The Employers' Confederation of Thai Trade and Industry (EconThai) welcomes the government's decision to reduce electricity and diesel prices, part of efforts to ease the cost of living and the financial burden faced by businesses.
After Prime Minister Srettha Thavisin delivered the administration's policy statement in parliament, the cabinet began work yesterday by resolving to approve a further cut in the power tariff to 4.104 baht per kilowatt-hour (unit), as well as placing a cap on the diesel price at 30 baht per litre.
The diesel price is currently 31.94 baht per litre.
Businesses, especially logistics service providers, will benefit from a reduced diesel price as they can save on costs, while consumers should see the price of goods remain roughly the same, said Tanit Sorat, vice-chairman of EconThai.
"These measures will eventually prevent goods prices from increasing, which is good for households," he said.
However, Mr Tanit said he is worried the measures may affect the state budget, leading to a new financial burden that does affect people in the future.
The new tariff rate replaces the existing rate of 4.45 baht, applicable between September and December this year, while the new retail price of diesel is scheduled to take effect from Sept 20.
The 4.45-baht power tariff, a decrease from 4.7 baht from May to August, was previously announced by the Energy Regulatory Commission. Authorities base their calculation on lower gas prices, public opinion and a need to pay back funds to the Electricity Generating Authority of Thailand.
EXCISE TAX CUT
To reduce the diesel price to 30 baht per litre, the cabinet agreed to cut the diesel excise tax by 2.50 baht a litre, starting on Sept 20 and continuing through to the year-end.
The Oil Fuel Fund Office has subsidised the diesel price after a waiver of the 5-baht diesel excise tax expired on July 20 to keep the price at around 32 baht a litre.
The diesel excise tax is usually 5.99 baht per litre.
Deputy Finance Minister Krisada Chinavicharana said the 2.50-baht tax reduction would reduce the government's revenue collection by up to 15 billion baht. However, for fiscal 2023 state revenue collection is estimated to exceed its target by more than 100 billion baht.
Lavaron Sangsnit, director-general of the Revenue Department, said the department's revenue collection for this fiscal year is expected to exceed the target by around 180 billion baht, while revenue collection in fiscal 2024 would depend on the economic conditions.
Chartsiri Sophonpanich, president of Bangkok Bank, said the new government's economic policy should help revive the economy, contribute to economic growth, and strengthen the country's competitiveness for the longer term. He said the policy implementation reflected the country's progress following the formation of the new government.
Somprawin Manprasert, chief economist at Economic Intelligence Center (EIC), a research unit of Siam Commercial Bank, said a massive stimulus plan, such as the 10,000-baht digital currency handout scheme, may increase Thailand's GDP growth by more than 5% in 2024. However, the temporary growth must be weighed against the long-term fiscal burden, he said.
Instead of a huge stimulus measure, there are other viable options to revive the economy amid the ongoing recovery, while uncertainties remain such as global value chain reallocation and climate change, said Mr Somprawin.
Moreover, such short-term, massive government spending could deteriorate fiscal sustainability by increasing public debt to surpass its ceiling of 70% of GDP. This could leave little fiscal space to cushion the economy against future uncertainties, as well as to maintain fiscal stability, he said.
The EIC proposes a long-term economic policy that prioritises the country's competitiveness and sustainable growth.
The policy should enhance Thailand's competitive edge at both domestic and international levels, and broaden economic opportunities, said Mr Somprawin.
The government should also promote fair competition to enhance the effectiveness of the 2017 Trade Competition Act and support Thailand in joining the Organisation for Economic Co-operation and Development (OECD).
As an OECD member, Thailand could benefit from expansive export markets while strengthening its footing in the global supply chain, according to the EIC.
The government's blueprint should propel sustainable economic growth via tax policy reform to reduce inequality by avoiding tax policies that could distort business or household decision-making, said the think tank.
The EIC cut its outlook for Thai economic growth this year from 3.9% to 3.1% because of lower than expected economic expansion and continued export contraction in the second quarter.