TRT grass roots policies - successful?

[Scuba22]

Thaksin & the TRT party love to talk about brining economic development to the grass roots of Thailand - the provinces, rural poor, inner cities, and so on. As an idea, this is difficult to argue with. Of course poor people deserve opportunity.

To create these opportunities for the poor, the party has instituted several specific programs:
1. 30 B health care to reduce costs for the poor
2. Debt moratorium for farmers
3. OTOP program to market village goods
4. Various microcredit schemes: village fund, SME bank, governmen savings bank
5. Assets to capital conversion scheme

Again, as ideas, it's hard to argue with any of these. Cynics may claim that these ideas were only floated to win votes, but if they actually help the poor, is that so bad?

The question is - how have they been implemented, and what have been the results so far?

I'd like to open this discussion with research that's been done in these areas, results that have come out, and specific examples, either positive or negative. I rarely see much analysis of the merits of these programs in the English press, though there is much rhetoric.

Would anyone like to discuss these?

Best regards,

Scuba22

[Wisarut]

1. 30 B health care to reduce costs for the poor -> NOT so good but deserved better improvement

2. Debt moratorium for farmers -> NO so good at all, shoud be scrapped

3. OTOP program to market village goods -> Quite good ... but DESERVE some improvement

4. Various microcredit schemes: village fund, SME bank, governmen savings bank -> TheONLY SHOULD be kept ... but with some stringent rules and further traing so they cango on theri feets ... without becomign a beggar.

5. Assets to capital conversion scheme -> NOT very successful .... sicne they cannto get the bankers and creditors to cooperate with them ... sould fidnthesettlement whcih both Bankers and local foramers could agree with.

[Scuba22]

Dear Wisarut -

Thanks for your post. I'm very curious about the reasons behind your comments on these programs. Let me give you some of my understanding and experience with some of these programs.

1. The 30 B health care program - this allocates a standard amount for every patient under the care of a given government hospital. In the health care financing lingo, this is called a capitation program. However, capitation has had lots of trouble in various countries simply because all populations are NOT the same. This leads to some hospitals having surplus funds and others going bankrupt - which is exactly what's happened here. Health care financing is an extremely complicated issue that no one in the world has solved despite lots of experimentation. From what's been implemented, and from some of the "advisors" to this program that I have met, it appears that the government has not done much homework on health care financing learnings and has rather implemented a scheme that sounded nice on the surface. Furthermore, I've never really seen any fully articulated explanation of the scheme in English at all, much less with references to experience in other countries. Do you know if a full explanation of this program in English exists?

2. OTOP program - the idea behind this, to get rural people involved in international commerce, sounded so good that some colleagues and I tried to set up an international marketing company based on these products. The idea was that westerners would be willing to buy good quality products made by villagers who were trying to improve their villages through commerce. But when we looked for village craftspeople making OTOP products for village development, we could hardly find any. Most OTOP products were being made by established SME businesses who were already trading in domestic or international markets. The OTOP program gave them more outlets to display - trade shows, retail locations and so on; this was all good, but it didn't really address rural commerce or development they way it said it would. After months of going to OTOP shows, fairs, displays, etc, we could find only 2 villages making new products to improve their development. A recent study on OTOP printed by the BK Post a month or so back concluded exactly the same thing - OTOP is something new in name only, in implementation and practically, it basically extended activities that the Department of Export Promotion was already doing.

3. Microcredit schemes - I've been seeing signs that there will be some kind of international conference on microcredit this coming weekend where the government will be showcasing its "successes" in these areas. Do you know anything about this? You mentioned something about "becoming a beggar" - can you say something more about this? Is there documentation on the rural poor getting into debt trouble with these schemes? has there been any independent assessment of how these programs are working?

4. Debt moratorium - what was not good about this?

5. Assets to capital conversion - any idea why the private sector (banks, creditors) are not cooperating? One would think that if land has value and the uses of funds is commercially viable, lenders would be happy to expand their business. If they are not, the reasons can be because the land title is not secure, the uses of loans is not productive, the asking value for the land is not marked to market, or because the banks and creditors are stupid (this is fairly common!). Any thoughts as to which is the reason, or is it something else entirely?

Thanks!

Scuba 22

[Wisarut]

4. Debt moratorium -> a BIG SPOIL to the farmers ...

It seems to me that the governemtn hasapplied thge Debt Moratorium and Microcredit alogn with the bombardment of AIS Ads so as to push thsoe grrassroot people to buy mobile phones and subscribe AIS alogn with UBC .... NOT for the REAL production ....

Therefore, better management alogn with the better regulation MUST be applied so both would ACTUALLY help those farmers to go on their feet..

[Scuba22]

Has anyone done any systematic research on how much money has been lent out and what it has been used for? I know that microcredit is a complex business around the world, requiring more thought in implementation than we've seen with most other programs that TRT has executied. Yet, they are about to host an international conference to tout their success.

The GSB site has an interesting document called "GSB’s Role in Thailand’s Poverty-Alleviation Policies" that you can take a look at ( http://www.gsb.or.th/microfinance/Press_Release.htm ).

According to this, they measure their success by increases in tax collection and spending in rural areas, plus a reduction of people living in poverty. They also brush off rises in household debt, saying that income has also risen, and over all debt is only 27% of GDP in Thailand, so no big deal.

Do you know of any other hard data about these programs that would be useful in assessing their effectiveness?

Thanks!

Scuba22

[2 Cents]

I don't know if I has joined this site too late, but I'm sure glad I found this web site.

Scuba22,

I kind of share the same feeling with you when you said "it appears that the government has not done much homework on health care financing learnings and has rather implemented a scheme that sounded nice on the surface."

You are right that healthcare finance is a complicated issue. Even for program like medicaid, which many states has done extensive research on this issue, it still remains an issue. Among other things that will determine the successful (or partially successful) of the program is to determine the proper capitation rate. I didn't see any document on how the government come up with this rate (which I find it rather low).

I believe this is not alone (in term of implemented a scheme that sounded nice on the surface), if you look at other things that the governemnt try to do like privatization or student loan, you will see that they only took the name rather than how to implement it.

Without a well define antitrust law and regulations, privatize of certain public enterprise will just create a monopolist (and I don't see monopoly as a better scheme than public enterprise). In the case of student loan, as far as I know, instead of giving the loan directly to the education institution, they basically give the loan to student. Of course, students can spend that money on anything (could be a new LV bag). So from what I see, the government just want to have all the things that other countries have. However, it will take too long if they were to do study and try to implement it in the right and effective way. So the best way from them to look good is to take a short cut and just take the skin and put it on.

Regarding micro credit and household debt. This actually is what I most concern. For some reason, I saw this as a replica policies of Chartchai (boosting GDP by induce domestic consumption and stimulate asset price), which I believe was the crack on the foundation that caused the financial crisi in 1997 (the different is it's private household debt instead of private institution debt).
I don't think Thailand has very good data on such level. However, in regard to household debt it stand at 33.2% of GDP as of Q2 2003 (from WB report), that's about 60% of household disposable income. It's ture that income was also grew. However, from 2001 to 2004 debt per household has grown at the rate of more than 2.5 times that of income (debt grew by 52.3% while income grow at 20%).
Now that inflation rose to over 4%, it's likely that the central bank will increase interest rate. If they do, how will it impact household ability to pay this debt. Remember, Thai households don't usually have other component of wealth rather than their regular income. So, the final results of houshold debt on the economy is remain to be seen.

[Scuba22]

Hi 2 cents - no of course you're not too late and welcome to the discussion. I'm so glad you joined, I was getting a little lonely on this thread!

On health care financing, the question I think is far more complicated than reaching a "proper" capitation rate. For people unfamiliar with the jargon, "capitation" refers to some kind of "set" rate of health care costs for the "average person" - it's the amount that each hospital gets for each patient enrolled; they can then spend it any way they want.

The whole idea of capitation is problematic, since it assumes some kind of "average" person in an "average" population. Such things do not exist - health care costs per person are highly dependent on age, sex, income, etc. and so will vary wildly from place to place. Setting broad capitation rates inevitably leads to surpluses in some areas and shortfalls in others - exactly what has happened in the current scheme. A quick reading of the literature could have shown that.

It's been over 5 years since I've been in the field, but in the US, the move had been toward a system of "diagnosis related groups" (DRGs), which set costs not for people but for specific medical problems (like "diabetes" or "heart attack", but more specific). This gets away from "average" people and populations, but also allows "gaming" the system since doctors are ultimately responsible for assigning DRGs - so you assign the most expensive one to look like you're saving money.

Working with "integrated HMOs" (doctors, hospitals, insurance all under one company), we did find ways to cut costs while maintaining quality, but the method required heavy ongoing analysis, information management, and communications between doctors, IT, and finance. It was not as easy as setting rates and forcing people into a system. Unfortunately, i see none of that sophistication in the current system.

On the household debt front, it's a tricky situation. Global comparisons have shown for years that in Asia savings rates are quite high and debt rates quite low - compare for example US savings & debt rates. Even so, it's not at all clear that these are really comparable - is it fair to say that rural Asians can manage the same debt levels as middle-class Americans? Claiming otherwise opens you up to charges of arrogance and racism ("what? are you saying that poor Thais can't handle money? You're a racist who hates the poor!")

Thaksin has taken a dangerous gamble here, IMO. He's loaned government money (GSB, GHB, KTB, OTOP, SML etc. etc.) to people who may not even understand that they need to pay it back. If he's right, they'll invest that money in millions of productive ways and the whole country will blossom. If he's wrong - and they've really used the money to buy motorcycles, mobile phones and handbags, Thailand is doomed.

We need to remember that Thaksin really doesn't understand business at all. He made his money with government support, so he things that the only way to make money is for government to help. He tried to make independent businesses, and failed every time. He only succeeded with family connections, and official protection. How can you expect a guy like that to have any idea how to really help poor people?

cheers,

Scuba22

[2 Cents]

Scuba22,

I completely agree with you in the fact that the problem of 30 baht for everything goes deeper than just the rate. I believe that the government didn’t think about anything except that this is a good policy for marketing purpose. They probably think no matter what they can finance this policy, if that’s true, then the question is how far can they go into their pocket?

Regarding debt issue, please don’t label me as a racist. However, IMHO, I do think that not only Thai households that are novice in managing debt, but even the Thai government is also inexperience. By saying so, I didn’t mean that Thai households or Thai government are incompetent of managing their life. I just don’t think that our economic understanding and foundation are strong enough to handle such policy and its consequence (if things turn wrong).

