GOVERNMENT AND BUSINESS

 

The subject assigned to me at this conference, The Relationship between Government and Business, is generously wide. In limiting the scope of the talk, I guess that perhaps you would like to hear my views on one of the main objectives of the Thailand Management Association, namely, “to maintain effective collaboration between government and business leaders in developing the national economy.” This will therefore be the main theme of my presentation. Moreover, I notice that during this conference, members will discuss (a) education and Training (b) planning, and (c) private enterprise. Accordingly, I shall also submit some of my views on these three topics in relation to the main theme.

 

I. EFFECTIVE COLLABORATION BETWEEN

GOVERNMENT AND BUSINESS LEADERS

We are not talking here about completely socialist states where government and business are one; nor are we talking about the old-time concept of Western laissez-faire societies where the task of government was simply to govern and that of business, solely to do business. In countries like our own, business leaders, while aiming primarily at making profits, must also (in the words of the TMA objectives) aim to at collaborate government in developing of the national economy along a steady and effective path of progress. The government, on the other hand, must promote business in order to tax it, to better  promote it, to better tax it. There are, therefore, diverse points of contact between government and business leaders.

What I have said above is surely a platitude for members of the TMA. I would like to dwell a little longer on the subjects of taxation and promotion.

 

TAXATION

Tax is a dirty word. People react with various kinds of emotion at the mention of it. Businessmen usually suspect that their competitors are taxed more lightly than themselves. Newspapermen rejoice in writing leaders condemning the government for any tax measures. Brave generals turn pale when advised to increase the government income, even when an election is one, some say two, years away. Many citizens, usually honest, delight in beating customs officers with petty smuggling of new cameras or watches. Even taxmen sometimes dare collect income tax from people or their relatives only after their deaths.

In fact, taxation is the life-blood of governments. Imagine a government with no tax income. If it wants to spend any money, it will have to borrow, and then it will not be able to repay if it can raise no taxes.

Of course, reasonable businessmen at least tolerate taxation. But they expect tax administration to be efficient, otherwise only honest people will bear the tax burden. Taxation ought to be purposeful, for instance the tax on raw materials must be lighter than that on finished products. It is also reasonable to expect that to the injury caused by taxes must not be added the insult caused by various kinds of nuisances from tax collectors.

In my capacity as adviser to the Ministry of Finance, I gladly admit that my colleagues and I at the ministry are human, and therefore we often make mistakes. I would like, however, to take this opportunity to say that the Ministry of Finance is always open to advice and ready to consider grievances on the part of taxpayers. And we promise not to bite the hands that feed us.

Fiscal policy is not merely concerned with raising revenue for the government. It serves many other important purposes, about which professors keep reminding their students, but which politicians keep forgetting. In times of inflationary tendency, even though the treasury is full, it is still the duty of a responsible government to raise tax to drain pernicious extra cash from national circulation. In times of deflation, tax must be lowered to stimulate consumption, investment, and business activities. A wise government must not be afraid apply brakes or accelerators, according to circumstances. Fiscal tools, also, together with appropriate expenditure policies, are available to bring about social justice and reach humanitarian objectives. Tax holidays, special exemptions, and protective tariffs are tools familiar in this country in connection with industrial promotion.

 

PROMOTION

That brings us to my next topic: The Role of Government in Business Promotion.

“Business thrives where there is no thief.” I forget who said this, but it is a wise saying. It is true for all the senses of the word thief that one can imagine.

A good policing duty is therefore the first duty of any government in this respect. Subversion and undemocratic armed agitations must be dealt with seriously and effectively. I would go as far as advocating that an important duty of the government is to promote a democratic regime and thus to prevent coup d’etats by force of arms.

All business calculations and decisions are expressed in terms of money: investments, payrolls, expenses, costs, sales, profits, dividends, interests, reserves, provident funds. The value of money must therefore be reasonably stable, externally and internally. Here, monetary and fiscal policy, to which reference has been made, must play their roles.

The infrastructure of society must be provided by the government. Efficient means of transport, modern means of communication such as  telephone-telex telecommunication, cheap power, appropriate land, and  good supply of labour with various skills must be provided. International trade cannot progress without efficient ports. Stable, reasonable prices of essential goods such as pork, vegetables, and clothing are also important. Monopolies must be kept to the bare minimum, and these tolerated must be controlled by good democratic means and the rule of law.

