Bt170 bn stimulus unlikely to reach communities, economists say

By PHUWIT LIMVIPHUWAT
THE NATION

 

 

Economists question the effectiveness of the government’s decision to boost economic growth with a short-term Bt170 billion stimulus package.

 

On Thursday, Lavaron Sangsnit, the director general for the Finance Ministry’s fiscal policy office, announced that the Bt170 billion package would be submitted to the Cabinet for approval on August 19.

 

The package, he said, will focus on the tourism and agricultural sectors while also boosting domestic spending and supporting small and medium-sized enterprises (SMEs) in the country.

 

However, doubts have been raised by economists on whether the ambitious package will have the intended impact amid declining exports, delays in government investment and disappointing consumer spending figures in the first half of this year.

 

The government’s stimulus packages may not reach the local community and secondary cities if the government does not also launch a public campaign to promote spending in local areas, said Kiatanuntha Luankaew, an economics lecturer at Thammasat University, regarding the government’s plan to promote the tourism sector and support small businesses.

 

Without a public campaign running in parallel with the stimulus package, the money injected into the economy might be spent in concentrated areas and end up with big businesses such as shopping malls, he said in an interview with The Nation.

 

Hence, Kiatanuntha suggested, the government should also run a campaign to promote tourism in secondary cities and communicate to the public that the stimulus package is meant to support small businesses in more remote areas of the country.

 

The effectiveness of the stimulus package is still unclear as the details of how the package will be implemented have not been released, said Mana Nimitvanich, first vice president of Krungthai Bank’s Global Business Development and Strategy Group.

 

Mana expects a portion of the stimulus package to be from state enterprise investments, such as allowing state banks to offer soft loans to promote spending.

 

Among the policies that would have an immediate positive impact on the economy would be an initiative offering soft loans to the agricultural sector, likely to be offered by the state-run Bank for Agriculture and Agricultural Cooperatives, he said.

 

While the stimulus package may lead to policies that are necessary to prop up economic growth in the short term, the policies resulting from the package may also be harmful to economic productivity in the long term, Kiatanantha cautioned.

 

For instance, he said, the government could use the package to fund its income and price guarantee scheme for the agricultural sector. This is necessary as a short-term measure to reduce inequality and support the sector due to recent droughts and price issues.

 

However, the government should also communicate to the agriculture sector that such policies are only one-off policies to support the agricultural sector in emergency situations, he said.

 

Otherwise, he said, the agricultural sector may become reliant on government income safety nets, leading to a reduction in the sector’s growth and productivity.

 

Source: https://www.nationthailand.com/business/30374488

 

-- © Copyright The Nation Thailand 2019-08-08

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19 minutes ago, webfact said:

......such as allowing state banks to offer soft loans to promote spending.

That's it, get people further into debt just to stimulate the economy. Is this part of the PM's economic wizardry?

 

20 minutes ago, webfact said:

The government’s stimulus packages may not reach the local community and secondary cities

Of course it won't. It will be like the Thai Niyom money and find it's way into the pockets of those who administer it. That is standard practice in Thailand and an open invitation given that nothing is ever audited.

I just talked to my wife... no, this stimulus package will NOT buy her vote.

 

Try again.

Will there be anything left?

There had been loads of talks about making hubs. Let me think:

 

• Aviation hub potential exists but work must be done
• Open Motors spots EV hub
• Thailand as Asean logistics hub
• Sukhumvit 26 gets new one-stop beauty hub
• Should Thailand strive to become a medical tourism hub?
• Creating a Knowledge Hub with Trueplookpanya.com Contest
• Hipster Hub #WalkAroundInTheDesert
• Ayutthaya City Park set for Mice growth (MICE Hub)
• Plan to promote the country as the marina hub of Asean. 
• Thailand aims to become ASEAN’s organic rice production hub
• Phuket event to promote Thailand as a yachting hub
• All aboard to establish superyacht hub

 

Why not spend money on the hubs?

 

Stimulus for the top 0.1% as usual 

The lazy Thai men swinging in their hammocks in the Village's around us want to know if this will help them increase their Beer intake ? No further questions were asked !

Exports declining ? How is the baht keep up with its strong stance and suppose to be a good economic lead compared to some in the region?

Its getting harder and harder to watch these thieves steal from the people..

2 hours ago, HeyHeyHey said:

Stimulus for the top 0.1% as usual 

yep paid out in Euros

this sounds very much like stimulus in the past, with rice scams involved

 

just got it a new name and little money flows to the people in need

 

sounds like all those organisation that ask to donate for children, aids patients, homeless, etc...  where 1 percent might reach the people in need and the rest are work expenses like big salaries, expensive cars, golden parachutes ...

170bn will stimulate many generals packages and that's about it???? 

Always a matter of defining "communities"

23 hours ago, webfact said:

However, doubts have been raised by economists on whether the ambitious package will have the intended impact amid declining exports, delays in government investment and disappointing consumer spending figures in the first half of this year.

Based on the first half of the year and previous four years of successive short-term stimuli, it's no longer in doubt.

On 8/8/2019 at 4:04 PM, Cadbury said:

people further into debt

Not only the borrowers but indirectly the Thai taxpayer in general.

Those "soft" loans involve interest rates below market rate that would otherwise be charged by a bank in consideration of borrower risk. Under normal bank credit requirements for many farmers and self-employed businesses like street vendors, they wouldn't qualify. But the government subsidizes the interest rate to the extent that unqualified borrowers can get bank loans. The government basically guarantees payment of the difference between market interest rate and soft interest rate.

Should the borrower default, the government loses the interest principle and that creates a treasury deficit.

Thailand government soft loans are the antithesis of economic sustainability!

That policy needs to terminate.