BANGKOK, 10 May 2011 – Academics have recommended the incoming government to cancel all energy subsidies and allow the retail prices to be in line with the global trend while stressing that long-term energy policies should be prioritized.
During a seminar, energy expert Manoon Siriwan criticized the current Government’s policy to subsidize the prices of oil and natural gas, saying it was only effective in lowering people’s cost of living in the short run and was geared towards political gains rather than solving economic problems. He added that the overuse of the State Oil Fund as the source of subsidy had also distorted the energy structure, prompted more imports of certain types of fuel and led to unfair pricing.
Therefore, Mr Manoon called on the new government to terminate the subsidization policy and gradually float the fuel prices in order to correspond to the global rates. At the same time, he said more attention would need to be paid to measures for promoting energy efficiency, particularly the reduction of oil imports, more reliance on alternative energy and the development of saving habits, while the Oil Fund should instead be reserved for the tackling of energy problems in the long run.
Meanwhile, Director of the Bank of Thailand’s Office of Macroeconomic Policy and Analysis Songtum Pinto stated that the Government needed to continuously downsize its fuel subsidy in a bid to let consumers know that the global oil price was still steep and to protect them from future tax burdens. He agreed that the subsidization policy had helped deter inflation but said if the Government ran out of funds, the country’s economy would be immediately devastated by a sharp inflation rise.