Archive for August, 2009

After tax waiver for air conditioners… tax waiver for spas ?

The government pursues, with great care, its Lala Santa Claus policies.

Let’s take for instance… air conditioners…

Abhisit decided to remove the 15 % excise tax on air-conditioners (read here), to boost… local sales (from local manufacturers)
But then a few days later we learn :

“For a particular category, a Chinese air-conditioner retails for Bt8,000, against Bt20,000 for a Thai unit. This FTA will cause difficulties for domestic sales and exports to neighbouring countries” (Nation)

It’s obvious : the problem is not this tax, the problem is first the crisis (people and businesses have less money to spend, even if there is discount)… and then the competition. Eventually, to remove the tax is a nice gift made to the… chinese manufacturers !

Don’t get me wrong : I do not believe government should impose a tax on air-conditioners… What I criticize is the timing and then the fact that they don’t think about the consequences of such decisions.

There is no coherence, whatsoever. The government just adds some inane policies on top of each other, like gifts, without any broad analysis.

Let’s take the latest example… spas.

The Finance Ministry will soon discuss whether to waive the 10percent business tax on spas, to promote Thailand as a spa hub. Such a move is expected to draw more tourists and create jobs. (Nation)

Once the laugh is over about the “hub” obsession… the government shows again that it’s totally clueless.

The problem of the spa industry is not a tax. The problem is that… virtually all hotels in Thailand now are “spa” ! (and “boutique” too). 😉

I mean It couldn’t be more ridiculous. As ridiculous as increasing the number of 5 stars hotels for instance.

The market is totally overwhelmed by spas. And the demand can’t follow. It’s just impossible. Few people can afford to pay several thousands of THB for one hour of “spa”.

The bottom line is : with all those idiotic tax cuts, the government will lose precious ressources ( in a budget deficit situation)… and meanwhile will achieve zero, NIL, nada as far as “job creation” or “stimulation of the economy” is concerned.

Abhisit and his ministers are like headless chicken, running amok, agitated, and taking decision for the economy like… taking a dump.

Abhisit still inside the Rabbit Hole : “we will be cautious with spendings”

The government will be cautious in its spending after the House of Representatives passed the 2010 fiscal budget bill on Saturday, Prime Minister Abhisit Vejjajiva insisted.
[…]
Mr Abhisit said during his pre-recorded programme aired on Sunday morning that he would like to thank all MPs who voted for the 1.7 trillion baht budget bill on Saturday.

The government would be prudent in its spending, prevent the diesel price from going above 30 baht a litre, and curb the A/H1N1 flu outbreak,” the premier said. (Bangkok Post)

Abhisit is the man who increased the subsidies of fuels, who tries to mimic all the other clowns (Obama, Sarkozy, Brown etc.) by creating “stimulus packages”, who created the “1 time special allowance” (2000 THB for 8 millions of people in april, who remember this today ?), who wants to borrow billions of THB, who continues the stupid policies created by Samak (his alleged political ennemy) with free electricity, free water etc., who authorizes the military to buy grotesque gears. etc.

Abhisit.

And the same man is talking now about “prudent spendings” ?

😉

Abhisit, stop being a politician. You’re too smart for that. Go back home. And try to do something useful with your life…

Lese-majeste : Da Torpedo burried alive under 18 years of jail

They have created a martyr. Another one.

The Criminal Court has sentenced Daranee Charnchoengsilpakul, better known as Da Torpedo, to 18 years in prison without probation for insulting the monarchy. (Bangkok Post)

First, you have to know what Daranee actually said during this (in)famous speech. Click here.

I wrote one year ago :

So there is little doubt that Miss Daranee is in a way… toasted.

Unfortunatly, we were right. Her speech was never heard before… in public. It was very bold.

But that’s not the point anymore.

Now the point is : the ticking bomb has exploded into the hands of all the Doctor Strangelove.

All those dirty politicians, crooks and other generals in operetta uniforms… who are toying with the lese-majeste law for their own benefits, who pretend to defend the monarchy but who actually are destroying it.

With promptness and stubbornness.

The first rule of lese-majeste law is that you don’t use the lese-majeste law.

Even a child could understand this basic principle.

The politicians have just put a burden on the King’s shoulders, with a dangerous binary thing.

