Financial authorities expect soon to finalise the sum needed for the Kingdom's reconstruction after the flood disaster with assistance from the World Bank, amid expectation that it will require hundreds of billions of baht to restore investor confidence.
Finance Minister Thirachai Phuvanatnaranubala reiterated the country's readiness to finance the rehabilitation efforts. Re-ferring to a meeting with World Bank executives yesterday, he said a team of 30 experts was now in Thailand and should complete their damage assessment and report on rehabilitation requirements by the end of the month.
"I was told about the availability of a damage-calculation formula and rehabilitation approaches. This will be reported to the Recovery Strategy Committee chaired by Vira-bongsa [Ramangkura]," he said.
Thirachai yesterday endorsed a proposal by the Federation of Thai Industries, the Thai Bankers Association and the Thai Chamber of Commerce to distribute some revenue from corporate income taxes to a rehabilitation fund.
The donation is based on the differential of tax rates between 2011 and 2012. Next year, the corporate tax rate is to be cut from the current 30 per cent to 23 per cent.
He said his ministry was ready to relax the rules to accommodate the initiative. It estimated that if all companies join the effort, the fund could be valued at Bt52 billion and should be a particular help to small and medium-sized enterprises.
A government committee chaired by Transport Minister Sukampol Suwannathat, tasked with resuscitating flood-affected infrastructure, will today ask the Cabinet for a budget of Bt18.44 billion to rehabilitate Don Mueang Airport, 799 schools, and roads.
Billions of baht is expected to be required to build flood barriers around industrial estates, after the inundation of nearly 1,000 factories.
Finance permanent secretary Areepong Bhoocha-oom said the ministry expected to achieve its tax-revenue target of Bt1.98 trillion for fiscal 2012, a 4.7-per-cent increase from a year earlier.
The ministry expects the economy to grow about 5 per cent next year, boosted by rising local consumption and reconstruction investment following the flood crisis.
The disaster may shave 1.8 percentage points from growth in gross domestic product this year, he said, without giving a forecast for 2011 economic growth.
It is now widely expected that the Bank of Thailand's Monetary Policy Committee at its November 30 meeting will cut the policy rate to boost the ailing economy.
Praipol Koomsup, a former member of the MPC, said the rate might be cut by half a percentage point. Amid calls from some companies for a cut of as much as 1.5 percentage points, he said such a reduction would be too steep and could make it hard for a U-turn.
"A 50-basis-points cut is large, but not too big. It could be cut that much while the Bank of Thailand monitors the situation. If the economy does not pick up, another cut is possible in the next round," he said.
In 2008 the central bank slashed the policy rate by as much as 1 percentage point. Praipol reasoned that the decision at that time was supported by the severe economic plunge sparked by the financial crisis that began in the US.
Though the impacts of the current flood crisis are huge, they vary in severity across the provinces.
The government is scrambling for plans to rehabilitate infrastructure as well as build new facilities to prevent a recurrence of the disaster in coming years.
Thirachai said a US trade representative who paid him a visit yesterday also urged both short- and long-term plans.
Attending the Asia-Pacific Economic Cooperation Leaders' Summit in Hawaii this weekend, Deputy Prime Minister Kittiratt Na-Ranong relayed the government's commitment to prevent another disaster.
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