Thai military makes paying rice farmers a priority

Thai military makes paying rice farmers a priority

Saturday, May 24, 2014 – 17:04


BANGKOK – Thailand’s military junta and the finance ministry will meet on Monday to discuss how to pay rice farmers over US$2.5 billion (S$3.13 billion) owed under a failed subsidy scheme run by the government the military overthrew on Thursday.

The Finance Ministry said in a statement on Saturday that Air Chief Marshal Prajin Juntong would meet senior officials from the ministry and from state banks to set out policy. Prajin has taken charge of economic affairs under the military government.

Army chief General Prayuth Chan-ocha, who heads the government, addressed hundreds of civil servants at an army facility on Friday, a day after the army seized power, and told them that paying the farmers was “an urgent issue”, according to a source with knowledge of the meeting who requested anonymity The state rice-buying scheme was one of the key policies in the populist electoral platform that brought ousted premier Yingluck Shinawatra to power in 2011. It was criticised by opponents who played a role in driving her from office for running up huge losses and being riddled with corruption.

Two weeks ago Thailand’s anti-graft agency indicted Yingluck for negligence for charges related to the rice-subsidy scheme, one of several policies that won the support of Thailand’s poor for both Yingluck and her brother, Thaksin Shinawatra, before her.

Thaksin, a billionaire telecommunications tycoon turned politician, earned the loathing of the royal establishment and was himself ousted in a military coup in 2006.

Yingluck’s rice-buying scheme paid millions of rice farmers way above the market price for their grain.

The scheme boosted rural incomes but made it impossible for the government to sell the rice on the export market without incurring big losses. Thailand was left sitting on millions of tonnes of rice stockpiles.

Yingluck’s administration had hoped limited supply from what was then the world’s top rice exporter would drive up global prices and eventually allow international sales at a profit.

The gambit failed as India and Vietnam exported millions of tonnes more rice to plug the gap. The Thai scheme ran into funding problems that were exacerbated by the government’s inability to access funds from the state budget from December.

Facing a wave of anti-government protests, Yingluck dissolved parliament in December, called an election and ran a caretaker administration with limited fiscal powers.

Protesters disrupted the February vote, which was subsequently annulled, leaving Thailand without a fully functioning government until the army seized power on Thursday.

Prayuth suggested on Friday he would be able to tap the state budget for funds to pay the farmers. “The budget office reported that there is about 40 billion baht (S$1.54 billion) in the central budget that can be used to pay farmers,” the source quoted Prayuth as saying. “Some are offering another 50 billion baht in loans,”Prayuth added. “This should be sufficient to pay for farmers.” That was an apparent reference to possible loans from banks. Commercial and state banks proved unwilling to lend to the Yingluck administration, worried about the legitimacy of such borrowing by a caretaker government and possible law suits.

At the end of April, farmers were still owed an estimated 90.5 billion baht. Some have been waiting since late last year for rice sold to the state from the crop harvested from October.

Prayuth was reported as saying all farmers could be paid within 20 to 25 days.

Air force chief Prajin, who was already chairman of national flag carrier Thai Airways International, will oversee the ministries of commerce, industry, agriculture, energy, labour and transport as well as finance.


Thai junta races to rescue, but braces for backlash

Fri, May 23 2014

By Martin Petty

BANGKOK (Reuters) – If Prayuth Chan-ocha’s decision to stage Thailand’s latest in a long list of coups was as impulsive as he suggests, then the stern-faced general has a Herculean task managing the fallout and deciding what happens next.

Seizing power in Thailand is one thing, running the country is another, and after overthrowing populist tycoon Thaksin Shinawatra’s political juggernaut for a second time in eight years, the generals should be prepared for a backlash.

The military top brass appeared to have been chastened by the experience of 2010, when a crackdown on Thaksin’s “red shirt” supporters ended in serious bloodshed. They had repeatedly said since that the army would stay out of politics.

Now, by detaining senior politicians, declaring martial law, shutting down partisan media and announcing curfews and bans on public gatherings, analysts say it has set the wheels in motion for a repressive crackdown to avert any new insurrection.

