Public Policy as an Instrument for Public Goods and Services Delivery: A Case Study of Nano Finance Policy Implementation
in Thailand
Wanchai Suktam1 and Surasak Chamaram2
Abstract
Public policy is a framework or government management instrument in delivering public goods and services for the benefit of the people. That is to help people live well, to have a better quality of life and to have peace and security of the society as a whole. Public policy is, currently, considered to be a complicated and complex issue, due to its extensive scope and a large number of related stakeholders. This article is, thus, intended to describe the concept of public policy as an Instrument for delivering public goods and services to the people. It also seeks to reflect the viewpoint of such public policy through Nano Finance policy implementation under the current Thai government on how the policy affects stakeholders in terms of effectiveness, unintended effects and equity. The study found that; Effectiveness: The government had succeeded in implementing such policy in terms of declining informal debt to almost 15 percent of the informal sector's debt and formal debt. Unintended effects: the policy had a negative or positive effect on the outcome. Equity: The policy promoted access to people and business capital. Especially low-income people who use debt service outside the system and those do not have access to credit services from any financial institution, which increases the economic opportunities and reduces the economic and social inequality.
Keywords : Public Policy, Public Goods and Services, Nano Finance Policy, Informal Debt
1Faculty of Humanities and Social Sciences, Surin Rajabhat University, Thailand;
e-mail : [email protected]
2Faculty of Law and Politics, Roi Et Rajabhat University, Thailand;
e-mail : [email protected]
Introduction
Although public policy has remained to be debated for long time on the issue of what public policy is, it is difficult to conclude that the definition of public policy is the best and most accurate. In general, public policy is considered to be a framework or government management instrument in delivering public goods and services to the people for the benefit of the people. That is to help people live well, to have a better quality of life and to have peace and security of the society as a whole. Public policy, generally, begins at the process of policy formulation, which is a matter of policy governing how policies have emerged and who are involved in the policy. In general, there are many models of public policy that will help to understand political life. The process or subsequent step is the policy implementation, which means implementing a policy to achieve as the goals setting.
And the final process is the policy evaluation, which is the process of deciding whether the consequences of the policy implementation are in line with its intended purpose in order to get information to improve or to terminate the policy (Chamaram, 2017: 72). Therefore, governments of all countries often set policy and implement policy as an Instrument for delivering public goods and services to enhance the quality of life of the people as a whole, which will affect the development of the country to flourish.
For the case of Thailand, Thai government has adopted a policy to address the problems and to respond to the needs of people. One issue of policy implementation is that Thai government has made efforts to push policies to address informal debt. The government of General Prayut Chan-ocha (2014-present) recognizes the need to solve informal debt effectively. Special measures are in place to prevent excessive interest rate borrowing in the form of Nano Finance, which has been in practice since the end of 2014. It is important to focus on integrating all aspects of cooperation in the society. All parties must work together to solve informal debt to be integrated and sustainable.
In this article, the authors intended to describe the concept of public policy as an Instrument for delivering public goods and services to the people. It also seeks to reflect the viewpoint of such public policy through Nano Finance policy implementation under the current Thai government on how the policy affects stakeholders based on the policy assessment concept developed by the National
unintended effects and equity.
Concepts of Public Policy as an Instrument for Public Goods and Services Delivery
1. The Meaning of Public Policy
By analyzing and synthesizing the meaning of public policy from the perspective of both domestic and international academicians, it is possible to reflect on the fact that public policy is defined in a variety of ways, with both similar and different parts. The public policy definition can be classified into at least 4 groups:
(1) public policy is a matter of decision making in the conduct of state affairs; (2) public policy is a matter of activities or actions of the state; (3) Public policy is a matter of the framework or guidelines for the implementation of the state in the form of ready-made series of plans, plans and related projects rationally and (4) public policy is a matter of the impact on society as a whole. The interesting meaning as shown in the following:
1.1 Public policy is a matter of decision making in the conduct of state affairs; the view of the most prominent public policy scholar, Dye (2005: 1), briefly states that public policy is whatever the government chooses to do or not to do. It will be seen that whatever the government chooses to do, it will be beneficial to society as a whole. For examples; a policy for reduction of social inequality, a policy for creating access opportunities for government services, a policy for public health and health services, etc. In addition to the views of Dye, there are also a number of academicians who try to reflect on public policy issues. For example, Jenkins (1978:
2) explained that public policy is a set of interrelated decisions taken by a political actor or group of actors concerning the selection of goals and the means of achieving them.
