PUBLISHED: 8 Sep 2024 at 14:20
Thailand’s new government is set to announce a bold plan for comprehensive debt restructuring aimed at alleviating approximately $474 billion in household liabilities, providing crucial financial assistance to small businesses, and accelerating fiscal stimulus to invigorate economic growth. This significant initiative aims to address the challenges posed by rising household debt, which exceeds 16 trillion baht – over 90% of the country’s gross domestic product.
Prime Minister Paetongtarn Shinawatra is expected to present these strategic plans to parliament on September 12, highlighting efforts to support borrowers, especially those with car and home loans. Furthermore, the plan will extend to the informal sector, utilizing state-owned financial institutions, commercial banks, and asset management companies for implementation.
The Prime Minister is set to express concerns regarding the escalating household debt levels, which are contributing to widening inequality across the nation, particularly as development remains concentrated in Bangkok and other major cities.
The proposed policy framework will outline the priorities of the coalition government, which is led by the Pheu Thai Party. Ms. Paetongtarn, the youngest daughter of the influential former leader Thaksin Shinawatra, was elected last month after the dismissal of her predecessor over ethical concerns.
As the third member of the Shinawatra family to lead the nation, Ms. Paetongtarn faces the pressing obligation of rejuvenating a $500 billion economy that has lagged regional counterparts, averaging just 1.9% growth over nearly a decade of military-backed governance.
In her remarks, she will emphasize the necessity for a stable administration that fosters foreign investment, minimizes conflicts with the central bank, and revitalizes the manufacturing sector to sustain tourism recovery. She will assert, “Without financial and fiscal measures supporting economic expansion, growth is projected to remain below 3% annually, pushing public debt toward the legal ceiling of 70% of GDP by 2027.”
While continuing existing policy initiatives from her predecessor, the new administration aims to inject fresh energy into the economy. The Prime Minister will also advocate for a digital wallet initiative, designed to bolster consumer confidence and spending, particularly among vulnerable populations. The program promises 10,000 baht to approximately 50 million adult Thais, with an initial roll-out targeting around 14.5 million individuals.
Plans to support small and medium enterprises, which make up roughly 35% of Thailand’s workforce and GDP, include measures for debt suspension, liquidity access, and protection from foreign competition on online platforms. Additionally, the government aims to draft a more democratic constitution that enshrines human rights and promotes political stability and rule of law.
The draft policy outlines several key initiatives:
- Reducing energy and utility costs, exploring alternative energy sources.
- Revamping the tax framework to enhance income distribution and incorporate the grey economy into the tax system.
- Evaluating a negative income tax system for low-income earners.
- Revitalizing tourism through improved visa structures and entertainment offerings.
- Accelerating trade agreement negotiations and pursuing OECD membership.
- Ensuring effective implementation of marriage equality laws.
- Investing in large-scale transportation projects.
- Developing Thailand as a medical and wellness hub.
- Promoting the nation as a clean energy production source.
- Addressing the drug crisis through comprehensive strategies and international cooperation.
