Thailand junta's slashing of funds to rural areas raises questions

Soldiers checking sacks of rice at a warehouse in Ayutthaya province, north of Bangkok, on July 3, 2014. One of the first measures Thailand’s military regime took after seizing power on May 22 was to pay millions of rice farmers money owed to
Soldiers checking sacks of rice at a warehouse in Ayutthaya province, north of Bangkok, on July 3, 2014. One of the first measures Thailand’s military regime took after seizing power on May 22 was to pay millions of rice farmers money owed to them by the previous government under a rice purchase scheme. But the question remains whether the junta’s affection for the countryside stops there. -- FILE PHOTO: REUTERS

BANGKOK - One of the first measures Thailand's military regime took after seizing power on May 22 was to pay millions of rice farmers money owed to them by the previous government under a rice purchase scheme which foundered on bad management, dodgy deals and late payments.

But the question remains whether the junta's affection for the countryside stops there.

Almost unnoticed in the Budget which was passed without debate on Monday by the regime's rubber-stamp Parliament, the National Legislative Assembly (NLA), was the omission of key programmes aimed at infusing cash and credit into the rural economy.

Some 10 billion baht (S$391 million) worth of funds, originally intended for rural communities, had been dropped.

This was no surprise; the junta, or National Council for Peace and Order (NCPO), chaired by Prime Minister and army chief Prayuth Chan-ocha, appears allergic to previous governments' cash infusions into rural areas which, not coincidentally, are the vote banks of former Prime Minister Thaksin Shinawatra. Mr Thaksin - seen by Thailand's conservative elites as a demagogue bent on eroding the power of the monarchy - was ousted by the military in 2006 but has come back repeatedly through proxy parties to win elections.

The May 22 coup d'etat unseated his last government, run by his sister Yingluck Shinawatra.

According to reports, the NCPO terminated the Small-Medium-Large (SML) village fund project, which would have required 5.7 billion baht in the 2015 Budget; a 3 billion baht fund to assist community enterprises; and a Regional Urban Development Fund which would have required 1.2 billion baht.

That has drawn criticism even from former Democrat premier Abhisit Vejjajiva, no fan of Mr Thaksin or any of the governments run by his sister or his associates.

On Wednesday the Bangkok Post newspaper quoted the normally careful and measured Mr Abhisit as saying: "This could disrupt the circulation of money in the economy, further lowering purchasing power, particularly of farmers who have already been hit by low crop prices."

Also questioning the economic soundness of the cuts of funds to rural areas was Dr Wiroj Naranong, research director of health economics and agriculture at the Thailand Development Research Institute, a largely conservative think-tank.

He told The Straits Times: "The NCPO claims these kinds of schemes are populist. They try to keep fiscal discipline, but when they think of that it means cutting down populist programmes."

But some of the NCPO's popular programmes in Bangkok - like free bus rides - could be even worse, he said.

The NCPO seemed to not distinguish between populist and popular programmes, he said. "These schemes are beneficial to rural people especially in the north and north-east. But as soldiers, they believe in common sense and order. I don't think they understand the economy."

They may not fully understand the politics either.

Dr Pavida Pananond, an associate professor at Thammasat University's business school, wrote in an email: "The cancellation of budget allocated for the village funds and farm subsidies carries strong economic and political ramifications.

"Economically, it could undermine the domestic consumption across Thailand's rural economy. Politically, this is a way to eradicate Thaksin's legacy not at his expense, but unfortunately at that of his supporters - Thailand's rural community."

Dr Pavida added: "While the village funds are cancelled, the defence budget has been increased by five per cent and budgets allocated for Bangkok's infrastructure are not affected; this will also reinforce the priority for Bangkok over the rural community - making the country's reconciliation attempts even more challenging."
Her concerns are echoed elsewhere.

In the executive summary of a January 2014 paper for The Asia Foundation, Professor Pasuk Phongpaichit, a political economist at Chulalongkorn University, and Dr Pornthep Benyaapikul, an economics lecturer at Thammasat University, outlined some home truths about skewed priorities in Thailand.

Inequalities have in part underpinned the political turmoil of the last eight years, and partly justify the popular if oversimplified notion of the divide between upcountry rural Thailand and urban Bangkok.

"Public expenditure in education and other sectors has long been disproportionately skewed towards the capital city," the two respected academics noted.

"Technical recommendations for increasing productivity and tackling barriers to more inclusive economic growth have repeatedly been made, but are only partially acted upon.

"The principal obstacle to their adoption is the persistence of entrenched and vested interests at national and local levels.

"Whether successive Thai governments were elected democratically or came to power by other means, they have been founded on oligarchic politics. Overlapping power centres contest for dominance. There has been little interest from any major political actors in institutional reforms to support a more sustainable, just and democratic society."

And democracy appeared far away on Budget day, although General Prayuth turned up in Parliament in a dapper, dark business suit to signal his impending transition to prime minister three days later on Thursday, Aug 21.

There was no debate before the unanimous vote for the Budget that day, a precursor of the overwhelming vote on Thursday that swept Gen Prayuth to the premier's chair. The absence of debate at both the sessions of the handpicked NLA could indicate how the army is going to run the country.

"While in the short term, this could be interpreted as an attempt to unlock the government spending, the lack of debate on the priority of how budgets are allocated shows a worrying sign of the weakening check-and-balance mechanism under the NCPO," wrote Prof Pavida.

Much depends on the Cabinet the Prime Minister will choose by the end of this month or the first week of September. But while there will almost certainly be some technocratic talent, whether the Cabinet can function independently of the regime's conservative thinking, or whether old inequalities are transcended or perpetuated, may be dependent on the ministers' backgrounds and their socio-political convictions.

There is also the problem of the lack of accountability in this government.

"No matter how it is rationalised, unaccountable power with absolute authority and direct control is a recipe for disaster," warned Chulalongkorn University professor of political science Thitinan Pongsudhirak in a commentary in the Bangkok Post on Friday, Aug 22.

If the proceedings in the NLA are anything to go by, there is no question where the authority lies today in Thailand.

Gen Prayuth's approximately hour-long, extempore, fast-talking Budget speech on Monday ended with him saying: "Does anyone disagree with me?"

That raised a mild laugh.

And nobody disagreed.

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