“It’s a very dangerous situation. I can’t see Thaksin’s supporters responding peacefully or nonchalantly,” said Andrew Walker, a 20-year Thailand expert and dean of the college of Asia Pacific studies at the Australia National University.

“We’re looking at a prolonged effort to neutralize pro-Thaksin forces and any successful attempt to do that would be very oppressive indeed.”

Thaksin himself was toppled by the army in 2006, after winning two landslide election victories with the support of the rural masses in the poorer north and northeast.

The red shirts formed after that, and they have since grown in number and are increasingly organized, defiant and militant in what they call a fight against a meddling military and a royalist establishment threatened by Thaksin’s rise.

They have long promised to fight back against any intervention to remove their governments and could launch a challenge to a junta that risks spiraling out of control.

The army says it was forced to launch the coup to bring peace to Thailand. But the men with guns may have shot themselves in the foot.

“The coup in 2006 gave birth to the red shirts, so the military created a monster and it now has to deal with it,” said Pavin Chachavalpongpun of the Center for Southeast Asian Studies at Kyoto University.

“This, sadly, will end with another round of conflict.”

Most experts point to the irony of the generals intervening as a circuit-breaker in a polarizing, often violent conflict, when they sided with a Bangkok oligarchy to topple Thaksin, a billionaire whose massive electoral popularity rattled Thailand’s decades-old royalist status quo.


Despite a steady flow of televised announcements, the junta has offered only vague hints about its next move. Few believe the military was naive enough to stage a putsch without first having a strategy in place, or a plan B if talks between bickering political factions collapsed.

Prayuth has taken over the powers of prime minister, but it was not clear if he intended to hold on to the position.

One possibility is that he appoints himself interim prime minister, a strongman with a rescue remit to reform and stabilize a country many Thais feared was heading towards armed conflict and irreparable damage.

That’s seen as unlikely, however, as Prayuth could be out of his depth handling a yawning social divide, an economy in poor shape and rival political factions with shadowy militant elements adept at carrying out bombings and drive-by shootings.

More palatable, according to analysts, is that the Senate – Thailand’s only legislative arm functioning now – would appoint an interim prime minister to choose a cabinet, a process with a semblance of democracy that could soften the blow of the putsch.

“It will follow the usual coup template, but this time, with more repression,” said Thitinan Pongsudhirak, a politics and regional security expert at Bangkok’s Chulalongkorn University.

“They’ll move to set up a government, maybe with support of the Senate, then begin to deal with damage control.

“Most challenging for the army will be domestic defiance, opposition and resistance and they will clamp down all over the country. We may see a level of repression not seen in a long time in Thailand.”

On Friday, the junta looked to be moving to snuff out potential opposition, detaining former premier Yingluck Shinawatra, who had been among dozens of politicians and bureaucrats ordered to report to the military. It was not immediately clear how many others may have been detained.

Yingluck was forced from office by a court on May 7 for abuse of power and is accused by Bangkok’s middle classes of entrenching brother Thaksin’s legacy of cronyism and corruption.

The military has also banned Yingluck and 154 activists and political figures, mostly allies of the deposed government, from travelling overseas, from where Thaksin has exercised a strong influence over the red shirts and two elected governments.

Though the red shirts’ response to the coup has been muted, they aren’t expected to sit quietly. They’ve already started to defy protest bans in their north and northeast strongholds, where Thaksin’s micro-loans, virtually free healthcare and generous subsidies since 2001 transformed Thai politics and won him the hearts and votes of millions.

It might be a while before they get a chance to vote their party back into power, and whoever gets to runs the country in the meantime could be in for a rough ride.

“Even if the next government is full of technocrats, they will all be part of an anti-Thaksin network that doesn’t trust elections and won’t be in a hurry to hold them soon and risk bringing another Thaksin proxy to power,” Pavin added.

“It will still be a military regime, it will struggle to govern and could be ruthless depending on how Thaksin and his supporters respond.”



About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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