1.2 Public policy is a matter of activities or actions of the state; the perspective of Sharkansky (1970: 1) explained that public policy is an activity that the government produces. The Thai public administrators, such as Sirisamphan (1996: 3- 4), viewed that public policy is a policy set by the government. This may be an organization or individual who has the legal authority to act under the political system. Public policies range from what the government intends to do or not to make
government decisions in allocating resources or values in society, government activities or actions, as well as actual productivity and results. This is what follows from the operation of the government.
1.3 Public policy is a matter of the framework or guidelines for the implementation of the state in the form of ready-made series of plans, plans and related projects rationally; the view of Anderson (1975: 3) reflected the image of public policy as a guideline for action taken by individuals and groups to address the problems. For Thai academician, such as Juyto (2009: 8) stated that public policy is a decision that the government chooses to do or not to do at every level of government to direct the action that requires real results by defining a package of plans, plans and projects that relate in a logical way to achieving the goals of social values.
1.4 Public policy is a matter of the impact on society as a whole; the point of view of Easton (1953: 129) was that public policy is about sharing or sharing what is valuable to society as a whole. For Thai academician, such as Thamrongthanyawong (2006: 2) explained that public policy is an activity of the government that chooses to act or not to act, focusing on the values and interests of the involved society with emphasis on the legal provisions. This is consistent with Siriwan (2015: 10) viewed that public policy is a decision made or not exercised by a government or a governmental organization that has the legal authority to influence the public. Resolving public issues In view of this perspective, it is clear that public policy will have direct and indirect impacts on stakeholders or the society as a whole.
Public policy in the authors’ point of view refers to the framework or instrument of government in delivering public goods and services to the people for the benefit of the people. That is to help people live well, to have a better quality of life and to have peace and security of the society as a whole. However, considering the definition of public policy from a variety of perspectives, it is noteworthy that public policy can generally be considered in at least two dimensions. Public policy in the national dimension or central public policy is the Constitution, for example, the Constitution Act, Notification of Ministry, Ministerial Regulation, etc., and Local Public Policy as the policy of the local government, for example, local regulations.
The definition of public policy above will inevitably reflect that public policy is important in several ways: (Juyto, 2009: 8-12; Siriwan, 2015: 6; Jittaruttha, 2018: 6-9)
2.1 Public policy is an Instrument for national development; it is an Instrument for targeting and developing countries. For example, it is an Instrument for the government to create an economy. It is an Instrument of government to create Thai society desirable to be a society of quality.
2.2 Public policy is an Instrument to solve problems and meet the needs of many people.
2.3 Politicians need to set the policy to meet the needs of the people.
The policy is to transform the political will of the people. If the government is trusted by the people, it will have a greater impact on the long-term governance of the government.
2.4 Public policy is a guideline and framework for planning the agencies responsible for implementing policies. It is also a collaborative instrument that will enable the unit to better understand goals, practices, and working directions.
2.5 Academicians play a very important role in terms of evaluating public policy, which will help to know whether public policies can be implemented in a way that is consistent with the will of the people.
3. The Process of Public Policy
From the literature reviewed, it was founded that public policy is usually divided into 3 main processes: policy formulation, policy implementation and policy evaluation as followings;
3.1 Policy Formulation; this process deals with a matter of policy governing how policies have emerged and who are involved in the policy. In general, there are many models of public policy that will help to understand political life. An important model for understanding policy formulation, for example, Institutional model, process model, group model, elite model, rational model, incremental model, game theory model, systems model (Dye, 2005: 20-45). In addition to these models, John W. Kingdon has published a work entitled “How does an idea's time come? Agendas alternatives and Public Alternatives, and Public Policies” in which he presented multiple streams frameworkmodel that influenced the entry into public policy, including problems, politics and policy (Kingdon, 2007: 565-569).
