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Thaksin: Robin Hood for the rural poor?

January 12, 2001

THE political platform of the Thai Rak Thai Party looks almost like a social revolution. Its 11-point national agenda clearly addresses the needs of rural people, thus far neglected in all past social and economic development. Once in power, Thaksin Shinawatra, the prime minister-in-waiting, will rewrite a new chapter in budget reallocation by channelling money to the poor, if he sticks to his campaign promises.

If you want to take over the capital, you have to win over the countryside first. Isn't that a revisit of Maoist strategy?

To conquer the countryside, Thai Rak Thai, backed by a cash machine from its leader, has built up a nationwide network and enlisted the voters to its camp. If the party could get a voter registration rate of up to 30 per cent in one constituency, it would have a high probability of winning an MP seat for its candidate. For this reason, Thaksin had been claiming all along that he could muster at least 250 seats out of the 500 up for grabs. Although the political concept sounds Maoist, the voter registration campaign was modelled after what the Republican or Democrat Parties had been practising during the American pre-election period.

Next, Thai Rak Thai presented an underlying populist agenda. If you would like to win an election, you would need policies that you could sell by sound-bites. By relying on marketing surveys, Thai Rak Thai was able to identify the basic needs of the local people. Debt suspension for farmers, the village fund and universal health care coverage were crafted after the results of the marketing survey. The sound-bite campaign made it all the more easy to sell to the voters: "Debt suspension", "Bt1 million for every village", "Bt30 fee for every medical treatment".

If you happened to go upcountry, you would see posters of this sound-bite campaign on virtually every corner in every village.

In Bangkok, Thai Rak Thai did not have to do anything much because Bangkokians were already fed up with Prime Minister Chuan Leekpai. All it took was to highlight the failures - though some messages were misleading - of the Democrat government. Posters depicted the depletion of treasury reserves, the proliferation of amphetamines (yaa baa), high unemployment statistics, the contraction of bank lending. This struck a nerve with Bangkokians, who were willing to vote for anybody but Chuan.

With his big promises, Thaksin will have a tough time running the next government when the economy is not expected to do well. But if he can keep the rural people happy, he will stay in power for a long time. To do so, he will have to reallocate government money and put into their hands as much as possible. If Thaksin goes for this strategy, he will emerge as the hero of rural folk.

Socially speaking, the cause of the Thai Rak Thai Party is a noble one. Past national economic and social development has widened the standard of living between rich and poor. Inequality remains high, with the poorest 20 per cent of the population accounting for only 3.8 per cent of aggregate national income and the richest 20 per cent accounting for 58.5 per cent, according to the latest World Bank report.

So the most important task for Thaksin and his finance minister is to squeeze every baht out of the tax system, the budget and government assets and send the money upcountry into populist programmes.

On the surface, though, there is very little room for manoeuvre in the budget. Out of the Bt900 billion budget, Bt700 billion already goes to salaries and other benefits paid to civil servants, Bt100 billion to carry-over projects and the remaining Bt100 billion to other costs such as refurbishing government buildings, buying new air-conditioners and computers.

From this pattern of budget allocation, it is clear that the bureaucrats eat most of the pie. The 30-40 million rural Thais have to be content with the leftovers. If Thaksin, who now has a powerful political mandate in his hands, declares war against the bureaucrats by cutting overhead spending by at least 10 per cent, he will have almost Bt100 billion available to finance his populist agenda.

Secondly, Thaksin will certainly squeeze money from state enterprises. These fat cat institutions have benefited the management and their employees for a long time. The party should be over. Thaksin has already said he would try to boost the profits of the state enterprises from a combined Bt89 billion to Bt120 billion.

If the price/earnings ratio of the state enterprises is further boosted to 25 times, this will add another Bt3 trillion in market capitalisation to the sagging Thai stock market.

Again, the money from the state enterprises can be channelled to upcountry to prevent an uprising there.

Thirdly, the actual expenditure of the fiscal budget normally lags behind schedule. Every year Bt50 billion is left unused because the government agencies, deliberately or not, cannot accelerate their spending in time. Thaksin may say "Thank you" and use this money to pay for the rural programmes.

Fourthly, if the tax system is overhauled by encouraging more businesses to enter the system, the government will stand to get more tax revenue. Of every Bt100 in potential tax revenue, the government now can garner only Bt25 or Bt30 at most. If the tax collection process is strengthened so that at least Bt10 more is collected, Thaksin will have more money available to pay for his projects.

It remains to be seen whether Thaksin is for real. But if he really wants to keep his campaign promises, there is nothing else he can do but to take on the Thai system head-on, take away the money from the Centre and hand it out to the Periphery. On second thought, isn't this a replay of Robin Hood?




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