EDITORIAL: BANGKOK POST- Ailing patient needs help

Tourism contributes to about 10-12% of Thailand’s gross domestic product (GDP), about US$505 billion or 15.6 trillion baht in 2018. Chinese tourists account for about a quarter of inbound tourists in the country, which reached 39.7 million people last year.

Unfortunately, the outbreak occurred during the high season — Chinese New Year. The Tourism Authority of Thailand estimates the number of inbound Chinese tourists will drop by at least 70% or by 1.9 million people in the first quarter of this year, resulting in a revenue loss of at least 95 billion baht.

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To deal with the impact, the Finance Ministry has come up with the fourth phase of the Chim-Shop-Chai (Taste-Shop-Spend) scheme. Aimed at triggering a spending spree, it will be rolled out after at the end of this month. But this scheme is not a strong enough measure to “cure” the sickly economy.

Even without the outbreak, the scheme has yet to show a significant impact on the economy. Since the scheme launched last September, a total of 11.78 million people have registered for various handouts and cashbacks for buying tour packages, air tickets and lodging. So far, their total spending amounted to only 21.5 billion baht.

The government’s economic ministers on Friday endorsed urgent aid measures for tourism operators battered by the outbreak. These include a soft-loan scheme, principal and interest payment suspension for six months by state-owned banks, jet fuel tax reduction and income tax payment suspension for six months.

Such measures will unlikely be enough to lift the ailing economy, which needs to be rescued by strong monetary and fiscal policies.

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A country’s economy is driven by four engines — local consumption, private investment, government expenditure and net exports of goods and services, including tourism. Unfortunately, all of these engines are in trouble. The prolonged economic slowdown, drought and the outbreak’s spillover effect on tourism has reduced local consumption.

Private investment indicators have deteriorated due to economic uncertainty. Public spending, which is supposed to be a key driver of the economy this year, has been disrupted by issues concerning the validity of the fiscal 2020 budget bill, which was marred by proxy voting by some coalition MPs. The Constitutional Court has yet to rule on the validity of the bill.

In fact, the bill was due to come into effect on Oct 1 last year, but was hampered by the lengthy government installation and legislative processes. This legal issue has further delayed the disbursement of the 600-billion-baht public investment budget. Thailand’s exports and tourism will suffer from the coronavirus outbreak’s impact on China’s 300-billion-yuan (1.3 trillion baht) economy which, according to economists, will further rock global supply chains, including Thailand. Rubbing salt into the wound is the Sino-US trade war, which will continue to pose serious risks to trade.

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Thailand needs major stimulus packages as “strong medicine” to cure its sickly economy. The government should not underestimate the current sluggish state of the economy, which is plagued by reduced local consumption and industry’s low capacity utilisation rate. In time, these problems may further affect the stability of the financial sector, which provides loans to manufacturers. Then, the economy will fall into a real crisis.