3.2 Policy Implementation; this process deals with carrying out, accomplish, fulfill, produce, complete which embodies the role of public servants in the government bureaucracy to give efficient and equitable service to the people.
( Pressman and Wildavsky, 2004: 340) Many public policy initiatives have been developed, for example, Policy Implementation model of Van Meter and Van Horn (1975), Policy Implementation model of Mazmanian and Sabatier (1983).
3.3 Policy Evaluation; this process deals with deciding whether the consequences of the policy implementation are in line with its intended purpose in order to get information to improve or to terminate the policy. A model for understanding public policy evaluation, for example, Tyler's policy evaluation process (1949), Hayes and Samuel’s policy evaluation process (1969). In addition, public policy evaluations can be understood using the policy assessment concept
Policy Formulation
Policy Implementation Policy
Evaluation
is presented as a guideline for policy effects assessment. There are 3 ways: ( 1) Effectiveness; (2) Unintended effects; and (3) Equity. (National Collaborating Centre for Healthy Public Policy, 2012: 2)
Public Policy as an Instrument for Public Goods and Services Delivery trough Nano Finance Policy Implementation in Thailand
The concept used in analyzing the issues is the policy assessment concept developed by the National Center for Public Health Policy (NCCHPP) of Canada, which is presented as a guideline for policy effects assessment, namely, (1) Effectiveness:
the first element used to assess the success of a public policy is its effectiveness at achieving its objective. (2) Unintended effects: Consideration is given here to all the effects that are produced by implementing the public policy under study, but that are unrelated to the objective pursued (in other words, the effects that are external to the chain of effects represented by the logic model). Given the complexity of human societies, it is impossible to control a policy so fully as to ensure that it produces only the desired effect, and no other. Unintended effects can be positive or negative. And (3) Equity: the aim is to determine whether the policy being analyzed produces different effects on various groups (categorized by age, gender, socioeconomic status, ethnicity, religion, residence in certain zones, sexual orientation, disabilities, etc.), or whether it could potentially create, increase or correct inequalities in the distribution of the targeted problem. ( National Collaborating Centre for Healthy Public Policy, 2012: 3-4)
1. The contents of Nano Finance Policy
Nano Finance policy came from the government of General Prayut Chan- ocha in awareness of the need to solve systemically informal debt problems. At the Cabinet meeting on December 9, 2014, the Cabinet took note of Nano Finance policy proposed by the Ministry of Finance. This is considered a special measure to control the loan interest rates too high and to help low-income people get access to loan sources to invest or career without having to rely on an informal loan. Later, the Ministry of Finance issued a Nano Finance policy with interest rates not to exceed 36 percent per annum effective from January 24, 2015. Nano Finance policy is an unsecured personal loan product for individuals who are able to repay their debts.
The loan is able not to exceed 100,000 baht per person and will have the interest,
penalty, service fee and fee not more than 36% per year (Effective Rate). The business must be a limited company or public company that has a registered capital of not less than 50 million baht, and will have a total debt to equity ratio of not more than 7 times and a business license from the Ministry of Finance. Nano Finance policy aims to promote access to finance and the opportunity to work as well as helps relieve the suffering of the people, due to informal debt problem. The government also expects that such Nano Finance policy will increase economic opportunities and reduce long-term economic and social inequality.
2. The Analysis of Nano Finance policy Implementation
2 .1 Effectiveness; the government had succeeded in implementing such policy in terms of declining informal debt to almost 15 percent of the informal sector's debt and formal debt. According to the statistics of the survey of Thai household debt in 2016 of Center for Economic and Business Forecasting, University of the Thai Chamber of Commerce (2016) shows that although the amount of debt increased. However, the amount of formal debt increased to 62.3% from the previous year at 48.7%, while the informal debt significantly reduced from 51.3% in the year 2015 to 37.7% in the year. 2016, and fell to the lowest level in 8 years, with significant reasons to come up with the government issued a policy on Nano Finance policy.
