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  Home > Thailand

Rich get richer, poor get the picture

Deputy Prime Minister Somkid Jatusripitak declared his government's bold poverty eradication policy, saying there will be no poor people in the country by the end of next year. (Bangkok Post file photo)


 December 15th, 2017  |  09:28 AM  |   1775 views



Deputy Prime Minister Somkid Jatusripitak declared his government's bold poverty eradication policy, saying there will be no poor people in the country by the end of next year. (Bangkok Post file photo)


In just two weeks, when the calendar ticks over to 2018 the Thai government will have a full year to achieve its poverty eradication mission.


It is understandable that distributing wealth to the poor is a must-do thing for governments. And it may take years for the state to make that happen if it is committed to economic reform, tax restructuring and social welfare improvement.


But, more than a month ago, Deputy Prime Minister Somkid Jatusripitak declared his government's bold poverty eradication policy, saying there will be no poor people in the country by the end of next year.


It gives me something look forward to. But, honestly, this seems more like a delusion rather than a pragmatic policy. It sounds like a very ambitious goal for a country where inequality is widening.


Mr Somkid and the military regime have often credited themselves for driving the country's economic growth, citing positive digits that don't represent the whole story of all the people. They celebrated the end of this year's third quarter which saw Thai GDP growth rise by 4.3% year-on-year, the speediest acceleration since the first quarter of 2013.


While attending a meeting at the Ministry of Agriculture and Cooperatives last week, Mr Somkid even cited the World Bank's newly released report, "Riding the Wave: An East Asia Miracle for the 21st Century", in saying that overall economic conditions of Thais have improved.


The report classified Thailand along with Malaysia as "progressive prosperity countries" which have "continued to move large numbers of the economically vulnerable into economic security, and they are now characterised by large middle [and rich] classes". This class transition is called an "evolution of economic classes".


According to the report, in 2015 Thailand's middle class accounted for 35% of the population. Fifty-five percent of the population were identified as economically secure. The rest were economically vulnerable, moderately poor and extremely poor. The figures were different from those in 2002 when the middle class, the economically secure, and the vulnerable proportions accounted for 15%, 45% and 40% respectively.


This "improvement" was determined by positive GDP and consumption along with low unemployment rates. But the miracle is not manifested at the bottom end of the economy.


In Thailand, even if many live above the international poverty line of US$1.9 per day, they still struggle. A worker who gets a 300-baht minimum daily wage can hardly be called a middle class or economically-secure man. He is a low-income earner struggling to make ends meet, to pay utility bills, to support his parents and children and to pay off debts. So working overtime to earn extra income is a must for him, leaving not much time for self-learning and professional development.


This sour taste has been felt by many living at the bottom of the economy. But this reality is overshadowed by GDP figures.


The National Statistics Office's preliminary survey in the first half of this year found that the average monthly household earnings are 26,973 baht against spending of 21,897 baht. More alarmingly, the average accumulated debt per household stands at 177,128 baht. At least half of all the households are indebted mainly from consumption expenses, housing or property rent, education and payment for agriculture input.


The most important question is: Why are there so many households getting stuck in the debt cycle?


One case that is very alarming is the accumulated debt of 1.3 billion baht owed by all residents in Chiang Mai's Mae Chaem district to the Bank for Agriculture and Agricultural Cooperatives. The case was revealed by a social activist group called Forestbook in November. Many of the residents are farmers under the contract-farming system monopolised by the agro-business hegemony.


Each of them started with a few thousand baht of debt to buy chemicals and fertiliser -- a condition required under the system. Then their debt grew. It got worse for them when their products suffered a slump in market prices.


Powerful players such as financial institutions, the private sector and governments have allowed business monopolies to take advantage of people who are living on the bottom rungs of the economy.


Next year, the government pins its hopes on the implementation of several megaprojects including the the Thai-Chinese railway project and the Eastern Economic Corridor. These two projects will inject trillions of baht into the economy. But what percentage of the financial injection will be distributed to those at the bottom end of the economy?


The government has been overly obsessed with the trickle-down theory in which the poorest in society are believed to gradually benefit from the increasing wealth of the richest.


The theory has been proven to be a failure in distributing inclusive growth. If it did work, we should have seen poverty eradicated now given that the old special economic zone, the Eastern Seaboard, has been operation for 30 years.


That is because wealth is distributed back to the top.


Credit Suisse's Global Wealth Report 2016 pointed out that the average wealth per adult has grown quite a lot in between 2000 and 2016 despite the vast inequalities in Thailand. About 58% of the country's wealth is controlled by 1% of the people.


However, this top 1% get lots of benefits from state policies including investment incentives, tax exemption and partnerships with government projects. The poor are being patronised with welfare cards given by the government. If you want to look for a miracle, here it is. It's a miracle the majority are being overlooked as the door of opportunity is opened only for the rich to get richer.


If Thailand wants to eradicate poverty, the government must be bold enough to fix an unfair economic structure including restructuring progressive taxes and limiting options for the rich to evade taxes, for example. As a result, the state could obtain more revenue to invest in public facilities and state welfare to reduce the financial burden of the poor.


We need real action, not just words.



courtesy of BANGKOK POST

by Paritta Wangkiat


If you have any stories or news that you would like to share with the global online community, please feel free to share it with us by contacting us directly at pr@brudirect.com


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