I think you are right when you said that “Taksin loan government money (GSB, GHB, KTB, OTOP, SML etc. etc.) to people who may not even understand that they need to pay it back.” That’s exactly what I mean when I said we don’t have enough understanding of how public policies and the economy work. It appears to me that the loan was given out with little consultation or other technical support on how this loan should be used. From what I see, these loans seems to go mostly to consumption and do very little to the real sector (correct me if I’m wrong). I didn’t mean that households are less rational than government, but sometime, they didn’t look at things in the big picture and in the long-run, and that’s why we need government.

I don’t think this kind of policy is sustainable anywhere (either in the U.S. or Thailand). However, in country like U.S., it was the rest of the world who finance their debts. Also, I think the other side of the policy, namely the Federal Reserve, has done a much better job than their counterpart in Thailand in keeping the economy on track. The same things don’t seems to exist for Thailand. I don't see the BOT taking the stand on their policies, and who would want to buy Thai treasury bond? The sad thing is, if Taksin lost this bet it’s Thailand and Thai people who would pay for it, not him (and I kind of think there’s a good chance that he will lost this bet).

Your last comment about Taksin really frightens me. I have always been thinking that he at least good in something, the only problem is he just happen to be in a wrong career. Are you saying that he actually incompetent at anything!!!!!! Gosshhh, Thailand is in a deeper trouble than I thought.

Just wondering one thing, what are all economists in Thailand doing? I don’t see many economists talking about Taksin’s policies as much as I expected (except the guy from Morgan Stanley). Are they really don’t think there’s problem? Is it because I am not living in Thailand and I just happen to not see it? Or I am the only one who crazy enough to think that this is a problem.

[Wisarut]

Khun 2 Cents,

You better take a look at the creticism from TDRI and you'll see.

[Naphat]

Furthermore, I've never really seen any fully articulated explanation of the scheme in English at all, much less with references to experience in other countries. Do you know if a full explanation of this program in English exists?


Something from the British Medical Journal here that might help:

http://bmj.bmjjournals.com/cgi/reprint/328/7431/103.pdf

[Scuba22]

Dear 2 cents:

You've certainly identified a critical question regarding "debt capacity" - how much debt are people/companies/countries capable of handling. It's even tough to raise the question, since as you mentioned, it opens up charges of racism or classism. Notice how often Thaksin makes arguments like "how dare you suggest that poor people are dumb, they're very smart, you're just arrogant..." This plays into his critics' sensitivity to being "reasonable" - just like you're worried about sounding racist.

But at the very least, I wonder if people actually understand that all these loan schemes are actually LOANS from the government, rather than HANDOUTS from Thaksin himself. The government doesn't make much effort to explain the difference, and publicity stunts like Thaksin running around villages and handing out 1000 B tips certainly creates confusion. I'd love to see some kind of independent survey of Thai villagers who have received the loans that asks if they know where the money came from and whether they need to pay it back. It wouldn't surprise me if a fair number of people get it wrong. Then again, maybe I'm a racist too :-)

I don't know much about BOT policy, except they seem to pretty much follow the US Fed. I'm not sure how much impact BOT really has; I'd say that Thailand is far more impacted by global financial and trade flows than domestic monetary policy (unless of course that policy is totally insane like the dollar peg).

I think Thai government debt has sold pretty well actually, though there's a lot of concern that emerging markets debt generally doesn't reflect the actual risks involved, and that low spreads with US treasuries is really a reflection of a lack of investment opportunities elsewhere. I'm not buying Thai sovereign debt, i'll tell you that - my money is all going into my own company!

you're right, it would be good to see more Thai economists weighing in on government policies, but I can understand why they don't. to begin with, if you were a smart Thai economist, there's a good chance that you wouldn't be working in Thailand - there are plenty of better opportunities at the UN, World Bank, foreign universities, WTO, etc. That doesn't leave many smart economists in Thailand. Apart from Ammar Siamwalla, who can we even name? As for Daniel Lian from Morgan Stanley, there's a whole other thread on this web-board devoted to him - check it out!

Also, the question of Thaksin's "business success" has a whole other thread ("Thaksin - capitalist & businessman?"). That discussion actually changed my view - I used to think he was just a government policy manipulator and crony nepotist; now I think he's also been very lucky in getting a privileged network concession (800 GSM) for an industry about to take off. A careful reading of the circumstances around this I think show that far from "brilliantly finding a growth sector" as he likes to claim, he got the concession because he wasn't at that point powerful enough to get more immediately attractive concessions.

But I look at the issue this way - if we assume that he is a brilliant businessman, a lot of questions arise about how he's conducting policy. If we assume that he's just a lucky crook, it all makes far more sense.

Cheers!

Scuba22

[Scuba22]

Naphat -

Thanks so much for that BMJ link, it was a great read. I had read before that the basics of the program were drawn up by some reform-minded good guys but that it was co-opted for political purposes by TRT who didn't really care about implementation. The information in the article is consistent with that story.

Some elements of the plan make a lot of sense, especially shifting to primary care rather than hospital-based care, as well as capitating primary care while putting in a DRG system for inpatient care. But that's where it starts breaking down. Implementation issues appear to have been treated in a shallow way - for example, capitation-related budget deficits were not corrected by fixing the capitation weighting scheme, but by establishing a separate contingency fund. That's just retarded.

More worrying is the comment that "richer groups are self-selecting out" of the system. Combine that with Thaksin's family buying into private hospitals at a rapid clip, and the story becomes frightening. Suppose you wanted rich people to come to your private hospitals and you had control of the public hospitals that are their other choice. What would you do to the public health system?

Cheers,

Scuba22

[BangkokPundit]

More worrying is the comment that "richer groups are self-selecting out" of the system.


Have you been to a public hospital in Thailand and seen the number of people waiting? The Mahidol University teaching hospitals treat more than 2.5 million outpatients every year. Here, is a good explanation (http://www.si.mahidol.ac.th/eng/Studentlife3.htm) of what it is like visiting a doctor at Siriraj:

The out patient clinics were another unique experience; quite different to anything I have seen before. The clinic took place in a large room, with benches in the centre. 10 or more doctors sat behind desks at the end of the room, with the residents sitting behind desks in front of curtained examination booths. Patients each had a number and came up to the desk when it was called. The doctor usually consulted for about 5 minutes, with absolutely no consideration for patient privacy. He would then either discharge them or ask them to go into and examination room, where he would examine them. They would usually see between 40 and 50 patients in a morning clinic.

You can easily wait 3-4 hours at a Thai public hospital to see a doctor and then collect the medication. And you wonder why "richer groups" are who have the money to go to a private hospital are "self-selecting out". I would expect every single rational rich person to go to a public hospital, particularly for outpatient services.



Combine that with Thaksin's family buying into private hospitals at a rapid clip, and the story becomes frightening. Suppose you wanted rich people to come to your private hospitals and you had control of the public hospitals that are their other choice. What would you do to the public health system?


If Thaksin wanted to make large amounts of money from private hospitals, why would he have created a system of universal healthcare? Hasn't the system resulted in larger numbers of his potential customers moving from the private sector to the public sector? Surely, getting rid of socialised medicine and making the whole system private would be your goal if you wanted to make money. Perhaps, Thaksin's economic plan is all part of a plot of his to increase disposable incomes throughout Thailand so more people will go to private hospitals and Thaksin will become even richer. As soon as people can afford it, why wouldn't you go to a private hospital?

Previously, the health system was greatly skewed in favour of the richer areas of Thailand. You almost seem disappointed that the systematic changes to the health system have spread the money throughout Thailand including to the poorer areas.

A paper (http://www.who.int/bulletin/volumes/82/10/en/750arabic.pdf) on the background to the reforms which also lists some reasons for choosing the capitation model.

A paper (http://www.unescap.org/pdd/publications/adpj_11_2/6_sinnathambu.pdf) on health spending in Thailand up until the reforms.

[2 Cents]

K. Wirasut,

Thank you so much for your suggestion. I have visited TDRI web site from times to times. However, I don't see much mentioning of the debt issue. I can't download several of their papers though, may be it's among one of them.

I like the one about "the tale of two cities (Star Wars)" though. :D

[2 Cents]

K. Scuba22,

I think that’s just the way he talks. I actually read similar comment her made about the protesters (sth. like they are stupid protesters, just ignore them…don’t know how much of that are true). So, I guess, he will say this anyway, no matter what you say or do.

Talking about people’s perception of these loans, consider this may be the first loan for many, I think you are not too far off (and that will make both of us a classism :eek: ). However, I think this may actually be his intention, to confuse people so that they re-elected him because they are enjoying their free money. If this is true, then he actually uses public money to bribe people.

The fact that people may not see this loan as an obligation doesn’t surprise me as much as the way government treats these polices. These loans are virtually a free loan to household (I mean it bare very low interest), however, it costs the government to finance this loan. Eventually someone got to pay for it and it’s easier for household to default than the government. So, unless the money is spent in productive manner that will create wealth, all these polices do would be future deficit or higher taxes.

You’re being too harsh when you said talk about economist in Thailand. Since it may also be true for someone who is not so smart, but he/she so sick of your prime minister, that person may choose to be somewhere else rather than being in Thailand ;) Come on, I’m just joking. The fact is I’m sure there are good economists out there. Unfortunately the most vocal one happens to be Taksin’s friend.

Talking about Taksin’s business, I always think of Taksin as a bright businessman. The problem is he cares more about profit than people, that’s what makes him a bad policy maker. Forgive me for being so ignorance. I guess I may didn’t do enough homework. I agree that if we assume that he’s a crook that will explain almost everything.

Please bear with me if I say something so naive, I didn’t mean to be so ignorance. I have never spent more than few weeks a year in Thailand for the past several years. I can only read from the web (and most of the time I only ran across the things between Taksin and the media tycoon). I’m glad that I found this web site. I finally can really learn and keep myself up to date with things in Thailand.

[2 Cents]

Thanks for the refernce naka K. Naphat

BTW Scuba22,
Suppose you wanted rich people to come to your private hospitals and you had control of the public hospitals that are their other choice. What would you do to the public health system?


So, are you saying that the incentive for this policy is…....the more crowded public hospitals are, the more money you make from your private hospitals? Well, I kind of agree. (here we go on top of being classim now I am also a conspiracy theorists :cool: )

[2 Cents]

K. BangkokPundit,

Have you been to a public hospital in Thailand and seen the number of people waiting? The Mahidol University teaching hospitals treat more than 2.5 million outpatients every year.

I found it a little premature to conclude that the program is successful from looking at participation rate. The fact is having access to healthcare doesn’t necessary means you get the healthcare you need. This number could go either way (program is successful or my conspiracy theory)
I actually share my point of view with K. Scuba22 that what this policy has a potential of segregating healthcare facilities into those that provides basic care for fix payment and those that charge for complete healthcare service . However, I will not jump into conclusion until I see the data. Do you happen to have data on public health utilization by income kha? That would clear our disagreement na.