The low income people have access to a source of money to invest more professionally. As a result, 66,146 credits have been issued totaling 1,710.7 million baht (10,000-20,0 0 0 baht per person), which is significantly increased from the previous. It is an opportunity to access the resources and resources of the people who earn a living.
2 .2 Unintended effects; the policy had a negative or positive effect on the outcome. Although the true intentions of the government are Nano Finance policy is likely to raise awareness and encourage low-income people to live a better life. It can also prevent and alleviate the burden of the informal system. In order to solve such problems, the government has been working to bring together all sectors of the economy, society and politics, with all sides working together to address the social inequalities in an integrated and sustainable manner. One of the most common problems is that the number of non-banks allowed to operate the NPL business is relatively small. This is due to the important conditions that the Ministry of Finance set to allow each business can apply for permission is must be a company with a registered capital of not less than 50 million Bath. But the reality is found that most
creditors is not as high. This has led to the denial of such conditions. In addition, Nano Finance policy will not encourage many private companies to apply for a license to operate the business. In some parts of the population, they still not access financial resources from Nano Finance policy. It also found that people still have misconceptions about Nano Finance policy is the government's money to give to the people. Moreover If the debtor has spent money lavishly, it may be rejected loan applications from the business of Nano Finance. This is consistent with the results of the case study and the financial status of the low income households of Center for Economic, Business and Economic Research, Government Savings Bank (2016: 6) was found that most of the expenses came from consumption expenses and from the current state of society, which has instilled more material values. This affects the consumption behavior, including media access. The demand for shopping is easier and finally, it may cost the household more than necessary. The lack of such financial discipline resulted in the debt being incurred. In addition, it did not affect the property or income to the borrower. It also added more interest and principal to recover the problem.
2 .3 Equity; the policy promoted access to people and business capital. Especially low-income people who use debt service outside the system and those do not have access to credit services from any financial institution, which increases the economic opportunities and reduces the economic and social inequality. In addition, there are guidelines for Nano Finance policy to ensure that the business is fair to not exploit the consumer under the same regulatory framework.
The people must know the credit to earn a living and use it to invest. It requires strict financial discipline to avoid bad debts in the system. However, people need to know how to use credit to earn a living and invest in. It requires strict financial discipline to avoid bad debts in the system. (Bureau of Policy, Financial System and Financial Institutions Fiscal Policy Office, 2016: 4) On the issue of promoting access to finance for the low-income people, Nano Finance policy helped increasing economic opportunities and reducing the economic and social inequality. The results of Nano Finance policy implementation showed that low-income people can easily access loan sources in the system without credit card fees. Most of them have liabilities from the source of the informal loan to pay the debt. This is consistent with the research of Laotrakoonchai (2015: 629) found that retailers who had demand for
NPLs from the GSBs were 56 or 84.8 and the factor affected the use of credit was No Credit Approval Loans. That would be reflected Nano Finance policy implementation of the government can help accelerate access to public funds, especially, the low income group in the society.
However, it is noteworthy that Nano Finance policy implementation for reducing social inequalities in a way that is only to help low-income people to get access to loan sources. To be invested or occupied by not having to depend on the source of the informal loan only. It is not a way or solution to social inequalities in the long run.
Conclusion
Public policy is an instrument for delivering public goods and services that are important for the benefit of the people. Because public policy affects a lot of people in the county, it must be implemented through the participation of all stakeholders and operate with caution. In the same way as Nano Finance policy implementation to achieve tangible results, it is necessary to provide opportunities for agencies and people involved in contributing to the criticism and expression for improving the policy to meet the needs of people. Credit support is available as a consultant in integrated business planning. Changes some conditions to be more appropriate to initiate or invite the creditors outside the system to bring business loans outside the system to apply for permission to open a business or a place to provide credit services legally. In addition, the habit of saving or financial discipline should be cultivated for the borrowers. As well as, all concerned agencies are necessary to establish a correct understanding of spending money to the borrowers in order to adjust the behavior of spending money appropriately.
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