Last week, Thai Prime Minister Prayut Chan-ocha published flashy portraits of himself looking more like a dapper Don Juan or B-grade
movie star than the stern army commander who suspended democracy in a coup and has ruled with near dictatorial powers.
About the same time, the military’s proxy political party – the Palang Pracharat – upped its ante on a host of populist campaign promises in what some observers see as a desperate bid to win the March 24 general election.
“This suggests they may be panicking,” said Chris Baker, an author of numerous books on Thailand’s past and recent history. “Someone has suggested they are going to lose so they are doing what they have avoided doing for the past five years,” Baker told a recent forum.
While Prayut’s ruling junta has concentrated on building infrastructure and improving the nation’s investment climate, it has done less well in bridging a yawning gap between rich and poor, which the soldier-cum-leader set out to address upon taking power in 2014.
Credit Suisse, an investment bank, recently dubbed Thailand as the world’s most unequal economy, an assessment based on wealth inequality rather than income inequality measured by the Gini coefficient. The kingdom fares better on the latter statistic, ranking close to Singapore and Malaysia, but nonetheless saw a slight increase in the inequality measure from 2015 to 2017 under the junta’s rule.
Palang Pracharat is not the only political party pumping up populist promises and other pro-poor sweeteners to win votes.
All the major contenders including Peua Thai, backed by the original, now self-exiled populist prime minister Thaksin Shinawatra; the Democrats, Thailand’s oldest political party that has not won a general election since 1992; medium-sized Bhumjaithai, which could play a kingmaker role in forming a ruling coalition; and daredevil, anti-junta newcomer Future Forward, have all hopped on the populist bandwagon.
At Thai elections in the 1980s and 90s, winning often involved buying votes directly from the populace. Thaksin introduced a raft of populist measures after his first electoral victory in 2001 and subsequently won re-election on the message his government was the first to seriously uplift the masses through redistributive policies.
The populist leader famously introduced Thailand’s first universal health care scheme, the 30 baht (US$1) health care scheme, that has now become institutionalized, as well as a village development fund. These policies, some more fiscally sensible than others, have helped Thaksin-aligned parties win every election held since 2001.
Prayut overthrew the last Thaksin-aligned government, led by his younger sister Prime Minister Yingluck Shinawatra, and has spent the past five years trying to purge Thaksin and Yingluck’s popular populist legacies.
The regime, relying heavily on technocrats from the Thai bureaucracy, has invested in long-term infrastructure projects by building highways, extending Bangkok’s mass transit system and the country’s dual track rail network.
That includes a new long-term for the country’s aging export engine via the Eastern Economic Corridor (EEC), a government-led bid to attract a new investment wave in high-tech value-added sectors by building on already existing infrastructure and manufacturing facilities in the three eastern provinces of Chachoengsao, Chonburi and Rayong.
The Finance Ministry, meanwhile, has hastened the digitalization of the banking system and economy by introducing the Prompt Pay e-payment system in 2017, a scheme that undermined banking services and forced commercial banks to waive service fees on e-transactions last year.
To its pro-poor credit, Prayut’s regime also introduced a new welfare card system in 2017, which now covers 14 million Thais, nearly half the 32 million labor force and all of the 8.6% of the population (6 million people) living below the poverty line, according to Asian Development Bank estimates.
“The initiative has improved financial inclusion of underserved people,” said a senior Bank of Thailand official, who asked to remain anonymous.
Although offering only a modest stipend of 600 baht ($20) per card holder per month, accumulated card payments have amounted to 50 billion baht ($1.6 billion) in the 2017-2018 fiscal year period.
The welfare card budget was initially 40 billion baht ($1.3 billion) a year, but was bolstered by another 39 billion baht this week to accommodate the growing number of recipients, now up to 14 million from 11 million in December 2018.
Prayut and his technocratic team would have done well to introduce the welfare card earlier in their terms, as it may prove one of his few selling points among the provincial poor this election.
“Without the welfare card they could not win,” said Nipon Paopongsakorn, a fellow at Bangkok’s Thailand Development Research Institute (TDRI), a think tank. “If they win it will be only for two reasons – General Prayut has kept the country calm for five years and people like the welfare card.”
The electoral appeal of the welfare card scheme has not been lost on other contesting political parties, most of which have adopted its expansion as part of their campaign platforms, with many promising to up the monthly stipends if elected.
Another junta policy that was kept quiet during the junta’s term to avoid accusations of populism, but is now featuring prominently on Prayut’s campaign trail are monthly subsidies given to poor mothers to take care of their children.
The policy has been raised in recent months from an initial 400 to 600 baht per month and has been extended to cover children up to the age of six. Other parties are jumping in, offering to make the policy universal and expanded to also cover pregnant mothers.
Political parties’ promised rice price support schemes, however, are considered more sensitive to technocrats and other fiscal conservatives.
Prayut’s 2014 coup was in part justified as a means to clean up the financial mess left by Peua Thai’s so-called paddy-pledging scheme, its main campaign policy in the 2011 general election that promised farmers artificially high fixed prices for “every grain” of their unhusked paddy.
The populist pledge turned the government into the main market player for the commodity, which involves exports of about 10 million tons a year, and became befouled with accusations of corruption.
The policy ultimately accumulated losses of an estimated 600 billion baht ($18 billion) and charges of malfeasance against Yingluck that led to her criminal conviction and flight from the country.
The loss-making scheme, which ended up paying Thailand’s seven million rice farmers up to 40% above prevailing market prices, was especially popular among the rural poor.
While other parties, including the military-backed Palang Pracharat, are also promising fixed prices for farmers’ paddy this election season, Peua Thai has vaguely promised to raise agricultural prices by 30% within six months.
To do so, the party is either very attuned to future weather conditions (rice growing areas are already facing drought), or intends to revive its interventionist role in markets.
The bigger question looming over Thailand’s democratic future is how parties, if elected, will rationally pay for all these populist offerings.
Prayut’s regime has had mixed results in raising taxes on the rich, which most elected governments have been loath to do. In 2015, the military government passed the country’s first ever inheritance tax and last year a much debated property tax.
Both were considerably watered down, with property tax to be imposed only on homes and land worth 50 million baht ($1.6 million) or more, leaving most Thai property owners untouched, by the time they were passed. The property tax comes into effect in January 2020.
Analysts doubt the next installed government will look to hike property taxes to finance their populist offerings. “Nobody wants to strengthen it because most of those parliamentarians have land,” TDRI’s Nipon noted.
Indeed, most political parties are campaigning on tax cuts, not hikes, especially for small and medium-sized enterprises. The other option for financing populist policies would be to hike the Value Added Tax (VAT), which is currently at 7%.
“The major sources of tax income around the world are VAT and land tax,” TDRI’s Nipon said. “If we keep doing these things [populist programs] we will run out of money for development.”
TDRI research into a universal welfare scheme being weighed back in 2007 found that many poor rural Thais were willing to pay a higher VAT to pay for it, as long as the tax revenues raised would definitely go to the welfare system and not be siphoned off for corruption.
The studied scheme never came to fruition under successive revolving governments and it’s not clear Prayut’s welfare card scheme will survive if Peua Thai or another party making populist promises comes out on top at the coming polls.
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