There must also be a healthy atmosphere of fair play among all kinds of enterprises, supervised and refereed by an objective and disinterested government. I believe that private business is usually not afraid of competition from public enterprises. The latter are normally not efficient enough, particularly if generals, admirals, and air marshals are appointed to the top jobs. To be watched out for is another species of animal altogether: an influential enterprise disguised as a private concern, a sort of mongrel if you like. They are deadly, atrociously destructive of the moral and the economic fibre of the society.

 

II. ROLE OF PRIVATE ENTERPRISE IN NATIONAL

DEVELOPMENT

In the past eight or ten years, this country has made considerable progress in economic development, although we still have a long way to go to reach a decent standard. Much of this progress has been due to good activities in the government sector with assistance for one international bodies and foreign friends. But most of the credit must belong to the private sector, with adequate savings, good capital formation and investments, and increases in productivity.

I have no intention of flattering those in this conference who are industrialists and traders. But I have to admit that the progress of industrial and commercial sectors included the most spectacular highest increase in percentage. It must be recognized, however, that industry and manufacture still contribute relatively little to the national product.

The backbone of the Thai economy is still agriculture. The little men, Thai farmers, have not only increased productivity; they also show resourcefulness by diversifying cultivation, thus putting export eggs in more than four traditional baskets. They also wisely tenaciously onto  rice, a precious produce much needed by the growing Eastern world. Trade terms are also in our favour.

What does all this good fortune mean? What is the single most important factor for progress? My short answer is private initiative. The government can provide; but the individual little men and women, perhaps mostly women in our case, produce. Kill initiative, as in so many neighbouring countries, and you can forget about targets in five-year development plans.

The enemies of individual initiative let us detect them and show them up are monopoly, privilege, and influential business.

 

III. PLANNING FOR DEVELOPMENT

Why do we plan for development? The answer, in short, is that we want to raise the standard of living for our men, women and children.

Let us say it again: Long live government wisdom and long live individual initiative!

Let us preserve and nurture and encourage our citizens’ will to work and produce the right things and give them the opportunity to reap the harvest of their labour.

Given all the opportunities, initiative is a necessary condition for progress for our farming compatriots. But it is not a sufficient condition. Why? Because Thai farmers and town dwellers do not only produce more goods; they are also among the world’s champion producers of children. The Thai population grows at the rate of 3.2% per annum, about 30% more than the world average.

On the one hand, we urgently need a population or family planning policy. I have said enough on this subject else where .

On the other hand, we also need to relieve the land from the pressure of its inhabitants and tillers. We need an industrial development policy.

A good proportion of our country lads ought to be helped to find employment in livelihoods others than living on the land. Industrial and commercial opportunities must be opened them. Suitable jobs must be provided and prospective manpower well prepared to take up these jobs. Not in Bangkok alone, obviously, but preferably in provincial towns and cities.

In thinking about industrialization, I would like to submit that we must have a wider outlook than the Thai national market. Some forms of regional international cooperation and coordinated plans for industrialization are necessary, in order to make our efforts worthwhile, and place our future industrial standing at par with the great American continent, the European Community, Japanese ingenuity and Indian and Chinese giants.

 

IV. EDUCATION AND TRAINING

As previously stated, education for livelihood is needed for our swarming millions to come. Of course we must train tomorrow’s managers. But what is the use of so many generals with so few sergeants? Education and training must be provided by the government for all levels and varieties of skill.

Leaving aside lower ranks, although reminding ourselves that their training and education are urgent, I would now like  to say a brief word about tomorrow’s managers.

Tomorrow’s scientific progress is unpredictable, except that it is going to be very rapid: what are the essential qualities of tomorrow’s managers?

Since some 40 participants are going to deal with this subject, it is my privilege to be brief and not necessarily exhaustive.

I think that tomorrow’s managers must be good leaders, adaptable, re-trainable, all-round generalists, but preferably with specialization in one basic branch of learning.

The manager must be a good leader and generalist because he cannot cope with all branches of the business. He must be able  to utilize and lead specialists under him wisely.

He must be adaptable, because one never knows what scientists and technicians are will produce next.

He must be re-trained and re-trainable because he must keep up with  changing circumstances.

He must have a good basic expertise, engineering for example, or economics as my preference, because without that he cannot get a good start.

One last word. I am glad the Thai Management Association is very much alive. Seminars and conferences are very useful and I notice that managers in Thailand are very keen. The question I am asking is: when and how can we make the business world keen on learning, and the academic world keen on business? When, in short, will the TMA seminar be held at Thammasat, for instance?

 

Address to the Thailand Management Association.

National Management Conference, 27 July 1967.