The incoming government must take urgent action to stimulate the economy by injecting budget funds into the system, academics and businesspeople said.
They agree that populist policies can be used to kick-start growth, but also warn against taking loans or using “future money” to fund such policies.
Spurring growth
Somjai Phagaphasvivat, an independent political and economic analyst, said the overriding priority for the new government is to stimulate the economy.
“Growth should rise to 3%. But in the first quarter, it was only at 2.6% while the second quarter saw it dip to 1.8%. During the first half of the year, growth averaged 2.2%. Lots of work must be done to achieve 3%.
“Even if the economy grows to 3%, it is still the lowest in Asean, which has an average of more than 4%,” Mr Somjai said.
The government must step up efforts to stimulate growth and disburse unspent budget funds worth more than 100 billion baht held by state enterprises and public organisations, he said.
The government also must work with the private sector to boost tourism, which is crucial for reinvigorating the economy, he said.
“Efforts have been made to attract 5 million Chinese tourists, but only 3 million have arrived so far,” he said.
Mr Somjai also urged the new government to encourage domestic tourism and promote exports by finding new markets. In the first half of this year, export growth dipped to -5 or -6%, he added.
He added that household debt has risen to 15 trillion baht or 90%, and that even though inflation is low, fuel costs are still high.
“Remedial measures must be directed to clear targets. Power bill subsidies for household users are okay but should be limited to members of the lower middle and lower classes only,” he said.
Mr Somjai also said economic stimulus measures require substantial sums of money, but the country is currently in financial straits, with public debt rising to 61%.
While stimulating the economy, the government must also maintain financial stability and take into account public debt, he said, adding that budget funds for public investment remain only at 20%, compared to 35% as suggested by the Organization for Economic Cooperation and Development.
“The government needs to spur short-term growth, but it must avoid excessive giveaways or handouts that will lead to overwhelming public debt,” Mr Somjai said.
Bread-and-butter issues
Isares Rattanadilok na Phuket, vice-chairman of the Federation of Thai Industries, echoed that view, saying that stimulating growth and addressing the bread-and-butter issues affecting people’s daily lives are a pressing concern.
“The economy is in crisis. Currently, tourism is the only growth engine contributing to GDP while export growth has fallen into minus territory for nine months now.
“Domestic consumption has declined as household debt has risen to 91% per GDP. The new government must stimulate the economy by injecting cash into the system, such as via the digital wallet scheme, with the help of blockchain technologies.
“It is also important to attract more tourists during the high season and facilitate their entry and visa processing. Budget planning for the 2024 fiscal year must be sped up to boost the economy,” he said.
Pheu Thai’s election pledges included a 10,000-baht “digital money” giveaway in which every Thai aged 16 and older will get a new savings account and a digital wallet connected to his or her ID.
The 10,000-baht giveaway is aimed at stimulating spending in local communities in the first six months, with the help of blockchain technology that will ensure the money is spent within a 4-kilometre radius of the recipients’ registered address in an effort to spur the local economy.
However, Mr Isares said the digital wallet scheme should be more selective in giving money to those in need, such as members of the middle and lower classes, and efforts should be made to ensure the money is spent with local SME businesses rather than big businesses.
Regarding high fuel costs and rising power bills, he said the government should initiate price restructuring as a long-term solution rather than diverting state budget funds or taking loans to subsidise fuel costs.
“Borrowing money for quick-win projects to reduce electricity bills or fuel prices will increase unnecessary debt. The government must think carefully about each project and must not borrow or use future money,” he said.
Digital money next year
Kitti Limsakul, deputy Pheu Thai leader and a member of the party’s policy steering committee, gave assurances that once the Pheu Thai-led government takes office, economic stimulus measures will be implemented as quickly as possible.
“It is important to inject cash into the economy to stimulate growth,” he said, while insisting the 10,000-baht digital wallet scheme is in line with the Bank of Thailand’s rules.
“The scheme will start next year. We already have budget funds to support the scheme. It’s not bitcoin. It’s real money from the state budget. We believe the global economy will improve next year and we expect more exports and money in the form of taxes will return to state coffers,” he said.
Apart from stimulating consumer spending, it is also necessary to upskill workers to keep them in line with the minimum daily wage of 600 baht, which is expected to materialise within four years, he said.
“The daily wage will be adjusted gradually. But we have to upskill workers first. Productivity will then increase and the economy will grow,” he said.
Regarding the policy involving the minimum income of 20,000 a month per household, he said that the policy cannot be implemented immediately as it requires a substantial amount of budget funds and a set of criteria must be devised carefully.
As for a proposal for a flat fare of 20 baht for electric trains, he said the incoming transport minister will look into the matter and details should be known next year.
He said that the operations of all electric rail systems may be merged with the use of a common ticketing system. However, the merger will not be easy as the concessionaires of these separate systems may quarrel over their share of profits, Mr Kitti said.
Paopoom Rojanasakul, deputy Pheu Thai secretary-general, said that the 10,000-baht digital wallet scheme is expected to be implemented within the first half of next year as it will take time to set up the system.
Delay in the formation of a new government has also affected the planned budget allocation, he said.
“We will try to ensure that people will receive the 10,000-baht digital money before Songkran so they can spend it in their communities,” Mr Paopoom said.
Doubt over wage policy
Atthayuth Leeyawanich, chairman of the Employers Confederation of Consumer Goods and Services, expressed reservations about the proposed minimum daily wage of 600 baht.
“Things depend on economic circumstances. It remains to be seen if employers can pay. Currently, the average daily wage nationwide is 337 baht and 353 baht for Bangkok and its surrounding provinces.
“The rate must be raised by about 250 baht or about 60 baht per year [if the 600-baht wage is to be implemented]. I want the new government to improve economic growth gradually first so employers can make enough profit and pay more wages to their employees,” Mr Atthayuth said.
“We don’t want political parties to use a minimum wage policy as a ploy to woo support as it will affect operators and employees,” he said.
He also disagreed with the pledge of the 25,000-baht salary for graduates with bachelor’s degrees, saying state agencies can pay the proposed salary, but private companies cannot do so and they may refuse to recruit bachelor-degree holders.
“The salary and wage rates must also correspond to the productivity of employees,” he added.