Gvt revenues : VAT continues to fall in december

No recovery in sight (read what I wrote in december).

VAT collection dropped 6,91 % in december, compared to december 2007 at 36,86 billions THB (in november, it was -6,56 % y-o-y).

vatq41

A negative % of change year on year… 2 months in a row (november and december) is unprecedented. Like many other data.

And now a view per quarter.

vatq42

Overall the situation is not catastrophic. Yet. We are back at the levels of end 2007…

But it’s bad reasoning… because inflation. With higher prices, the VAT should increase. Mechanically. If it doesn’t, then you have a problem.

In any case, it’s going to be long.

You have to figure the long process at work here : a company looses its exports customers... the company is going to cut its costs first, then it will use its cash on hand, its bank will probably cut its support… still no new customers… the company chokes, then it starts to downsize… employees lose their job… those people can’t find new jobs (because the situation is deteriorating around too), therefore they cut their expenses, consume less (VAT collections are going down), invest less (no new house, car) … the State loses money… etc.

It’s the vicious circle of a recession.

Ask yourself : do you see any probability of an improvement in the world, in the next 6 months ? One year ? No you don’t. Of course you don’t.

Even if you’re watching CNBC all the day… you start to doubt

The poison of doubt, supported by more and more data from the ground, is getting into your brain.

Nothing is going to stop the vicious circle, the vicious negative loop that fuels itself.

Look at the details for december…

Everything is going down : total collections for Revenue Department, down by 9,65 % y-o-y. Personal income tax, corporate tax (don’t forget, it’s a lagging indicator… taxes paid now are the mirror of… last year results)… etc.

revq4

Source (report from the Ministry of Finance for december 2008 )

1 Response to “Gvt revenues : VAT continues to fall in december”


  1. 1 Prokster 1 February 2009 at 7:45 am

    Revenue generation will be hard for this government. Not a chance of any more privatizations, and hard to collect more from corporate TH or the middle class. Ditto a broad revamp of foreign ownership rights, which would of course shore many provincial as well as BKK property segments in this time of need.

    The Baht has to go to 40 if they are to even have chance of staying in the game for both exports and tourism.

    They will struggle to sell bonds, as will Thai companies unless they are willing to pay huge premiums with a hefty CDS to boot. Red shirted antics will make institutions all the more scared. Red, yellow, it’s all the same to them.

    I would propose a more radical approach.

    – Get the Middle East and India to finance the canal or land bridge / oil line from the Andaman to the Gulf.
    – Do an Amsterdam on herbal goodies and let nightlife flourish in to the wee hours.
    – Allow full foreign ownership rights to all types of property apart from large scale agri. Reasonable restrictions apply, but nothing too silly.
    – Spend the handout dosh on hiring 20-30K foreign teaches and teacher teachers…. With the aim of a new national curriculum for primary, secondary vocational and undergraduate within 18 months.
    – Redefine vocational education in Thailand towards IT, robotics, clean energy, science & engineering.
    – Use software … middleware…automated system… to fully rationalize all government departments and agencies, and send the roughly 50% of the total bloated numbers through a re education-employability processes, be it vocational, academic or entrepreneurial.
    – Fund a large program to create independent thinking ‘provincial development offices – whose aim is to go and sell the province to the world. At last some of the funds blown by other provincial government layers should be reallocated.
    – Open that border with Burma, and help invigorate the western (and northern) boarder provinces.
    – Allow free flow of capital for Thai nationals
    – Open the capital / debt markets before foreigners forget they even existed.
    – Offer a wide ranging power sharing deal in the far south before it’s too late. PR machine to be out in overtime during the process.
    – Allow resident non Thais to run for office – at all levels bar the PM’s.
    – Create a corruption sting team with powers to send those caught red handed down for 10. The team must be multinational in nature, and governed by a joint Thai- expert non Thai panel and judicial process board.

    I suppose it’s easier just giving away cash, although one has to wonder how a group of supposedly well educated individuals failed to come up with something creative.


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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