Price controls : when Thailand is happy to be third world

Coca-Cola company’s chief has urged Thailand to cut or waive the excise tax on carbonated drinks, with a promise to invest more in Thailand and employ more Thai workers if the issue is reviewed.

Muhtar Kent, chairman of US-based Coca-Cola, said while paying a visit to Prime Minister Abhisit Vejjajiva yesterday at Government House that a reform of excise taxes and pricing controls would pave the way for fair competition and benefit the Thai economy.

Kiat Sitthiamorn, president of the Thailand Trade Representative Office, said after the meeting: “Kent said the pricing controls and the excise taxes are major investment obstacles. The pricing controls, which require the declaration of cost and sale prices to the Commerce Ministry, is now imposed in a few countries like Laos, Cambodia, Vietnam and Egypt.

“Meanwhile, Thailand also imposes excise taxes only on carbonated drinks, not all types of beverages. This creates unfair competition. He also complains that Coca-Cola business in Thailand has failed to effectively grow despite annual investment of Bt1 billion throughout the 40-year period.” (Nation)

During the Inflation Drama (2008), I wrote many times that price controls were a wrong policy… especially on soft drinks.

What is the rationality behind the idea of controlling prices of… soft drinks ?
Are Fanta and Coke essential goods, like rice, water and housing ?

The bureaucratic clique in Thailand understand only 2 things :
-FORCE : tell them : “It’s crisis time. You want me to invest in your country in order to save your pathetic GDP figures ? So do as I say. Be nice with me. And say “please Mister Foreigner” “. 😉

-FACE : tell them : “you behave like Egypt, a third world country, therefore you are third world”.

Do I exaggerate ? Sure. But only a little bit.

Anyway, It’s good to see private businesses speaking openely about this issue, and putting pressure on the thai government.

Coca-Cola is not small fish…

Abhisit should brush off all those non sensical policies… instead of removing tax on… spa. 😉 But Abhisit is more concerned by politics and his own survival…

If you think about it, eventually, there is a (twisted) logic behind such absurdity.

Those arrogant and brainless bureaucrats and politicians believe that they can control inflation… Basically, by making it illegal !

In their Lala world, yes indeed, inflation wouldn’t exist. Unemployment wouldn’t exist. Because all those irritating effects of free market… would be declared illegal.

But Lala world does not exist… Reality check. You can not have at the same time the butter (the cheap coca-cola, the artifically low CPI) and the arse of the farmer (the stupid foreign companies rushing to invest cash money in Thailand)…

There is nothing free in this world.

The thai bureaucrats need time to understand, obviously. But eventually they will learn their lesson.

2 Responses to “Price controls : when Thailand is happy to be third world”

  1. 1 Tarrin 5 September 2009 at 10:33 am

    I think the catch is that they dont want to further increase the decaying tooth rate in Thailand! lol!

    Anyhow, the aim of the “governing” class in Thailand is to make the poor as poor as they can because when people are poor they tend of keep their head low and demand for less.

  2. 2 sammy 5 September 2009 at 12:25 pm

    its sammy time.

    It always amazes me that any of these foreign multinationals invest here. Look at what happened to Siemens with the skytrain, abnamro’s bank of asia, thaksin’s american cable television partner, etc etc etc on and on the lose there totl investment and yet they keep coming back for more. its the ultimate in positive reinforcment and that’s why the situation is not being addressed for cocacola. the thais know they will still poor more money in no matter what happens and the coke people know they will end up losing it all, but yet they will still write the check. amazing foreign investor.

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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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