BANGKOK, Oct 7 (Reuters) - Thailand's new government, led by Yingluck Shinawatra after an election on July 3, is pushing ahead with its populist, pro-growth policies, including a huge increase in the price paid to farmers for their rice from Friday.
Economists are worried that its programme will increase the budget deficit and add to inflationary pressures.
Details follow of policies implemented so far or promised.
WAGES
-- Starting monthly salary of 15,000 baht (${esc.dollar}482)for new university graduates in government jobs and state enterprises from January, up from the current 10,640 baht.
The plan has been approved by cabinet, together with higher living allowances for state employees whose salaries are below 15,000 baht. The government said the scheme would require 18.9 billion baht in the fiscal year from Oct. 1.
-- A daily minimum wage of 300 baht (${esc.dollar}10) nationwide, up 35 to 90 percent from the present minimum set in each province.
The government has said this could take effect from January in seven of 77 provinces, including Bangkok. . A tripartite committee that sets minimum wages failed to reach a conclusion this week and meets again on Oct. 17.
The minimum wage has risen by 2.3 percent annually over the past 10 years, less than inflation at 2.8 percent, according to the National Economic and Social Development Board.
TAXES
-- Tax breaks for first-time buyers of cars and homes.
The plans have been approved. First-time car buyers will get a tax refund of up to 100,000 baht. The car price on which the refund is based is capped at 1 million baht; the vehicle must have a maximum engine of 1,500 cc and be kept for five years.
The government says this will cost 30 billion baht in lost revenue but could boost demand by 500,000 new vehicles. .
First-time home buyers will get a five-year deduction worth 10 percent of the price of the home in their income tax, or up to 500,000 baht (rather than a deduction in their taxable income as earlier proposed).
The home price is capped at 5 million baht. The government has said this would cost about 2.4 billion baht per year.
A 30-year loan of up to 1 million baht with zero interest in the first three years will be offered to first-time home owners.
-- Corporate tax will be cut to 23 percent from 30 percent in 2012, then to 20 percent in 2013. The government says this could be submitted for cabinet approval this month.
Economists at Morgan Stanley have estimated the first corporate tax cut could cost about 150 billion baht (${esc.dollar}4.8 billion). UBS puts the cost at 100 billion baht.
RICE INTERVENTION SCHEME
-- Pledge to buy unmilled rice from farmers at a guaranteed price of 15,000 baht per tonne, double the market price at election time. Jasmine rice would be bought at 20,000 baht.
This is going ahead from Oct. 7. It could cost 410 billion baht, based on a projected main crop of 25 million tonnes, and this will be funded through bank lending. (As a comparison, the projected state budget deficit for the fiscal year from Oct. 1 is 350 billion baht).
Economists say the new policy could force up inflation and may push Thai export prices up to ${esc.dollar}850-${esc.dollar}870 a tonne, far above the current ${esc.dollar}650 for the benchmark 100 percent B grade. That could push buyers towards Vietnam and other rival producers.
FREE TABLET COMPUTERS
-- Free tablet computers for about 800,000 school children each year and wireless internet networks, starting as a trial for first-grade students in 2012.
But the government will not give tablets to every school, only those that can show they are capable of making proper use of them, Education Minister Worawut Ua-apinyakul was quoted as saying in the Nation newspaper on Oct. 6.
Yingluck's party has said the tablets would cost between 3,000 and 5,000 baht (${esc.dollar}100 to ${esc.dollar}160) each and operate with open-source software, possibly from China.
ENERGY AND OTHER RETAIL PRICES
-- In August, as promised, the government temporarily removed a levy on some fuels, resulting in a big fall in the retail price of gasoline and diesel. It said this would run for up to one year and cut contributions to the state Oil Fund by 3 billion baht each month .
But on Sept. 30 it said it would reimpose a levy; it will take 1 baht per litre on 91-octane and 95-octane gasoline and 0.60 baht per litre from diesel from Jan. 16, to help stabilise the fund, which is used to subsidise other fuels.
It will also keep the retail LPG (liquefied petroleum gas) price for households at 18.13 baht per kg until the end of 2012, extended from September. .
The government has extended the excise tax cut for diesel for three months to end-2011, which will cost it about 25 billion baht (${esc.dollar}830 million) in lost revenue.
The tax was cut to 0.005 baht per litre from 5.31 baht by the previous government as it tried to cap the retail price.
-- The government has broader plans to revise the whole system of energy price regulation, which is still taking shape.
It said in August it expected to raise excise tax on all fuels in the next 6-8 months to make a more appropriate price structure.
-- Pledge to hold down prices of consumer goods and energy.
The government has said it will not force operators to cut prices. The Commerce Ministry last month suggested lower prices for pork and chicken and said sellers of some products such as cement, fertiliser and water pumps were willing to lower prices.
On Oct 3., the cabinet approved the extension of free public transport until Jan. 15 for certain users and the government said this would cost 2.18 billion baht.
TRANSPORT
-- High-speed rail lines: the plan is to build separate lines from Bangkok to three major urban centres: Nakhon Ratchasima (260 km/160 miles northeast), Chiang Mai (700 km north) and Hua Hin (200 km south).
-- Develop existing rail systems to allow movement of cargo from the north, northeast, east and south to Bangkok.
-- 10 new elevated rail lines within four years to connect Bangkok with its suburbs.
-- Extend a rail link from central Bangkok to Suvarnabhumi airport out to eastern Chon Buri province, which includes the tourist city of Pattaya.
Little has emerged on this, including how it will be funded.
OTHER INFRASTRUCTURE
-- Yingluck has promised anti-flooding levees to protect the Bangkok area from tide surges around the Gulf of Thailand.
SOCIAL WELFARE AND OTHER SERVICES
-- Universal medical care; patients pay 30 baht per visit
-- The government said it would start from October a three-year household debt moratorium for those with no more than 500,000 baht of debt, which will help about 640,000 farmers and cost the government about 14.2 billion baht.
-- Plan for credit cards for farmers to buy fertiliser and other supplies for production, and for taxi drivers. Details not finalised, but the government has said farmers could be allowed credit worth up to 70 percent of the value of their produce.
-- Annual rural village development funds of between 300,000 and 2 million baht for each of Thailand's 73,000 villages.
-- Monthly welfare allowance of 600 baht for citizens over 60, rising to 700 baht at 70, 800 baht at 80 and 1,000 baht at 90. (${esc.dollar}1 = 31.15 Thai Baht) (Compiled by Orathai Sriring, Jutarat Skulpichetrat and Martin Petty; Editing by XXX)
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