1-the King does pardon her, like he did for the Australian in february.
The king, again, would show his generosity. But… It would be also another proof of the inanity of lese-majeste law, and its uselessness. And It could open a dangerous flood of critics against the monarchy.

2-the King does not pardon her.
She would become a martyr. The monarchy would be seen as crual, disconnected from the reality, a gravedigger of freedom.

I don’t want to play with words but the dirty politicians have just put the King into a check-mate like situation.

They should be ashamed of themselves.

Chart, credit, june : after the Green Shoots… the credit crunch ?

(Source Bank Of Thailand, table FI_CB_015_S3).

The total credit (outstanding) at commercial banks was at 7 483 billions THB in june. That’s 131 billions less than may. But it’s still increasing by 7,5 % year on year (compared to june 2008).

Sounds good ? Well… look at the details.

CREDITJUNE1

Yes… Growth of credit for business is in negative territory (-1,3 %)... And it’s still decreasing for individuals.

Businesses are under pressure because of the recession.. and for some their cash bloodline is getting dry. And It makes perfectly sense : banks are not willing to increase lendings. Because risks are increasing. And because it’s absurd to add capacities during a recession.

At least, this is how It works in a “normal” system. In China for instance, when the politicians order the banks to increase lendings… the banks comply. And in a hurry (it would be so bad to end up in jail…)

That’s the beauty of communism if I may say. 😉 But of course It’s just another bubble (“property sales surge 60 %“), ready to burst. Anyway.

Now let’s look at the amounts.

CREDITJUNE2
And the differences per month.

CREDITJUNE3

Our dashing Prime Minister, Abhisit, told us that Green Shoots are to be seen everywhere, that the bottom is reached, that recovery is under way blablabla…

Looking at the figures provided by the BOT, his statements are just wishful thinking…

The credit party is over.

And the clowns should explain us how a system based on credit can continue to grow if the credit is drying up ? This basic question is a burning one in the US (read this striking article about the severe US consumer credit crunch).

But it’s much more entertaining and convenient to talk about Green Shoots Soup and Recovery Salad.

Bon appetit. And sleep good.

[ I’m taking holidays. See you last week of august. Until then, may the Crisis be with you and be ready for an exciting september 😉 ]

Abhisit opens the subsidies Lala circus : 48 billions THB worth of fossil fuels to be burned

Done. Abhisit has totally embraced the subsidy logic. The same that Thaksin and Samak used before. For that matter, the current PM is as short sighted as his predecessors… as populist… as full of dirty tricks from the political backroom… as weak… as -let’s speak frankly- dumb as them.

Does Abhisit think seriously that this costly package will change the economy ? Will make the people to love him ? Will allow him to win an election (which he NEVER did) ? Sure he does. But he’s wrong.

The economic crisis will be his Nemesis. Burning cash to burn fossil fuels and meanwhile speaking about “recovery” is just a pathetic move from a meek politician, afraid of his own shadow, who is falling day after day deep into an ocean of ridicule (read here for his latest grotesque mistake).

The government yesterday approved a Bt48-billion energy-subsidy package to lower retail prices of diesel and other types of energy in a bid to win wider public support. […]

The move is aimed at helping ease people’s cost-of-living burden and fuel economic activity during this critical juncture, it said.

-The price of B5 biodiesel will also be reduced by 81 satang a litre, in order to promote the use of this alternative fuel, costing the government Bt421 million a month.

-Second, the government will spend Bt740 million a month over the next year to subsidise LPG, which is imported at Bt25.73 a kilogram but resold domestically at only Bt18.13.

-Third, the government will spend Bt300 million a month to subsidise CNG for another year.

-Fourth, the government will spend Bt1.2 billion over four months to subsidise 30,000 taxis that want to convert to running on NGV. Altogether, the four measures will cost the government Bt27.5 billion.

-Fifth, the government will use Bt10 billion to subsidise the FT surcharge on electric bills.

The government already owes Bt20 billion to Egat for keeping the FT below the agency’s cost, and the year’s extension will add Bt10 billion to the state’s outstanding debt to it. (Nation)

Abhisit = all the previous thai Prime Ministers : let’s subsidize diesel !

SANTADRUNK

Christmas in August Part 2 (for the first part, read here).

