The government led by Pheu Thai is poised to introduce utility tokens in a bid to fortify its digital wallet initiative, awaiting the green light from the Bank of Thailand, the country’s financial authority who currently prohibits the use of tokens as legal tender, says a report by Asia Plus Securities (ASPS). The respected finance firm speculates that the government will issue Type 1 utility tokens, each tagged at 10,000 baht; this roll-out will target Thai citizens who are 16 years or older, which could necessitate a budget amounting to an estimated 560 billion baht.
Negotiations are underway with the Finance Ministry and the Securities and Exchange Commission about the issuance of said tokens and the identification of potential revenue streams, stated the notable brokerage firm. ASPS made it clear in a research paper that the tokens the government plans to issue will be intended for consumer purposes; moreover, these utility tokens will not be tradable on digital asset exchange platforms. Echoing this exciting development, Prime Minister Srettha Thavisin recently confirmed that the digital wallet initiative would see its premiere in the early part of the coming year.
However, there will be certain guidelines to adhere to in using the utility tokens. For instance, they can only be utilized for buying consumer goods within a 4-kilometer radius from the home of the recipient. Drawing from a research conducted by the Thailand Development Research Institute, ASPS added that funding for this digital wallet operation might derive partially from the government’s fiscal revenues in 2024, which is expected to see approximately 260 billion baht in increase, along with the inflated tax revenues of around 100 billion baht resulting from various economic impetus measures.
However, there have been concerns about the financing methods of this initiative. Therdsak Thaveeteeratham, the executive vice president of ASPS, expressed worries about possible reductions in the public expenditure, particularly in investments, due to the prevalent high public debt. He also cast doubt on the reliability of the predicted increase in tax revenue via the economic measures, considering uncertainties over their effectiveness in boosting the economy. ASPS proposed the possibility of borrowing to fund the digital wallet operation.
The public debt-to-GDP ratio of Thailand stood at 61.2% as of June last year, leaving the government with the legal capacity to borrow until it hits the 70% mark. This opens up an additional room for the government to borrow about 1.58 trillion baht based on the GDP forecasts of 17.9 trillion baht, as reported by Bangkok Post. That being said, the ASPS expounded that the government loans should ideally not reach these extreme limits.
The brokerage firm cautioned, “This issue needs to be scrutinized over a longer period to verify whether it will yield effective results and when the scheme will take effect. Nonetheless, in the near term, the economy is projected to bounce back due to the existing conducive factors.” Stay on top of the latest developments by following The Thaiger’s stories on their new Facebook page: CLICK HERE.
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