Policies of The Surayud Government - Economy and Agriculture

Economy and Agriculture

• A budget deficit of 147 billion Baht for fiscal year 2007. This was the first budget deficit since 2003.
• Elimination of subsidies for rice farmers. The price of rice, set at 30% above market prices during the deposed Thaksin Shinawatra government, was dramatically lowered. It was claimed that the high price of rice seriously affected farmers and caused social burdens.
• The cancellation of the Million Cows project. Under the project, the government lent five million cows to one million farming families. The families were allowed to sell milk and calves for profit. The program was highly popular among politicians.
• Capital controls in an attempt to reverse a massive appreciation of the Thai Baht. The moves caused a crash in the Thai stock market, with a one-day loss of 820 billion baht (approx. US$22 billion) in market value. The move resulted in harsh criticism both within Thailand and abroad. "My definition of what's going on is 'Welcome to amateur hour,'" said Donald Gimbel, fund manager for Carret & Co. Korn Chatikavanij of the Democrat party noted of a policy reversal, "That can't repair the damage that was caused in one historic day."
• Amid pressure from the junta to find wrongdoing in Thaksin Shinawatra's sale of Shin Corp to a Singaporean company, the Commerce Ministry altered regulations concerning foreign ownership companies. This impacted the legality of thousands of local subsidiaries of foreign companies operating in Thailand.
• Amendments to the Foreign Business Act that would limit foreign companies investing in List I and II businesses (including media, telecoms, and aviation) from holding more than 50% of shares. List III businesses (including retailers and hotels) were exempted from the new restrictions. Investors holding more than 50% would be forced to lower their stakes within a year. Investors holding more than 50% of voting rights would be forced to lower their voting stakes within a year. Finance Minister Pridiyathorn noted, "If they (foreign investors) had seen the details (of the foreign investment law), I am sure that they would be happy." Brokers and analysts criticized the move (widely seen as necessary in order to punishment Temasek Holdings for its acquisition of deposed Premier Thaksin Shinawatra's Shin Corporation) as politics intervening to hurt the economy. The governments of the United States, Canada, Switzerland, Japan, and European Union protested the move.
• The approval of debt-relief measures for farmers. This prompted Northeastern farmer leaders from cancelling a planned protests in Bangkok.
• Reopening Don Muang Airport for domestic and international flights after allegations that the newly opened Suvarnabhumi Airport alone was incapable of handling future traffic volume. The decision met with strong opposition from Airports of Thailand, the Civil Aviation Department, and domestic and international airlines. Surayud made the decision based on his personal advisors, without waiting for the Ministry of Transport to finish a study.