In what could potentially shake up Thailand’s plans for GDP growth in the coming year, the nation’s proposed digital wallet and e-refund initiatives face significant legal and funding hurdles. Market analysts warn that these challenges could precipitate a drastic scaling back of these high-ticket digital stratagems that have been slated for a rollout in 2024. These obstacles are seen as critical roadblocks that could derail the successful implementation of these ambitious digital plans. The news was reported by Maybank Securities, shedding light on these ominous undercurrents.
Notably, a number of legislative roadblock issues have been pointed out by opposition parties. Relevant clauses of the Constitution and the State Fiscal and Financial Responsibility Act that deal with state and emergency funding caps have been called into question. Beyond that, academia point towards possible violations of Sections 20 and 62 of the Public Debt Management Act. All in all, plenty of concerns are rippling through the sea of regulatory approval.
Sending ripples through the market, Maybank issued a stark statement, asserting that “unfavourable rulings by the court could mean these stimulus measures may need to be scaled down significantly.” To give muscle to its argument, Maybank draws parallels to a 2013 legal scuffle which led to the Yingluck Shinawatra administration’s bill for an additional 2 trillion baht (for a high-speed rail project) being declared unconstitutional by the Constitutional Court. This precedent could very well have ramifications for the current scenario.
Meanwhile, Asia Plus Securities (ASPS) has emphasized that the primary concern for the proposed 500 billion baht digital handout and 100 billion e-refund scheme is funding. These two policies are expected to trigger spending to the tune of 100 – 200 billion baht, and are undoubtedly pivotal to meeting the government’s 2024 GDP growth goal of 5%. Despite the huge potential growth, ASPS did not pull any punches when it warned of a financial backlash. According to the firm, taking on an additional 500 billion baht debt could push Thailand’s public debt from the current 62.1% of GDP to 65%, which could potentially result in a credit rating downgrade.
On a more optimistic note, Maybank put forth two companies that stand to benefit from these stimulus schemes, namely Home Product Center (HMPRO) and COM7. The digital wallet scheme, slated for a May 2024 to April 2025 timeframe, could spur spending for 14 out of the 16 months starting from January 2024. This could manifest as a significant boon for HMPRO, a bigwig in the home improvement retail scene, and COM7, a heavy-hitter in the consumer discretionary sector. These developments were reported by Bangkok Post, indicating a silver lining amidst the looming clouds of uncertainty.
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