Economic rehab plan en route

Economic rehab plan en route

Mr Somkid says rehabilitating the farming sector is crucial.
Mr Somkid says rehabilitating the farming sector is crucial.

A 400-billion-baht borrowing plan intended for economic and social rehabilitation after the pandemic to strengthen the domestic economy will be added to the cabinet's agenda next week, with the first batch expected to be doled out later this month.

Rehabilitating the farming sector is crucial to build up the local economy as a buffer against the export and tourism sectors' fluctuations, especially as they have been adversely affected by the virus, said Deputy Prime Minister Somkid Jatusripitak.

"These projects are essential because the economy, particularly from the second quarter, has been crippled for a few months," he said after attending a meeting to outline farming sector rehabilitation. "The global economy remains gloomy and this will deal a blow to investment, exports and tourism."

Last month the cabinet approved a royal decree to borrow 1 trillion baht, of which 600 billion is for financial aid and health-related plans for those whose jobs and businesses have been upended during the outbreak. The remaining 400 billion baht is for economic and social rehabilitation through projects aimed at creating jobs, strengthening communities and building infrastructure.

Mr Somkid said Thailand needs to turn the crisis into opportunity to support the domestic economy, which is one of three pillars for local economy development. The others are scaling up the digital system and upgrading the country to become a regional hub.

The crisis suggests that the country's big data system remains small-scale, he said.

The Thai Bankers' Association estimates that Thailand stands to lose 1.3 trillion baht, representing 7.7% of GDP, from the coronavirus crisis and that the damage could be on a par with the 1997 financial meltdown.

Of the total damage, 1.1 trillion baht would be from lost tourism receipts. The Bank of Thailand forecasts the economy to shrink by 5.3% this year.

The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) has proposed a three-pronged solution for farming sector development, Mr Somkid said. Building food security, strengthening community business and sustaining the grassroots economy are the three elements.

BAAC branch managers nationwide will take charge of projects related to the three tasks in their areas.

The BAAC could offer a negative interest rate for loans to smart farmers who are accommodating of agricultural sector development by absorbing their fertiliser expenses, Mr Somkid said.

The 400-billion-baht local economy rehabilitation plan must be executed step-by-step, starting from training in return for money, supporting loans after participants complete training courses and seeking a market for them.

Mr Somkid wants state energy firm PTT to review its mission by adding community development.

The national oil and gas conglomerate could replace complimentary drinking water with fruits for customers at fuelling stations to help farmers, he said.

BAAC president Apirom Sukprasert said the bank will ask for a 55-billion-baht budget under the 1-trillion-baht borrowing plan from the government for the farming sector rehabilitation to comply with the sufficiency philosophy.

According to the Thai Chamber of Commerce's estimate, 7.1 million people will lose their jobs as a result of the pandemic and 1.87 million of them are expected to return to their hometowns.

Entrepreneur fund

Finance Minister Uttama Savanayana said the ministry has floated the idea of establishing a fund to assist small entrepreneurs who lack access to bank lending.

There are a significant number of business operators living along the country's borders who are underbanked or have no collateral to seek loans, he said, adding that the Fiscal Policy Office has been delegated to explore mechanisms to offer these operators special loans.

A fund could be set up for the purpose, Mr Uttama said, and the 1 trillion baht to be borrowed could be used as a funding source.

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