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Sufficiency economy

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The chief proponent of localism in Thailand is King Bhumibol Adulyadej's "sufficiency economic theory." The foundations of King Bhumibol's theory included sustainability, moderation and broad-based development. The Learning Centre of King Bhumibol’s Philosophy of Economic Sufficiency claimed the concept focused on living a moderate, self-dependent life without greed or overexploitation of, for example, natural resources.

After a coup d'état, the military junta claimed that the policies of deposed Prime Minister Thaksin Shinawatra, e.g., universal health care scheme, poverty reduction, and a conservative fiscal policy, were inconsistent with the theory.[1] The preamble of the junta's new constitution stated that promotion of self-sufficiency was one of the fundamental roles of the state.[2]

Junta-appointed Prime Minister Surayud Chulanont pledged to allocate 10 billion baht (almost US$300 million) for projects to promote well-being in line with King Bhumibol's sufficiency economy principle. He made the pledge while participating in King Bhumibol's 80th birthday celebrations.[3]

In 2007, the Democrat Party-run Bangkok Metropolitan Administration gave away a million baht to each city community that joined the ”Self-sufficiency Community Plan According to His Majesty the King’s Self-sufficiency Initiative.” [citation needed]

Foreigners were for the most part left confused. After a meeting with Ministry of Finance officials where the need for more sufficiency was explained, Standard & Poor's director of sovereign ratings noted, "No one knows what [sufficiency economy] really means."[2] The Asia Times noted that, "There is a concurrent risk that the royal philosophy will be twisted by less scrupulous government officials as an opportunity to abuse their authority for rent-seeking and extortion, particularly among foreign-invested concerns."

Criticism of the philosophy

There have been the efforts by military junta government to incorporate the King's 'Sufficiency Economy' (Localism) in the national economic policy. The criticism is directed towards the military junta government, i.e., to the practitioners not to the principle itself. The ineffective uses of the philosophy/principle are criticized as (a) The philosophy is not consistent with Thailand economic development, (b) nobody understands it and there are several unclear interpretations, (c) Other theories have historic academic ground 

'Sufficiency Economy' and 'Localism' are absolutely different in their meaning.

Investment and Loan

Investment.

Sufficiency economy is designed to cover the weaknesses in the capitalism, i.e. the philosophy alone cannot be used solely, but can be the implement to capitalism.

For example, the philosophy states that one must consider the investment at low risk, avoid the investment that possess the potential of over-finance. This idea is not new, but has already been in the financial textbook (close to the concepts in finance: Liquid ratio, acid ratio, debt-capitol ratio, etc.).

Loan.

Another example in the philosophy: one must save money enough before investment, and do not overinvest such that you become deep in debt. Some believe this idea is in conflict with the concepts of economy of scale and economy of scope in economics and exploitation of the future demand.

Resource

Self-sufficiency economy (Localism) offers the idea of limited productions for the purpose of saving the environment and scarce resources. The production is limited to the level that adequate for individual consumption the excess of the consumption will be for sale. This gives rise to the problems according to the four conditions of the availability of resources: abundance; scare; and nonrenewable resources.

Scarce resources and nonrenewable resources

The philosophy emphasizes on this two conditions of the availability of resources. The philosophy implies that resources and productions are for individual consumption, the excess of the consumption would be for sales.

Social class and resource consumption

The philosophy holds that the rich can consume as much resource as they like if their consumptions do not incur loan. In contrary, the poor should consume resources only at the level that do not incur any loan.

Media Criticism

Asia Times Online has published an article that analyzes the Thai military junta government's economic policy that is fully influenced by the King's self-sufficient philosophy [1]. The article notices the unexpected, rather bold step in Thailand economic development of the military junta government, endorsed by the King, that willingly responds to the King's philosophy. The article criticizes the philosophy as being so new as to have no academic ground and no empirical approval. As a consequence, any misstep, whether improper interpretation from the philosophy to be economic policy or the unaudited practices, would have caused the Thai economy's demise. The article also claimed that the protectionism that the Thai government has used will disperse foreign investors and reduce short term cash flow from outside the country.

The article emphasizes on the contradiction between capitalism and self-sufficient economy, which it favor the long-term economic alignment and environmental friendly, that are the main principles in the philosophy, particularly in lowly-regulated market. The Thai model of sustainability is slightly differences to western sustainable development. In western concept of sustainable development, the force that drives the will to save the environment comes from corporations' need. In Thai model, the driving force comes from basic human psychological state of need. This psychological state of need comes from long government education of the public. The other name for localism in Thailand is called "Buddhist Economics" [2].

