The Nation October 13 1998

THE concept of economic self-sufficiency promoted by the government is one of the main measures helping communities to ride out the crisis.

But in the process it is producing a new ''bubble economy'' at the grassroots level and has destroyed the momentum built up by local communities on their own, a community researcher warned on Thursday.

''A new bubble economy is emerging in villages because now a lot of money is being handed out by the government for people to run their own businesses,'' Phitthaya Wongkol, a community researcher, said at the ''How About the Poor?'' seminar at the Social Institute of Chulalongkorn University.

''This phenomenon is similar to the last bubble economy when Thai business people could get easy money from the BIBF [Bangkok International Banking Facility] loan window for non-productive businesses like property and cellular phones.''

Phitthaya said the government had tried to convince communities in villages nationwide to access loans and grants to invest in business activities in the name of a self-sufficient economy without being concerned about their capability and linkage plans.

This month, the Interior Ministry has ordered every province to complete a self-sufficiency plan for which it will allocate a supporting budget. The Social Investment Fund (SIF) is to allocate grants from funds totalling Bt4.8 billion for about 100 communities.

In addition, the Labour Ministry and the Industry Ministry have arranged more than Bt10 billion in loans for villagers.

''All these budgets come with the wrong policy of attracting and urging people to do the same thing nationwide within a short period. Now, more than 5,000 villages are producing the same things like herbal shampoo, processed banana, cloth and agricultural products,'' Phitthaya said.

''How can they sell the same thing to each other and who will buy their products? There is an oversupply and people will lose out soon.''

Unlike the government, the oil firm Bangchak Petroleum has spent about six years in working closely with villagers to promote a self-sufficient economy through its petrol stations and to build a network to sell their products in urban areas. In addition, it plans to export local goods, mainly agricultural products and handiwork, within this year.

The researcher noted that the government's plan was not only creating a new bubble economy but was also destroying the process of community development owing to top-down management.

He explained that for proper community development, it was more important for villagers to undergo a learning process. However, he said, this top-down policy urges people to ask for money without allowing them to think about the process.

He cited the savings group, in Khong Pea village in Songkhla, which has mobilised more than Bt50 million on their own to support their businesses since they understand their own financial system. It is impossible for the government to work like this group which has emerged in such a short period, he said.

Recently, the Assembly of the Poor refused an SIF grant to follow a government plan because it believes the money will reduce cooperation among members instead of promoting self sufficiency.

BY SURACHAI CHUPAKA

The Nation