Cabinet passes Bt116-billion economic stimulus package

A Bt116-billion economic stimulus and social-welfare package that sailed through Cabinet yesterday is the first in a series of funding boosts expected to total Bt300 billion this year.

This first package of 17 projects aims to prevent the economy from worsening further, especially in the second quarter, so it would be implemented quickly, said Korbsak Sabhavasu, deputy premier in charge of economic affairs.

The package includes a monthly living allowance of Bt2,000 a person for about 9 million low-income earners nationwide, school subsidies, promotion of rural small enterprises, plus free electricity and tap-water for small households, among others.

Korbsak told The Nation in an interview that low-income earners should see the money should reach low-income earners, including those with a monthly salary of Bt14,000 or less, around April, with checks sent by mail to eligible members of the Social Security Fund and the civil servants.

In regard to school subsidies, he said parents would save on tuition fees, uniforms and textbooks starting from May 1.

Overall, the package is intended to boost consumption as other engines of economic growth slow due to domestic and external factors, especially the global economic crisis, which has hit export earnings.

Korbsak said the stimulus package should add a full percentage point to a Bank of Thailand forecast of zero to 2.5-per-cent growth in this year's gross domestic product.

The government is also considering borrowing funds from international institutions like the World Bank and Asian Development Bank to finance its stimulus programmes.

The business and industrial sectors yesterday gave a mixed response to the package, with Thai Chamber of Commerce vice chairman Dusit Nontanakorn hailing it as a good move to boost the economy.

However, Federation of Thai Industries vice chairman Tanit Sorat said the government should also initiate longer-term policies to develop workers' skills, because a quick spending programme like this one would just "go down the drain".

Chulalongkorn University economist Sompop Manarungsan said he doubted whether the stimulus package would really work as envisioned by the government. For example, he did not agree with handing out cash to low-income earners, because he felt it wouldn't be productive.

"Handouts do not guarantee that receivers will re-inject the money into the economy," he said.

Sompop also suggested the government help workers find new jobs so they can better survive under the new economic conditions, rather than have them simply hold onto their existing ones.

In addition to this first Bt116-billion package, Korbsak said another one to boost the real-estate sector was under consideration, with plans to double the annual tax deduction from Bt100,000 to Bt200,000 for new-home purchases.

There would also be a mortgage-insurance scheme to help low-income earners buy houses with low deposits.

Meanwhile, Budget Bureau chief Banthoon Supakvanich said the 17 stimulus and social-welfare projects were approved yesterday as part of the mid-fiscal-year supplementary budget to be submitted to Parliament on January 28.

Other projects include Bt9 billion for senior citizens aged 60 and above, Bt6.9 billion for retraining unemployed workers, Bt3 billion for community-based public-health workers and Bt15 billion for community-based enterprises.

The government will also offer Bt500 million in soft loans to tourism and service businesses.