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In May 2023, Thailand held its general election. General Prayut Chan-o-cha, representing the United Thai Nation Party (UTN), eagerly seeking its third term, only received 36 of the 500-seat Parliament. The Moving Forward Party (MFP), led by Pita Limjaroenrat, got 151, thus becoming the biggest party in the House of Representatives, followed closely by Pheu Thai (PT) Party’s Srettha Thavisin with 141 seats. As no party received the majority of seats, MFP needed to negotiate with other parties to form a coalition but failed due to differing political visions for the country. Eventually, PT formed a coalition government with several parties, and Srettha became the Prime Minister. Srettha, in his election campaign, mentioned the digital wallet policy would be his major plan if he became the Prime Minister.
What Is the Digital Wallet Policy?
Not long after the election, Srettha, who also holds the position of Finance Minister, announced the digital wallet policy to promote Thailand’s economy and “boost [domestic] spending.” He wished to increase the 5% in Gross Domestic Product (GDP) as the economy had stumbled during the military rule.
This one-time payment policy ensures that Thai citizens sixteen and over receive 10,000 baht (CAD 375) in a digital wallet app — distributed in the fourth quarter of the year. However, those citizens can only spend the money in a radius of 4km from an individual’s home. Also, “the money can only be used to buy food and consumer goods,” excluding purchases made online, legal recreational drugs, “cash vouchers [and] valuables.” Moreover, recipients will only have six months to spend the money; if they do not, they will have to give it up. The government later modified the policy that citizens with a monthly income of 70,000 baht (CAD 2,615) and above — or a bank balance of more than 500,000 baht (CAD 18,695) — are not qualified to receive the handout, reducing the number of eligible citizens from 56 million to 50 million.
On November 10, 2023, Srettha announced that the government would borrow 500 billion baht (CAD 18.7 billion) from the Central Bank to fund the policy as “promised by the party during the election campaign.” His speech sparked severe criticism among the public and academia. Ninety-nine academics have issued a joint statement disapproving of the handout, claiming it is not worth giving out to citizens in light of Thailand’s current economic situation.
Where Is the Money Coming From?
There are reasons to be concerned about the policy. Borrowing 500 billion baht is considered a mega project for Thailand, considering the minimum daily wage in Bangkok is only 363 baht (CAD 13.82), less than the hourly wage in British Columbia (CAD 16.75). Also, according to the National Economic and Social Development Council in Thailand, GDP dropped 0.6% at the end of 2023. Since the start of the COVID-19 pandemic, the cost of living has seriously increased, and eventually, more people are in financial difficulties. Although this year’s forecasted GDP may grow, the main reason for concern about the policy is fewer travel restrictions due to the global pandemic. Thailand has reached agreements with several countries like China and Kazakhstan, offering visa-free travel, thus enhancing consumption power from foreign tourists.
The digital wallet policy also increases public debts. According to Professors Peerasit and Suradech from Khon Kaen University, the loan of 500 billion baht is projected to increase public debt by about 3.06% of its GDP, which impacts fiscal discipline and annual debt repayment. Currently, millions of Thais are encountering household debts. According to TTB Analytic, a Thai economic think-tank, household debt will reach 16.9 trillion baht (CAD 632 billion) at the end of 2024.
Also, the National Anti-Corruption Commission (NACC) has warned the coalition government that they should prove the scheme benefits the public rather than certain groups and business giants. For example, if one lives in central Bangkok, one will likely spend money in large shopping malls and chain stores, which is different from what the government wanted. Julapun Amornvivat, the Deputy Finance Minister, said the cabinet will investigate the report from NACC. However, he defended that the policy will still apply despite heavy criticism. So, the question remains of why the government continues to turn a deaf year towards criticisms of the policy.
Upholding an Election Promise
However, some academics do support the digital wallet policy. Dr. Thitinan Pongsudhirak of Chulalongkorn University’s Faculty of Political Science supports the government’s stimulus program because it is an election promise made by Srettha during his campaign. As the prime economic stimulus measure, this election promise ensures that Srettha will not run out on Pheu Thai supporters.
On the other hand, the election promise also has a chance of violating Thailand’s Constitution. Sirikanya Tansakul, deputy leader of the opposition party, MFP, has claimed that the borrowing plan may violate Section 140 of the Constitution and Section 53 of the State Fiscal and Financial Disciplines Act 2018. According to her, the law states that borrowing extra loans can only be for urgent actions and to resolve critical problems. While Srettha disagrees, a deep investigation is still needed to ensure the borrowing does not breach the Constitution.
To Go or Not to Go?
The coalition government is at a crossroads: either ignore the public and implement the digital wallet policy or accept criticisms and put it to rest. If the government wanted to finish a full four-year term before the public overthrew it or even the military, Srettha needed to make a wise choice — not just for the Kingdom of Thailand but also for the public good.
Edited by Chelsea Bean
