Bangkok Post – Making a Business Wish List

The fourth quarter is generally seen as the last attempt by businesses to accelerate or improve their performance, which may have been hampered by negative factors during the first three quarters, to avoid turning their balance sheet into the red.

The situation has been challenging for the private sector this year and they are concerned that the magic of the festive season may not be enough to lift sentiments as in previous years as purchasing power remains stagnant.

With less than two months left in the year, companies are hoping for an early New Year’s gift from the government to help them end the year successfully.

REALLY NEED STIMULUS

Thanawat Phonwichai, president of the University of Thai Chamber of Commerce, proposed government stimulus measures totaling 250 billion baht from the end of this year to the middle of next year to create momentum for the Thai economy.

He said the 10,000 baht distribution to 14.5 million vulnerable people had only a small impact on the economy. More stimulus is needed because the economy is in deeper decline than we think,” Mr Thanawat said.

It recommends tax incentive measures during the New Year period, such as Easy E-Receipt, which have been used in the past, with a budget of around 50,000 baht per person. This will result in a loss of tax revenue of 10-15 billion baht, but will generate at least 50 billion baht in turnover for the economy, Mr Thanawat said.

Coupled with increased spending over the New Year period, improved export performance and relatively low oil prices, the new stimulus should help boost the economy in the fourth quarter, he said.

Early next year, Mr Thanawat proposed spending an additional 50 billion baht on a “half” co-payment subsidy program from January to March, which would help support the economy during the period.

The economy is expected to pick up by April and the Songkran festival, potentially bringing about 100 billion baht into circulation, he said. This will support Thailand’s economic growth of more than 3% in 2025, Mr Thanawat said.

“If the first phase of the half-subsidy program is not enough to stimulate the economy, the government could implement a second phase in the second quarter of 2025, resulting in another 200 billion baht in circulation in the first half of the year. “, he said.

“These stimulus measures, combined with upward economic momentum next year through lower interest rates, debt restructuring, credit expansion and improved exports and tourism, could significantly benefit the economy.”

While the Bank of Thailand has shown no intention of cutting interest rates further after a recent 25 basis point cut, if the Federal Reserve announces a significant cut next year, narrowing the interest rate gap and strengthening the central bank’s local baht, Mr. Thanawat said. may have to follow suit to stimulate the economy in the first quarter of next year.

However, he said the central bank does not need to cut rates if it instead eases lending criteria for financial institutions.

On exports, Mr Thanawat said the next year was fraught with uncertainty due to the ongoing trade war, which could prompt businesses to stockpile goods if they fear a Donald Trump presidency would mean an additional 10% import tax.

TAX DEDUCTION

Soratep Rojpotjanaruch, head of the Restaurant Business Club, said the country’s economy is burdened by high levels of household debt, which is reducing the purchasing power of consumers, especially those on low incomes.

Total household debt stood at 16.3 trillion baht as of the second quarter of 2024, accounting for 89.8% of GDP, according to the central bank.

He said he was also concerned about the government’s plan to raise the daily minimum wage to 400 baht nationwide.

The wage hike will have little impact on the restaurant industry as most Thai workers are already paid more than 400 baht a day, although foreign workers are still paid the minimum wage, Mr Soratep said.

“Increasing the minimum wage could impact the restaurant business of establishments that hire foreign workers,” he said.

As economic sentiment for restaurants weakens, he suggested the government introduce a tax relief scheme for people eating out.

Mr Soratep also called on the government to renew the “We Travel Together” co-payment scheme as soon as possible. According to him, there is no need to wait for the low tourist season from May to September to boost the country’s economy.

Regarding the tourism subsidy scheme, Nattakit Thangpunsinthana, chief marketing officer of Central Pattana Plc (CPN), said he was fully in favor of the revival.

The scheme, implemented under the Prayuth Chan-ocha administration, provided subsidies of up to 40% on accommodation, airfare and meals at local establishments, encouraging spending by Thai travelers and helping the tourism sector recover from the pandemic.

For foreign tourists, he said the Tourism Authority of Thailand is on the right track by targeting independent travelers with high purchasing power rather than focusing solely on the number of foreign arrivals.

“We support the agency’s continuation in this direction, with a particular focus on tourists with high purchasing power,” Mr. Nattakit said.

He also suggested the government revive the Shop Dee Mee Kuen (Shop Dee Mee Kuen) program to stimulate domestic spending, which would boost the economy by the end of the year.

