Srettha Thavisin / AFP
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Thailand will dole out 560 billion baht ($16 billion) to its 55 million adults in the next six months to spur domestic demand and investment, with former Prime Minister Srettha Thavisin pitching the revival of a sluggish economy as his government’s top priority.
The so-called digital wallet plan “will act as a trigger that will once again wake up the country’s economy,” Srettha said, adding the handout will ensure even distribution of the money into all sectors of the economy.
The first working meeting of Srettha’s cabinet on Wednesday is likely to sign off on some of the measures outlined by the premier in parliament.
The digital wallet program — set to be rolled out within the first quarter — is the main pre-election promise of Srettha’s Pheu Thai Party and officials say the multiplier effect on the economy could be four times the handout and lift economic growth next year to as high as 5% from 2.8% projected for this year.
Srettha, a former property mogul who also doubles as the finance minister, faces the challenge of boosting growth amid declining demand for its goods from its top trading partner China, and less-than-expected earnings from foreign tourists. The 11-party coalition government also faces the prospect of a spurt in inflation as drought conditions threatens to slash harvests of crops such as rice and sugar.
The Thai financial markets, which had seen an exodus of foreign investors in the wake of the post-election turmoil, were largely neutral to the policy announcement. The benchmark stock index was down 0.5% by 11:26 a.m in Bangkok after opening higher, while the baht held its 0.4% gain against the US dollar.
Budget Focus
While Srettha’s policy statement marks the end of a government formation process and months-long political impasse that followed the May general election, the new leader now needs to quickly pass a budget for the fiscal year starting Oct. 1. He also needs to tackle household debt at 90% of gross domestic product and public debt at 61% of GDP.
The government intends to fund the digital wallet program via state budget and additional taxes from the program without resorting to fresh borrowing. But economists from Bank of America Securities and Nomura Holdings Inc. say the spending plans will widen fiscal deficit, limiting the country’s room to absorb future shocks.
The opposition Move Forward Party slammed the government for not spelling out details and setting deadlines for implementation of the newly announced initiatives. “If this policy statement is like a Global Positioning System, the nation will probably get lost,” said Sirikanya Tansakun, a deputy leader of the Move Forward.
The short-term priorities for Srettha’s administration will include boosting tourism revenue by easing visa processes and fee waivers for travelers from select countries. It also plans to hold a referendum for overhauling the nation’s constitution, he said.
Highlights of other priorities:
- Working with the military to shift to a voluntary military service as well as reducing the roster of high-ranking officials and modernizing the arms procurement process
- Setting up four new special economic zones to spread the benefits of economic development
- Establishing a “Matching Fund” with the private sector to invest in start-ups
- Accelerating free-trade agreements with the European Union, countries in the Middle East, Africa and South America and India
- Easing rules for foreign labor and skilled-workers to meet rising demand
- Taking steps to tackle the air pollution menace
- Scrapping and improving outdated laws including lifting curbs on production of homegrown alcohol
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