The recent ascendance of Prime Minister Srettha Thavisin’s government in Thailand has triggered a wave of emphatic debate and risen eyebrows. His leadership credentials and promises are being rigorously examined and weighed, seven weeks post his assumptions of the office. An impending issue of rampant concern is the matter of the repatriation of Thai citizens adversely impacted by the Middle East turmoil, interspersed with the unrelenting Israel-Hamas strife.
In its campaign, the Thai government committed to an increase in the daily minimum wage to 400 baht this year, with a further increase to 600 baht anticipated within the next four years. However, the efficacy of such a move is questionable, given the appealingly higher wages visibly in the offering from the Thais’ host countries abroad. This discrepancy could likely extend the trend of Thailand depending substantially on the workforce from its neighboring geographical territories.
Furthermore, the proposed 10,000-baht digital wallet scheme by the administration is garnering curious inquiries concerning its financial backing. Economists are dissecting the potential threat posed by long-term risks leveraging certain methods of financing.
Amonthep Chawla, the chief economist at CIMB Thai Bank (CIMBT), conveyed apprehension concerning the missing details about the digital giveaway, shedding light on the enigmatic sources of funding, the digital unit type, and the functioning of the digital wallet. Thus, CIMBT is unable to ascertain if the scheme will realize its expected roadmap.
While the administration’s announcement surmises the hand-out’s inauguration to be early next year, Amonthep proposes a pre-launch education drive to edify the public and traders regarding the intricacies of the scheme. Addressing an equally pressing concern, Chawla emphasizes the crucial aspect of persuading businesses to register for the scheme and adhere to the tax procedures therein.
If the scheme kicks off as scheduled in February next year, CIMBT projects a 4% economic growth the following year although the sustainability of this growth rate through 2025 and 2026 evokes skepticism.
The bank asserts confidence in the Thai government’s timely execution of the proposed wage hike, given the lack of a significant fiscal budget requirement. However, this prediction is contingent on the outcomes of crucial tripartite discussions.
The international economics consultant Aat Pisanwanich conversely speculates a delay in the launch of the 10,000-baht digital hand-out until February next year or later, despite the probable implementation of the minimum wage hike this year.
Sangchai Theerakulwanich, namely, president of the Federation of Thai SMEs, recollects an earlier occasion when a rise in the daily minimum wage culminated in a slew of business shut-downs triggered by the wage increase to 300 baht a day. Consequently, elevating minimum wage rates may not prove to be a resolution to the cost of living predicament as manufacturers might respond by upscaling their product prices.
As a viable alternative to the planned 560 billion baht for the digital handout, Pisanwanich suggests the Thai government divert 40% of this budget for restructuring the country’s production costs. He advises a shift towards lowering logistics costs and establishing a leaner production process that aligns with reduced emissions, a blueprint already adopted by Vietnam, as reported by Bangkok Post.
While helping Thailand mitigate its environmental footprint, executing these proposed policies effectively raises concerns. The crux of the matter lies in the Thai government’s ability to efficiently implement these, as per Visit Limlurcha, president of the Thai Future Food Trade Association.
The escalating conflict in Ukraine coupled with the Israel-Hamas situation is anticipated to impose a strain on the Thai economy. Thailand’s reliance on these regions for fertilisers, raw materials for animal feed and oil is projected to amplify this impact. Chaichan Chareonsuk, chairman of the Thai National Shippers’ Council, acknowledges this while also highlighting the need to stimulate exports by opening up new markets and reinforcing existing ones.
While the task ahead may seem overwhelming, the Thai government is making way with its efforts to cut costs in electricity, oil and gas and public transport, complemented with a visa exemption for Chinese tourists. Stepping up ‘soft power’, especially in the food and textile industries, plays a vital role in propelling this endeavour forward, Chareonsuk emphasizes.
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