You can easily wait 3-4 hours at a Thai public hospital to see a doctor and then collect the medication. And you wonder why "richer groups" are who have the money to go to a private hospital are "self-selecting out". I would expect every single rational rich person to go to a public hospital, particularly for outpatient services.

You got to be kidding me, any rational person would never spend 3-4 hours at a public hospital if their 3-4 hours time has more value than what they will gain. IMHO value of time for people with high income are much more than the benefit of accessing to medication.

Previously, the health system was greatly skewed in favour of the richer areas of Thailand. You almost seem disappointed that the systematic changes to the health system have spread the money throughout Thailand including to the poorer areas.

Do you really think this policy solves that problem?
I saw this policy has potential of driving out good healthcare practitioners from public healthcare system, and you evetually end up getting what you paid for. Well, the government may still consider the program as successful since the goal of the program is “to provides an acceptable quality of services.” The next question would be what’s this “acceptable quality”? To answer that question we may run into ethical problem, which I won’t get into that ahead of time.

My last concern is how the government going to finance this policy? There are actually two issues related here. First is the one that K. Scuba22 raise about how effective is the distribution of this funding among all the public healthcare facilities. The second question is, how will the government finance this excessive expense? (tax, deficit?)

I’ve seen states dug themselves into pile of debt with the Medicaid program. Well, the initial incentive for that was the more they spent, the more they save (the more money they get from the federal). Now, they are struggling to dig themselves out of this huge cost. Did Thailand learn anything from this? What's the incentive of Thailand to jump into such policy so quickly.....it can either be for the people, or for ........... I think you may prefer to fill in the blank yourself rather than I do it naka.

I am in no way opposing the idea of providing healthcare to everyone. However, IMHO the way this policy is implemented, it could do more harm than good in the long run.
Just my 2 cents.

[Wisarut]

BTW, for the Public Debt Issues, you have to take a look at the Public Debt Administration Bureau, Ministry of Finance.

Well, I do have my friend who are woking on that Public Debts Admin Bureau thouhg.

The lestest news igot isthat the government has asked MOF to raised the debt ceiling by 1.2 Trillion Baht .... :eek:

[Scuba22]

Ah, finally, a rousing debate about health care policy - thanks for entering the discussion!


And you wonder why "richer groups" are who have the money to go to a private hospital are "self-selecting out".

No, actually, don’t wonder at all. If the public system is dysfunctional, this is exactly what one would expect. The fact that this is happening is an indication of dysfunction. The question is why this dysfunction is happening. It could be due to incompetent policies and implementation- that’s the benign explanation and warrants action on its own. However, when the same people involved in public health care policy are also buying into private hospitals, the conflict of interest is undeniable. Or are you denying it?


If Thaksin wanted to make large amounts of money from private hospitals, why would he have created a system of universal healthcare?

“Universal health care” in itself has as much to do with private hospitals as “universal public education” has to do with private schools. The issue is quality as much as reach. You can shift richer people to private hospitals or schools through limiting public availability, but this is politically untenable. Making a substandard “universal” system allows you to have your political cake and eat the private returns at the same time.


Hasn't the system resulted in larger numbers of his potential customers moving from the private sector to the public sector?

No. It has resulted in “richer groups self-selecting out of the system.” Please read the article you are commenting on, thanks.


Perhaps, Thaksin's economic plan is all part of a plot of his to increase disposable incomes throughout Thailand so more people will go to private hospitals and Thaksin will become even richer.

That’s exactly the type of thinking that I’d expect from the brilliant business mind of Thaksin. Never mind that there is not ONE developed country with a predominantly private health care system. Even in the US, the most privatized country in the world with 10x the disposal incomes of Thailand, more than 50% of total health care costs are picked up by government through Medicare & Medicaid. You want to try that argument again?


You almost seem disappointed that the systematic changes to the health system have spread the money throughout Thailand including to the poorer areas.

Huh? I must have missed the part where I’m complaining about more equitable spending distribution. If in fact health access was being made more equitable, I applaud it - note my approval of the shift from hospital-based to clinic-based care. However, given the BMJ article’s referenced research that “suggests that the scheme has not yet provided adequate financial protection,” plus my personal experience, I can’t state that this is the case. Do you have any evidence to show that this equity is really happening?

My disappointment is in the implementation of a politically expedient incomplete pseudo-solution with massive holes that have been well demonstrated elsewhere, such as universal capitation, leading to sadly predictable problems. If you read the summary points of the BMJ article, this is pretty much what it points to: a radical shift to primary care (good) with big political backing, but problems in financing, staff & public confidence. This is always what happens when marketing gets too far ahead of product design.

Thanks for the two papers, they were good reading. The one on the background compares capitation to a reimbursable fee-for-service (FFS) model. That’s a false choice in any modern health care policy discussion. There’s decades of evidence from US employer-paid systems to show that the FFS model doesn’t work, It’s like saying bows and arrows are better than spears. Hardly an argument for stocking your armory with bows and arrows.

And regarding the pre-reform situation, again, pointing out the old system was pretty bad (and it was) is hardly grounds in itself for claiming success of a new system.

Cheers!

Scuba22

[Scuba22]

Hi 2-cents, thanks for the replies:

1. On debt capacity and common understanding - I don't really have much more to add; except to repeat that I would love to see some indication of what the recpients' perceptions of this actually is.

2. Good economists in Thaiand - yes, perhaps I'm being a bit harsh. I do actually know a few good Thai economists personally, but none of them work in Thailand. Similarly I know smart Thai engineers, scientists, consultants, bankers and other professionals, but very few of them work in Thailand. It's a real problem for the country I think when the best and brightest choose to stay away - you yourself for example, clearly you're intelligent and well-read, but you're not here. Being independent and bright, I bet you'll find it difficult to fit in at a typical Thai company, university or government department. The harshness is about Thai institutions, not Thai people. Apart from Siamwalla, can you name any other prominent Thai economists working in Thailand?

3. Health care conspiracy theory - I am not claiming that this is what's happening, I have no evidence for it. I am saying that IF this was the case, it would clearly explain a lot.

4. Thaksin's business skills - I use a very specific (and unusual) definition for "business skills", as opposed to the general link that people make between business smarts and wealth. Basically I think that wealth can be gotten from many roads that don't involve business - for example winning the lottery or robbing a bank - so that simply having money is not an indicator fo business skills. The key is to make money in a competitive environment through providing superior value to customers. Privileged concessions and closed markets throw extraneous variables into this assessment, so I think at best Thaksin's "business skills" are "questionable", and at worst they're non-existent. But there are good arguments against me - the other thread gets into some of thos.

Best regards,

Scuba22

[BangkokPundit]

“Universal health care” in itself has as much to do with private hospitals as “universal public education” has to do with private schools. The issue is quality as much as reach. You can shift richer people to private hospitals or schools through limiting public availability, but this is politically untenable. Making a substandard “universal” system allows you to have your political cake and eat the private returns at the same time.


So having a private health system which poor people can't afford is part of your universal health care.

Without more money, there will be problems with the system, but this will take time to iron out.


No. It has resulted in “richer groups self-selecting out of the system.” Please read the article you are commenting on, thanks.

I did read the article. I am talking about poor people who are able to go to public hospitals.

[QUOTE=Scuba22]
That’s exactly the type of thinking that I’d expect from the brilliant business mind of Thaksin. Never mind that there is not ONE developed country with a predominantly private health care system. Even in the US, the most privatized country in the world with 10x the disposal incomes of Thailand, more than 50% of total health care costs are picked up by government through Medicare & Medicaid. You want to try that argument again?


I was making a joke. You've lost me here. What argument was I making?

Ok, your problem seems to be with the implementation of the scheme, not the scheme itself. Well, I will defer to your knowledge on the problems of implementation. Like most reforms, it will take time. I just think Thaksin is moving in the right direction away from healthcare to the few (civil servants etc) to everyone.

I imagine with any such system it will only try to provide a basic service which people can opt out of it by going private and paying. I have no problem with such a scheme. This is how you go rich people to opt out.

I just find most of your comments overally critical of everything, everything is bad, everything is wrong, nothing is good.

[BangkokPundit]

You got to be kidding me, any rational person would never spend 3-4 hours at a public hospital if their 3-4 hours time has more value than what they will gain. IMHO value of time for people with high income are much more than the benefit of accessing to medication.

Ok, what I meant to say was:
You can easily wait 3-4 hours at a Thai public hospital to see a doctor and then collect the medication. And you wonder why "richer groups" are who have the money to go to a private hospital are "self-selecting out". I would expect every single rational rich person to NOT go to a public hospital, particularly for outpatient services.


I am in no way opposing the idea of providing healthcare to everyone. However, IMHO the way this policy is implemented, it could do more harm than good in the long run.
Just my 2 cents.

If implemented badly and there is no change to the present system which is lacking money, yes it could do more harm. I just expect as the economy expands that more money will go into healthcare so don't think it will do more harm. But we'll just have to look at the policy in 10-20 years time to see what happens.

[Scuba22]

Hey BK Pundit - thanks for your comments.

So having a private health system which poor people can't afford is part of your universal health care.

A private health system which poor people can't afford is part of EVERY health care system I've ever seen. Have you seen any health care system that doesn't ahve this feature? Maybe Cuba or Iraq at present.

Without more money, there will be problems with the system, but this will take time to iron out.

I doubt we're going to see TRT slogans saying "the 30-B scheme will have problems without more money, but with time it will work out"

But that's pretty much the case with any public health care scheme ever implemented. No one has yet come up with a workable public health care system, it's a constant tinkering of service levels, eligibility and financing. There are tons of different examples in the world trying new things to figure out what's going to work.

My major complaint against the TRT scheme is that it incorporates measures that have been tried and failed in numerous places around the world. The results (physicians leaving the system, hospitals going broke - Thammasat Univ Hospital just left the system because of financial losses) were entirely predictable based on past experience, yet no one seems to have bothered to look into that or to prepare for the inevitable. Instead, they tout it as some kind of miraculous innovation as if TRT has stumbled on to some magic bullet that has eluded the armies of health economists and policy planners in the world.

It's this kind of attitude that makes me think that the whole scheme was developed as a marketing ploy to get votes rather than a sincere effort to solve health care issues.

I was making a joke. You've lost me here. What argument was I making?

Apologies, I often confuse arguments defending Thaksin with jokes.

Ok, your problem seems to be with the implementation of the scheme, not the scheme itself. Well, I will defer to your knowledge on the problems of implementation.

What's the point of "the scheme itself" divorced from the implementation of the scheme? Without thinking through the implementation, schemes are just marketing pitches - kind of like "let's liberate Iraq!". I'm not asking anyone to defer to "my knowledge", I'm asking TRT health policy planners to defer to global experience in implementing health care solutions, not just to make something up that sounds nice to win votes.

