Prime Minister Yingluck Shinawatra’s new cabinet held its first full meeting on Tuesday.
The new ministers approved a draft policy platform which included ten economic priorities, such as the minimum wage increase, a new 15,000-baht minimum monthly salary for university graduates, corporate tax reductions, cuts in fuel taxes and a revival of programmes to help boost farm incomes. Many of these were key campaign promises by the Puea Thai Party.
Prime Minister Yingluck said that strengthening the domestic economy and raising household incomes would be the foundations of the government's economic policies. "Before, we were focusing on exports but today we have to focus on the domestic economy - increase people's income and bring down their cost of living," she told reporters after the meeting.
The new minimum monthly salary for university graduates is expected to begin in January 2012 for civil service workers. Prime Minister Yingluck declined to comment specifically on when the 300-baht minimum daily wage hike would be implemented.
Once the government implements its core policies, Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong predicts that economic growth will increase by an extra percentage point in 2012. Prime Minister Yingluck believes that the public “will see concrete results within the first year. Within six months, you will see progress already”.
In the long term, the government plans to focus on policies related to strengthening tourism, sports, education, agriculture, industry and social services.
Mr. Kittiratt said the fiscal 2012 budget would be revised to match the government's spending priorities. He commented that the “the government will borrow only as necessary".
Additionally, Mr. Kittiratt mentioned that certain policies of the previous government, such as free electricity and public transport fares for low-income residents, would be scrapped as they are ineffective in promoting savings. He declined to comment on whether changes would be made to the budget deficit target, which is currently set at 350 billion baht.
Former Finance Minister Korn Chatikavanij expressed concerns over whether the new cabinet's tax policies were in the country's long-term interest, asking "who gains from tax reductions? How will it impact the behaviour of companies? And what are the expectations?" He added that "if the government cuts taxes while keeping spending unchanged, the result is higher debt.”
Report: New Thai govt to focus on pushing up people's income [Reuters, 16 Aug 2011]
Report: Kittiratt backs policies to lift economy [Bangkok Post, 17 August 2011]
Earlier this week on his first day in office, Finance Minister Thirachai Phuvanatnaranubala said he plans to hold discussions with Bank of Thailand Governor Prasarn Trairatvorakul to discuss the central bank’s on-going effort to rein in inflation through tightening of its monetary policy. Mr. Thirachai is of the opinion that such a move could hurt purchasing power.
He also announced five fiscal policy priorities which included improving private and public sector cooperation, continuing tight fiscal and monetary policy, offering aid to flood victims, and ensuring manufacturers were not hurt by the government’s minimum wage increase policy.
Report: Thirachai wants BOT to reconsider inflation policy [The Nation, 16 August 2011]
Report: Thirachai unveils fiscal priorities [Bangkok Post, 15 August 2011]