Anticipation is high as the Pheu Thai-led government ponders issuing utility tokens to bolster its digital wallet initiative. This innovative step is currently awaiting the green light from the Bank of Thailand, as the regulator presently outlaws the use of tokens as a means of payment, states Asia Plus Securities (ASPS).
ASPS, a leading financial services firm, envisions that the government will release Type 1 utility tokens, each pegged at a value of 10,000 baht. These tokens could potentially be issued to Thai citizens who are 16 years and above, thereby potentially necessitating a budget of around 560 billion baht. Active deliberations are in progress with key officials from the Finance Ministry and the Securities and Exchange Commission to identify potential funding sources for the distribution of these tokens, as divulged by the brokerage.
An insightful research document composed by ASPS observes that the government will possibly dispense these tokens for consumer purposes and has expressly stated that these utility tokens will not be tradeable on digital asset exchanges. Recently, Prime Minister Srettha Thavisin confirmed that these digital wallets are scheduled for rollout early in the next year.
However, the utility tokens will feature some specific conditions, such as restricting their use within a 4-kilometre radius from the recipient’s domicile for purchasing consumer goods. Relying on a research study conducted by the Thailand Development Research Institute, ASPS disclosed that a fraction of the digital wallet initiative’s budget may likely be procured from the government’s predicted fiscal income for 2024. This is estimated to be a solid 260 billion baht surge, complemented by a potential increase in tax revenue of approximately 100 billion baht, stimulated by revitalizing economic measures.
Despite these projections, Therdsak Thaveeteeratham, the Executive Vice President of ASPS, expressed his concerns about the funding source. His worries revolved around potential cuts in the government budget, including various investments, due to the skyrocketing public debt. The EVP also seemed sceptical about assured increments in tax revenue, deriving from stimulus measures, primarily due to uncertainties surrounding their effectiveness in resuscitating the economy.
The financial services company hinted at the possibility of the government resorting to borrowing for funding the digital wallet project. As of June 2023, the country’s public debt-to-GDP ratio was at 61.2%. However, the government legally possesses the ability to borrow until it reaches a threshold of 70%. This scenario grants the government a borrowing capacity of an additional 1.58 trillion baht, calculated based on GDP projections of 17.9 trillion baht, as reported by the Bangkok Post.
Still, ASPS laid stress on the principle that, ideally, government loans should not tap this limit. They opined, “This issue demands long-term observation to assess whether it will yield effective results and to chart out when the scheme is set to launch. In the short term, however, the nation’s economy is likely to rebound due to current supporting factors.”
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