The industry is pushing for longer-term solutions
Foreign tourists arrive at Suvarnabhumi Airport in February. The Tourism Council of Thailand proposes a sustainable solution for the economy by creating jobs by allowing more tourists to enter the country without obstacles. Varuth Hirunyatheb
The government should develop not only short-term measures but also medium- and long-term plans to cope with the impact of the global oil price hike and the Russia-Ukraine war, according to industrialists from different sectors.
They suggest the government also focuses on creating more jobs, overhauling national energy management and making the corporate sector more self-sufficient to support the broader economy and help people survive the long-term impact of economic uncertainties .
BEYOND SHORT-TERM RELIEF
The cabinet recently approved a list of 10 measures to counteract the rise in fuel prices. The measures are expected to last from May to July.
While agreeing to the measures, the Federation of Thai Industries (FTI) wants the government to consider measures to enable businesses to become more self-sufficient once the cost-of-living package comes to an end.
The measures are helping households and businesses, particularly in the retail and transport sectors, but they are insufficient as the country needs medium- and long-term plans to deal with the impact of the global oil price surge and the Russia-Ukraine war, the federation said.
These two issues have dealt a blow to the Thai economy, which is still suffering from the economic impact of the pandemic.
While Thailand needs an urgent economic cure, it is more important that additional measures are taken to fully recover the economy, especially in terms of supporting pandemic-hit tourism businesses and small and medium-sized enterprises (SMEs), Supant Mongkolsuthree said. Chairman of the FTI.
The corporate sector should ultimately become more self-sufficient and less dependent on government fiscal-monetary injections, he said.
“Don’t forget that when a huge amount of budget is spent to solve certain problems, the authorities can hardly avoid draining the country’s coffers,” Mr Supant said.
This could lead to a lack of opportunities to address other issues, he said.
Mr Supant suggested the government should help SMEs deal better with their debt so they can manage their money and continue their businesses in the long term.
The government should use the energy price crisis as an opportunity to reshape national energy management by using more renewable energy and reducing dependence on fossil fuels, he said.
In the tourism sector, authorities should seriously consider abandoning the mandatory Test & Go scheme, a Covid-19 screening measure that requires foreign travelers to undergo RT-PCR testing in Thailand, Mr Supant said.
This measure contradicts the embassy to really open Thailand to tourists again, he said.
Foreign visitors who are fully vaccinated want to travel freely without incurring any additional costs, Mr Supant said.
JOBS COME FIRST
Chamnan Srisawat, president of the Tourism Council of Thailand, said Thailand could receive just 5.6 million international tourists this year in a worst-case scenario – if the country’s full reopening is pushed back to October or key markets like China and Russia are able to do so this year not return.
It is impossible for tourism businesses to survive with such a low number of foreign arrivals, so there is a need to lower the cost of living amid the pandemic so that the domestic market can support the tourism industry, Mr Chamnan said.
But the most sustainable way to support people and the broader economy is to create more jobs by allowing more tourists to freely enter the country, he said.
Marisa Sukosol Nunbhakdi, president of the Hotel Association of Thailand, said the government’s financial aid will cover daily living needs temporarily, but may not be enough for people to survive in the long term compared to long-term solutions such as creating more jobs.
Thailand has an estimated 30,000 hotels, of which 15,000 are officially operated and have over 800,000 rooms. There are many other hotels in development, she said.
However, in a stagnant market, hoteliers are continually looking to cut costs, particularly in relation to the workforce, to keep their businesses running.
The country will not see 40 million tourists again any time soon – close to the 2019 tally – Ms Marisa said.
Somchai Lertsutiwong, chief executive of Advanced Info Service, the country’s largest mobile operator by subscriber base, said the government’s new relief measures to reduce people’s daily expenses are short-term.
“It’s like a headache pill or a symptomatic treatment that cannot effectively cure the disease in the long term,” Mr Somchai said.
Several of Thailand’s economic engines are struggling, notably tourism and domestic consumption, although exports have been in better shape since last year, he said.
A key driver that could help ease the country’s economic hardship is government spending in ways that could generate revenue, such as organizing training to boost knowledge and skills and create jobs, Mr Somchai said.
Citing the example of Japan’s Miyazawa Fund, established in 1998 to help Asian countries through the economic crisis, he said the Thai government used the fund at the time to formulate upskilling programs and create new jobs for people.
The government should quickly develop a long-term strategy to tackle economic problems and help critically affected parties through budget spending, Mr Somchai said.
ALL EYES ON INFLATION
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, welcomed the government’s latest relief measures and suggested the 10 points, including a three-month cooking gas subsidy for 3.6 million government social card holders, would provide direct support to low-income earners.
According to Mr. Sanan, the government’s move to freeze the retail price of diesel at 30 baht per liter until the end of April will also help ease consumer hardship as diesel is a major factor in transportation costs and product prices.
But he said measures like freezing diesel prices are only short-term and the government needs to develop campaigns to get people to reduce energy consumption.
Mr Sanan said the chamber has told the government to monitor inflation and export performance as they are important factors in Thailand’s economic growth this year.
The government should maintain a stable exchange rate for the benefit of the export sector, he said.
“The inflation rate is expected to remain high in the first half of this year, which will affect people’s cost of living,” said Mr. Sanan.
Yunyong Thaicharoen, chief wholesale banking officer and economist at Siam Commercial Bank (SCB) Economic Intelligence Center, said the 10 government measures are appropriate because they focus on specific groups within a specific timeframe and allow the government to limit the use of the to maximize budgets.
However, the measures will not cover all economic impacts as Thailand depends on fuel imports amid the fragile economic recovery, Mr Yunyong said.
He said the government should set out a longer-term roadmap for economic reform and focus on an alternative energy development plan instead of capping fuel prices, as the latter affects both energy and economic structure in the future.
As part of the cabinet’s 10 measures, the fuel tariff will be cut by 22 satang per unit from May to August for those using less than 300 units of electricity per month.
Some 5,500 vendors and street vendors who are government social card holders will get a 100-baht-per-month rebate for three months to buy cooking gas.
Another measure is to keep the retail price of NGV (natural gas for vehicles) at 15.59 baht per kilogram for three months.
A Treasury source, who asked not to be identified, said the measures are targeting specific targets as the government wants to maximize its financial resources.
The government has spent an estimated 164 billion baht on energy price subsidies for the general public since 2020 to keep fuel prices low.