The first phase of Thailand’s “digital wallet” stimulus scheme got underway last week, following up on a major campaign promise from the Pheu Thai party ahead of Thailand’s general elections in 2023.
Former Thai Prime Minister Srettha Thavisin heavily pushed the scheme during his 11-months in office, maintaining that providing consumers with money would help grow Thailand’s GDP.
The overall scheme calls for payments of 10,000 baht ($280) to 45 million citizens who will spend locally in efforts to boost Thailand’s economy.
Despite delays to launch the scheme, and initial errors with the application system for the handout, millions have registered.
On September 25, the government launched the first stage of the program, with 10,000 baht being distributed in cash to the bank accounts of Thai welfare cardholders and disabled citizens.
The scheme is estimated to cost the Thai government $14 billion dollars. There is discussion among economists whether it will be effective in bolstering consumer spending, or if it is merely a populist policy
A political ploy or sound economic policy?
Ilada Pitsuwan, an economic journalist from Thailand, said there are pros and cons with the handout.
“For political agendas, it is quite clear that after the introduction of the 10,000-baht cash handouts, the popularity of PM Paetongtarn Shinawatra, rose to the top, according to a NIDA poll,” she told DW.
At an event launching the program, Paetongtarn said “cash will be put into the hands of Thais and create a tornado of spending.”
However, the latest survey shows that the People’s Party, a regrouping of the dissolved Move Forward Party, remains Thailand’s most popular political party in the latest survey.
Ilada said this reflects that the economic boost can help the Pheu Thai Party’s popularity in the short term, but long-term, the Thai people need structural changes for the country.
She added there are concerns the scheme may not have the promised economic benefit to domestic production.
“The current challenge of the Thai economy is the influx of cheap Chinese goods that could threaten Thai manufacturing in the long term,” she said.
“It would be beneficial if this policy continues to drive Thailand’s economic growth, but if not, the results of this huge consumption may not benefit Thai manufacturers and may instead spread outside the country as well,” Ilada added.
Criticism from the opposition
Sirikanya Tansakun, a senior member of Thailand’s People Party, claimed the digital wallet plan isn’t the same as what was originally pledged by Pheu Thai because cash is being distributed.
“They just launched the new campaign about giving cash handout for 10,000 each for those vulnerable groups. That’s not the digital wallet that was pledged during the election campaign,” she told an event at the Foreign Correspondents Club of Thailand on Thursday.
“If this is the stimulus package, I don’t think it’s effective,” Sirikanya told the event, adding that the projected stimulus will only add up to a 0.35% boost of GDP.
“It’s not quite a very effective way to stimulate the economy in the first place. The government has run out of the options for the people,” Sirikanya said.
Sirikanya says the scheme could become a budgetary burden over the next two cycles, and that $14 billion total cost is “too much” for a cost of living alleviation plan.
“If we continue to do this, it will put a fiscal burden on country and the economy,” she added.
The People’s Party hope to form the government if they win Thailand’s next elections in 2027.
The party’s previous iteration, the Move Forward Party, won the popular vote in 2023 but was unable to form a government, and was eventually dissolvedby a court order in August 2024.
Thailand seeks more growth
Thailand’s economy isn’t growing as fast as government officials had hoped, and that’s why lawmakers are focusing on improving the kingdom’s economic outlook.
The World Bank’s Thailand Economic Monitor recently projected GDP growth of 2.4% for 2024, slower than Thailand’s regional peers.
It’s of the reasons Thailand has also focused on boosting international tourism.
The government recently relaxed visa requirements for visitors from 93 countries to enter the country for 60 days. It also launched the “Destination Thailand Visa,” which allows digital nomads, freelancers and remote workers to live, work and travel in the country for five years.
Thailand is also hoping it can prosper from the economic benefits tourism accounted for in 2019, the peak of the country’s tourism. Tourism accounted for 11.5% of the country’s overall GDP that year, that saw a record year of 39 million visitors. The kingdom predicts 36 million visitors by the end of 2024 and for 2025, a record-breaking 41 million visitors.
Thitinan Pongsudhirak, a political scientist, says Thailand has to be looking towards digitalization.
“Now I think the dial has moved on, they have to be talking about much more digitalization, digital economy, AI, machine learning, education reform,” he told the Foreign Correspondents Club of Thailand in August.
“Thailand has missed the semiconductor innovation, the tech boom and now it is missing the AI burst, and the reason is because of the domestic political situation. I think Thailand has been held back,” he added.
Edited by: Wesley Rahn
