after a country moves beyond a subsistence level of development.

Resolving problems of Thais' daily life topped the list of priorities. The new government has pledged to alleviate impediments to work, tackle indebtedness and, most importantly, amend the tax system and a lending scheme to encourage people to buy homes. The tax reforms are likely to involve an individual income tax cut.

Prayuth put improving the welfare system and people's quality of life as item No. 2 on the agenda. Measures include distributing state welfare cards to more people. Under that program, which began under the junta, people with welfare cards are eligible for public transportation allowances and other benefits. Thais also received one-time cash payouts when the government sought to stimulate the economy and boost its popularity.

The welfare cards were given to the elderly and the poor, but the new government wants to expand the program to include pregnant women, infants and schoolchildren whose families experience economic difficulties.

Other urgent issues Prayuth touched on in the speech were attacking corruption among politicians and government officials, taking on drug trafficking and restoring peace in the region near the southern border with Malaysia.

For the next two days, the new cabinet will face questions from the ruling parties and the opposition coalition. Prayuth's speech was interrupted several times by questions from parliament members. As the ruling camp holds a majority of only a few seats in the lower house, the opposition is expected to sharply question the government over its plans.

Even some within the ruling coalition have raised concerns, especially over proposed changes to the tax system. Korn Chatikavanij of the Democrat Party warned that cutting individual income taxes will mostly result in shrinking the tax base.

Academics had mixed reactions to the proposals. "The government's policies covered everything that it needs to be concerned with," said Thanawat Phonwichai, assistant professor and director of the Center for Economic and Business Forecasting at University of the Thai Chamber of Commerce.

"Since the ruling coalition holds a lower house majority only by a small margin, it has to implement policies efficiently to convince people of its capabilities," he said. "The government has to make people feel that they have more money in their pockets," he added, defending populist initiatives.

But Anuson Tamajai, assistant professor at Rangsit University, sees a flaw in the government's economic program. "The urgent policies lack measures to cope with the [U.S.-China] trade war," he said. "It also lacks with a vision to deal with disruptive technologies that will affect the economy and labor market." 

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