The philosophy has been made corporeal by Pridiyathorn Devakula, Minister of Finance, who proclaims he is the supporter of the King's self-sufficiency economy or Localism. The examples of his policies that follow the King's localism are: Limiting foreign companies investments that enormously reduce liquidity in Thai economy; regulation and investigation of foreigners' source of fund; and Capital controls that destroyed US$20 billion of market value in one day. As a consequence of capital control and investigation over foreign investors, World Trade Organization (WTO) sent negative feedback to Thailand and doubts the ability of Thailand to continue to be the WTO member [3]. The prime minister Surayud Chulanont, who also proclaims the King's localism, has called for the former minister of commerce Somkid Jatusripitak, who are pro-capitalism, to the service of the country.

Articles appearing in the Bangkok Post on 22 February 2007 noted that Somkid Jatusripitak, who had been the finance minister in the previous Thaksin-led government, resigned his new position as spokesman for the sufficiency economy within days of being appointed. His appointment to the position had been heavily criticized, and Mr. Somkid said that he resigned in order to prevent ongoing divisions in Thai society.

The Bangkok Post reported on 23 February 2007 that there is now discussion about whether the committee drafting the new constitution should include language defining Thailand's economic policy. The previous constitution, drafted in 1997, had identified capitalism and free markets as the Thai economic philosophy.

The government has made the King's self-sufficient philosophy corporeal by promote the use of local currency, for example. The use of "Bea-Kud-Shum"[4], as a local currency in specific part in rural Thailand, has been endorsed by the Thai government in August 2006. However, the use of currency instead of 'Baht' had been deemed illegal before. By using local currency such as "Bea-Kud-Shum", the currency itself is exempted from tax collection and can interfere with tax system.

Note

It should be noted here that the Asian Times's article "the King's 'Sufficiency Economy' (Localism)" is not the right quote and is led to be misunderstood. "Sufficiency Economy" calls for partial localism - a quarter - not the whole [citation needed]. In other words, "sufficiency economy" is meant to be "partial" localism. It is true that many parts of Thailand still enjoy capitalism. "Sufficiency Economy" calls on those to practice "some" localism particularly those in the rural areas.[citation needed] However, the oppositions see no different between "Sufficiency Economy" and "Self-sufficient economy", i.e., they are the same as Localism [5]. Kevin Hewison describes the self-sufficient political agenda in Thailand as Populist Localism.

Self-sufficiency as a Political agenda in Thailand

Self-sufficiency is being strengthen through the link between nationalism and the King. Criticism over the King's philosophy would be a demonstration that the critics do not respect the King. The philosophy itself is often portrayed as a national barrier that guards Thailand from evil foreign, greedy capitalists.

After the oust of former Prime Minister Thaksin, the Thai government under the Prime minister Surayut began political campaign that under the King Bhumibol's Localism is the new Utopia. Thus, Localism is used as a political tool to counter Thaksin's proposal of Thaksinomics. The King's philosophy had been introduced to Thailand before Thaksin was a prime minister. In fact for the celebration of King Bhumibol Diamond Jubilee, Thaksin's government organized public exhibitions commemorating the event, one of the major exhibitions being sufficiency economy.

References

  1. ^ The Economist, Rebranding Thaksinomics, 11 January 2007
  2. ^ a b Asia Times, In Thailand, a return to 'sufficiency', 5 October 2006
  3. ^ Bangkok Post, PM earmarks B10bn for ‘well-being, 10 March 2007
  1. ^ Thailand's new economic logic, Shawn W Crispin, Asia Times, 2 February 2007.
  2. ^ Buddhist Economics, George Wehrfritz, Newsweek International Edition, 22 January 2007.
  3. ^ WTO doubts Thailand, Prachachat business newspaper, 19 April 2007.
  4. ^ Bea-Kud-Chum as a new currency, Prachachat business newspaper, 15 February 2007.
  5. ^ Localism in Thailand a study of globalisation and its discontents, Kevin Hewison, 1999.
  1. ^ [6], Bilaterals, FTA BACKLASH: Farmers petition the King, 7 July 2004
  2. ^ [7], Thaingo.org, 31 March 2007
  3. ^ Self-Sufficiency Economy Topic, Chaweewan Saiboa, Prachachat Newspaper, 8 February 2007.
  4. ^ Thailand's Royal Wealth, Asia Sentinel, 01 March 2007.
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