Price control, rice, export growth among urgent tasks for new minister

Analysis
Price control, rice, export growth among urgent tasks for new minister
Petchanet Pratruangkrai

Newly appointed Commerce Minister Chatchai Sarikalya and Deputy Commerce Minister Apiradi Tantraporn have a host of important issues to address, with urgent decisions needing to be made on some, and long-term development plans needing to be drawn up in relation to others.
Their priority tasks include controlling the cost of living and goods prices, selling and managing huge rice stockpiles of up to 18 million tonnes, driving up rice prices in the market and reducing the cost of production for farmers, and stimulating overall export growth.

The current retail price-freeze agreement between consumer-goods manufacturers and the Commerce Ministry is scheduled to end in November. Santichai Santawanpas, deputy director-general of the Internal Trade Department, said the agency would urgently seek the new ministers' consideration of whether to continue the measure or allow goods prices to increase.

The government will also have to take into consideration the consequences of next year's rise in the rate of value-added tax, which will result in a higher burden for consumers.

It needs to consider carefully whether to allow prices to increase or to maintain the price-freeze policy, which could damage manufacturers and traders.

Moreover, the government needs to drive up and then stabilise the prices of major crops - mainly rice, rubber, maize and cassava.

With the next main rice-harvest season starting in late October, the new ministers must consider their policy for the crop carefully because, if the government continued to sell off its stockpile, market prices would fall - to the detriment of farmers.

However, if the government delayed selling rice, an enormous quantity in the warehouses would continue to deteriorate in quality, besides which the authorities would have the added burden of handling high stockpile costs.

Chookiat Opaswongse, honorary president of the Thai Rice Exporters Association, said the government needed to manage its rice stockpiles as well as ensure that prices for the new crop did not fall significantly and hurt farmers.

The deputy commerce minister is aware of the stockpile-management problem and is consulting with exporters over how to promote Thai rice exports this year and next, he said.

"Apiradi has called for the association's cooperation to outline strategies in promoting Thai rice exports. The government needs to work closely with the private sector to manage rice stocks within a suitable period, as well as prices, so that it does not face huge stockpiles and high operating costs," Chookiat said.

The government should also create a sustainable plan to stabilise rice prices and reduce farmers' production costs without any subsidy measures, he added.

On the broader front, overall Thai exports shrank by 0.42 per cent in the first seven months of the year. The government therefore needs to find measures to stimulate shipments to the targeted level of 3.5-per-cent expansion, or 1.9 per cent at the very least, for the full year.

Amid the slowing global economic recovery - mainly in China and Asean - and the approaching loss of Generalised System of Preferences (GSP) tariff benefits in the European Union, the new ministers must rapidly find new creative strategies and plans to drive Thai shipments.

Paiboon Ponsuwanna, vice chairman of the Thai National Shippers Council, said the government should look beyond this year's exports and draw up plans for next year's performance.

Pornsilp Patchrintanakul, vice chairman of the Thai Chamber of Commerce, said the government should find new strategies to drive export growth.

The resumption of negotiations over a free-trade agreement(FTA) between Thailand and the EU is also needed, because the country will lose its GSP benefits by the end of this year, he said.

However, as it is a military-led government, the current administration may find it difficult to get the EU to agree to further FTA talks at this time, he added.

Another key task in Chatchai's and Apiradi's in-trays is how to increase Thailand's competitive-ness with a view to facilitating trading and investment growth and turning the Kingdom into an Asean hub.

Additionally, the ministers need to solve the bad reputation that the country and some industries have in regard to labour issues, given that the United States has downgraded Thailand to its list of the worst countries for human trafficking.

The Commerce Ministry must also stringently suppress violation of intellectual property rights (IPR) as well as enforce relevant laws, in order to show the government's sincerity in combating infringement and punishing violators.

Washington has for a number of years maintained Thailand on its Priority Watch List of countries it deems to be weak in their efforts to solve IPR problems.

Thailand is seen as lacking stringent laws to punish violators, which has put at risk its GSP benefits for exports to the US.

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