Bt170 bn stimulus unlikely to reach communities, economists say

On Thursday, Lavaron Sangsnit, the director general for the Finance Ministry’s fiscal policy office, announced that the Bt170 billion package would be submitted to the Cabinet for approval on August 19.
The package, he said, will focus on the tourism and agricultural sectors while also boosting domestic spending and supporting small and medium-sized enterprises (SMEs) in the country.
However, doubts have been raised by economists on whether the ambitious package will have the intended impact amid declining exports, delays in government investment and disappointing consumer spending figures in the first half of this year.
The government’s stimulus packages may not reach the local community and secondary cities if the government does not also launch a public campaign to promote spending in local areas, said Kiatanuntha Luankaew, an economics lecturer at Thammasat University, regarding the government’s plan to promote the tourism sector and support small businesses.
Without a public campaign running in parallel with the stimulus package, the money injected into the economy might be spent in concentrated areas and end up with big businesses such as shopping malls, he said in an interview with The Nation.
Hence, Kiatanuntha suggested, the government should also run a campaign to promote tourism in secondary cities and communicate to the public that the stimulus package is meant to support small businesses in more remote areas of the country.
The effectiveness of the stimulus package is still unclear as the details of how the package will be implemented have not been released, said Mana Nimitvanich, first vice president of Krungthai Bank’s Global Business Development and Strategy Group.
Mana expects a portion of the stimulus package to be from state enterprise investments, such as allowing state banks to offer soft loans to promote spending.
Among the policies that would have an immediate positive impact on the economy would be an initiative offering soft loans to the agricultural sector, likely to be offered by the state-run Bank for Agriculture and Agricultural Cooperatives, he said.
While the stimulus package may lead to policies that are necessary to prop up economic growth in the short term, the policies resulting from the package may also be harmful to economic productivity in the long term, Kiatanantha cautioned.
For instance, he said, the government could use the package to fund its income and price guarantee scheme for the agricultural sector. This is necessary as a short-term measure to reduce inequality and support the sector due to recent droughts and price issues.
However, the government should also communicate to the agriculture sector that such policies are only one-off policies to support the agricultural sector in emergency situations, he said.
Otherwise, he said, the agricultural sector may become reliant on government income safety nets, leading to a reduction in the sector’s growth and productivity.

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