Since the cabinet led by Prime Minister Srettha Thavisin was sworn into office almost seven weeks ago, the administration has faced numerous incidents, testing the vows it made to the public on the campaign trail.
One urgent task is to bring home thousands of Thai nationals affected by the conflict in the Middle East and the ongoing conflict between Israel and Hamas.
The government pledged to increase the daily minimum wage to 400 baht this year and 600 baht within four years, but this policy might be insufficient to persuade Thais working abroad to return home as the minimum wage abroad is higher than in their home country.
As a result, Thailand is likely to continue to depend on labourers from neighbouring countries.
Similar to Thai labour employed overseas, these workers seek better opportunities in another nation to support their families back home.
The government also faces questions on the source of funding for its planned 10,000-baht digital wallet scheme, with economists noting the long-term risks the scheme may pose for the country based on certain forms of financing.
Evacuees disembark from a Royal Thai Air Force plane sent to bring them back from Israel. One of the most urgent priorities for the government is to rescue thousands of Thais affected by the Israel-Hamas conflict. VARUTH HIRUNYATHEB
RIDDLED WITH DOUBT
Amonthep Chawla, chief economist at CIMB Thai Bank (CIMBT), said no more details were announced about the digital handout, including funding sources, the form of digital unit to be used, or how the digital wallet would operate.
As a result, CIMBT is unable to forecast whether the scheme will be implemented in a timely manner, he said.
The government has announced the handout is scheduled to launch early next year.
Mr Amonthep said the government should educate the public and merchants about the format of the digital handout in a timely way, ahead of its implementation tentatively scheduled for February.
Fostering understanding and building confidence in the digital wallet scheme among the public should be a priority in preparation for a smooth roll-out of the scheme, he said.
"I believe most people want the digital cash handout of 10,000 baht, but I'm not sure whether merchants are willing to join the programme because they need to comply with the tax system," said Mr Amonthep.
"The government should encourage shops to register for the scheme and inform them about the plan during the initial stages."
If the scheme is implemented starting in February 2024, it would help contribute to economic growth of 4% next year, predicted CIMBT.
While the scheme would increase consumption and support the economy in the short term, the bank is not confident it could sustain economic growth at 4% in 2025 and 2026.
CIMBT is awaiting further details on the scheme before assessing the fiscal multiplier effect and economic expansion in the long term.
He said all previous populist policies increased domestic consumption and GDP growth in the short term.
Mr Amonthep said many parties proposed populist policies during their election campaigns, but few focused on restructuring the country's economy to sustain expansion and strengthen its competitiveness over the long term.
Regarding the minimum wage increase, the bank expects the government to implement this policy on time because it does not require a huge fiscal budget, though it depends on tripartite discussions.
Hiking the daily minimum wage would affect some small and medium-sized enterprises (SMEs), so the government should support these fragile businesses through a skills training programme, or provide a soft loan scheme for technological development and automation, he said.
FIRST 100 DAYS
Aat Pisanwanich, an international economics consultant at International Research Consultant Co, said the administration may be able to implement the minimum wage hike within this year, while the 10,000-baht digital handout is unlikely to launch before February 2024, which is beyond the government's first 100 days in power.
Regarding the daily minimum wage increase, Mr Aat said it should be achieved because it does not require a fiscal budget.
A wage hike can be reached through negotiations among three parties: workers, employers and the government.
However, there should not be any "intervention" into the work of the national wage tripartite committee, said Montri Mahaplerkpong, vice-chairman of the Federation of Thai Industries (FTI).
He insisted the wage issue must be carefully considered because it will have a significant impact on labour-intensive businesses.
Sangchai Theerakulwanich, president of the Federation of Thai SMEs, reminded the government of a previous instance when the daily minimum wage was raised. This policy led many businesses to close after the rate was raised to 300 baht a day.
The minimum wage for skilled workers exceeds 300 baht per day, while some industries pay more than 400 baht per day.
Unskilled workers are still paid at a rate of 300 baht a day, said Mr Aat.
"It seems migrant workers will gain more benefits from a wage increase than many Thai workers because the latter group already receives a wage exceeding the minimum rate," said Mr Montri.
He wants the government to base any wage increase on workers' skills under a "pay-by-skill" concept, as this would encourage workers to improve their talents, which should improve productivity and attract more foreign investment.
