Thailand election: Campaign freebies could be a ‘Band-Aid solution’ with fiscal risks


A Thai demonstrator with a sign calling for equal workers’ rights and fair elections at a Labor Day rally in Bangkok in 2023. Experts widely agree that pro-democracy groups are expected to perform strongly in light of deep-seated discontent with the current military. Affiliate Administration.

Lauren DeSicca | Getty Images

Thailand is bracing itself for a general election this month, and livelihood issues – such as the minimum wage, farm subsidies and welfare – will be top of voters’ minds.

Southeast Asia’s second largest economy is still reeling from the Covid-19 pandemic – although tourism has resumed and unemployment is below 1%, the country is facing a number of problems. energy and electricity bills are high; number of employers is still Below pre-pandemic levels; household debt levels are Emerging at breakneck speed; and annual per capita income has increased it’s falling Since 2018.

That’s why most political parties are focusing their campaigns on gifts like subsidies and tax breaks – populist pledges that economists fear will derail the country’s fiscal balance.

The claimants can be divided into two categories: the parties that support the pro-military establishment and the pro-democracy camp of the opposition factions.

The former group included the newly formed, conservative United Thai Nation party run by Prime Minister General Prayut Chan-o-cha; Democrat Party (Thailand’s oldest conservative faction); and the military-backed ruling Palang Prakarath Party. The second group includes the social democratic Pheu Thai, led by Paitongtarn Shinawatra, daughter of former leader Thaksin Shinawatra; Progressive Move Forward Party; and Bhumjaithai, a pro-democracy but also pro-monarchy organization.

Experts widely agree that pro-democracy groups are expected to put up a strong show in light of deep-seated discontent with the current military-allied administration. Ultimately, whoever wins will still need support by the monarchy-military coalition, which activists say reduces the chances of free and fair elections.

Sietern Hansakul, an analyst with the Economist Intelligence Unit, told CNBC that despite his vulnerable position, Prayut’s return as prime minister could not be ruled out.

“He can count on support from the Senate vote (250 in total) and the support of other allies,” she said. “If Prayut is confirmed as prime minister by the new parliament, without a democratic mandate but with the help of an appointed Senate, that could lead to a return of street protests.”

Economists at DBS recently said, “Thailand’s election results remain very fluid, and may differ from opinion polls.” reports, “The formation of a new government could be delayed due to the long time required to agree on a coalition, hampering policy making,” he warned.

freebies galore

Parties are making various promises to appeal to the voters.

The United Thai Nation wants to increase farm subsidies and increase monthly allowances for state welfare cardholders and the elderly. Phaeu Thai aims to increase the minimum wage to 600 baht ($17.60) a day (up from the current high of 354 baht), triple farmers’ income by 2027, and provide one-time distributions of 10,000 baht in digital money. Move Forward wants to raise the daily minimum wage to 450 baht a day and expand welfare benefits. And Bhumjaithai wants a three-year loan moratorium for farmers, free solar panels and free life insurance for those above 60 years of age.

Few details have been provided about the funding, worrying economists who say those policies will strain already public finances after significant fiscal support during the pandemic. Public debt has crossed 60% of GDP since 2022 fiscal and is expected to stick In 2023, Coface warned reports,

recently Analysis The New Delhi think tank Observer Research Foundation described the populist pledges as “a temporary Band-Aid solution that will provide limited relief to debt-ridden citizens without encouraging them to become self-reliant.” The remark referred to household debt, which was to be 86.8% of GDP by the end of 2022.

Given the tight fiscal room, DBS expects it will be “difficult” for the newly elected government to fully deliver on its promises. Moreover, any post-election performance is likely to further hurt economic activity and investor confidence.

Other Hot-Button Issues

In Prayut’s reign, protests broke out between 2020 and 2021 demanding reforms to the monarchy, particularly the country’s infamous lèse-majesté law. Only the Move Forward party has campaigned to change the defamation law, while Phieu Thai has previously said it would consider discussing it in parliament.

Realistically, however, unless Move Forward leads a government – ​​an unlikely scenario for political observers – legislation relating to the monarchy is not expected to be on the new prime minister’s agenda.

EIU’s Hansakul said the recent protests have rekindled issues of social justice and income inequalities – a topic the new government cannot ignore. The next leader will be asked to “create a fair playing field that allows small and medium-sized businesses to better compete, expand the social safety net for the public, improve the quality of education, and supplement the labor force.” challenges of a more technology driven world,” she said.

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Cannabis regulation is another pressing matter for the next administration. In 2022, Thailand will decriminalize the cultivation and license sales of marijuana for medicinal use, but many politicians want to roll back that rule. Pheu Thai plans to limit the use of the plant to medical and research purposes, while Move Forward wants the herb to be treated as a narcotic drug. Only Bhumjaithai Party seems intent on expanding the market.

Asked how likely re-criminalization of marijuana is, Wiroj Naranong, a research director focusing on health economics and agriculture at the Thailand Development Research Institute, said it is possible but unlikely.

“The current discourse employed by almost every major party is medicinal cannabis, the main difference will be how liberal each government will be in its governance,” he said.

Even if the ultra-conservative United Thai Nation party won, it would be unable to form a coalition government without the Bhumjaithai party, he said, explaining that the United Thai Nation would have to accept the latter’s key policy on cannabis promotion. Will have to tolerate, as it is doing in the present government.

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