I just think Thaksin is moving in the right direction away from healthcare to the few (civil servants etc) to everyone.

Before the 30 B scheme, health care was NOT limited to "the few". In addition to the civil servants program, there was the Social Insurance Scheme, Voluntary Health Card Scheme open to all and the cheaper Low Income Card Scheme open to anyone under a given income level. In 1999, 76% of Thais were covered by at least one of these schemes.

One of the big problems with these schemes (apart from there being too many of them and thus adding to admin costs) was a reliance on hospitals for primary care. The 30-Baht program has shifted some of this to primary care clinics, which is definitely a good thing. But basic problems like generic capitation rates are just basic. It's as if they designed a car with a coal-fired engine - it's really hard to take seriously if you've got any familiarity with public health policy. Make no mistake, when the British Medical Journal writes "Major revisions may need to be considered if the policy is to survive" - that's academic diplomatic speak for "this is a crock of shit thought up by morons"

I just find most of your comments overally critical of everything, everything is bad, everything is wrong, nothing is good.

Thaksin and the TRT as doing a fine job calling attention to all their good works without me. It's the criticism that's needed.

But fine - find me something worthy of credit and credit I shall give. What has the TRT done that's so great, exactly?

Cheers,

Scuba22

[Scuba22]

So, are you saying that the incentive for this policy is…....the more crowded public hospitals are, the more money you make from your private hospitals? Well, I kind of agree. (here we go on top of being classim now I am also a conspiracy theorists :cool: )

Plus the better doctors leave the low-paying public health system and join your private hospitals!

I'm not saying that this is the incentive - I can't read minds - but it is a very interesting coincidence that Thaksin's family is investing in private health care while he's instituted a financially unsustainable public health policy. It's as if he invested in his own airline while having control over the national airline - oh wait, he HAS done that. Or perhaps if were a policeman writing a proposal for a contract that his private company was bidding on - oh wait, he's done that too.

This guy has a long history of conflicting interests between himself and the public trust. In every case, his personal interest has won out. The amazing thing is that people are somehow surprised at all this. It's pretty well documented.

Cheers,

Scuba22

[Wisarut]

Well, even thsoe wll to do folks have complained that the Doctors at Bamrungraj Hospital have become mroe and more money hungers ... they just simply OVERPrescribed the medicine so they can sell more drugs.

They evben prologn the medicaltreatments so as to Extract mroe moen yto the last Satang ....

Sooner or later, the doctors woudl face the patients with AK47 or M16 pointign on theri head -> Treat us FAST -> Or ELSE! :eek: ;)

[2 Cents]

BTW, for the Public Debt Issues, you have to take a look at the Public Debt Administration Bureau, Ministry of Finance.

Well, I do have my friend who are woking on that Public Debts Admin Bureau thouhg.

The lestest news igot isthat the government has asked MOF to raised the debt ceiling by 1.2 Trillion Baht .... :eek:

Well, I sure hope that your are wrong naka, but it won't be too surprising naka. I just wonder how he is going to repay it. Or may be he just don't care because for now more debt won't have too much effect on debt service, not until we have to repay the principle. And that might be the problem for the next government to handle. Ohh boy!

[2 Cents]

Hi 2-cents, thanks for the replies:
Thaksin's business skills - I use a very specific (and unusual) definition for "business skills", as opposed to the general link that people make between business smarts and wealth. Basically I think that wealth can be gotten from many roads that don't involve business - for example winning the lottery or robbing a bank - so that simply having money is not an indicator fo business skills. The key is to make money in a competitive environment through providing superior value to customers. Privileged concessions and closed markets throw extraneous variables into this assessment, so I think at best Thaksin's "business skills" are "questionable", and at worst they're non-existent. But there are good arguments against me - the other thread gets into some of thos.
Scuba22

Thanks a lot Scuba22, I was cought up with my work, and have just finally have time to go to the thread you were talking about, now I know what you mean. Well, how lukcy Thailand is, and it's even amze me more that there are so many people still buying his policies... :(

[2 Cents]

Ok, what I meant to say was:
You can easily wait 3-4 hours at a Thai public hospital to see a doctor and then collect the medication. And you wonder why "richer groups" are who have the money to go to a private hospital are "self-selecting out". I would expect every single rational rich person to NOT go to a public hospital, particularly for outpatient services.



If implemented badly and there is no change to the present system which is lacking money, yes it could do more harm. I just expect as the economy expands that more money will go into healthcare so don't think it will do more harm. But we'll just have to look at the policy in 10-20 years time to see what happens.

I sure hope we have 10-20 years to evaluate this policy naka, however, I feel that it will be too little too late na. Why can't we just learn from others who has been in this spot before. Have we learn anything from the medicaid, social security, or even the GM situation now? Why do we have to risk our well-being while we can learn from others. Or at least spent more time plan it out carefully and implement it in a more sustainable way, why so rush?

[2 Cents]

Well, even thsoe wll to do folks have complained that the Doctors at Bamrungraj Hospital have become mroe and more money hungers ... they just simply OVERPrescribed the medicine so they can sell more drugs.

They evben prologn the medicaltreatments so as to Extract mroe moen yto the last Satang ....

Sooner or later, the doctors woudl face the patients with AK47 or M16 pointign on theri head -> Treat us FAST -> Or ELSE! :eek: ;)

Yeb, market discrimination is the starting of price inflation.

Also, lets have fun with some statistics. If you were to use one indicator to evaluate this policy, what would you use? How about mortolity rate? What would you expected Thailand mortality rate will be after this policy......since everybody have access to healthcare now, mortality rate should be lower, right? You are wrong. According to the National Statistical Office from 2542 to 2544 mortality rate of Thailand increase by 6.1 (from 589 deaths/ 1000,000 population to 595.1 deaths/100,000 population). From 2545-2547 this rate jump by 34.4 from 595.1 deaths/100,000 to 629.5 deaths/100,000 population). Of course this is just a crude number, it didn't control for aging of population, other demographic factors, and of course it didn't control for those who die in the southern part (because of who?). Just a fun stat na :D .

[dingo]

BTW, for the Public Debt Issues, you have to take a look at the Public Debt Administration Bureau, Ministry of Finance.

Well, I do have my friend who are woking on that Public Debts Admin Bureau thouhg.

The lestest news igot isthat the government has asked MOF to raised the debt ceiling by 1.2 Trillion Baht .... :eek:

public debt can be a good thing.....

i have spent a bit of time over the last year, looking at issues in
the corporate debt market in thailand. corporations issue debt
primarily in order to lower costs of capital, increase returns to equity
holders, blah, blah. but ok, here in thailand, there isn't much of
a corporate debt market to look at. alarge part of that is falls
under the chicken-and-egg scenario. for pricing corporate debt,
it is good to have a benchmark. a benchmark in this case is the
price of something without (the perceived) possibility of defaulting,
against something with the possibility of defaulting - i.e., corporate
debt. typically, the best no-default benchmark is, government
debt issued in the domestic currency - aka baht.

for many years, the thai government was in surplus, and hence no
debt issued, no benchmark, no real corporte debt market to speak
of, higher costs of capital for companies, less need for good
corporate governance, less competitive companies (internationally),
etc.

there are some interesting reports (IMF, WDB) regarding this. Even
one recently that goes into the impact of the excess volatility of the
government bond index (aka the benchmark) and the costs incurred.
if interested, let me know and i will find the links or pdfs.

[Scuba22]

2 cents - thanks for the kind words, I'm glad you enjoyed the debate!

Dingo - yes of course debt is not in and of itself "bad", like any other tool it can be used well or cause a lot of problems.

We seem to be mixing up questions of consumer debt, corporate debt, and public debt. My original questions were about consumer/household debt, which has more than doubled since Thaksin started doling out government bank funds to the countryside. Credit is of course critical for economic development, especially for the poor who have limited access to it, but the issues are far too complex to solve simply by throwing money around; indeed haphazard cash transfers can ultimately do far more harm than good. There is a tremendous amount of excellent thinking and a wealth of experience in credit services for the poor, including de Soto's work and microcredit experience like Grameens, but as in the 30 B health scheme, TRT seems to be far more interested in making noise and winning votes rather than trying to understand this experience and properly using it in the Thai context. And, much like Bush crying "you're a terrorist" if you don't like his policies, Thaksin cries "you don't care about the poor" if you don't support his policies.

I don't know much about the public debt situation in Thailand, except to know that emerging markets sovereign issues including Thailands have been trading on a very thin spread vs. US treasuries. This implies a level of riskiness far lower than reality in my opinion, but I've also felt the S&P was totally overpriced for the past 2 years and it keeps going up. I still think there's a big crash coming on the back of a housing slump in the US, but I don't see a lot of investors worrying about all this.

On the corporate debt issue in Thailand the problem is the same as in the equities market - size and liquidity. Debt is even less liquid than stocks, so price transparency is hard to come by. Specific brokers are essentially market makers with little effective supervision, so they make a killing routinely at the expense of their customers. But since none of this is public knowledge, they consistently get away with it. Getting yourself into corporate debt brokerage in thailand is a license to print money, IMO.

At the end of the day, Thailand is simply too small a market for any major investors to take seriously. The entire SET together has a lower market cap than General Electric. The average free float is around 20%, 80% of trades are retail transactions - go to any trading floor and you see these old Chinese grandmothers who you'd think would be playing mah jongg somewhere (sorry for the racial stereotype) gossiping and making trades based on rumors. If you have a brokerage account, your broker routinely calls you with more rumors - ask about any fundamentals and they're completely flumoxxed. In fact, go into the accounts of any listed company and even the senior executives can't walk you through their numbers. Start digging into the numbers and inaccuracies emerge like fungus. Even SET ratios - ROA, P/E, etc. are impossible to re-create based on the data given. It's as if people are throwing darts to come up witht these numbers. The capital markets here ain't called a casino for nothing.

If you ask me, the SET should just shut down, along with the KLSE and the Jakarta exchange, and everyone should go list in Singapore.

Scuba22

[dingo]

i agree with you entirely that all the financial markets in thailand
are incredibly thin. it is always amusing to translate the prices
into US$ and understand the bulk of the market trades at $0.10/share.
whoopee. throw volume into the mix and it seems you have the option
to invest in a stock or go to lunch.

in view of recent events, i wonder if the existence of the SET is to
only provide a tax-free cash-out vehicle. the lack of capital gains
on the market was instituted (and justified) as a method to increase
participation and hence liquidity. i had always assumed (stupid me) it
was for stocks bought and sold in the market - not just selling
already owned shares through a broker.

my points about the government debt (domestic currency) was basically
that it is necessary to develop a local corporate debt market, which
not only can lower a firms cost of capital and encourages better
corporate governance (and CEOs who know what fundamentals are,
projections, etc.), it also helps allievate the financial markets from
shocks. right now, and prior to the 1997 crisis, thai firms rely to
a great deal on bank financing. however, bank financing tends to be
pro-cyclical (things are good - money is thrown around - things are
bad, no money to lend) which exacerbates upsides and downsides.

i cant recall specific details about the consumer debt market, but the
data seemed a bit too granular to draw any conclusions. debt was
most as likely under-utilizied by consumers in prior years - so a big
year-year increase might not necessarily mean much. the anecdotal
evidence does seem to point to an over-reliance though. just hate
to draw conclusions on that, especially when i haven't been paying
a whole lot of attention.

