Thai govt unveils $14b economic stimulus package

Incentives include subsidies for farmers, cash for low earners and domestic travellers

Thailand's new government yesterday unveiled a 316 billion baht (S$14.2 billion) plan to stimulate the country's economy, which posted its slowest growth in nearly five years in the second quarter.

The package of incentives, which has been approved by the Cabinet, includes subsidies for farmers, cash handouts for low-income earners and money for domestic travellers.

Thais will get 1,000 baht each in their registered electronic wallets between Sept 27 and Nov 30 this year to spend when visiting parts of the country outside their home provinces.

On top of that, they will get a 15 per cent rebate on up to 30,000 baht in hotel accommodation, food and shopping costs.

In all, they can get a maximum cashback payment of 4,500 baht, said government spokesman Narumon Pinyosinwat.

Also, visa fees for tourists from 18 countries will be waived for another six months, until April next year.

Low-income earners will each receive 500 baht a month via the government's welfare cards.

In agriculture, Thailand's four million rice-farming households will each receive 500 baht per 1,600 sq m of farmland in the light of the worst drought in a decade.

Another boost for farmers is that interest will be cut to 0.1 per cent for one year for loans of up to 300,000 baht taken from the government-owned Bank for Agriculture and Agricultural Cooperatives.

Thailand's economy has been flagging owing to weaker domestic demand, and slowing export and tourism activities.

Its gross domestic product (GDP) growth in the second quarter was 2.3 per cent, down from 2.8 per cent in the first quarter, according to the country's National Economic and Social Development Council.

The continued slide has prompted several agencies to downgrade their 2019 growth forecasts.

In June, the Bank of Thailand cut its forecast to 3.3 per cent from 3.8 per cent, while the World Bank trimmed its earlier prediction from 3.9 per cent to 3.8 per cent.

On Monday, CGS-CIMB Securities, a financial service provider in Asia, slashed its 2019 projection to 2.7 per cent but maintained its 2020 figure at 3.2 per cent in anticipation of the effects of the newly launched stimulus package.

Thailand's exports, accounting for 68 per cent of GDP, are bearing the brunt of the trade dispute between China and the United States.

Overall shipments declined 2.15 per cent year on year in June, while exports to China, Thailand's biggest trading partner, plunged 14.9 per cent.

The baht, one of the strongest currencies in Asia, and the weak yuan, which is at an 11-year low, not only affected Thai exports to China, but also the tourism industry.

The number of Chinese tourists, the biggest group of visitors to Thailand, dropped 8.89 per cent in the first quarter, compared with the same period last year.

Economist Somchai Pakapaswiwat said in an interview that the government stimulus measures could pull the GDP back to 3 per cent, but not more, as they are merely a "painkiller", not a remedy to the problem.

A version of this article appeared in the print edition of The Straits Times on August 21, 2019, with the headline 'Thai govt unveils $14b economic stimulus package'. Print Edition | Subscribe