Jump to content
BANGKOK
webfact

Government stimulus package not sustainable, economist warns

Recommended Posts

Government stimulus package not sustainable, economist warns

By Wichit Chaitrong
The Nation

 

800_5495a6ed64cd036.jpg?v=1566136713

Uttama

 

The government stimulus package will not make much difference and might not be sustainable, an economist with Rangsit University cautioned on Sunday.

 

The Cabinet is expected this week to approve an economic stimulus package worth Bt370 billion, covering cash handouts for farmers and low income earners, grants for children and incentives for domestic travellers as well as tax incentives to support small businesses. The government aims to boost economic growth by 3 per cent to counter both uncertain domestic conditions and the impact of trade war between the United States and China.

 

graphicgrowth.jpg

 

Finance Minister Uttama Savanayana said last week that the package would prevent economic growth sliding to below 3 per cent this year.

 

“Short-term spending as part of populist policies will not help much as the Thai economy is monopolised by big business,” said Anusorn Tamajai of Rangsit University’s Economic and Business Research Centre for Reform.

 

Most of the spending by low income groups will end up as revenue for large businesses, he noted. 

 

He did however agree with the government plan to reduce the tax burden for small and medium-sized enterprises which could lead to more private investment. The government plans to offer generous tax reductions for those who import machinery to upgrade their production with a five-year depreciation allowance. Two state run banks; Government Savings Bank and Krung Thai Bank will also provide combined soft loans worth about Bt100 billion.

 

Currently, total investment in GDP is 24 per cent which is considered low compared to the peak of more than 40 per cent before the crisis of 1997. The ratio of private investment to GDP is 18 per cent GDP to government investment of 6 per cent.

 

Private consumption accounts for 51 per cent of GDP, and if boosted sustainably would drive the economy, he said.

 

The government also plans to direct other state run banks to provide soft loans to farmers and lower income groups. The Bank for Agriculture and Agricultural Cooperatives, The Government Housing Bank, and the Small and Medium Enterprise Development Bank of Thailand are expected to join the lending under the government stimulus plan. Anusorn warned that it may not be sustainable because its effectiveness depends on public confidence in the future.

 

Thai governments often resort to state run bank lending, quasi-fiscal measures that usually increase the burden for banks and then translate into a burden for tax players later.

 

Source: https://www.nationthailand.com/business/30374944

 

nation.jpg

-- © Copyright The Nation Thailand 2019-08-19

Share this post


Link to post
Share on other sites
7 hours ago, webfact said:

The government also plans to direct other state run banks to provide soft loans to farmers and lower income groups

And repay them with what ? 

Share this post


Link to post
Share on other sites

Personal bank accounts will of corse remain unaffected and will remain stimulated to the point of arousal with 370bn up for grabs as the low earners get told sorry you had your chance but we blew it 🤔

  • Like 1

Share this post


Link to post
Share on other sites
7 hours ago, webfact said:

Finance Minister Uttama Savanayana said last week that the package would prevent economic growth sliding to below 3 per cent this year.

To bad he didn't add, "or I'll resign my Ministry post."

If growth does fall below 3% let's see if Prayut will hold him accountable and replace him. 

But I expect he won't.

Share this post


Link to post
Share on other sites
33 minutes ago, RichardColeman said:

And repay them with what ? 

It’s giveaway money-they never intend to get repaid 

  • Like 1

Share this post


Link to post
Share on other sites
7 hours ago, MaxYakov said:

having half the population not paying taxes that is not sustainable.

 

Not really half, more a 1%..

  • Thanks 1

Share this post


Link to post
Share on other sites

That was a nudge nudge wink wink, be quick at the trough before it dries up. There will always be new opportunities to get your snout wet, maibpenrai.

  • Like 1

Share this post


Link to post
Share on other sites
8 hours ago, webfact said:

Most of the spending by low income groups will end up as revenue for large businesses, he noted.

In other words, we know who the "hand out" is really for. Nothing less than hitting the accelerator as they head into the wall.

  • Like 1

Share this post


Link to post
Share on other sites
12 minutes ago, timendres said:

In other words, we know who the "hand out" is really for. Nothing less than hitting the accelerator as they head into the wall.

Most money spent goes to large corporations. If you go to your local noodle shop and buy food some of your money is used by the owner for their personal use some is spent at a market to buy more noodles the market pays it's employees and suppliers the rest is profit for the corporations and the stock holders

  • Sad 1

Share this post


Link to post
Share on other sites
10 hours ago, webfact said:

Government stimulus package not sustainable

It will be even less sustainable after it finishes paying for Thai Airways 23 new widebody jets and the 11.88 billion baht State Railway of Thailand debt to Hopewell.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...