[Wisarut]

The very reason for the existing of SET sicne April 30, 1975 is to get the STOCKs out of the hands of "Families" of billionairs . However, speculations has turned SET into "Legal" gabling den though ... :(



Thaksin badly want to Balloon the size of SET through the privatization of state enterprises as well as teh sell of Beer Chang by his friend (Sia Charoen). However, the sell of stocks at cheap price to those cronies while leavign very few stocvks for public has OUTRAGED many small size buyers who want to grab the IPO stocks of profitable state enterprises ... ONLY to see their oppotunities deprived or robbed at the broad daylight .....

[dingo]

Thaksin badly want to Balloon the size of SET through the privatization of state enterprises as well as teh sell of Beer Chang by his friend (Sia Charoen). However, the sell of stocks at cheap price to those cronies while leavign very few stocvks for public has OUTRAGED many small size buyers who want to grab the IPO stocks of profitable state enterprises ... ONLY to see their oppotunities deprived or robbed at the broad daylight .....

actually there is nothing wrong with upping the market capitalization
of the SET. it is actually good for the economy. scuba's suggestion
to list everything in singapore is a practical idea - but just won't fly.

the issues with the privatization are 1) there is no regulation in place, and
2) how the shares are allocated. regulation of monopolistic industries
such as electricity as it is done for example in the US (for which i am
familar). sets prices, etc. right now, it seems like they are IPO'ing
another monopoly with a license to print money, much the same way
SHIN/AIS "was successful". for 2) the way the share allocation is
done appears downright sleazy. if anything, the capitalization
should set aside shares for 'incentive programs' such as stock options,
vesting grants. one portion offered for public issuance through some type
of auction process to eliminate these issuers like the sister of the wife
of one of the managers in the power plant division getting some huge
allocation. another portion should be retained by the government
for the time being.

btw - not all IPOs are profitable.

--dingo

[Scuba22]

I was being a bit tongue in cheek about listing everything in Singapore. A single large market with lots of liquidity is helpful, but of course handing over all public trading to a different country is politically untenable - just look at the uproar over Thai Beverage (Beer Chang) listing in Singapore, or the problems with the CLOB (Malaysian shares trading in Singapore) during the 1997 crisis.

But pure market cap is not the right measure - the real issue is free float. You can list a 100 billion B company and the SET market cap will rise bu 100 billion B, but if 80% of the company is still closely held, the effective trading volume is maxed at 20 billion B. This is one of the main problems with the SET - average free float is very small, so the impact of public ownership on corporate practice is nil. Of course, passive shareholders in western countries lead to similar effects, but there are other issues at play in small stockmarkets like the SET.

Dingo raises an excellent question regarding the "purpose" of the stock market. I think this is related to the reasons so many family conglomerates started banks in the 70's and 80's. Retail deposits are a cheap source of capital since you only pay a couple % interest, so lots of conglomerates used their banks to raise consumer deposits to funnel low-cost capital into risky ventures in other parts of the conglomerates. If you force your employees into your own bank, you now have a captive capital source. Of course, this leads to a warped risk/reward imblance and massive misallocation of funds.

As banking regulators started getting tough, I think selective listings and owning brokerage firms became a new scam for these family conglomerates. First, you take one portion of our private group and list it with a small float. That portion has all sorts of related-party transactions with other privately held parts of the conglomerate that are deliberately kept opaque, allowing you to manipulate earnings of the public entity as much as you like. You use these manipulated earnings fluctuations coupled with selective press releases to generate market sentiment amplified through your brokerage. That allows effective share price manipulation that you can ride on through your trades. We've looked at several companies with massive volatility and wild swings that we couldn't explain through any rationality, but starting with a presumption of price manipulations suddenly made a lot of sense.

Of course, all that is post-IPO. The IPO itself is a whole other set of funny business. Sure, not all IPOs are profitable, but the right combination of hype and early share allocations in a happy market can get you a tidy little windfall with little underlying value. Public equity is still pretty much seen as "free money" here - the idea of "cost of equity" doesn't mean much to any Thai finance professional that I've met. Witness how often cash raised through a public offering is used to retire bank debt - unless that debt was raised far back in a period of very high interest rates, the cost of equity should be higher than the cost of debt according to basic finance theory.

I totally agree with the value of broad and deep corporate debt markets. But that's only useful if the debt market offers useful signals on risk through the bond yields, and this doesn't happen in an illiqiuid market where a small number of brokers effective set prices rather than the market, which is the case here.

The state of the financial markets, much like the state of political institutions, leads me to believe that Thailand has only the superficial appearance of modernity. As soon as you scratch the surface and start getting into details, the situation starts looking rather feudal. I don't think conventional macro indicators like market capitalization are particularly useful in understanding the financial markets here, just as simply having elections doesn't automatically create a vibrant democracy. In both cases, I think there are foundational behavioral and psychological elements that are missing because they never developed - basically an understanding of capitalism and beyond simply making as much money as you can however you can.

I also must agree on the consumer debt situation - there simply isn't enough information to say much about it. Yes, savings rates are far higher in Asia than in the west, so debt capacity should theoretically be a lot higher than it has been, but I do wonder if that's the proper metric. I'm not sure if consumer debt capacity is comparable across countries with vastly different income levels, education levels and bankruptcy laws. Of course, comments like that open you up to the kind of charges Thaksin makes - "how dare you suggest that poor people are too stupid to handle debt" - but I think it's worth examining rationally.

Getting back to the topic of this thread, I think much of this conversation at least points out that the issues are far too complex to solve by simply throwing a lot of money around, which is the gist of TRT's grassroots policies as I see them. It's a huge gamble with peoples' lives and state money.

Cheers,

Scuba22

[dingo]

I was aware in the past of the float issue, but did neglect it as i
forgot. I am not sure it would be as much of an issue if the
corporate governance was not.

you have an interesting historical perspective on the development
factors of the markets here. i don't have any experience with
brokerages here. but i do have to go digging around for financial
data at times - and the hoops to get something, anything is
amazing. even when you go to the source - i.e., the SET or
Thai BDC/BMA - the data they provided gives me no indication
that anybody actually uses it - it seems as it is just a process of
going through the motions.

i am interested in the bond market - if you have sources that you
can point me to, i would be interested. i have seem some of these
anomalies you talked about - corporates at yields 100s of basis
points below the government yield curve - which are true head
scratchers. this would support your comments regarding the
inefficiences in the market (or the pure lack of understanding of
the participants).

sorry if i took this too far off-topic, but thanks for the insight.

--dingo

[Scuba22]

Dingo - yeah, I've had the same experience with official data. I was invited to guest lecture on shareholder analysis for the SET's Investor Relations course a couple of times and I went into these questions of shareholder data and free float levels. My main conclusions were that the data sucks (funnily enough, I used AIS, Shin, and Ample Rich as examples of understanding your shareholders) and without larger companies with bigger free-floats, investor relations is a pointless exercise.

Most of the audience pretty much slept through the talk - they were mostly junior finance or marketing people put into hastily created investor relations programs and were mostly interested in things like "what should our IR website look like" and "what kind of brochures should we send to investors" - very much going through the motions.

On the bond market, I don't really have any more hard data than you'd get from the TBDC; I'm not sure if more hard data actually exists anywhere. Most of what I know I've heard from a bond trader at a local brokerage who really shouldn't have been telling me the things I was told, but clearly they weren't smart enough to realize that what they're doing in Thailand would be colossally illegal in the US.

It would be better to get together and chat. Please drop me a line at scubadbabu@yahoo.com and let's take this off the board!

Cheers

Scuba22

[2 Cents]

Scuba22,

May I ask why do you decide to take this dicussion off the board.

The discussion between you and Dingo is very knowledgible for me. I have been reading and educating myself (I didn't post anything because I have nothing to say except to learn from your guys), so, if what you plan to discuss further with Dingo it not too personal or confidential, do you mind keeping in on this board? Well, I still want to continue learning, but I would understand if you want to keep it off the board.

I know it's a bit off the topic now, but since you are the one who start this thread, I think you can amend it. After all, life is all about changing, right? ;)

Dingo,

Thanks for the info on the benefit of public debt on corporate financing. BTW, I like your name.:D

[Scuba22]

Dear 2 cents -

thanks for asking, I'm happy to explain. Any further details I can discuss would be mostly rumors coming from people I know. The credibility of those rumors depend on the background of the people saying those things, but I can't really identify them in a public forum where I myself stay anonymous and I also don't know who I'm talking to.

I'd much rather meet in person and discuss these issues if anyone is interested in getting to this kind of depth.

I understand you're not in Thailand, but I assume you visit occasionally and I am based here, so if you're really interested in bond trading, please e-mail me when you're planning on coming back and perhaps we can get together with dingo as well and have a nice dinner?

Cheers,

Scuba22

[dingo]

hi all,

this is all fine - we can get together sometime and love
to hear the dirt. but i think scuba is the one here in the
thick of it. my involvement is fairly academic.

for me, i only chimed in when i thought it was worthwhile
to point something out.

i am all for just letting the discussion go, even if it a bit
off the original topic. starting a new thread though might
attract those interested in where we start going though.

regards,

--dingo

ps: scuba - did pop you a message - not sure if you got it.

[Scuba22]

Dingo - I saw your message yesterday but didn't have time to reply, will do so today.

I was more in the thick of the local financial world a few years ago. My interest is in building businesses and a few years ago I joined with a couple of others to start up a local private equity fund. It quickly dawned on me that my approach to making investment decisions, which is rather academic (heavily based on analytics and fundamentals), had little practical relevance to the local markets, so I left my partners a couple of years ago and since then have been building businesses in other industries.

I still have close friends I respect working in financial markets here, both Thais and farang, but just about all of them work for large multinationals with foriegn clients who invest in Thailand; plus a few working in the finance departments of Thai companies. I've been singularly unimpressed with the quality of local finance-related companies (brokerages, investment-banks), and in fact some of my current staff are bright young Thais who used to work in local securities companies and found it completely stifling.

I'd love to hear different perspectives on these matters; I just don't have that much more to say publicly without veering into unsubstantiated-rumors where I can't attribute sources.

