Government expenditure programmes during the second Phibun-led
government were directed to improving national income and social welfare
in a broad array of areas, from urban housing to irrigation (Kobkua 1995:
150–1). Generally uncoordinated, the programmes implicitly favoured
centralisation, having the cumulative effect of consolidating Bangkok’s
urban primacy and benefiting key economic actors in the capital and urban
consumers generally (Muscat 1994: 52). Significantly, the first major infrastructure
project benefiting from international loans was the development
of a new port at Khlong Toei, five miles downriver from the central city.
Mooted from the mid-1930s, dredging of the river to create this port area
was completed in 1954, significantly enhancing the international import–
export capabilities of Bangkok (Porphant 1994: 210–11). In 1955 the
government introduced a premium on rice exports (levied on exporters) in
order to enhance government revenues and stabilise domestic rice prices
and provided the government with windfall revenues due to high world
commodity prices. The premium allowed the state and private employers
to keep salaries and wages low by acting as an income subsidy. In the
process, it exacerbated rural–urban income disparities. It operated at the
expense of rural households because merchants passed on the costs in
the form of lower farm-gate purchase prices (Pawadee 1987: 186–90).
Combined with the stagnating wage effects of an increasing labour supply
in Bangkok, the rice premium (only abolished in the mid-1980s) enhanced
the profitability of investment in urban-based manufacturing and service
industries, which grew significantly in the following decade (Muscat 1994:
75–7; Porphant 1994: 194–8).