The cabinet yesterday gave the nod to new stimulus packages to spur the economy, with the aim of boosting growth by one percentage point.
The packages focus on boosting private consumption and private investment, speeding up the government's budget disbursement and stimulating exports after the economy showed signs of slowing down.
Deputy Prime Minister Kittiratt Na-Ranong said the stimulus measures will help to boost the country's economic growth to 5% this year from 4%.
The Bank of Thailand last month slashed this year's economic growth forecast to 4.2% from 5.1% due to tepid domestic consumption and the fragile state of the global economic recovery.
The central bank also cut its export growth estimate to 4% from 7.5%.
The National Economic and Social Development Board yesterday reported to the cabinet that economic growth this year would stay at 4% to 4.5%.
It said growth will likely stay at the lowest rate of only 4% if infrastructure spending remains delayed and export performance is still sluggish.
Yesterday, Credit Suisse AG also cut its forecast for Thai economic expansion to 4% from 4.7%, citing delays in infrastructure spending and weaker-than-expected export growth.
Eugene Leow, an economist at DBS Group Holdings in Singapore, said the medium-term outlook depends critically on three factors _ the execution of the infrastructure projects, the momentum of domestic demand growth and a recovery in external demand.
The Goldman Sachs Group said Thailand should increase infrastructure spending as a percentage of gross domestic product (GDP) and needs US$105 billion in investment by 2020.
Government spending is projected to rise to 2-3% of GDP by 2020 from about 1% now, Goldman Sachs estimates, lagging behind the 4-5% of GDP that the Philippines may spend.
"We think political stability will be vital for successful implementation of infrastructure plans," said the group.
Capital Economics, in a July 29 research note, said Thailand has a poor record in implementing big infrastructure projects, with the government spending only 60% of its planned budget over the past eight years.
What's in the package?
Private consumption
- Juristic persons are allowed to claim up to two times actual expenses incurred from organising training-related seminars in their corporate tax filings in the 2013 and 2014 accounting years.
- Sales campaigns for low-cost energy-saving products will promote energy-saving electrical appliances with the government's financial support.
Private investment
- Tourism operators investing in buying or repairing assets, furnishings and furniture except vehicles will be allowed faster depreciation, with up to 60% of the value of the improvements taken into account in the first year and the remainder averaged over five years. The measure will apply only for the 2013 and 2014 accounting years.
- The launch of the second phase of the eco-car project with greater investment privileges than in the first phase.
- Easing rules and regulations for investors who set up food factories, sugar mills and ethanol factories in compliance with the agricultural zoning policy.
- To provide more credit and credit guarantees to small and medium-sized enterprises with cooperation from commercial banks and specialised financial institutions, plus microfinance for Otop and community enterprises.
Public spending
- To accelerate disbursement of the fiscal 2013 budget allocated to provinces, local administrations and off-budget funds.
Exports
- To step up promoting exports to potential destinations, particularly other Asean countries and certain provinces of China.
- To promote the use of the baht in cross-border trading.
- To promote trade financing through the Export-Import Bank of Thailand in a move aimed at curbing financial risks and support financial liquidity for business operators.
- To provide multiple-entry visas that are effective over the course of several years to international tourists as well as promote Thailand as a shopping paradise.