BANGKOK: The government at its cabinet meeting this week will be discussing a range of practical measures to ease the burden on low-income workers and struggling business concerns. Thailand’s economic planners, following their economic council meeting last Friday, gave a frank assessment of the situation when they indicated that any prospect of growth or improvement in the Thai economy will not be seen until the end of 2020.
Stock markets reeled on Monday and the price oil plummeted with the sharpest drop in three decades. Some financial analysts believe it could be the prelude to a worldwide recession sparked by the coronavirus. The Thai cabinet is to meet on Tuesday to approve a range of targeted proposals designed to assist the less well off and struggling business concerns through the worst in what now looks like an economic crisis. A spokesman for the government at the Office of the Prime Minister Dr Kobsak Pootrakool has said that top officials believe it will now be the last quarter of the year before the economy is back on track.
Thailand’s Council of Economic Ministers met on Friday chaired by the Prime Minister Prayut Chan ocha and announced a series of measures to deal specifically with the heavy impact of the coronavirus crisis emergency on the economy at this time.
Details of an outline package, which involves a range of practical stimulus measures were announced by the Deputy Prime Minister Somkid Jatusripitak, the Finance Minister Uttama Savanayon and Bank of Thailand Governor, Veerathai Santiprabhob.
Tourism was down over 44% in February
The news comes as Thailand’s Tourism Authority, known for its bullish forecasts and optimistic assessments, confirmed that figures for February were down by over 44% and that Thailand could lose up to 10 million visitors this year even if the coronavirus is brought under control by May.
That prospect appears to be unlikely given the havoc being wreaked currently in Iran and Europe.
A crisis that the government cannot control
Deputy PM Somkid reminded his audience on Friday that the coronavirus emergency was now a worldwide problem which is impossible for authorities in Thailand to control.
The same situation is now true for every country.
The Economic czar also warned the Thai public that the peak effect of this international problem has not yet been reached.
Deputy PM Somkid warns that the resources are limited and all measures must be legally compliant
Bearing in mind the ongoing nature of this challenge, the Deputy PM said the government was looking both at the legal structure of efforts to support the economy and the available budget. All measures must be legally compliant.
Mr Somkid underlined the limited nature of the government’s resources and the importance of targeting any stimulus carefully.
He said he had seen many news reports suggesting the government was ready to spend hundreds of billions of baht in stimulus measures but wondered himself where such money was to come from.
He said it was important for news outlets to confirm the factual basis of such reports. The government can only introduce measures based on available reserves.
Cabinet to review the proposals
Mr Somkid suggested that a range of measures will be discussed by the full cabinet on Tuesday, March 10th. He gave an outline of what was being proposed.
Soft loans for the SME sector
A key proposal was a fund of low interest or soft loans targeted at the SME business sector.
The Deputy PM mentioned a figure of ฿100 billion to be lent out by the Government Savings Bank at a rate of 0.01% to other financial institutions who could forward the loans but at an interest rate of not more than 2%.
Debt restructuring for performing loans only
The government was also interested in developing a scheme to defer principal payments on loans in debt restructuring plans between financial institutions and debtors or business concerns impacted by the emergency.
This would be limited to firms that are already meeting their loan obligations and would not apply to nonperforming loans.
Minimum amount payable on credit cards
It is also being proposed that the minimum amount payable on credit card advances be reduced from 10% as prescribed by the Bank of Thailand to 5%.
The government was also exploring a mechanism to allow both employers and employees to borrow for the country’s social security fund for short-term working capital requirements.
Taxation measures including lower withholding tax and faster VAT refunds within 15 days
The government is also exploring a range of taxation measures such as temporarily reducing the country’s withholding tax and an incentive for employers offering new employment with credits applying for April, May, June and July.
In addition, the Ministry of Finance will speed up VAT (Value Added Tax) refunds to business which will now be paid on a speedier basis with the target being that all payouts will be received by business concerns within 15 days of submission.
Reductions in electricity and water charges
For the less well off, there is also some good news. The government will work to reduce electricity and water charges during this period. There will also be a reduction in social security contributions for the coming months.
Cash payments for self-employed and low-income farmers of ฿1,000 per month on self-assessment
The government will pay ฿1,000 for both April and May to low-income farmers and self-employed entrepreneurs.
The proposals are being formulated by the Ministry of Finance. Screening for such payments will be on a self-assessment basis by those receiving the payments.
Economy badly impacted across the board
Assistant Secretary-General at the Office of the Prime Minister, Kobsak Phutrakul, also took the opportunity to confirm that the economy will be impacted severely across the board by the virus epidemic spreading around the world.
It will severely hinder both the export and tourism sector.
No anticipation of recovery before the last quarter
On that basis, he intimated that Thailand will now only be planning for some recovery to take place for the last quarter of 2020.
The government viewed the economic performance of the country for this year until then as governed by extraordinary circumstances, an aberration.
The government is to focus on both fighting the prospect of a coronavirus epidemic within the kingdom and arresting its economic impact on the Thai public as much as possible.