Business leaders want the government to urge state enterprises and local government organisations to expedite the use of existing investment budgets, while launching more stimulus packages as the nation awaits the fiscal 2024 budget to push the economy forward.
The government should distribute the 2024 budget quickly once it is approved, as a delay would be harmful for entrepreneurs, especially those relying on revenue from state projects, the executives say. Many businesses may find it hard to survive.
The fiscal 2024 budget calls for spending of 3.48 trillion baht with a deficit of 693 billion, up from 593 billion approved by the previous government before the May 14 election.
Swift budget allocation
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said the private sector sees the proposed draft budget for fiscal 2024, which was approved during the first parliamentary reading, as crucial to bolstering confidence within Thailand.
During the 2024 budget allocation process, expected in May, Mr Sanan said the chamber suggests the government negotiate with state enterprises and local government organisations to expedite the utilisation of the existing investment budget of each agency.
The chamber also proposes the government unveil fresh economic stimulus measures without relying on additional budget allocations.
The government is advised to accelerate budget disbursement as fast as possible once the fiscal 2024 budget is announced, as there may be only five months to spend the allocated funds, he said.
"We hope the government will come up with effective plans to accelerate budget disbursement to distribute funds to each region promptly, stimulating the economy," Mr Sanan said.
The House of Representatives on Jan 5 approved the first reading of the draft budget for fiscal 2024, with 311 votes in favour, 177 against and four abstentions.
The budget calls for spending of 3.48 trillion baht with a deficit of 693 billion.
Fiscal 2024 began on Oct 1, 2023, but the budget could not be passed because of the protracted delay in forming a government following the election.
The draft budget heads to a 72-member House committee for greater scrutiny. Then it is sent back for second and third readings.
Deputy Finance Minister Julapun Amornvivat said last month the new budget bill is expected to become effective in early May.
While Prime Minister Srettha Thavisin said the budget allocations will provide the greatest benefit for the public, the opposition, led by the Move Forward Party, said the budget was vague and failed to address many key problems plaguing the country, such as economic stagnation and environmental and education issues.
Lack of clear focus
The cabinet approved a budget framework for fiscal 2024 worth 3.48 trillion baht, with 2.78 trillion in projected revenue, resulting in a deficit of 693 billion baht or 19.9% of budget expenditure.
The government also seeks to borrow 693 billion baht to compensate for the budget deficit.
The general governmental fiscal balance has remained in deficit over the past 25 years, except in fiscal 2005 and 2006, with borrowing used to address the budget deficit.
In fiscal 2009 and 2022, the government recorded the highest borrowing to cover a deficit, representing 22.6% of budget expenditure.
Since 1995, the highest investment expenditure, at 28.3% of the total planned spending, was in fiscal 1999, while the lowest was 12.6% in fiscal 2010.
Aat Pisanwanich, an economist and senior consultant at International Research Consultant Co Ltd, said the budget lacks a clear focus amid a host of uncertainties and challenges.
He said geopolitical tensions such as the conflicts in Ukraine and the Middle East as well as the Red Sea shipping crisis are weighing on the global economy, pushing up energy prices and international shipping costs.
Mr Aat said the fiscal 2024 budget fails to explicitly address these global challenges.
He said the lack of a clear focus may stem from the nature of the coalition government, with each party advocating for its own agenda. This may have caused the budget to become fragmented, said Mr Aat.
Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce, said the problem with the fiscal 2024 budget is significant changes cannot be made, only minor adjustments as the budget is mainly a continuation of the previous government's budget.
Furthermore, the fiscal 2024 budget is limited by a fiscal discipline framework, capping the budget deficit at 20% of budget expenditure, while public debt must not exceed 70% of GDP.
Moreover, up to 70% of the total expenditure is allocated for the salaries of civil servants, leaving a meagre portion for investment expenditure, said Mr Thanavath.
Within 10-20 years, budget expenditure for civil servants' salaries is projected to be reduced as civil servants are reclassified as government employees, he said.
Mr Thanavath said the 2024 budget addresses the country's problems to a certain extent, concerning reducing social disparities, developing human capital, promoting sustainable development and strengthening the country's competitiveness.
Srettha Thavisin, Prime Minister of Thailand, speaks to members of the press regarding a meeting of the House of Representatives on January 5 held for the draft budget for the 2024 fiscal year. Nutthawat Wichieanbut
BLACK HOLE
Rather than drilling down on the details of the budget bill, the Federation of Thai Industries (FTI) is focused more on how fast the government can make up for the months-long delay in budget spending, comparing it to a black hole.
Fiscal 2024 started on Oct 1 last year, but the process of forming a new coalition government, which involved negotiations and lobbying, put back the budget planning.
"Budget planning is likely to be postponed for eight months. The delay is like a black hole preventing the development of the economy from moving forward," said Kriengkrai Thiennukul, chairman of the FTI.
The government said earlier the parliamentary session to consider the budget bill should be completed by April.
"The delay is not good for large and small entrepreneurs, especially those relying on revenue from state projects," said Mr Kriengkrai.
"Many businesses will find it difficult to survive. Some have already closed up."
He said these companies had no cash to pay their debt and buy materials, particularly in the construction sector.
This lack of liquidity will affect construction businesses in the country, said Mr Kriengkrai.
He suggested the government allocate money to large-scale infrastructure development projects as it is a way to uplift the economy.
With the money directed at projects in certain areas upcountry, it should stimulate consumer purchasing power in many provinces, eventually helping drive the economy, said Mr Kriengkrai.
The FTI chairman also wants the government to speed up budget disbursement to projects in the pipeline, especially those developed by state agencies and state enterprises.
Talks between the government and officials are needed to ensure budget allocation is completed as soon as possible, he said.
Mr Kriengkrai said the FTI supports the state's controversial 10,000-baht digital money handout scheme, which should be used in tandem with budget allocation on infrastructure development.
Thailand requires new stimulus measures, he said.
The country cannot wait months for the budget bill to pass as internal and external headwinds swirl, including high household debt and worries over a global economic slowdown in 2024, said Mr Kriengkrai.
WORK QUICKLY
Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association, said the delayed budget will likely pass during the low tourism season, leaving only five months for authorities to stimulate the sector, comprising the Tourism Authority of Thailand (TAT), the Tourism Department and the Designated Areas for Sustainable Tourism Administration.
She said the tourism industry is not affected by the delayed budget at the moment as market sentiment is buoyed by the high season.
Other government efforts that do not rely on the fiscal budget, such as the visa exemptions, have helped maintain positive sentiment since October, despite the delayed fiscal budget, said Mrs Marisa.
However, in terms of marketing, the TAT may have missed opportunities to boost potential markets, hampered by a limited budget during this vacuum, she said.
The Tourism and Sports Ministry and the TAT have to prepare a tourism promotion plan and implement it quickly because they will have limited time to accelerate budget utilisation within this fiscal year, which ends in September, said Mrs Marisa.
"Increasing foreign arrivals through events and festivals might be necessary for the upcoming low season, when state agencies have sufficient budget," she said.
"However, supply development should not be neglected as many local communities and operators have felt the impact the past few months when they lacked state support to develop tourism products amid growing demand."
Regarding soft power development, which is an agenda item for the current government, Mrs Marisa said if the government can allocate state budget to the 11 sectors covered by the soft power committees, it could indirectly help the tourism industry, as those activities have the potential to bring more travellers to Thailand.
However, the budget allocation for each sector should not be redundant and must be able to create benefits for the targeted industries, as well as spur growth for other relevant industries, she said.
Phusadee Arunmas