Cheers,

Scuba22

[2 Cents]

Scuba, Dingo,

I completely understand your point. That's what I thought might be the reason. I just like to read (and learn from) others opinion and experience.
It would be nice to get together sometime, lets see. In the mean time, I will be around here.
:D

[Wisarut]

The COnspiracy theories from TU Tha Prachan

1) Aiming th Overthrow His majesty so they can install Frenh-Model Republican Regime

REF: http://www.thaimisc.com/freewebboard/php/vreply.php?user=tuthaprajan&topic=1196

2) How Ai Maew and Cronies Sell Out Thailand to Foreigners - after usign Populist Policy as a bait to trap all Thai grassroot into the Heavy Debts
and Discredit His Majesty's Policy of Sufficent Economic
Ref: http://www.thaimisc.com/freewebboard/php/vreply.php?user=tuthaprajan&topic=1278

3) Why the corrupt intelluctual elites aroudn Thaksin OPPOSE Khun Sondhi's Movemnt for Royal Power - the Background of Morally BANKRUPTED Bhokin
http://www.thaimisc.com/freewebboard/php/vreply.php?user=tuthaprajan&topic=1338

[Wisarut]

Now, the iltellecutual have CONDEMNED Populist Policy that it would create the full scale Class Struggle War .... the Urban vs. The rural ...

Look at this and you'll see:

http://www.komchadluek.net/news/2006/03-13/p1--17316.html

[otherstuff1957]

I'm not basing my comments here on any research or on any objective data, these are just my personal opinions.

I don't think that rural Thai's, in particular, view debt the some way that most Westerners do. In the old village setting, loans were usually made by wealthy locals or senior family members. Consequently, debt was not something that always has to be paid in kind. Rather, people who owed money would be obligated to do some sort of future favor to the lending person. These favors might not be called due for years, or even generations. I see this kind of behavior among my wife and her friends. They are always borrowing and loaning each other money, OR doing each other favors. These loans and favors seem to be seen as ways of ensuring a comfortable future with lot's of people obligated to you and ready to help you.

This sort of thing works well at the village level, but gets totally messed up when banks and governments get involved! Many poorer people will borrow money for the 'first time' through one of the TRT village fund schemes. Even if they understand that the money has to be repaid and that it isn't a personal gift from Thaksin :D , they usually don't have the background in budget planning or the surplus income that they would need to repay the loan.

[Scuba22]

otherstuff - your opinions and observations are actually borne out by a fair amount of research in microlending. Around the world, various groups like Grameen have come up with innovative ways to help poor people learn how to properly use credit. Unfortunately, Thaksin's programs display no such innovation, and don't bother much to learn from others.

They hosted a microcredit conference a few months ago where Mohamed Yunus, the founder of Grameen, was a keynote speaker (as was Thaksin). The conference appeared to be a marketing event for TRT programs rather than a serious effort to learn from global experience. There were booths set up in the lobby displaying the tremendous successes of all the rural programs, but as soon as you started asking detailed questions about the claims made, the story started falling apart.

For example, one scheme tried to "solve the problems" of the rural poor. They noted that 80% (or so) of people who signed up for the program had their problems solved within 24 hours. OK, I asked, what kind of "problems" were these and how did you "solve" them? Most were people with outstanding loans, i was told, who thought that the government would pay their loans for them. When told that this wasn't the case, they went back to their creditors to work something out. Voila - problem solved! Did they follow up? No. "Problem solved" means that the person went away. Not bad, eh?

Of course, if you start criticising these programs, TRT hits back accusing you of belittling poor people and being against development, as if being against air-dropping money into the Congo proves you're a racist.

I am also amazed at how many seemingly bright foreigners are sucked into the TRT's song-and-dance. I continually hear about how Thaksin is developing the countryside and bringing poor people into the economy - which all sounds great and noble. Yet none of the people who think this is all great have any clue about what the programs actually are, how they're being implemented, or how they relate to 50 years of global experience in rural development.

It's telling to me that this thread specifically asking for direct evidence of the impact of TRT's grassroots policies has had no defenders of these programs.

Cheers,

Scuba22

[Tettyan]

I'd especially appreciate hearing comments from those who think otherwise...



TDRI ECONOMISTS:
Thaksinomics 'not a driver of growth

March 30, 2006

Members of the country's foremost development research think-tank said yesterday Thaksin Shinawatra's economic policy had not contributed to the country's bullish economic performance over the past five years, as the prime minister has frequently claimed.

Economists at the Thailand Development Research Institute (TDRI) said the Thaksin government had instead left more questions hanging over economic performance, transparency of policy management, populist policies and universal healthcare schemes.

The four economists presented their assessment of "Thaksinomics" during a press conference at the Thai Journalists' Association.

"We are accused by the government of being its regular critics. However, we have left bias behind and conducted our analysis based on facts and numbers," said Ammar Siamwalla, a respected TDRI economist.

He insisted the assessment was the personal opinion of the economists rather than an official TDRI statement.

The economists came up with four conclusions.

First, Thaksin should not take all of the credit for the economic recovery from the 1997 crisis.

He said this government had benefited from the economic stability laid down by the previous government of Chuan Leekpai, which had striven for fiscal austerity, said Somchai Jitsuchon, TDRI's research director for macroeconomic development.

Thaksin has often said his government was the main factor in driving the country out of the clutches of the International Monetary Fund.

However, the economists said the process of recovery had already been "auto-piloted" from the previous government.

Besides this, the process for economic recovery bore fruit under the Thaksin government, as it took five and a half years for the country to recover.

Among Asian countries affected by the financial crisis, Thailand suffered most, with economic growth of minus 6.1 per cent from 1997-98.

The deeper economic problems led to a later recovery compared with that for Malaysia, the Philippines, South Korea and Singapore, whose recovery took only two and a half years, said Somchai.

Second, there is no evidence to show that the Thai economy under Thaksin has performed better than that of neighbouring countries.

Thailand's average economic growth was 5 per cent from 2001-05, better by 0.5 to 1 per cent than other Asean countries.

Somchai noted, however, that growth was higher only during the first three years of the Thaksin government, with the last two years being the same as for other countries.

Somchai said the government may blame the lower growth rate on the tsunami for having an adverse affect on the tourism industry, but any real impact was small, shaving only 0.35 per cent off of last year's GDP.

Moreover, the dual-track policy, a key part of Thaksinomics, has not done much to promote domestic consumption. A rise in domestic consumption was the result of a low-interest-rate environment.

Furthermore, the public did not fully use measures under the dual-track policy to promote their capabilities, which has led to debt-accumulation problems.

Nonetheless, returns on stock-market investment have increased remarkably under the Thaksin government.

But returns in the past two years have diminished.

Overall, returns from stock-market investment under Thaksin have yet to recoup the accumulated losses that investors incurred from the financial crisis.

"So, we cannot claim that Thaksin's economic management was obviously better than that for other countries. Export demand largely contributed to growth," he said.

The economists also noted that Thaksin's populist policies had not boosted capacity among borrowers.

The Thaksin government allocated Bt80 billion to a revolving fund aimed at increasing income, reducing expenditure and creating opportunity for villagers.

Among the various populist programmes, spending on the Village Fund scheme was the highest, with the fastest disbursement, said Somchai.

Somchai also charged that government debt restructuring for the poor missed its target.

He said the government register of the poor was not accurate and pointed out that 84.9 per cent those who registered as poor were in fact not poor.

He said 82 per cent of those who did not show up for registration were poor.

While the scheme was created with good intentions for helping the poor, it passed over the poor, he said.

Somkiat Tangkitvanich, a TDRI research director, also said the Thaksin government had implemented a number of policies that also, by coincidence, benefited Shin Corp subsidiaries.

For instance, the Board of Investment granted an eight-year tax exemption for Shin Satellite's iPSTAR project. The corporate tax exemption in this case totalled Bt16 billion.

Moreover, the Thai government transferred the risk from the Burmese government to Thai taxpayers by guaranteeing the Exim Bank's loan extension for the Burmese government for telecom infrastructure development, of which a certain amount was for purchasing the services from one Thai company.

Wichit Chaitrong

The Nation

http://www.nationmultimedia.com/2006/03/30/business/business_30000503.php

[otherstuff1957]

I suppose I'm just stating the obvious here, but whose company do you think is being referred to here:

'Moreover, the Thai government transferred the risk from the Burmese government to Thai taxpayers by guaranteeing the Exim Bank's loan extension for the Burmese government for telecom infrastructure development, of which a certain amount was for purchasing the services from one Thai company.'

[dingo]

I suppose I'm just stating the obvious here, but whose company do you think is being referred to here:

'Moreover, the Thai government transferred the risk from the Burmese government to Thai taxpayers by guaranteeing the Exim Bank's loan extension for the Burmese government for telecom infrastructure development, of which a certain amount was for purchasing the services from one Thai company.'

Temaseks?

BTW - anybody remember how much this deal was for?

--dingo

[Scuba22]

Tettyan -

Thanks for this, it was good reading. A couple of questions - any idea where we might find the source material for this (e.g. data sets, academic publications)? I've looked through the TDRI site and can't find anything specific - am I missing something?

Second, what kind of reputation does the TDRI have among the general population? Gads, i just realized how useless that question sounds just as i'm writing it... Is it well-known or well-regarded? My wonky policy and development oriented friends have a lot of respect for Ammar and TDRI in general, but they're hardly representative of anyone.

Scuba22

PS - I loved the including of "by coincidence" in "the Thaksin government had implemented a number of policies that also, by coincidence, benefited Shin Corp subsidiaries." Heaven forbid that it might have been purposeful!

Do you know of any compendium of conflict-ridden policies? It would also be great to have a list of Thaksin's promises (e.g. no traffic in 6 months, no poverty in 5 years)

[Tettyan]

Here's the Bangkok Post's take on the same story from The Nation that I posted earlier today. You don't even need to read the article in full, just take a look at the title!



Modest gains from Thaksin economics
Mixed five-year results in study

March 30, 2006

POST REPORTERS

Economic policy under the Thaksin Shinawatra government failed to result in growth outpacing the region, according to the Thailand Development Research Institute.

A new paper drafted by Ammar Siamwalla, a TDRI honorary economist, and researchers Somchai Jitsuchon and Somkiat Tangkitvanich, tracking economic performance since 2001, showed only modest gains relative to the region.

The Thaksin government has generally received high marks from businesses and investors for its pro-business policies.

Mr Somchai noted yesterday that average economic growth from 2001 to 2005 was 5%, or only 0.5-1% higher than other Southeast Asian countries.

Post-crisis growth in 2004 and 2005 averaged 5.3%, still below the 5.7% average growth posted from 1980 to 1996.

