Govt tries to kickstart economy
Stimulus measures to ‘lift growth to 3%’
The government has rolled out a raft of stimulus measures to boost economic growth to 3% this year as it seeks to expedite investment spending, attract more tourists and speed up investment from the private sector.
Finance Minister Pichai Chunhavajira said yesterday after a meeting of economic ministers that Thailand’s economic growth has trailed behind that of other countries in the region.
Attendees at the meeting agreed that if the country is to survive, the economy should be expanding by at least 5% annually over the next three years.
But for the rest of this year, shortterm stimulus measures are needed to boost growth to 3%, compared to this year’s growth projection of 2.4% by the Fiscal Policy Office, Mr Pichai said.
The short-term measures include increasing the number of foreign tourists from an earlier estimated 35.7 million this year to 36.7 million, which is expected to boost GDP by 0.12%.
Mr Pichai said another measure involves accelerating the disbursement of the investment budget for the 2024 fiscal year, which is worth about 850 billion baht.
“The government wants to see at least 70% of the investment budget disbursed within this fiscal year ending September, which is expected to boost
GDP by 0.24%. Currently, only 41% of the investment budget has been spent,” Mr Pichai said.
Another measure is to speed up private sector investment through the Board of Investment, Mr Pichai said, adding that private companies have now applied for Board of Investment promotion privileges for investment projects worth 800 billion baht.
“If investment projects worth at least 30-40 billion baht can start this year, this will also help GDP expand by 0.140.15%,” Mr Pichai said.
Moreover, the economic ministers also approved a proposal to set up a national semiconductor board to upskill semiconductor industry workers.
Thailand has lagged behind other countries in terms of highly skilled semiconductor workers, and the private sector must be involved in tackling the shortage of skilled labour in domestic semiconductor manufacturing.
Currently, investment has expanded in the industry with growing demands for skilled workers, Mr Pichai said, adding that the government is planning to send Thai workers for training in Taiwan, which is famous for its semiconductor industry.
The National Economic and Social Development Council ( NESDC) reported economic growth of 1.5% year-on-year for the first three months.
The NESDC now expects GDP growth of between 2% and 3% for the year, slightly lower than its previous forecast of 2.2% to 3.2%. Last year’s growth was 1.9%.
The downgrade was due to high levels of external risk, especially intensifying trade protectionism, geopolitical conflicts, and increasing volatility in the global economy.
Thailand’s growth in the first quarter was below that of six other members of the Association of Southeast Asian Nations (Asean). According to NESDC figures, the Philippines and Vietnam led the pack, each with 5.7% expansion, followed by Indonesia (5.1%), Malaysia (4.2%), and Singapore (2.7%).
Mr Pichai went on to say that the Finance Ministry will propose a plan for a credit guarantee fund worth 50 billion baht to help small and medium-sized enterprises (SMEs) access credit to the cabinet for consideration today.
The new portfolio guarantee scheme (PGS 11), operated by the state-owned Thai Credit Guarantee Corporation (TCG), aims to provide lending guarantees for banks to inject liquidity into the financial system quickly.
The PGS 11 credit guarantee scheme has a project budget of 50 billion baht and offers a maximum of 40 million baht per borrower. The guarantee period is up to 10 years, and each guarantee cannot exceed 30% of the credit amount.
Mr Pichai also said the government will launch a new soft loan programme to help SMEs manage their financial costs better. Under the programme, the Government Savings Bank and other financial institutions will offer soft loans worth 100 billion baht, he said.
He said that even though the programme will cause the GSB to lose about 1 billion in profit annually, it will still have positive effects on the overall economy.