In 2023, the scheme offered a tax rebate of up to 40,000 baht. In 2024, it was renamed Easy E-Receipt, offering discounts of up to 50,000 baht.

According to Mr. Nattakit, this program will increase sales opportunities for entrepreneurs and businesses that issue electronic tax invoices and electronic receipts.

FAST REHABILITATION

Sanan Angubolkul, chairman of the Thai Chamber of Commerce and Industry, said the group wants permanent government stimulus measures beyond the 10,000 baht cash payment to vulnerable groups.

Regarding measures to boost tourism in flood-hit areas, the government should speed up the restoration of various tourist attractions and important commercial areas, he said.

Relevant agencies should help by highlighting these areas through various media channels to build confidence among both local and foreign tourists, especially during the upcoming high tourism season, Mr. Sanan said.

The Joint Standing Committee on Commerce, Industry and Banking also called for more stimulus measures to boost the purchasing power of consumers, especially in early 2025, such as the Easy E-Receipt scheme as well as other tax incentives.

“The Chamber, the Ministry of Commerce and relevant departments will coordinate with local manufacturers to offer discount campaigns and seasonal promotions to reduce the cost of living as GDP is projected to grow by 2.6-2.8% in 2024,” he said He.

The government also needs to continue efforts to restore investor confidence among both locals and foreigners as this can boost business confidence and accelerate economic growth, Mr. Sanan said.

The chamber estimates Thailand’s GDP will grow by 3.5% in 2025, with an inflation target of 2-2.5%.

DEBT REDUCTION

The government can improve consumers’ purchasing power by introducing new measures to reduce household debt in addition to stimulus during year-end holidays, said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries.

He said the government should clarify how it will deal with high levels of household debt, which requires action in the short, medium and long term.

“In the short term, authorities need to find ways to ease the financial burden of debtors. Once these people have more money to spend, the economy will improve,” Mr Kriengkrai said.

Reducing household debt could boost consumers’ purchasing power, he said.

Mr Kriengkrai suggested the government introduce new incentives to boost tourism in the north during the high season, which has just begun following severe flooding in those provinces, especially Chiang Rai.

He said measures introduced under the Prayuth administration could be brought back, such as the co-payment scheme. The co-payment scheme stipulated that the government would pay 50% of purchases of food, beverages and general merchandise up to 150 baht per person per day, up to a maximum of 3,000 baht per person.

Cooperation with the business sector is essential to the successful implementation of government stimulus measures, Mr Kriengkrai said.

“The government must work closely with the financial, manufacturing and retail sectors,” he said.

GRADUAL CHANGE OF ENERGY

A gradual transition to clean energy should be part of the government’s energy policy following the revised Power Development Plan (PDP), which is scheduled to be implemented by the end of 2024, said Pongtham Danwungderm, head of strategy at Asia Green Energy Plc, a local bituminous coal miner. trader and logistics service provider.

The new PDP, covering the period from 2024 to 2037, promotes greater use of renewable energy, but efforts to introduce alternative energy must be undertaken gradually and carefully as Thailand is still dependent on fossil fuels, he said.

Instead of stimulus, Mr Pongtham wants the government to be more flexible in its policies to shift from fossil fuels to clean energy for the sake of the economy.

Using clean energy will increase production costs for mass production industries, including food processing, building materials and cement. Many companies in these industries use coal, which is the cheapest fuel, to generate heat.

If these companies quickly switch to clean energy, they may not be able to bear the higher costs, which could eventually lead to their businesses going out of business, Mr. Pongtham said.

“The rapid transition to renewable energy poses a risk to the economy as many industries depend on fossil fuels,” he said.

Asia Green Energy is gradually restructuring its business with a greater focus on clean energy, especially biomass fuel production.

The company expects the share of revenue from its coal business to decline in the future, Mr. Pongtham said.

STRENGTHENING SMEs

Somchai Lertsutivong, chief executive of Advanced Info Service (AIS), said stimulating the economy requires more targeted assistance, especially for small and medium-sized enterprises (SMEs) and low-income people, as they can quickly stimulate the economic cycle.

He said that while there are signs of domestic economic recovery, large corporates appear to be reaping the benefits much more than SMEs.

Mr Somchai said the government should strengthen SMEs by helping them reduce the burden of operating costs.