Economic growth from 2001 to 2003 accelerated due to fiscal stimulus policies as well as benefits gained from structural reforms following the 1997 economic crisis.

Mr Somchai said, from 2001 to 2003, the ''dual-track economy'' model, emphasising domestic grass-roots development and external trade, helped boost local consumption and overall growth.

External factors in 2004 and 2005 helped curb growth, although bird flu and the tsunami only resulted in a 0.35-percentage-point decline in gross domestic product.

The SET, however, has outperformed markets of other countries, with a 17% gain in the main index from 2000 to 2005, compared with a 16.2% increase for South Korea, 10.7% for Indonesia, 3.8% for Malaysia and 3.2% for Singapore.

Mr Somkiat noted that the SET suffered a 30.5% decline from 1997 to 2000, the largest decline in the five Asian countries.

''Macroeconomic policy under the Thaksin government was average, and was not any more remarkable than that of neighbouring countries,'' he said.

Growth in the first years of the Thaksin government was driven by fiscal policy, with budget constraints affecting spending.

Mr Ammar said the 30-baht universal healthcare programme, while a sound policy, had been hastily implemented and suffered from insufficient funding.

Economists agree that a prolonged political stalemate will affect economic growth, as policymaking slows and investor and consumer confidence declines.

Most projections had forecast growth of 5-6% for 2006, a slight pickup from the 4.5% recorded last year.

But months of political paralysis and protesting has caused investor sentiment to turn bearish, with some forecasting a growth decline to just 3% this year.

Naris Chaiyasoot, the director-general of the Fiscal Policy Office, said investors were watching closely to see whether the political situation would stabilise following this Sunday's general elections.

''If the conflicts are not resolved, many forecasters will surely be revising their projections,'' he said.

The Finance Ministry now forecasts 2006 growth of 4.5% to 5.5%. A business survey conducted by the University of the Thai Chamber of Commerce last week showed many expecting growth would decline to 3-3.5% if the conflicts continued.

While exports have continued to grow steadily, domestic demand and investment has weakened through caution.

Rising interest rates have also begun to affect sales. Dr Naris said interest rates were expected to rise, particularly following yesterday's hike by the US Federal Reserve.

Analysts expect the central bank's Monetary Policy Committee to hike 14-day repurchase rates by a quarter-point to 4.75% at its next meeting on April 10.

[Scuba22]

These two articles are brilliant examples of spin. Neither headline is incorrect. Thaksin's policies have provided "modest gains" (BKPost), in that they have flooded cheap credit into the countryside and helped spur consumption. You can't lay this all on simply a low interest environment, though that definitely helps. You also need to make the money available, and that's what all those government loan policies did.

But "modest gains" does not constitute a "driver of growth", so the Nation headline is also correct. Simply flooding cheap money into rural areas has never shown to do much long-term good, there's no reason to believe it will help here, and there are already signs of problems. And as both articles point out, Thailand's economy is only slightly better than others in the region

One interesting thing about the articles is that while the Nation article is completely about TRT policies and their impact, the BK Post veers into the impact of the protests. That's a fine topic in itself, but why stick it into an article about Thaksinomics (gads what a terrible term, as if Keynesian demand stimulus is something new) - unless you're making the point that ill-advised policies tend to create their own backlash.

Cheers,

Scuba22

[GWR]

Well, it's obvious that Thaksin only wants change on his terms. In effect, he sells people the idea that they are better off, but maintains the right to pull the plug at will on anything that might affect his clan in the pocket and power stakes. TRT is obviously a complete waste of time when it comes to meaningful change. That said, the Democrats and Chat Thai basically have the same problem. These mainstream parties are all burdened with the vote of the merchant class. Whereas I'm not against the idea of OTOP at all, it is a very poor alternative to giving farmers the profit they deserve from their PRIMARY occupation. It seems that none of Thailand's parties is capable of resisting the demands of the merchant class, who will stop at nothing to keep their profit margins. It seems they have no scruples about giving people a pittance for their produce. Their answer to the poor is to go out and gamble their savings on producing things that should be always be regarded as only a sideline.

[dingo]

It seems they have no scruples about giving people a pittance for their produce. Their answer to the poor is to go out and gamble their savings on producing things that should be always be regarded as only a sideline.

Interesting comment. I hadn't been a fan of the OTOP thing because I was always under the impression that for the most part they were just providing a market label (and apparently budget) for something that always existed.

As for the poor - who primarily appear to be farmers - there doesn't seem to be anyone addressing the real issues - productivity. I never looked in detail, but I believe that improvements in the irrigation infrastructure helped significantly allowing farmers to do more than one crop a year - but even that has problems with droughts, etc. Until the yield of the farms improve significantly, crops that return more than rice, or some type of consolidation occurs where higher productive techniques can come into play - the family farm with the guy riding behind his little two-wheel tractor is not going to be any driving force for rising incomes.

regards,

--dingo

ps: The Thaksinomics dig also deserves kudos. quite appropriate.

[GWR]

- the family farm with the guy riding behind his little two-wheel tractor is not going to be any driving force for rising incomes.

regards,

--dingo

Nor is getting hundreds of villages to make the same undrinkable wine.;) I suppose they could always convert it into green diesel.

And I'm beginning to think that the notion of 'driving forces' in the majority world is just a capitalist myth anyway. The G7 agonize over it, and it goes no further. Oh how they suffer for their art!

A bit of dignity in one's occupation is worth something too. And I've seen precious little in the way of either dignity or rising incomes (in real terms) during this lifetime.

But seriously, does it really make any sense either to convert every Isaan village into an agricultural prairie for the profit of government ministers and their chronies. Just another village lost to create a new generation of cultureless and alienated Bangkok tenement dwellers.

From what I've seen of large-scale agriculture here, it has no concept of farm husbandry. Short-term gouging is more its line. Is it really so difficult to give farmers the skills they need to improve themselves, without turning it into yet another corrupt policy? Since when has agro-industry been able to feed the world on its own?

[Wisarut]

The lat4st news from Minitry of Finance:

The Public Debts of February 2006 is reduced by 1.9 billion Baht.
The current level of Public debt is 3.241466 TRILLION Baht -> 41.68% of GDP

[dingo]

interesting - but is reducing public debt by 0.059% newsworthy?

actually i find the 3.2 trillion number to be more interesting. definately
puts the cost of the 1.7 trillion for infrastructure projects in perspective
(not necessarily a good one).

--dingo

[Scuba22]

Public debt of 42% of GDP is not particularly high by global standards. What's more alarming is that in 2005, the CIA lists Thailand's public debt at 35% of GDP - a 7-point rise in a year seems pretty severe, and further makes a tiny one-month decline seem meaningless. Any ideas about how the debt increased so much in a short time?

Scuba22

[dingo]

there was some talk about a year or so ago (i think around the regularily schedule elections) of that a lot of government spending was not even appearing in the national debt figures. reminiscent of a national government version of Enron. however, like most issues, it just seemed to get superseded by the next one, and lost in the background noise.

was the CIA country analysis for Thailand in 2005 using the Thai data for 2005? i wouldn't be suprised to see some lags - and hence the 35% number is actually 2004 data. still, a big piece of the costs of what Thaksin/TRT never seem to mention when they are out thumping their chests about their policies.

i have never seen any real Thai budget breakdowns in English. it might make for fun reading if anybody has a link, please post.

--dingo

[Wisarut]

Better contact with Budget Bureau (http://www.bb.go.th), PM Office for this Matter

[Scuba22]

The CIA factbook just said (2005), so with lag time, you're probably right that they're 2004 figures. Then again the "current" figure also has lag time; it takes at least a quarter to get accounts done, and then revisions keep on coming.

You're right about the Enron quality of government spending. Much of the rural giveaways are actually loans made through government-controlled banks, and as such will not show up on any government budget (in fact, they'll show up as assets on the bank's books).

In the Enron case, assets were sold to "special purpose vehicle" shell companies using loans backed by guarantees from Enron, and then leased back to Enron. This removed the asset from Enron's books, replacing it with cash that could be booked as revenue, while the loan guarantee never showed up as a contingent liability. It was quite a crafty bit of financial magic - until it all fell apart.

You see exactly the same mechanics in the government schemes - government banks loan out tons of money, with an implicit government guarantee, but that never shows up anywhere. What happens if the loans default? Either the government has to bail out the banks through a budget outlay, or the banks fail, stranding their depositors. Pretty risky game these guys are playing.

I really wish people understood these machinations better, perhaps then they wouldn't get hoodwinked into them so easily. The lack of basic accounting principles even by so-called "educated" people is simply appalling. How, then, do we get this understanding to the rural masses?

Scuba22

[dingo]

The CIA factbook just said (2005), so with lag time, you're probably right that they're 2004 figures. Then again the "current" figure also has lag time; it takes at least a quarter to get accounts done, and then revisions keep on coming.

You're right about the Enron quality of government spending. Much of the rural giveaways are actually loans made through government-controlled banks, and as such will not show up on any government budget (in fact, they'll show up as assets on the bank's books).

In the Enron case, assets were sold to "special purpose vehicle" shell companies using loans backed by guarantees from Enron, and then leased back to Enron. This removed the asset from Enron's books, replacing it with cash that could be booked as revenue, while the loan guarantee never showed up as a contingent liability. It was quite a crafty bit of financial magic - until it all fell apart.

You see exactly the same mechanics in the government schemes - government banks loan out tons of money, with an implicit government guarantee, but that never shows up anywhere. What happens if the loans default? Either the government has to bail out the banks through a budget outlay, or the banks fail, stranding their depositors. Pretty risky game these guys are playing.

I really wish people understood these machinations better, perhaps then they wouldn't get hoodwinked into them so easily. The lack of basic accounting principles even by so-called "educated" people is simply appalling. How, then, do we get this understanding to the rural masses?

Scuba22

ah yes - that was it - arm twisting the government-controlled banks to do
the dirty work.

the problem with even getting people to understand what the issues are is
that even if they do, they don't really give two hoots. the vast majority
of rural folk have never, ever, filed a tax return in their life. so if you don't
go through that process - do you really care that the taxpayers foot the
bill for lending money to yourself or your neighbor?

your explanation on Enron had a typo - it was the "liabilities" that they
wanted not to have on the balance sheet. assets are a good thing.

on the web site - it is all thai. since my reading ability of Thai is about
that of a second or third grader, i best i wait until 'chat naa' to figure
it out.

--dingo

[Scuba22]

I totally understand the sentiment from the rural point of view. This was pretty much the way my student loans worked - they were guaranteed by the government which kept my interest rates low, and I took tons and tons of them to finance a couple of very expensive degrees. It was certainly tempting to default on them - what did I care? For me, a combination of gratitude, responsibility, ability to pay based on the excellent salary I made as a result of those expensive degrees, and the desire to continue to participate in the credit system all led to me honoring my agreements, but then I was deeply aware of what I was getting into from the beginning.

