As well all know the “evil one” (AKA Thaksin) was in power in 2001 when they implemented the village fund, which gave 1 million baht to every village in Thailand. Critics state that this money was wasted on mobile phones.

Thanong in The Nation:

The grass-roots people, of course, loved the handouts and they came to identify these with “Thaksin’s money”, things they did not have to repay. Instead of using the money for investments, the handouts were spent on mobile phones, motorcycles and pick-up trucks that ended up creating more debt for poor rural people

BP: Of course, mobile phones, motorcycles* and pick-up trucks are not investments, when brought by poor people. They weren’t actually handouts, they were loans with a mean annual interest rate of 6% (PDF- a good explanation of the village found). This can be compared with informal money lenders who can charge than much, or even higher, per month. From the same PDF file, if they were really handouts how come the 78 billion baht has resulted in, by Ma 2005, “259 billion baht” being lend out – with “repayment of principal amounted to 168 billion baht, leaving outstanding principal of 91 billion baht”.

Part of Sondhi L’s and other PAD protest movement against Thaksin included the charge that:

…villagers were lured into borrowing from the village fund to buy mobile phones.

BP: Also, see footnote 11 of this journal article (academic access not required)

Bangkokian in The Nation:

He said he would create entrepreneurs through the Village Fund. Why is it used to buy mobile phones and motorcycles instead of investing in enterprises that create jobs?

The Nation again:

The Thaksin government knows very well that people at the grassroots aren’t familiar with running a business….Money distributed through the populist policies ends up being spent on mobile phones, phone cards, motorcycles, pickup trucks and consumer items. The rich or top-bracket earners stand to benefit from such grassroots consumption because they control most of these businesses.

BP: Some might call it investment rather than simply consumption.

Dr Roger Tatoud:

The poorest and rural people were converted to Thaksinomics too and if they did not benefit as much as the upper classes, they were given a taste of what it is to have money with such initiative as the Village Fund (often used to buy mobile phones rather than farming equipment), debt canceling and other populist handouts.

Also, on the issue of “consumer items” and “farming equipment” an actual survey (PDF) that surveyed almost 35,000 households asked households what the true objective of the money and responses were that only 1.4% of the village fund money was spent on consumer items compared to 39.5% on “agricultural equipment/inputs”. Ahead of consumer durables was 9.7% for animals, 10.3% for non-farm business equipment/input, 4.8% for improving the dwelling, and 4% for school fees.

However, as noted by the authors in the above PDF “[b]orrowing is fungible, so this does not necessarily imply that spending on agricultural activities actually rose as a result of the implementation of the Village Fund program”.

Of course not all articles were negative, particularly when they spoke to locals as this Reuters article reports:

“People are grateful to Thaksin,” said Supatra Kittawong, a retired teacher and now chairwoman of a million-baht ($28,500) village fund.
…
The village funds, which critics alleged were spent on luxuries like motorcycles and mobile phones, had created jobs in her area, Supatra said.

Borrowers invested the money in goods sold at the weekend market in the town, she said.

As Andrew at New Mandala has previously noted, academics see an improvement in GDP from increased mobile phone numbers as reported by the Economist:

The idea that mobile phones bring economic benefits is now widely accepted. In places with bad roads, few trains and parlous land lines, they substitute for travel, allow price data to be distributed more quickly and easily, enable traders to reach wider markets and generally ease the business of doing business. Leonard Waverman of the London Business School has estimated that an extra ten mobile phones per 100 people in a typical developing country leads to an extra half a percentage point of growth in GDP per person.

BP: So Thaksin’s dastardly plan was to intentionally lure poor people to buy mobile phones in order to deviously increase GDP. The latest New York Times Magazine has a very long piece entitled “Can the Cellphone Help End Global Poverty?” which looks at the economic benefits of mobile phones. Some excerpts:

“You don’t even need to own a cellphone to benefit from one,” says Paul Polak, author of “Out of Poverty: What Works When Traditional Approaches Fail” and former president of International Development Enterprises, a nonprofit company specializing in training and technology for small-plot farmers in developing countries. Part of I.D.E.’s work included setting up farm cooperatives in Nepal, where farmers would bring their vegetables to a local person with a mobile phone, who then acted as a commissioned sales agent, using the phone to check market prices and arranging for the most profitable sale. “People making a dollar a day can’t afford a cellphone, but if they start making more profit in their farming, you can bet they’ll buy a phone as a next step,” Polak says.
…
Robert Jensen, an economics professor at Harvard University, tracked fishermen off the coast of Kerala in southern India, finding that when they invested in cellphones and started using them to call around to prospective buyers before they’d even got their catch to shore, their profits went up by an average of 8 percent while consumer prices in the local marketplace went down by 4 percent.
…
For this reason, the cellphone has become a darling of the microfinance movement. After Muhammad Yunus, the Nobel-winning founder of Grameen Bank, began making microloans to women in poor countries so that they could buy revenue-producing assets like cows and goats, he was approached by a Bangladeshi expat living in the U.S. named Iqbal Quadir. Quadir posed a simple question to Yunus — If a woman can invest in a cow, why can’t she invest in a phone? — that led to the 1996 creation of Grameen Phone Ltd. and has since started the careers of more than 250,000 “phone ladies” in Bangladesh, which is considered one of the world’s poorest countries. Women use microcredit to buy specially designed cellphone kits costing about $150, each equipped with a long-lasting battery. They then set up shop as their village phone operator, charging a small commission for people to make and receive calls.

BP: Entry level phones can be picked up for just under 1000 baht in Thailand, but some second hand phones can be picked up for 200 baht. I blame Thaksin!

btw, the New York Times Magazine article is worth a read in its entirety.

*One victim of Thaksin who wasted his money first on a motorcycle and then on a pick-up truck is a villager in the Northeast, as reported by Time in 2005:

Winai Tatasuthai, a 45-year-old cowherd living in the tiny northeastern Thai hamlet of Baan Dongsaensuk, owes Prime Minister Thaksin Shinawatra debts of both money and gratitude. Three years ago, Winai could barely make ends meet; today, he’s a modestly successful entrepreneur, proudly serving up plates of roasted chicken from his own barbecue pit at a roadside marketplace. Winai’s life changed when, in 2001, Thaksin set aside 1 million baht�about $25,000�for each of Thailand’s 80,000 hamlets to form a fund that would provide low-cost loans to farmers, artisans and other needy villagers. Winai borrowed $250 from the $2 billion Village Fund, bought a few chickens and a three-wheel motorcycle with an attached charcoal grill, and began rumbling around villages, hawking wings and drumsticks. The 20 chickens he now sells daily net him a profit of $7.50�tripling his annual income. Winai has bought a pickup truck and expanded his herd of cows, and he no longer struggles to pay his 16-year-old son’s school fees. “Life is getting much better,” he says. “I didn’t have enough money to do anything. Now I have the freedom to do what I want.”

Baan Dongsaensuk’s residents and tens of thousands of other poor Thais who have borrowed from the Village Fund will, with perseverance and luck, also pay off their loans.