The general public including the business sector will lose
TAMC regulations mean only one thing to the average citizen or businessperson: higher taxes. The public and businesses will be used as scapegoats to shoulder the burden of more than 20% NBV NPLs. Actually, under present economic conditions, there is a higher likelihood of loss than gain on TAMC investments. Why? First, because financial institutions lack confidence in the management abilities of TAMC, they will likely transfer as many of their non-performing debts – especially those with a probability of incurring more than 40% NBV losses – to the TAMC. Secondly, because the TAMC is viewed as a public institution in the sense that it is under government jurisdiction, there would be little motivation for the TAMC to effectively administer its debts. As well, under such a system, the pressure of answering to creditors would decrease considerably, as government and professional managers will hold the debts. Third, decision making by the many sets of committees could be severely delayed by public lobbies, resulting in indecision and tardiness. Undoubtedly, much pressure will be put on the TAMC to ensure unilateral treatment in all cases, thus opening the door to inappropriate political intervention.
The government must give more thought to the details of its TAMC. It must garner input from those who stand to gain as well as those who stand to lose in order to prevent the good intentions behind the establishment of the TAMC from being mistakenly corrupted. Now is not the time to experiment with a system that may result in heavy burdens on the many for the benefit of the few. Inequality has never solved problems in society.
Social security for small businesses - losses and gains
Professor Dr Kriengsak Chareonwongsak Executive Director, Institute of Future Studies for Development (IFD)
kriengsak@kriengsak.com, http://www.ifd.or.th
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