Comment on “Thailand after 1997”

• DOI: http://doi.org/10.1111/j.1748-3131.2011.01183.x
• Date: 01 June 2011
• Published date: 01 June 2011
• Author: Worapot MANUPIPATPONG

Comment on “Thailand after 1997”

Worapot MANUPIPATPONG†

Asian Development Bank Institute

JEL code: O53

Ammar (2011) is an account of political and economic developments in Thailand after the

Asian financial crisis in 1997. The paper introduces and discusses the measures under-

taken to address the 1997 Crisis which led to deleveraging of the Thai economy, and

liberalization and reform of the banking system, including greater independence of the

Bank of Thailand through the 2007 Bank of Thailand Act which specifies inflation tar-

geting as its official mandate.aepr_118388..89

Ammar describes in great detail some of the populist policies, such as the universal

health care, the agricultural debt moratorium, the one million baht per village program,

the agricultural price support, and privatization, including their financing and impacts on

the Thai economy.He also gives some insights into the political developments in Thailand

from 1997 to the present.

In addition, the paper demonstrates the close linkages between politics and economic

policies. The Thaksin government was able to form a one-party government with a

majority in the House of Representatives (through merging a few small parties into its

own) which allowed the government greater freedom to set and implement its policies

(though political infighting occasionally occurred among different factions in the govern-

ing party). Many of these (populist) policies were designed to deliver on the promises

made during the election campaign.

But as far as off-budget financing is concerned, it is not an unusual practice sincemost

governments try to support their policies off-budget, where possible, in order to enhance

fiscal space and thus their capacity to intervene in support of the country’s economic

activities when needed.

For example, the agricultural price support was replaced by a price insurance scheme

in October 2009 whereby farmers are compensated when the benchmark market price of

rice falls below the insured price level set at the beginning of the season. Initially,the cost

of the scheme was absorbed as part of the second stimulus package, but the government

plans to eventually charge a premium for the insurance and hedge its position through a

commodity exchange.

The unprecedented power and control, however, led to overconfidence of the then

Prime Minister and subsequently to his downfall. In addition to his efforts to gain control

of various independent agencies, the evasion of income taxes on his share sales was

†Correspondence: Worapot Manupipatpong, Capacity Building and Training,Asian Development

Bank Institute, Kasumigaseki Building 8F,3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo100-6008, Japan.

Email: wmanupipatpong@adbi.org

doi: 10.1111/j.1748-3131.2011.01183.x Asian Economic Policy Review (2011) 6, 88–89

© 2011 The Author

Asian Economic Policy Review © 2011 Japan Center for Economic Research

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