Add Category
In short:
Thailand has begun the sign-up process for a controversial $21 billion "digital wallet" plan for 50 million Thai citizens.
Economists have labelled the long-promised scheme costly, unsustainable and detrimental to Thailand's already struggling economy.
What's next?
Citizens have six weeks to apply for the one-off 10,000 baht ($420) payment.
Thailand has begun rolling out a controversial $21 billion digital cash handout scheme that has been criticised as costly, unsustainable, and detrimental to the country's already struggling economy.
Under the plan, 50 million eligible Thai citizens will each receive a 10,000 baht ($420) digital payment to spend on local businesses.
The government has marketed the scheme as an "economic tornado" that will stimulate the economy, reduce the cost of living, and lay the foundations for a digital economy.
The "digital wallet" program was originally promised in the May 2023 election and has already faced delays as the government sought ways to finance it.
While registration for the scheme opens on Thursday, the subsidy is expected to be rolled out later this year.
"The government came in to fix the problem of low income," Thailand's Finance Minister Pichai Chunhavajira said, as reported by Nikkei Asia.
"Every government must create debt.
"Adding money to the economy is necessary to solve the crisis."
People can pay with the digital currency in stores registered with the government and in their voting districts, excluding major retail and wholesale outlets and department stores, according to local media reports.
There are also restrictions on what they can spend the money on.
About 18 items including alcohol, tobacco, gold, fuel oil and electrical appliances can't be bought with the digital currency.
But some experts are concerned there will be no way for the government to control what the payments are really spent on.
Aim Sinpeng, an associate professor in international relations at the University of Sydney, said the digital handout was likely to increase spending but monitoring would be a challenge.
"The intention is to stimulate spending, and in turn, the economy — a goal likely to be achieved although it is not always possible to forecast whether Thais would spend money on things they should not," she said.
Adam Simpson, a senior lecturer in International Studies at the University of South Australia, told the ABC that people could still get around the restrictions by using the digital currency to buy items they would have bought anyway, and simply use the money they saved to purchase restricted items.
Last week, the government hosted its "first official press conference" on the digital wallet, with Deputy Prime Minister Pichai Chunhavajira briefing reporters on details.
The Pheu Thai Party also shared details of the sign-up process for citizens.
This includes a six-week window — August 1 through to September 15 — for citizens to register on the government's Tangrat app.
Applicants must be at least 16 years old, have no criminal record and qualify as low-income.
There is a separate application process for shopkeepers to be designated an eligible business to accept the currency which opens on October 1.
'Bad return on investment'
The government says the plan will boost gross domestic product growth by 1.2 to 1.6 percentage points but economists and political analysts have labelled the measures as short-sighted.
Dr Simpson said the policy might have been useful during the height of the pandemic, but that the need for borrowing and stimulus now was questionable.
"There will likely be a small increase in GDP but less than the total expenditure," he said.
"There might be a 1 per cent increase in GDP over two years for government borrowings and expenditure of around 2.7 per cent," he said.
"That's a bad return on investment for a policy that is unlikely to have much effect on reducing inequality or any other useful public policy outcome," he said.
In addition to criticism of its economic projections, the Thai government's financing of the scheme has also come under fire.
The handout was initially due to be funded by the Bank for Agriculture and Agricultural Cooperatives, but this plan was aborted in favour of pulling money from the 2024 and 2025 fiscal budgets, which the government claimed was possible due to a revised $18.9 billion program cost.
The new figure, according to Deputy Minister of Finance Julapan Amornvivat, was possible because the government would exclude tens of thousands of shop owners and cash recipients with a record of committing fraud.
But in implementing a new system like this, there are yet more risks of fraudulent misuse.
"One of the key worries has always been security — whether the digital wallets could be hacked or scammed in some way," Dr Sinpeng said.
"The extra features of registration have been put in place to help increase the safety features of the program, but the real impacts remain to be seen."
ABC/wires