Legal and funding challenges could derail or significantly scale down implementation of the costly digital wallet and e-refund schemes the government plans to roll out next year, blunting GDP growth estimates for 2024, according to analysts.
Maybank Securities said legal challenges are viewed as potentially the biggest stumbling block to these policies being implemented.
Opposition parties are citing Section 140 of the Constitution, which deals with issues pertaining to state funding, and Section 53 of the State Fiscal and Financial Responsibility Act, which deals with limits for emergency funding. Academics also cite several potential legal challenges relating to Sections 20 and 62 of the Public Debt Management Act.
"Unfavourable rulings by the court could mean these stimulus measures may need to be scaled down significantly," Maybank said in a research note.
A precedent was set by the Constitutional Court when it deemed extra spending unconstitutional, noted Maybank, referring to a case in 2013 when the Yingluck Shinawatra administration proposed a 2-trillion-baht bill for extra spending for the construction of a high-speed railway.
"The court ruled the bill was unconstitutional because it was not for emergency spending. A similar ruling could happen this time around," Maybank noted.
Asia Plus Securities (ASPS) said it believes funding sources should be the main concern for the 500-billion-baht digital handout and 100-billion e-refund scheme, which aims to increase spending by 100-200 billion baht.
With the implementation of these policies, the government expects the country's 2024 GDP growth to reach its target of 5%, the brokerage noted.
"If the government borrows an additional 500 billion baht, public debt may increase from 62.1% of GDP at present to 65%. Higher public debt may cause Thailand's credit ratings to be downgraded," said ASPS.
While these two stimulus schemes will likely benefit all listed retailers, Maybank suggests Home Product Center (HMPRO) and COM7 could potentially be the biggest beneficiaries.
The digital wallet scheme is slated to run from May 2024 until the end of April 2025. This means Thailand's economy is likely to benefit from a hike in spending for 14 out of 16 months from January 2024, said the brokerage.
COM7 has a large footprint in the consumer discretionary sector, while HMPRO has the largest footprint among home improvement retailers. They are likely to earn more than their peers from the digital wallet scheme, said Maybank.