Evacuees disembark from a Royal Thai Air Force plane sent to bring them back from Israel. One of the most urgent priorities for the government is to rescue thousands of Thais affected by the Israel-Hamas conflict. VARUTH HIRUNYATHEB
CONTROLLING COSTS
Mr Aat said raising the minimum wage may not address the government goal of reducing the cost of living for people because wage hikes may cause manufacturers to increase product prices.
In the past, the government sector has been unable to keep up with the private sector in terms of product costs as it does not have the cost structure of each type of product in hand, he said.
Mr Aat estimated the reduction of electricity and diesel prices would help reduce the cost of manufacturing a product by 20% and 30%, respectively.
Referring to the digital handout scheme, which is estimated to require a fiscal budget of 560 billion baht, he recommended instead the government allocate 40% of the budget to restructure the country's production costs, helping to propel the economy over the long term.
Mr Aat emphasised reducing logistics costs and adjusting the production process towards lower emissions, which Vietnam has already begun.
Mr Sangchai suggested the government spend part of the 560 billion baht estimated for the digital handout to support new measures to improve the skills and quality of life for workers.
Mr Aat said injecting 560 billion baht into the economy would create a fiscal multiplier effect, the extent of which depends on economic circumstances.
If the economy stagnates for some time, monetary circulation would be low, making the effect at least one time, he said.
However, if the economy still has momentum, the monetary turnover would be higher, said Mr Aat.
He predicted disbursing the entire 560 billion baht would lead to a fiscal multiplier effect of 1.9 times, though it would dip to a range of 1.1-1.2 times or around 800 billion baht if inflation is taken into consideration.
Tassapon Bijleveld, executive chairman of Asia Aviation, the holding company of Thai AirAsia, said the public should give the government a chance to finish drawing up the digital wallet plan before criticising it.
Though the current scheme is not expected to directly benefit tourism spending as the usage area for the money is limited to where homes are registered, he said if the project can create a multiplier effect of five times as predicted, it should increase spending power, which could be used for tourism outlays down the line.
The government needs to be diligent about this policy to be certain it can really stimulate a stagnant economy, said Mr Tassapon.
A gathering at the headquarters of the Pheu Thai Party of supporters of the government's popular 10,000-baht digital wallet policy. Somchai Poomlard
NOT AN EASY JOB
Visit Limlurcha, president of the Thai Future Food Trade Association and honorary president of the Thai Food Processors Association, said the private sector finds several policies advocated by the new government intriguing and potentially beneficial for the economy, society and the environment.
The key question is whether the government can effectively put these policies into action, said Mr Visit.
He cited the FTI CEO Poll released in September 2023 that indicated most chief executives believe the new government's policies would meet the needs of the industrial sector at a "moderate" level.
The survey attributed this rating to the previous economic crisis that led to various issues the government still needs to address, especially regarding SMEs that have not yet recovered.
The private sector wants the government to urgently issue measures to reduce the energy cost burden for the public, adjust the country's energy usage structure, and address debt issues in agriculture, business and the public sector, said Mr Visit.
In addition, there should be a push for income generation from tourism, such as more visa exemptions, repealing or reworking unnecessary laws to create income opportunities for people, and economic diplomacy to open new markets and expedite negotiations for free trade agreements, he said.
Companies want to promote clean and renewable energy production and usage, as well as environmental crisis preparedness and prevention planning for future environmental challenges, said Mr Visit.
Addressing the PM2.5 ultra-fine dust crisis that has plagued much of the country for years should be upgraded to a national priority, he said.
Chaichan Chareonsuk, chairman of the Thai National Shippers' Council, said he believes the administration's pledge to raise the daily minimum wage to align with rising inflation and higher living costs is unlikely to be achieved within 100 days.
Wage adjustments must consider both the cost of living and business owners' costs, he said.
However, Mr Chaichan praised the government's measures to reduce the prices of electricity, oil and gas, as well as public transport costs and the visa exemption for Chinese tourists. These policies are "quick win" measures that should help industrial and tourism sectors manage their costs to compete with foreign firms during the economic slowdown, he said.
The ongoing war in Ukraine and the recent Israel-Hamas conflict are likely to affect the Thai economy both directly and indirectly in terms of production costs as Thailand imports fertilisers, raw materials for making animal feed, and oil from these countries, said Mr Chaichan.
These conflicts are difficult to predict and have repercussions on economies worldwide, he said.
In order to stimulate exports, cooperation between the government and private sector is essential to tap new markets during the fourth quarter this year and strengthen existing markets, said Mr Chaichan. Building soft power is crucial in this endeavour, particularly for the food and textile industries, he said.
