Thailand: Rising costs seen as final straw

• Jan 13, 2022

Soaring food prices are taking a bigger bite of people’s income and are believed to be intensifying political pressure on — and even shaking the stability of — the coalition government, which has a little over one year left in office.

As the price hikes look set to add to the public’s financial burden and no one knows how long the situation will last, the Bangkok Post has talked to various stakeholders including economic experts, coalition and opposition politicians, businessmen and representatives of the public about what the government should and could do to address this pressing concern of the Thai people.

Short-term price hikes

Somjai Phagaphasvivat, an independent political and economic analyst, said the price increases are a short-term problem that can be addressed by proper planning.

The key factors that contribute to soaring prices are a suspected swine disease outbreak, the need to continue exports to revive the economy, and Covid-related production limitations. Increases in production costs such as fuel or fertilisers have also had an impact on transport and animal feed.

“The government’s mistake is a lack of planning to prevent price rises and address the swine disease outbreak. Exports also contribute to high prices, which the government should regulate to avoid shortages in terms of domestic supply,” he said.

Mr Somjai said the government’s ban on swine exports should be timed properly so the measure is not implemented at the expense of pig farmers and traders.

Currently, the government has imposed a temporary ban on the export of pigs and piglets in an effort to rein in rising pork prices.

The three-month ban is expected to put the brakes on the rapidly increasing prices of pork, which have soared from 150 baht per kilogramme to over 200 baht/kg in just two weeks.

He said that to help consumers in the long run, the government will have to deal with higher production costs and mobilise resources to improve both animal health and farm productivity.

According to Mr Somjai, the discounted pork scheme implemented by the Commerce Ministry is only a temporary relief measure and the government could have done better.

“If we compare the severity of the current situation with the worst that we experienced over a decade ago, I would give it six on a scale of one to ten. It is temporary and unlikely to cause a long-term impact,” he said, adding “but the government can’t afford to sit it out”.

Pork prices vs stability

Nonarit Bisonyabut, a senior research fellow at the Thailand Development Research Institute (TDRI), said the country’s economy is expected to return to pre-Covid levels in the first quarter of 2023.

“The economy isn’t recovering from the pandemic and it is being pressured by the swine disease outbreak, which has raised the prices of several goods. It’s the government’s responsibility to help [people] survive,” he said.

Mr Nonarit said funds from loan decrees could be drawn to solve the problem, but noted that a subsidy programme will have to be carefully planned.

He said the government should only consider ramping up pork imports as a short-term measure to bolster domestic supply.

He stressed that imports should be limited to pork to create market balance and prevent a monopoly by large-scale pig farmers. At the same time, the government should introduce measures to help small and medium-sized farms return to the business to shore up supply, he noted.

Mr Nonarit said there should be more research and development to help small and medium-sized pig farmers improve farm efficiency and contain animal diseases. When an animal disease outbreak erupts, these businesses are the most affected, he said.

He described as “interesting” an observation that soaring pork prices could affect the stability of the government, saying it was likely to pressure the government to take action to boost or maintain political support.

Mr Nonarit said the next election would not bode well for the government if it fails to address people’s economic hardship.

However, the academic said the country has endured numerous disease outbreaks and major disasters and should use this experience to plan for long-term prevention and sustainability.

“We’re concerned the government will resort to cash handouts to solve the problem. We hope to see a sustainable measure with data being used to build and strengthen the capacity of farmers,” he said.

Public confidence wanes

Sutin Klungsang, Maha Sarakham MP for the Pheu Thai Party and opposition chief whip, said the price hikes will erode public confidence even though the government can scrape through and complete its term.

He said the government is in a difficult situation following the soaring prices, but that it has no one else to blame. The veteran MP said the economic situation would increase pressure among coalition partners, but it was unlikely to cause the government to collapse.

However, Mr Sutin said he is not sure the government is up to the job of solving the problem. If so, public pressure could be tremendous and force its collapse, he predicted.

“Public confidence is dropping due to the higher cost of living. People may not endure and the government may leave before completing its term. Coalition partners may pressure each other, disrupting the work of parliament and creating disunity,” he said.

Mr Sutin also criticised the government and Prime Minister Prayut Chan-o-cha for taking the issue lightly, saying it could fuel public discontent.

“Injustice and freedom also matter but cost of living is the factor that can drain public confidence [the most],” he said.

The government’s defence

Government spokesman Thanakorn Wangboonkongchana said the prime minister has instructed the Commerce Ministry to deal with rising living costs while Commerce Minister Jurin Laksanavisit has ordered related organisations to find ways to keep consumer product prices down as much as possible.

The Department of Internal Trade, meanwhile, is stepping up its inspection of suspected cases of goods being hoarded and then sold at inflated prices, he said.

Gen Prayut and his cabinet maintain they are ready to explain the facts about all matters associated with the rising prices of consumer products, he said when responding to a threat by the opposition to grill the government in parliament over the prices hikes.

“The current situation may stem partly from inflation but also a number of international situations …such as high oil prices that have triggered a domino effect,” Mr Thanakorn said.

In one measure aimed at easing the financial burden caused by the rising living costs, the ministry has set up between 600 and 700 points of sale where cheap products are being distributed to consumers nationwide, he said.

Businessmen optimistic

Sanan Angubolkul, the chairman of the Thai Chamber of Commerce (TCC), said that the TCC has been warning since late last year that the prices of goods would increase this year, considering a number of factors including higher energy prices.

This is a problem that requires cooperation from all sides, both in the government and private sectors, as it involves market dynamics, he said.

The government and private sector have begun freezing prices of cooking gas and other products in order to mitigate the impact of higher prices on consumers, he said.

Regarding the rising price of pork, he said the government has rolled out preliminary measures to deal with it while further cooperation from all other parties will be sought to sustain efforts to bring prices down again.

“I don’t think this would cost the government its political stability as it’s been evident to us, the private sector, that the government has been working to resolve the problem,” Mr Sanan said.

The government has been implementing a range of economic stimulus measures to generate income and cut the costs of living such as through the Khon La Khrueng co-payment scheme, the Shop Dee Mee Khuen tax rebate and the Rao Thiew Duay Kan tourism promotion programme, he said.

Time to step up

Prayong Doklamyai, an adviser to P-Move, said the government should apologise to the public and admit it made a mistake by adopting a policy that favours private companies, which is clearly seen from the outbreak of African Swine Fever (ASF) in live pigs.

“At least it should apologise for mismanaging the issue. The government has the tools at its disposal to solve the problem, but it must deal with it effectively without benefiting any specific group,” he said.

Source: https://www.bangkokpost.com/thailand/general/2246483/rising-costs-seen-as-final-straw