Motorists will again enjoy cheaper diesel by two baht a litre starting next week, after Prime Minister Abhisit Vejjajiva demanded that the state Oil Fund subsidise prices. […]

The result, said an Energy Ministry official who declined to be named, was that the ministry on Monday would seek approval to suspend the Oil Fund levy of 1.70 baht a litre collected on diesel. Approval is needed from the National Energy Policy Council (NEPC), which Mr Abhisit chairs.

An additional subsidy to oil traders of 0.30 baht would bring the pump price down by two baht a litre.

“So all of the money will go to help the Oil Fund to pay part of the price for diesel users as the Oil Fund now has accumulated income of 16.8 billion baht, too little to finance the subsidy,” the official said.

The source added that Mr Korn had resisted cutting the excise tax on fuel.

“He told us that the excise tax can’t be cut because the government’s tax revenue was far lower than the target,” the official said. (Bangkok Post)

This is a show case. A show case of inane economic policy. And a striking example of “political copycat”.

-Abhisit in january decided to scrap the excise tax on diesel… Talk about coherence…

-Abhisit and his buddy Korn, the alleged Finance Minister, prefer a… debt to a lower tax. Pathetic accounting trick…

-people should remember that SOMEONE WILL PAY. There is no free lunch. Never. A subsidy is a fix of “feel good dope”. But YOU WILL PAY.

-Pushing people to consume more diesel is the bottom of economic thinking… When Thailand has already a poor energy efficiency

-and let’s remember that Thaksin did exactly the same absurdity, from 2004 to 2005. The result of this “folie” was a hole of 100 billions THB ! And this is why the Oil Fund was created (a small tax on each liter sold, to pay back the debt).

-same story with Samak (you remember ?) last year… Subsidies for gasoline and diesel. On a large scale. A festival.

-it’s easy to see the short term obsession behind such policy : Abhisit is in full “populist gear mode”, spreading money around. The guy is terrified by his own shadow.

So, like I wrote just after the “election” of Abhisit… Change with Abhisit ? Yes We Can(‘t). 😉

UPDATE
I’m wondering if Korn plays stupid on purpose ? … On friday he’s okay to subsidize diesel… and sunday he’s willing to increase taxes on cars to promote “alternative energy”. 😉

The Ministry of Finance is eyeing to increase motor vehicle taxes to urge motorists to use alternative energy.

Finance Minister Korn Chatikavanij said on Sunday that he had a meeting with Industry Minister Charnchai Chairungrueng and Energy Minister Wannarat Channukul to discuss the tax structure for the automotive industry and the energy consumption at the moment.

Because of the rising fuel prices, the government wanted motorists to turn to alternative energy, he said. (Bangkok Post)

Christmas in august : Abhisit wants to extend Social Security benefits

SANTACLAUSSABHISIT2

Spouses and children of the Social Security Fund’s 9 million members will soon be entitled to benefits in the event of accident, illness, disability or death

The move will be the result of a revision of the Social Security Act and the government’s promise to foot the extra bills. […]

This is part of the government’s policy of improving social welfare. We believe this is also what all fund members want,” he said [Abhisit].

Sure. Who would say “no thank you” ? Smart political move. After his special “national bribe” (2000 THB per worker in april, read here), Abhisit seems to be an expert in opening the purse he doesn’t own to spread money around and buy… votes ?

Hum… Not so long time ago, a guy called Thaksin was accused of such “populist policies”… by Abhisit.

How do you spell “irony” in thai ?

I can assure the public that the SSF will not increase members’ contributions, as that would be against government policy. We want to promulgate the law soon, as we’re concerned about it taking effect amid any political changes,” Phaithoon said.

Chulalongkorn University economics lecturer Lae Dilokvidhyarat said the government must be clear about how it would fund the extra expense. He said the SSF was now reduced, due to a temporary cut in compulsory contributions. (Nation)

Indeed. As a part of the “stimulus-bailout” whatever policy, the government has reduced the contributions of workers (and companies) to the SS.

So to summarize :

-they want to extend SS benefits
-no one know how much it will cost
-but Abhisit doesn’t care
-however, he’s adamant : contributions will not increase (ah ah ah)
-and even better : contributions are lowered

I should add that :
-they don’t want to increase taxes neither

So… Who will pay ? In Lalaland, this question is totally irrelevant… 😉

It’s astonishing.

Who are those clowns ?


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.