Stimulating domestic demand has featured in strategies adopted by the Prayut Chan-o-cha administration, with a government budget of 200 billion baht spent in its efforts to offset the downturn caused by Covid-19.
Although the pandemic has forced governments worldwide to devise fiscal and monetary stimulus measures to mitigate adverse effects, the Thai government has had policies in place to boost demand since 2019 in an attempt to compensate for a decline in the country's exports, which were crippled by the Sino-US trade war.
Initiated in September 2019, the "Eat, Shop, Spend" scheme enabled 10 million Thais to access a 1,000-baht e-subsidy and a 15% tax rebate. It was among the flagship stimulus policies implemented by the government's economic team when it was spearheaded by Somkid Jatusripitak.
MONETARY ASSISTANCE
As the Covid-19 pandemic started to take a toll on the economy earlier this year, the government reacted to the strict lockdown measures, put in place for several months in an effort to curb the outbreak, by initially rolling out a 5,000-baht transfer of money to workers employed in the informal sector.
The monthly stipend ran for three months, from April to June, and was provided to temporary workers, contract employees and self-employed workers who are not covered by the Social Security Fund's Section 33.
A man gets his temperature checked before entering the central shrimp market in Samut Sakhon province. With the pandemic harming the economy, the government has launched several stimulus campaigns. (Photo by Arnun Chonmahatrakool)
Named "No One Will Be Left Behind", the scheme was marred by problems involved with the transfer of the funds. The final payments were supposed to have been made in June, but the money transfer problems have delayed the process until the present.
It was reported on Sept 11 that 79.5 billion baht of the funds had been transferred, reaching a total of 15.3 million recipients. However, about 56,000 subscribers to the scheme have yet to receive their funds.
People failed to receive their funds for a variety of reasons, such as not having bank accounts set up to receive the funds, said Lavaron Sangsnit, the former director-general of the Fiscal Policy Office.
The ministry brought the money transfer process to a close on Sept 30.
CONSUMPTION STIMULUS
As Thailand's GDP saw a 12.2% year-on-year contraction in the second quarter, the government stepped up its efforts to shore up domestic demand hampered by the pandemic.
While tourism suffers because of strict limitations on inbound arrivals, exports have bore the brunt of weak external demand. The government believes revving up fragile domestic demand represents a beacon of hope for the economy going forward.
Three core policies were unveiled to stimulate consumer spending in the final quarter of 2020: a co-payment scheme, money disbursement for holders of state welfare cards, and a tax rebate scheme for buying goods and services between October and December.
Small merchants and the urban and rural poor are the target groups for the co-payment scheme and money disbursed as state welfare, while taxpayers are at the heart of the tax rebate scheme.
People line up for the 5,000-baht No One Will Be Left Behind scheme. (Photo by Varuth Hirunyatheb)
The co-payment scheme subsidises registered individuals who make purchases at small shops, with the government covering 50% of receipts.
The government pays for half of purchases of food, drink and general goods up to a value of 150 baht per person per day, capped at 3,000 baht per person for the duration of the scheme.
Although the scheme initially received a lukewarm response, 10 million people were formally registered on Oct 29, 13 days after the registration process was launched. The first phase of the scheme runs from Oct 23 to Dec 31.
The scheme's popularity and rising demand were reflected when the second phase launched for registration on Dec 16.
Some 5 million people formally registered for the second phase of the co-payment scheme within two hours of the online registration opening at 6am.
The second phase covers an additional 5 million people, and the subsidy amount has been raised from 3,000 to 3,500 baht per person.
Under the scheme, the 10 million people who already registered in the first phase are eligible for an additional 500 baht.
The second phase runs from January to March 2021. The rights of existing registered users have been extended to March 2021.
The registration system was overwhelmed earlier this month and the process of confirming registrants' identity via a one-time password crashed for those using DTAC mobile service.
Krungthai Bank (KTB) is not going to compensate people who failed to register for the second phase of the co-payment scheme because the crash was due to a technical error and every registration system can potentially encounter this kind of bottleneck, said KTB president and chief executive Payong Srivanich.
KTB is a state-owned bank responsible for overseeing the Pao Tang and Tung Ngern apps used to disburse the subsidy scheme, among other functions.
Police have also pressed charges against four individuals suspected of defrauding the co-payment scheme.
Four individuals allegedly encouraged people to make fraudulent purchases so money could be claimed through the scheme. Police also suspect over 700 other people may have defrauded the scheme.
TROUBLED TOGETHER
To mitigate the economic impact from a lack of international arrivals as borders have been closed since April, the cabinet approved two new domestic tourism stimulus campaigns proposed by the Tourism Authority of Thailand (TAT) and the Tourism and Sports Ministry on June 30.
A combined 22.4 billion baht was allocated for "We Travel Together", which is for individual travellers, and "Moral Support", which targets health personnel who travel via tour services with a 2,000-baht budget per head.
Under the We Travel Together scheme, the government initially subsidised 5 million rooms at 40% of the accommodation rate, capped at 3,000 baht per night for up to five nights.
The government later increased the duration to 10 nights, and it is expected to expand this to 15 nights when the extension phase is rolled out.
In tandem with the room bookings, tourists automatically receive an e-voucher for other expenditures valued at 600 baht from Friday to Sunday and 900 baht from Monday to Thursday.
The government is also helping to compensate 40% of the price of air tickets, up to a maximum of 3,000 baht per person -- up from 1,000 baht and 2,000 baht in the first few months of the scheme.
The first stage of the We Travel Together scheme received a lukewarm response from the public, leading the government to offer more attractive benefits such as added nights of accommodation, additional value for e-vouchers and the higher ticket price level for air ticket compensation.
In spite of these additional benefits, individuals were slow to enrol in the programme, with many people suggesting the application system for benefits is too complicated.
More obstacles involved the campaign being rolled out when there were still fears of the contagion, in addition to being the low season for tourism.
During the early stages, people flocked to nearby destinations, but they mostly made these journeys on the weekend, leaving most of the rooms empty during weekdays.
Tourism operators urged the government to extend the deadline beyond October to reap the windfall of the high season during the final quarter, and to be coincide with holidays the government added to the calendar.
This suggestion received a positive response during the cabinet meeting in October, and the scheme was extended until Jan 31, 2021. Domestic tourists were also given the ability to choose hotels located near their home areas.
On Dec 8, the cabinet approved the amendment to the We Travel Together campaign, which is now available until April 30, 2021.
However, this campaign faced another challenge when fraudulent actions were uncovered, resulting in the government abruptly halting the planned extension of 1 million rooms, which was scheduled to begin on Dec 16.
According to media reports, some of the alleged fraud related to how hotel rooms were booked, which allowed this to be done at lower prices via phone apps.
There were also allegations that check-ins were recorded without guests actually being there, and benefits claimed from coupons without money being spent.
Further allegations involved hotels increasing their room rates and colluding with restaurants in claiming benefits.
In some cases, no travel actually took place and the fraudsters selling their benefits would provide the last four figures on their ID cards and their mobile phone numbers to give the impression a legitimate check-in took place.
Some hotels were registered to participate in the tourism campaign, but were not actually open for business. Those registering to participate sought to gain state subsidies for room bookings that did not actually take place.
Although the campaign started to see positive momentum when all 5 million rooms were completely redeemed this month, the complicated system and loopholes in the verification process are areas where the government needs to improve to stimulate consumption.