For the rural population, there seems to be quite a few questions in these regards - do they understand their liability? did they invest in productive endeavors? do they feel responsible? Who knows. If I were in their shoes, i wouldn't feel particularly inclined to pay back my loans, especially now that my hero has been hounded from office despite winning an election.

On the Enron case, it actually wasn't a typo. you're right of course about getting rid of liabilities being a good thing, but that's not how the scam worked - it was about getting long-term assets off their books and replacing them with cash that shows up as revenue and props up your stock price.

Here's an example: suppose Enron has a power plant worth $1 million sitting on its books making a return of 5%. That's giving earnings of $50,000, and with a P/E of say 30, makes that asset worth $1.5 m. I own 10% of the company, so for me, that's $150,000.

OK, now I set up a shell company, Chewbacco. Chewbacco takes out a loan of $1 million, guaranteed by Enron, to buy the power plant. This removes the asset from Enron's books and puts it on Chewbacco's books, balanced with Chewbacco's loan (guaranteed by Enron). On Enron's books, the $1 m power plant asset is replaced with $1 million cash. The loan guarantee never shows up on the balance sheet (hence the "off balance sheet transaction") Even better, the "sale" is recorded as revenue, and since there's no cost associated with it, it flows directly to earnings - now my earnings are $1 million rather than $50,000. Keeping my P/E at 30 with some fast talking, the $1 million earning is worth $30 million in stock, and voila - my 10% holding goes from $150,000 to $3 million! All I need to do is to sell out before this house of cards falls down - and it must, since ultimately the loan has to be paid back, at which point Chewbacco goes bust, the liability falls to Enron, they have to pay back the $1 million, which gets taken out of sales and sends earnings back to what it was before. But by that time, I'm gone with my stock earnings! Cool, huh?

I personally think that this is the same kind of trickery that Thaksin has been playing with the entire Thai economy, with the aim of pumping up his own stock prices for the inevitable sellout, which just happened. There is barely any scrutiny of the fundamentals of the Thai stock market, the companies in it, or the Thai economy from what I've seen. The local analysts are useless, and the best international analysts don't cover the Thai market, it's just too small to bother with.

Investment in Thailand is pretty much speculative, hardly tied to fundamentals. Having looked at even well-respected Thai companies, the quality of the data is beyond aweful, it almost seem made up out of whole cloth to fit whatever the company has in the bank. National accounts are no better - the deeper you look the murkier and more made up they are. I understand that after WWII, the US invested over $1 billion to standardize economic data collection, due to which we get all those great indicators. Thailand has nothing of the sort. Take a look at the NESDB website and go to the methodology used to calculate GDP - they lay it out right there that in cases where the data doesn't fit the experience of the NESDB, they use "professional judgement" to modify it. Have you met any of the "professionals" at the NESDB? I've presented to the entire board on a couple of occasions, and given their comments and questions, I'd sooner rely on a monkey throwing feces at a dartboard before relying on their "judgement".

Sadly for the rural poor, even though they won't feel the pinch directly through taxation, it will ultimately get back to them through cutting services and benefits. Somehow I doubt they'll cut back on motorcades and junkets.

Cheers!

Scuba22

[Scuba22]

Article from the Nation: 30 May 2006

THAKSINOMICS
TDRI slams govt policies as unfair and no help

Economists insist few schemes are benefiting the poor

Economists from the Thailand Development Research Institute (TDRI) have criticised the Thaksin administration's public policies of the last three-years, suggesting increasing discrimination, minimal impact on the economy, and little in the way of follow-up measures.

Speaking yesterday at a seminar entitled "The Public Policies of the Thaksin Administration", Ammar Siamwalla, honorary advisor of TDRI, said the debt suspension and village funds over the last three years have had less impact on the economy compared to the first three years of the administration.

The village fund, he said, has not really benefited the poor in the provinces but has created political problems instead. The village funds also provide benefits on an across-the-board basis, which means that high-income earners also benefit from the fund.

There are also several problems concerning the Small and Medium Loan scheme including discrimination in granting loans, he said.

Somkiat Tangkitvanich, an economist from TDRI, said he was not surprised that some public policies are unfair as borrowing for the education fund, similar to the village fund, does not really benefit the poor. The fund provides loans to those who wish to study at university. However, there are few people from poor families that can further their education to university level. Thus, this becomes a discrimination by practice.

"Thai Rak Thai policies contain vote maximisation and wealth maximisation," Somkiat said.

He said "wealth maximisation" was brought about by giving benefits to only a few groups. For example, telecom and communications are two sectors that are capital for the Thai Rak Thai administration - and directly benefit from the government's policies.

In addition, privatisation is only a policy to change state-owned enterprises to listed firms, while the Thai Rak Thai only wants these stocks to have a large market capitalisation in order to get the benefits from them.

Tax privileges granted to foreign investors by the Board of Investment have been recently granted by consideration, rather than on a clearer zoning basis, he said.

The government has also established two special economic zones in Chiang Rai rather than just the one like in other provinces, because they will benefit those who are related to politicians, Somkiat said.

Ammar said the government had failed to follow up the Bt30 for universal health care scheme, particular on the sufficiency of funds - and on the quality of hospitals and services. He said the government ignored following the scheme, because it already had the votes. Although it still has money left, it will not put money into the scheme, he said, because it wants to keep the money for other "gimmicks".

He said the Thaksin administration now wanted to stimulate exports to boost GDP growth figures, as its domestic expenditure is not enough to drive the economy.

Anoma Srisukkasem

The Nation

[PAC]

One of the chief justifications for TRT's grass roots policies has long been the argument that Thailand needs to increase domestic demand. The logic goes that if domestic spending can be increased, Thailand will be able to reduce its reliance on exports. (memories of the Asian crisis are still fresh in many minds). While the desire to bolster internal demand is worthy, the results have been less than stellar, and the logic may not be valid in any case.

Thailand's growth continues to be driven by exports (with foreign demand accounting for around 70% of total economic growth). This is not a bad thing - the danger is that the Thaksin government's efforts to placate the rural electorate go too far.

The other issue is whether attempts to develop a stronger domestic market will ever succeed. The wealthy nations of Asia have all followed a path of achieving a robust domestic demand as a result of export driven economic progress.

With a never too independent central bank scheduled to review interest rates on June 6th, and inflation looming, the current political crisis is damaging enough for Thailand's economic future. The nation can only hope Thaksin's efforts to pander to the populist vote do not further impede it.

www.analyticaasia.com

[Scuba22]

PAC -

Thanks for the comments and the link. Domestic demand is of course an important factor for at least a couple of reasons. First, it increases the diversification of your markets and therefore reduces risk, similar to adding a new country to your list of customers. Second, it should also increase the velocity of money in the domestic economy, creating a multiplier effect with no increase in money supply and therefore growth with limited inflation.

I also think demand can get too high, as we're seeing in the US, with negative real savings rates and increasing national debt financing ongoing consumerism, plus all the societal issues that come with rampant materialism, but that's another issue.

Domestic demand can be a measure of a robust economy, which is great. But it can also be a measure of a massive loosening of money supply, which can look great on the surface, but can cause problems if that money isn't invested productively. This is the big risk that Thaksin is taking - assuming that if you shower the countryside with loans, they will be invested wisely. Will they? Have they been? Who knows? I've been looking for any kind of data to support any conclusion but I don't see much.

A sincere and honest effort to tackle rural poverty and development can involve debt, but also needs close monitoring, technical support like business development services, and creation of more efficient and deeper financial intermediation than simply handing out debt. Simply doling out cash is good politics, but bad development; which makes me think that Thaksin and the party don't care much about good development.

Still looking for hard evidence to the contrary...

Cheers,

Scuba22

[Wisarut]

Public OUTRAGE for the Poor quality Drugs to be used in public hospitals

http://www.manager.co.th/QOL/ViewNews.aspx?NewsID=9490000080934

[Tettyan]

It just goes to show you that no matter how much you profess to pursue pro-growth, "liberal" economic policies such as privatisation and deregulation - it makes little difference at all if you don't have the rule of law and protections against arbitrary authority.



NESDB SEMINAR
'Monopoly and cronyism must '

Govt think-tank urged to address these factors if another

July 1, 2006

Monopoly and cronyism must be tackled by the National Economic and Social Development Board if Thailand is to avoid another financial crisis, an economist has warned.

As the NESDB finalises its 10th economic development plan, negligence could induce another crisis intensifying in seriousness in line with the wave of globalised capitalism, said Bangkok Bank executive chairman Kosit Panpiemras.

He said economic fairness was not equivalent to income distribution and warned of the dangers of monopoly, cronyism, unfair trade practices and insider trading.

The four major side-effects of capitalism are economic instability, uneven income distribution, economic unfairness and environmental exploitation, Kosit said at the annual seminar hosted by the NESDB.

"Thais might be OK with these issues, but under capitalism these are serious crimes. The government therefore must determine what is capitalism and what are its adversaries," he said.

"There must be a regulatory philosophy to ensure economic fairness. If we are to move along with globalised capitalism and if society wants to avoid another crisis, it is extremely necessary to address the issues."

Economists gathered at the seminar to comment on the 10th plan, which incorporates His Majesty the King's sufficiency-economy principles aimed at ensuring happiness at all levels of society.

Kosit said a sufficiency economy must be used in the right way and constantly.

Paiboon Wattanasiritham, a prominent social activist, threw his support behind Kosit's warning. He said that though the philosophy of a sufficiency economy had been integrated in the plan, it could render little benefit if there was no mechanism to turn the philosophy into action.

"This guidance should be implemented at all levels, from policy-making to communities," he said. "Political leaders, senior officials, business leaders and community leaders should set a benchmark,"

A number of guidelines have been set to restructure the economy at the macro and micro levels. But Vice Commerce Minister Suvit Maesincee pointed out that people would be the key development energy and the NESDB must find out how to empower them, not just through education but through job opportunities and the democratic system.

"Macroeconomic and microeconomic restructuring is just the context. If we're to create a people-centric system, we should not draw a frame and then put people inside the frame. If people know how to innovate, these understandings would be incorporated into the company level and then the national level. That would mean sustained prosperity," he said.

To him, people-centricity is a factor in ensuring that Thailand, under the globalisation waves and sufficiency-economy principles, would create wealth and achieve sustainable development.

Narongchai Akraseranee, chairman of fund company MFC Plc, said a nation would survive if its people were assured of economic wealth.

The government could help when their income drops, but not through price-subsidising schemes. The government must also ensure that it creates the infrastructure that allows fair principles. Subjecting private companies to market forces would not help, because if the companies could not compete, that would lead to job losses.

"A competitive business environment, sufficient growth rate, not-