Finance Minister Korn Chatikavanij has indicated he might extend the government's cost-of-living relief measures for low-income earners for another two or even five months. The five measures, originally introduced for six months, include a price cap on cooking gas, free rides on public buses, economy-class trains and free tap water and electricity. The measures are due to expire at the end of the month. Korn is basing his projections on economic recovery in the fourth quarter of this year, so that by then, low-income earners, aided by the government's measures, can move on by themselves.

If he chooses a five-month extension, it will cost about Bt12 billion. The original cost of the measures, which began in February, was estimated at close to Bt14 billion.

It is incomprehensible that Korn continues to bank on economic recovery in the fourth quarter. Investors in the financial markets are all cheering at the prospect of fourth-quarter recovery, as most economists believe that the worst is over. But what will happen if the worst is about to begin and we are still far from recovery, as judged by the severity of the global financial crisis?

We believe that the government should adopt a conservative view toward the global economic outlook. It should do so by asking itself a hard question: What should Thailand do in the event of the global recession (or depression) continuing for a number of years? If the government assumes the global outlook is going to be very negative, then it should formulate a totally different economic package or devise fresh policies that will keep Thailand afloat and at the same time strengthen our foundation.

The finance minister is still managing the economy according to the economic textbook. But the old textbook might not work.

Korn said he is concerned about a slow recovery due partly to slow capital spending caused by complex government procurements, e-auctions in particular. Last week, he said he would review government procurement rules, or e-auctions, in order to speed up implementation of both the first and second stimulus packages, worth Bt116 billion and Bt1.43 trillion, respectively.

Korn said he also faced a tough decision on whether to give employees of state-owned enterprises a Bt2,000 stipend. Trade unions of both the Provincial and Metropolitan Electricity Authorities have asked for a Bt2,000 monthly stipend - a fixed regular payment - for employees whose monthly income does not exceed Bt50,000. "If I agree to their request, how can I explain it to the poor who are working in informal sectors, such as self-employed workers?" Korn said.

By embracing the old textbook, the government plans to spend Bt1.5 trillion, about 16 per cent of GDP, over the next three years to prop up the economy. That's on top of the annual budget deficit that will be needed to maintain the economy for the next few years. Most of the money will go to the same old items such as large projects (including one or two mass transit lines and airport expansion) and smaller water and road projects all over the country, designed to create local and regional jobs. Korn earlier told the Asia Times that these are not transformative projects, but are long-awaited and are designed to create jobs, inject demand into the local economy and produce efficiency at the grassroots level.

The old economic textbook dictates that the government must try to revive growth. This year the economy might contract by 5 per cent. So the government's logic is to boost spending in areas that will recover lost ground in the GDP.

We believe that it is time the government set a fresh agenda by putting the interests of 40 million Thais - who have not benefited from industrialisation or manufacturing exports - as a priority. Its economic policy must be devised to benefit these people.

Last week the IMD made an interesting remark about Thailand's competitiveness, saying Thailand had the potential to become a global food and fuel energy supplier. There is huge potential indeed in the two areas of food and biofuels. These are two areas we have been arguing all along for the government to give full attention to, and to allocate money and resources to develop them. In agriculture, commodity prices should rise even in the event of global recession because production will not meet global demand. Many countries are facing drought or natural calamities. Thailand is in a position to supply food to them. Agriculture can also absorb Thai labour. Investing money in agriculture is better than handing cash in relief programmes.

Biofuels and green energy have bright prospects. Thailand is importing oil and energy to the tune of Bt1 trillion a year, so it is better to devise a strategy for the country to become energy self-sufficient. We should explore the potential of solar and wind energy, and biofuels. In biofuels, we'll need palm, tapioca and other crops. Resources should be allocated to develop green energy projects throughout the country. Those 40 million Thais could engage in either food production or energy production. We can earn foreign exchange through food exports and save foreign exchange by producing our own energy. At the same time, we can tackle unemployment among low-income earners. This can be achieved without having to bother about the GDP growth. The country would then return