BANGKOK: Last month, the Thai parliament approved three economic support schemes worth 1.9 trillion baht (US$61.45 billion) to soften the financial blow of the COVID-19 crisis.
However, some have noted a lack of detailed information on the huge expenditure, saying that this raises questions about the schemes’ transparency as well as checks and balances.
The three Bills were part of the Thai government’s economic relief package designed to steer the economy through the health crisis. They include a government loan worth 1 trillion baht and the central bank’s two support measures for small-and-medium-sized enterprises or SMEs and corporate bonds, which are worth 900 billion baht.
The move is considered necessary by economists after a state of emergency, nationwide curfew and various lockdown measures disrupted numerous economic activities across Thailand.
Still, there have been calls for more transparency and detailed plans showing how tens of billions of dollars will be spent to rebuild the economy and support millions of Thais reeling from the health crisis.
“In my opinion, there is not so much concern about the 900 billion-baht measures because they’re under the central bank, which is responsible for setting clear conditions,” said economist Sarinee Achavanuntakul.
Her biggest concern, she added, is the 1 trillion-baht loan to be managed by the government because there have been limited details on how the money would be spent.
According to the Ministry of Finance, 400 billion baht from the loan will be used for economic and social rebuilding, which includes projects to support community-based economics and develop local infrastructure.
As for the remaining 600 billion baht, it will be used to support public health and farmers, as well as assist other people affected by the health crisis for a period of six months.
Given the large sum of money at stake, Sarinee is convinced more clarity on the expenditure is needed to improve public confidence and demonstrate the government’s genuine commitment to solve the economic problems.
The economist said that 60 per cent of the government’s loan is likely to be handed out as aid money – a short-term relief package that she believes could only keep people financially afloat for a limited period of time.
It’s like helping drowning people by throwing them a rope just to help them breathe for 3-4 more months. It doesn’t really affect their long-term skills or prepare them for the future – the so-called ‘new normal’.
For the past few months, the Thai government has been giving cash handouts to people affected by the crisis. However, given the online registration required, the programme has been heavily criticised for its failure to reach those who cannot afford to go online or access the digital platforms.
Besides the handouts and other measures such as water and electricity subsidies, critics said there is no clear plan on how the government would rebuild the economy or prepare Thais for an uncertain future, where new waves of infection are possible and the return of strict lockdown measures is not unexpected.
When the opposition suggested a special House committee be set up to scrutinise the government spending, some of the ruling party’s Members of Parliament (MPs) voiced their objections.
For Sarinee, this is a “very disappointing” development.
“This gives a bad signal that shows this parliament isn’t willing to be transparent or open to scrutiny. A special committee isn’t a mechanism to be used against anyone but a normal and necessary process,” she said, noting a general lack of confidence in the civil service.
“We have to admit the Thai civil service system is problematic and we’ve seen that in the past months of the health crisis. If we compare it to a pipe, it’s decayed and ineffective. And corruption also makes it leak.”
“THE ECONOMY WILL DEFINITELY COLLAPSE”: OPPOSITION MP
The COVID-19 crisis has a profound impact on Thailand’s economy. The central bank announced in April that the Thai GDP is expected to contract by 5.3 per cent this year – a significant cutback from the 2.8 per cent growth forecast in December 2019.
“The economy would remain at a level below its potential throughout the forecast horizon,” said the Bank of Thailand in its March 2020 Monetary Policy Report
“Nevertheless, the government’s implemented measures would be the key mechanism to alleviate the impact on the economy despite being unable to offset a significant contraction in aggregate demand,” it added.
Based on its projections, the Thai economy should recover and expand by 3 per cent next year. Still, the forecast is based on an assumption that the health crisis in the country would be contained within the second quarter of 2020.
In his address to the parliament on May 30, opposition MP Mingkwan Sangsuwan from the New Economics Party expressed concern that the economy could contract even more due to the crisis.
On top of the recession, he said, the net government revenue – which is set at 2.731 trillion baht or US$88.3 billion in the 2020 national budget – could also miss the target.
“Today, we have zero tourists. Our export sector is exhausted,” he said.
“What if the net government revenue is not 2.7 trillion baht but 2 trillion, 1.9 trillion or 1.5 trillion? What would happen then? Regardless of what you call it, the amount of money you’ll spend is 1.9 trillion baht,” he added.
The economy will definitely collapse.
According to Mingkwan, it is important to have a special House committee overseeing the government’s expenditure of the 1 trillion-baht loan to prevent the economy from failing.
PRAYUT DISMISSES CONCERNS
Meanwhile, Prime Minister Gen Prayut dismissed concerns that his government may misuse the loan, saying it is necessary to alleviate the impact of the health emergency.
“Speaking about corruption, let me ask what corruption is. It’s about checks and balances, evidence and reports, not just statements made by word of mouth and shared on social media,” he said in parliament on May 30.
“Today, we can see that if anyone gets involved in corruption, they are prosecuted and interrogated,” he added. “This government is determined to solve problems for the people, with a sincere political will.”
Calls for the special House committee – by both opposition and coalition parties – eventually resulted in government whips agreeing to the proposal, despite previous objection from some of the ruling Palang Pracharat Party MPs.
According to Akkradech Wongpitakroj, a government whip and coalition Democrat Party member, the whips have agreed to set up a scrutiny committee comprising 49 people.
“This is a good sign that shows the government and the parliament value the scrutiny for transparency of the spending,” he told reporters after a whip meeting on Jun 8.
LOOKING AHEAD: TOURISM, PRIVATE INVESTMENTS COULD SUFFER THE MOST
Siam Commercial Bank’s Economic Intelligence Center (EIC) has released its analysis of Thailand’s economic situation in the second quarter of 2020, saying it expects a 7.3 per cent contraction this year.
The projection has brought the current situation much closer to the ‘Tom Yum Kung’ financial crisis in 1998, when the country’s economy shrank by 7.6 per cent.
This year, according to the report, tourism and private investment are two sectors that could suffer most from the COVID-19 crisis. The EIC forecast a drop in foreign visitors to Thailand in 2020 – from its previous prediction of 13.1 million tourists to 9.8 million.
“The severe and quick recession of the Thai economy will bring financial fragility to the household and business sectors, which will then cause a great impact on private consumption and investment,” EIC said in a report.
Still, EIC expects the government’s 1 trillion-baht loan would help inject a large sum of money into the struggling economy. It also believes the central bank’s soft loans for SMEs and corporate bond stabilisation fund would save private consumption from a deep slump previously predicted.
It is clear help is needed to stabilise the Thai economy. But given the size of the economic support package, particularly the government’s 1 trillion-baht loan scheme, Sarinee said the implementation should not rely on the government alone but also the public – people who are directly impacted by the health crisis.
“I’m thinking whether it’d be possible for the government to pilot something like this amid the COVID-19 crisis to make sure that those who are affected by the outbreak have a say in how the relief money is spent,” she told CNA, citing a number of civic groups in Thailand that are familiar with local communities.
It takes a multidisciplinary approach to tackle the health emergency, she added. “Thailand can’t take the one-size-fits-all approach to solve all the problems.”
“You should already have details and platforms or avenues for the public to participate and voice their needs. It should be clear already that the spending would be decentralised because different communities have different characteristics,” Sarinee added.